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Unfair competition claim against Redtube et al. dismissed under California Anti-SLAPP statute

By J. DeVoy

A California Appeals Court decision reversed a trial court’s decision dismissing an unfair competition claim against Bright Imperial Limited (Redtube) and a host of other adult entertainment companies including Bang Bros, Brazzers and  The decision, Cammarata v. Bright Imperial Limited, No. B218226 (Cal. App. Ct. Jan. 26, 2011), invoked California’s Anti-SLAPP statute in reaching its conclusion.  To wit, Randazza predicted this outcome in July, 2009.

At the core of Cammarata’s grievance against RedTube was that it offered licensed content at a lower price than its competitors.  Apparently, notions of efficiency and price competition are best left to Ivory Tower blockheads at Wharton and Harvard Business School; alternative revenue models for pornography offend fair competition (yet making everyone charge for it strangely doesn’t).  I can see the logic in this — post-Twombly, conscious parallelism won’t even get past the motion to dismiss stage in Antitrust cases, so forcing your competitors to charge for a product so that you can do the same with a larger profit margin makes a lot of sense.  The court summarized Cammarata’s argument thusly:

Cammarata argues that because the price Bright charges to watch a video—zero—is less than what it costs Bright to maintain the video on its server Bright is selling or giving away the viewing of the video “at less than the cost thereof” in violation of Business and Professions Code section 17043 notwithstanding the undisputed evidence that Bright makes a net profit by selling advertising that appears on and accompanies the videos. (source.)

Isn’t that what most businesses do, though?  Newspapers and magazines are sold below cost, and network television is still free, though you certainly get what pay for.  If a model based on advertising revenues seems familiar to you, fear not, because that very thought occurred to the California Appeals Court:

If Bright’s business model sounds familiar it’s because it’s the business model typical of broadcast radio and television stations in the United States not to mention thousands of local newspapers and, more recently, tens of thousands of Internet websites including Youtube, CNN and Video.Yahoo. (source.)

Finally, there was no evidence that Redtube was responsible for Cammarata’s losses.  In the course of the dispute, Redtube’s attorneys viewed more than 100 tube-based adult entertainment sites.  Not only had Redtube failed to push Cammarata out of business, despite down sales, it has failed to push other tube sites out of the market.  The evidence belied Cammarata’s argument, as unfair business practices ultimately are used to gain a market advantage, and none was evidenced by the facts before the Appellate Court.  This lack of evidence proved fatal for Cammarata’s unfair competition claim:

The trial court erred. Business and Professions Code section 17204 provides that a person may pursue a cause of action for unfair competition only if the person has “suffered injury in fact and has lost money or property as a result of the unfair competition.” As Cammarata could not make a minimal showing that he suffered losses which would entitle him to restitution he lacked standing to pursue injunctive relief. (Citizens of Humanity, LLC v. Costco Wholesale Corp. (2009) 171 Cal.App.4th 1, 22.) Therefore, the court should have stricken the unfair competition cause of action. (source.)

California’s Anti-SLAPP law did not dismiss the entire Complaint, but eliminated a charge that could have required significant restitution from the defendants.  Respondents were also awarded their costs on the appeal, and may receive further fees under California’s Anti-SLAPP statute — making it an even more powerful force for, shall we say, “creative” litigants to contemplate.

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