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Lisa J. Borodkin (CA Bar #196412) lborodkin@zuberlaw.com 777 South Figueroa Street, 37th Floor Los Angeles, California 90017 Admitted Pro Hac Vice
Firm State Bar No. 00443100 Renaissance One, Two North Central Ave. Phoenix, AZ 85004-2391
TELEPHONE 602.229.5200

Quarles & Brady LLP

John S. Craiger (#021731) John.Craiger@quarles.com David E. Funkhouser III (#022449) David.Funkhouser@quarles.com Attorneys for Defendant Lisa Jean Borodkin IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA XCENTRIC VENTURES, L.L.C., Plaintiff, v. LISA JEAN BORODKIN and JOHN DOE BORODKIN, husband and wife; RAMOND MOBREZ and ILIANA LLANERAS, husband and wife; DANIEL BLACKERT and JANE DOE BLACKERT, husband and wife; ASIA ECONOMIC INSTITUTE, LLC, a California limited liability company, DOES 1-10, inclusive, Defendants. No. 2:11-CV-01426-PHX-GMS DEFENDANT LISA JEAN BORODKIN'S REPLY IN FURTHER SUPPORT OF MOTION UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(b)6 TO DISMISS THE VERIFIED FIRST AMENDED COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION (Assigned to the Honorable G. Murray Snow) (Oral Argument Requested)

Defendant LISA JEAN BORODKIN (Ms. Borodkin) respectfully submits the following Reply in further support of her Motion to Dismiss for Failure to State a Claim (Doc. #102). Xcentric does not cite to any allegation in its pleadings in its Response.

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Rather, Xcentrics Response again tries to introduce vagueness and revisionist history to keep Ms. Borodkin the dragnet of its catch-all litigation style. When analyzing whether Xcentric has properly pleaded that Ms. Borodkin continued the California Action without probable cause or with malice, it is essential to look objectively at the facts as pleaded in the FAC, in documents attached to the FAC, and matters of which the Court may take judicial notice, and not the hyperbole in Xcentrics response. Here, Xcentrics Response attempts to muddy the record with arguments that contradict the allegations in the FAC and introduce facts extrinsic to the FAC. The most telling signs of this tactic is that Xcentrics Response never once cites to any portion of the FAC. This is particularly true of the chronological sequence of events. Even passing scrutiny of Xcentrics Response shows that Xcentrics Response is based on revisionist history. The chronology in the FAC is, as follows: From April 19, 2010 to July 26, 2010, Ms. Borodkin litigated only the claim for RICO/attempted extortion that was contained in the complaint attached as Exhibit A to the FAC. The FAC does not allege that Ms. Borodkin had knowledge that her clients lied in their original declarations of May 3, 2010 at any time prior to May 11, 2010. The FAC does not allege that Ms. Borodkin continued the claim for RICO/attempted extortion based on the false information in the May 3, 2010 declarations. The FAC alleges that Ms. Borodkin participated in filing declarations on May 20, 2010 that corrected the false statements in the May 3, 2010 declarations. The FAC alleges that in his May 20, 2010 declaration Defendant MOBREZ further perjured himself by testifying for the first time, In addition, there were a number of incoming calls to me from Ripoff Report, and that Defendant

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MOBREZ knew that at no time were any calls ever made from Ripoff Report to him. See FAC 49. The FAC does not allege that Ms. Borodkin knew that at no time were any calls ever made from Ripoff Report to MOBREZ. The FAC alleges only, in a conclusory fashion, Upon information and belief, Defendants BORODKIN and BLACKERT assisted Defendant MOBREZ with the creation of his corrected declaration and in doing so BORODKIN and BLACKERT intentionally suborned perjury from MOBREZ. See FAC 50. The FAC references at 56 the July 19, 2010 Order, in which the Court found, inter alia, that the Plaintiffs did not rely on evidence of oral threats in their RICO/attempted extortion claim. See Asia Econ. Inst. v. Xcentric Ventures, LLC, CV 10-1360 SVW PJWX, 2010 WL 4977054 at *14 (C.D. Cal. July 19, 2010). The FAC references at 56 the July 19, 2010 Order, in which the Court found, inter alia, that Xcentric refused to reveal the name of the third party vendor that purportedly recorded all of Xcentrics calls despite the Plaintiffs' reasonable request. See Asia Econ. Inst. v. Xcentric Ventures, LLC, CV 10-1360 SVW PJWX, 2010 WL 4977054 at *13 (C.D. Cal. July 19, 2010). The FAC alleges that on July 27, 2010, Ms. Borodkin participated in filing the First Amended Complaint in the California Action. See FAC 57. The FAC does not attach the First Amended Complaint filed in the California Action on July 27, 2010. The First Amended Complaint in the California Action filed July 27, 2010 focused on Xcentrics activity in developing information in the form of computer coding, manipulation and redaction of Google search results, and Xcentrics failure to disclose to the public the large amounts of money it received for giving favorable treatment to members of its CAP program. See RJN Ex. 8 The First Amended Complaint does not allege any facts that Ms. Borodkin knew were false in continuing the California Action after July 27, 2010.

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A similar blurring occurs where Xcentrics Response characterizes Ms. Borodkins motives. Although Xcentric was ordered by this Court to separate the motives and state of mind of Ms. Borodkin from those of her former clients, Xcentric has used its Response to attribute the motives of her former clients to her, again. I. Xcentrics Attorney Declaration of David Gingras Should Not Be Considered. As an initial matter, the declaration submitted by Xcentric and the argument accompanying it at 3:17-5:5 should not be considered on this motion under Rule 12(b)(6). Federal Rule of Civil Procedure 12(d) provides:
(d) Result of Presenting Matters Outside the Pleadings. If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion. See Fed. R. Civ. P. 12(d).

Thus, the Declaration of David Gingras must either be excluded or this motion must be treated as one under Rule 56. However, the contents of the Declaration of David Gingras are themselves immaterial to this motion. The colloquy quoted by Xcentric shows that Ms. Borodkin wanted to consult with her client rather than answer a hypothetical question of how she would fill in the blanks on a pleading that she did not draft. This does not establish any element of a claim for malicious prosecution. II. Xcentrics Has Failed to Allege that Ms. Borodkin Continued Any Claim in the California Without Probable Cause. Under California law, a claim for malicious prosecution must show that the defendant initiated or continued a lawsuit (1) without probable cause; and (2) with malice. See Sheldon Appel Co. v. Albert & Oliker, 47 Cal.3d 863, 87172 (1989) (quoting Bertero v. National General Corp., 13 Cal.3d 43, 50 (1974)).

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The probable cause inquiry is objective, asking whether a reasonable person would have thought that the claim was legally tenable without regard to [her] mental state. Estate of Tucker ex rel. Tucker v. Interscope Records, Inc., 515 F.3d 1019, 1031 (9th Cir. 2008). Xcentrics Response admits that the issue of whether it has alleged the lack of probable cause element must be analyzed with respect to the merits of the individual claims in the California Action, and not with respect to the action as a whole. See Response at 2. However, when the claims that Ms. Borodkin actually continued in the California Action are examined by date, Xcentrics theory unravels. The only potential factual issue for purposes of probable cause in a malicious prosecution claim is the state of the defendant's knowledge at the time she initiated [or here, commenced] the underlying lawsuit. See Estate of Tucker ex rel. Tucker v. Interscope Records, Inc., 515 F.3d 1019, 1031 (9th Cir. 2008). [W]hen the state of the defendant's factual knowledge is resolved or undisputed, it is the court which decides whether such facts constitute probable cause or not. Xcentric erroneously argues that this motion should be denied, arguing that Ms. Borodkins mental state, extent of research and knowledge raise questions of fact which must be resolved by a jury, not by the Court. See Response at 9:17-18. However, no questions of fact have been raised. There are no allegations in the FAC regarding Ms. Borodkins mental state, extent of research and knowledge that raise these questions. This motion accepts the allegations of the FAC as true, except where they are contradicted by exhibits or matters in the RJN, or where the allegations are mere legal conclusions couched as fact. The only allegations in the FAC that conceivably implicate Ms. Borodkins knowledge are the following wholly conclusory and self-serving allegations: Paragraph 47 (despite knowing that the claims made by their clients were factually untrue, [Ms. Borodkin and Blackert] continued to pursue the case even more aggressively than before)

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Paragraph 50 (BORODKIN . . . intentionally suborned perjury from MOBREZ) Paragraph 76 (As of no later than May 7, 2010, . . . BORODKIN knew, with absolute certainty, that . . . MOBREZ and LLANERAS had committed perjury and that their claims of extortion were totally and completely fabricated and false.) Paragraph 82.d ([BORODKIN continued the California Action] despite knowing that Xcentrics conduct was, and is, entirely lawful). This explains Xcentrics bizarre tactic of trying to compare its theories to a 12legged stool. Unfortunately for Xcentric, its lack of probable cause element does not have 12 legs, it has one. Xcentrics FAC only has one factual theory (that the clients lied in their May 3, 2010 declarations) for why one claim (the one for RICO/attempted extortion) was not brought with probable cause. Xcentric argues that, because Ms. Borodkin knew that her clients lied, she should have dropped the California Action as a whole, presumable because she should have known that her clients had a propensity for lying.1 The FAC fails to state a theory that Ms. Borodkin thereafter continued the RICO/attempted extortion claim in the California on false facts. This is because Ms. Borodkins argument on the motion for summary judgment on the RICO/attempted extortion claim did not rely on false facts, but relied only on predicate acts communicated in writing. See Asia Econ. Inst. v. Xcentric Ventures, LLC, CV 10-1360 SVW PJWX, 2010 WL 4977054 at *14 (C.D. Cal. July 19, 2010) ([A]lthough not relied upon by Plaintiffs here, California Penal Code 524 criminalizes attempted extortion by means of a threat even where such threats are not made in writing. Cal.Penal Code 524.) (emphasis added).

By that logic, Xcentrics attorney should have dropped his client, Ed Magedson, and refused to represent him as well. Ed Magedson admitted in the California Action to lying in one of his declarations as well.

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The FAC also alleges that Ms. Borodkin corrected the statements on May 20, 2010. See FAC 50. But even taking as true the allegation that MOBREZ falsely claimed to have received incoming calls from Ripoff Report in his May 20, 2010 declaration, the FAC does not allege that Ms. Borodkin knew this. See FAC 49. Untangling Xcentrics circular logic and the revisionist history in its Response does take some time. Fortunately, the analysis of the RICO/attempted extortion claim Ms. Borodkin allegedly continued wrongfully can be performed separately from analysis of her allegedly wrongful continuation of all the other claims. To review, the FAC attaches only the original complaint filed in the California Action filed January 27, 2010, see FAC at 28, Ex. A. It omits to attach the First Amended Complaint filed in the California Action on July 27, 2010, compare FAC 57 with RJN, Ex. 8. April 19, 2010 the date Ms. Borodkin entered the California Action -- was also the date the Court bifurcated the California Action to address only the RICO/attempted extortion claim. See FAC Ex. B2 See also Asia Economic Institute v. Xcentric Ventures, LLC, 2010 WL 4977054 at *1 (C.D.Cal. July 19, 2010).3 The complaint attached to Xcentrics FAC had thus become a nullity on July 27, 2010, with the filing of the First Amended Complaint in the California Action. See FAC 57. The FAC even admits that the First Amended Complaint in the California Action was much more detailed than the original complaint and supported by exhibits, see FAC 57

The FAC alleges that Ms. Borodkin first entered the California Action on April 19, 2010. See FAC 30. The Minute Order of April 19, 2010 is attached as Exhibit B to the FAC, disclosing that the Court bifurcated and advanced the RICO/attempted extortion claim to try only that one first. See FAC, Ex. B.
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On April 19, 2010, the Court held an initial case status conference at which both parties appeared and were represented by counsel. The Court instructed the parties that it was bifurcating Plaintiffs' third and fourth causes of saction under the RICO statute, 18 U.S.C. 1962(c), and 1962(d), to the extent that those claims are based on the predicate acts of extortion, and ruled that those claims would be tried first. The Court set a trial date for August 3, 2010. The Court also ruled that the issue of damages would be bifurcated; thus, the August 3, 2010 trial would only address Defendants' liability under the RICO statute. Consistent with this ruling, Plaintiffs made a motion before Magistrate Judge Walsh to bifurcate discovery so as to limit discovery prior to August 3, 2010 to the RICO/extortion claims only. Magistrate Judge Walsh granted the motion on June 24, 2010. (Order, Docket No. 82.)

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(On July 27, 2010, Defendants . . . filed an 84-page First Amended Complaint . . . supported by more than 250 pages of exhibits). Although Xcentric omitted this operative document from the FAC, with this Motion Ms. Borodkin submits the First Amended Complaint in the California Action with a Request for Judicial Notice (RJN), showing that the character of the claims that Ms. Borodkin continued in the second phase of the bifurcated California Action were substantially different from the character of the claims in the original complaint, see RJN Ex. 8, and nothing like the characterizations of the claims in Xcentrics Response. Yet even when confronted with the actual pleading that was actually litigated in the California Action from July 27, 2010 to its concluson, Xcentric fabricates arguments on a timeline that blurs the operative pleadings and events. Xcentrics Response argues that Ms. Borodkins lack of probable cause for wrongful continuation of civil proceedings can be inferred from the nature of the complaint in the California Action that was filed before she got into the California Action, and were not a part of the first phase of the bifurcated action. See Response at 4:22-23. As of July 12, 2010 (the date of the colloquy quoted in Xcentrics Response), the California Action was still bifurcated to address only the RICO/attempted extortion claim. Thus, on July 12, 2010, Ms. Borodkin was asked to respond to an aspect of the case that was not currently being litigated. Xcentric argues, in its Response at 3:20-24, that the court asked Ms. Borodkin to explain the factual basis for the damages aspect of the RICO/wire fraud portion of her case which was premised on the allegation that Xcentric made various false statements on its site. From there, Xcentric argues [a]s this dialogue shows, Ms. Borodkin was clearly aware of serious defects in the claims she was prosecuting. See Response at 4:22-23. This is another example of Xcentrics characteristic double-talk. It is an attempt, essentially, to frame Ms. Borodkin for the actions of others, perhaps hoping that this Court will not notice the gaps in logic or chronology.

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In fact, on July 12, 2010, Ms. Borodkin was careful not to orally advocate the pleading that Mr. Blackert had drafted, since advancing an oral argument based on a pleading is presenting to the court a pleading for Rule 11 purposes. The confusion that Xcentric seeks to foster does not stop here. Xcentric causes more confusion by not attaching to the FAC the First Amended Complaint filed in the California Action on July 27, 2010. See RJN, Ex. 8, and then arguing that a superseded pleading did not present viable legal theories. In fact, the First Amended Complaint in the California Action provided the fraud particulars requested by the Court in the July 12, 2010 colloquy. The First Amended Complaint in the California Action also contained proper allegations of damages. Finally, the RICO/wire fraud claim cannot support Xcentrics cause of action for malicious prosecution in any event. An essential element of a malicious prosecution claim under California law is that the underlying proceeding was pursued to a legal termination in the plaintiff's favor. See Bertero v. Nat'l Gen. Corp., 13 Cal. 3d 43, 50, 529 P.2d 608, 613 (1974). If, however, a claim is voluntarily dismissed on technical grounds, for procedural reasons, it does not constitute a favorable termination. See Lackner v. LaCroix, 25 Cal. 3d 747, 750, 602 P.2d 393, 394 (1979). A voluntary dismissal of a claim on technical grounds does not constitute a favorable termination for purposes of a malicious prosecution action, because it does not reflect on the substantive merits of the underlying claim. See Drummond v. Desmarais, 176 Cal. App. 4th 439, 456, 98 Cal. Rptr. 3d 183, 196 (2009). In the California Action, the Plaintiffs voluntarily dismissed the RICO/wire fraud cause of action by motion (over Xcentrics opposition). See Asia Econ. Inst. v. Xcentric Ventures LLC, CV 10-01360 SVW PJWX, 2011 WL 2469822 (C.D. Cal. May 4, 2011). Thus, Xcentric did not obtain a favorable termination on the merits of the RICO/wire fraud claim in the California Action, and Xcentrics arguments regarding the RICO/wire fraud claim are irrelevant. In any event, the Declaration should not be considered on this

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Motion. III. Xcentrics Response Fails to Point to Any Factual Allegations in the First Amended Complaint that Adequately Plead the Element of Malice. Another ground for this Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) [Doc. #102] (Motion) is that, even if all the allegations Plaintiff Xcentric Ventures, LLC (Xcentric)s Verified First Amended Complaint (FAC) are taken as true, the FAC fails to allege facts sufficient to establish the element of malice in order to state a plausible claim of malicious prosecution, or aiding abetting same, against Ms. Borodkin. See Motion at 12:3-14:20. Xcentrics Response [Doc. #107] (Response) does not argue that the FAC contains any such factual allegations. See Response at 10:7-11:21. Rather, Xcentric makes legal arguments. First, Xcentric argues that the sufficiency of the FAC was previously confirmed in this Courts July 17, 2012 Order on Ms. Borodkins motion to strike or for more definite statement under Rule 12(e) [Doc. #97]. See Response at 10:10-11, 10:1911:7. However, it is unclear that this issue has already been determined in favor of Xcentric, because a Rule 12(e) motion has a different standard than a motion to dismiss under Rule 12(b)(6). A Rule 12(e) motion tests vagueness or ambiguity, not plausibility. See Sagan v.
Apple Computer, Inc., 874 F. Supp. 1072, 1077 (C.D. Cal. 1994). A Rule 12(e) motion for

more definite statement could be denied on the same pleading as to which a Rule 12(b)(6) motion to dismiss is granted. See, e.g., Sagan, 874 F. Supp. 2d at 1077, 1079. The chief ambiguities that Ms. Borodkins motion for more definite statement sought to clarify were (1) to distinguish which of Xcentrics new allegations of malice applied her, and which applied to Defendant Daniel Blackert, and (2) to distinguish

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between her clients allegedly improper motives for bringing the California Action and Ms. Borodkins allegedly improper motives for continuing the California Action. As to the first ambiguity, this Court resolved the Rule 12(e) motion by concluding that Xcentric could plead malice of Mr. Blackert and Ms. Borodkin collctively. As to the second ambiguity, this Court stated: [A]t this stage of the litigation, Plaintiff need not identify a specific factual basis for Borodkins alleged state of mind. It is sufficient that Plaintiff has distinguished between Borodkins alleged improper motives for bringing the California Action and her clients motives for bringing the California Action. See Order of July 17, 2012 at 7:4-7. Respectfully, this Order did not conclusively decide the issue of plausible malice. Read carefully, the FAC alleges only Xcentrics fanciful opinion of Ms. Borodkins motivations, and not a single extrinsic fact from which any reasonable factfinder could infer the motives ascribed to her. Instead, Xcentric introduces bizarre, inapposite metaphors that are as fanciful as its allegations. Xcentric argues that its claims against Ms. Borodkin are like a 12-legged stool. This is a logical fallacy known as false analogy. FAC presents only a partial set of facts regarding the claims in the California Action, so that Xcentric can bundle together the twelve claims in the original complaint (which was drafted before Ms. Borodkin got involved) and sell them to the Court as the action that Ms. Borodkin continued with malice. Xcentric wants to bundle together the alleged perjury of Mr. Mobrez and Ms. Llaneras and sell them to the Court as showing Ms. Borodkins lack of probable cause in continuing the California Action. Finally, Xcentric wants to bundle together a list of conclusory allegations regarding Mr. Blackert and Ms. Borodkins purposes (without including a single, plausible fact allegation) and sell them to the Court as having sufficiently alleged the something more required to

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show malice. Understandably, Xcentric wants to continue arguing in generalities, because when the FAC is analyzed in detail, Xcentrics house of cards collapses. Shockingly, Xcentrics FAC alleges, with impunity, that Xcentric violated Californias eavesdropping law (Penal Code 632), and displays no compunction in using these illegal and inadmissible recordings to demand money damages from the Defendants here. It is time to call a spade a spade. Xcentric has pled no case against Ms. Borodkin. Xcentric does not dispute that California law requires something more than legal untenability to establish the improper purpose element of a malicious prosecution claim against an attorney. But Xcentric has nothing more to allege against Ms. Borodkin. Xcentrics claim that the unfair competition claim was brought without probable cause on behalf of Asia Economic Institute LLC (AEI) is easily disposed of. The allegations in the Amended California Complaint showed that AEI paid money out of pocket to repair its search engine results, which were worsened by following Xcentrics advice to follow rebuttals to Ripoff reports. Accordingly, this motion should be granted. RESPECTFULLY SUBMITTED this 30th day of August 2012. By /s/ Lisa J. Borodkin Lisa J. Borodkin Admitted Pro Hac Vice QUARLES & BRADY LLP Renaissance One, Two North Central Avenue Phoenix, AZ 85004-2391 John S. Craiger David E. Funkhouser III Attorneys for Lisa Jean Borodkin

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