Appealability of SLAPP orders in Federal Court under collateral order doctrine depends on state law

If you file a SLAPP motion in federal court these days and that motion is denied, do you have an immediate appeal right under the collateral order doctrine first set forth in Cohen v. Beneficial Industrial Loan Corp. (1949)? More recently, Batzel v. Smith (9th Cir. 2003) 333 F.3d 1119 was the first SLAPP case to reach the 9th Circuit, address this question, and apply the collateral order doctrine to the immediate appeal provision set forth in California's anti-SLAPP law. The 9th Circuit, however, reached an opposite conclusion in Englert v. MacDonell (2009) and held that the collateral order doctrine did not apply to Oregon's anti-SLAPP law. In Metabolic Research v. Ferrel (9th Cir 2012) 2012 DJDAR 1862, the 9th Circuit reached a similar conclusion holding that the collateral order doctrine did not make orders denying SLAPP motions under Nevada law appealable. The key to each of these decisions is the plain language of each state's respective anti-SLAPP statutes. Because California law has the biggest and baddest anti-SLAPP statute, with limited exceptions, it will be applied to pendent state law claims in federal court just as it is in California Court. Conversely, because Oregon and Nevada have more wimpy anti-SLAPP statutes that do not provide for an immediate appeal for a losing SLAPP defendant, the collateral order doctrine is not going to create an immediate appeal right in federal court.

Libel Suit Based On YouTube Video not a SLAPP

The San Francisco Recorder published an article on 1/27/12 about a recent unpublished SLAPP case Brain Research Labs LLC (BRL) v. Thomas Howard Clarke, et al. (filed 1/26/12 No. A127544) from the First Dist. Div. 3. In BRL, Clarke a lawyer published a nine minute video on Youtube whose purpose was to solicit potential clients for a class action against BRL, the maker of Procera alleging that Procera is a dangerous and ineffective supplement and that BRL's claims about Procera are false and illegal. Hence, the solicitation of potential clients for a class action for false advertising, inter alia. In the video, the Court noted a number of libelous statements. Also, attorney Clarke and his client were interviewed in a short segment on KTVU about the case. Each of these communications formed the basis of BRL's libel and intentional interference action, inter alia. The attorney, defendant Clarke, filed an anti-SLAPP motion pursuant to CCP 425.16. As to prong one, the Court also determined that the commercial speech exemption under CCP 425.17(c) does not apply under the recent High Court ruling in Simpson-Strong-Tie Co. v. Gore (2010) 49 Cal.4th 12, 22. The Court reasoned per Simpson that because Clarke's statements in the video and KTVU segment were about BRL and Procera and not about Clarke's goods or services. Hence, the commercial speech exemption under CCP 425.17(c) did not apply.
Accordingly, the court found that the statements in the video about Procera and BRL concerned a matter of significant public interest as the public has an interest in consumer information and the burden shifted to BRL to show a probability of prevailing.

As to prong two, the court revisited the recent controversy over the application of the Mann rule, which holds that the plaintiff need only prove up any part of its claim and need not prove up all counts or theories within a single cause of action to prevail on prong two of a SLAPP motion. Mann v. Quality Old Time Service (2004) 120 Cal.App.4th 90, 106. The BRL Court noted the High Court's recent decision in Oasis West Realty v. Goldman (2011) 51 Cal.4th 811, 820-821, which recently applied and reaffirmed the Mann rule despite recent criticism of the Mann rule in Wallace v. McCubbin (2011) 196 Cal.App.4th 1169, 1195-1212 and Justice Jones disagreeing with majority on Mann rule pp. 1216-1220. (See my previous blog on the Mann rule controversy fall 2011 for a thorough discussion).

The defense asserted the litigation privilege of CC 47(b) and common interest privilege of CC 47(c). The Court rejected each of these defenses based primarily on the Rothman v. Jackson (1996) 49 Cal.App.4th 1134, a great read for libel cases where attorneys seek to litigate in the press. In order to be privileged under CC 47(b), the communication "must function intrinsically, and apart from any consideration of the speaker's intent, to advance a litigant's case, i.e. the litigant's ability obtain the remedies which can be awarded by courts."

The crux of defendant's argument is that the Youtube video as a whole is an attorney solicitation of client's for a potential class action suit in the future. But the court found that "there is no evidence in the record that defendants contemplated in good faith , and seriously considered filing, any litigation other than the Rotenberg action" (the main underlying action pending against BRL). "Accordingly, whether the Youtube video is privileged depends solely on its functional connection to the Rotenberg action."

Under the well-settled Nguyen v. Proton Technologies (1999) 69 Cal.App.4th 140, 142-143, 148, 150-152, the court found that even if the Youtube video as a whole is categorized as an attorney solicitation, not all of the individual statements made within the video are protected by the litigation privilege. Because the statements in the Youtube video did not focus solely on Procera but also discussed on other supplements made by BRL and other manufacturers that had no nexus to the Rotenberg action.

The video and the statements within it were overbroad and exceeded the scope of issues necessary to advance the objectives of the Rotenberg action.

More importantly, under Rothman, supra, publishing the video on Youtube made it accessible to the general public and could be accessed by anyone, regardless of whether he or she had a potential claim or interest in participating in the litigation. Hence, the publication of the attorneys solicitation was "excessive."

Similar reasoning applies to the CC 47(c) common interest privilege.

As a result, the Court affirmed the trial court order denying the SLAPP motion as to BRL's claims.

In my opinion, this case is a great read because it covers a host of well-established litigation and common interest privilege cases while addressing many recent SLAPP cases regarding the mixed cause of action analysis on prong one, the commercial speech exemption of CCP 425.17(c), and the Mann rule on prong two.

I have represented many SLAPP defendants as well as plaintiffs in libel actions as well as many attorney defendants in malicious prosection and abuse of process claims where the various privileges have been raised. Contrary to the opinions of some of the attorneys quoted in the S.F. Recorder article, I do not see any real cutting-edge issues in the BRL case other than the application of well-established litigation privilege cases (primarily Rothman and Nguyen v. Proton) to a 21st century medium of the internet. I do not see any real distinction between a settlement demand letter in Proton and the Youttube video. Nor do I see a distinction between the excessive publication i.e. "litigating in the press" in Rothman and the Youtube video or the KTVU interview of Clarke here. Either way the analysis is the same.

Your comments are welcome!!!

SLAPP MALPRACTICE. IT'S HERE TO STAY!! ANGRY SLAPP PLAINTIFF SUES ATTORNEY

With the ever increasing number of anti-SLAPP motions that are being filed, granted, and won by defendants throughout California in state, federal, trial, and appellate courts every month, the number of angry SLAPP plaintiffs that get hit with high fee awards is rising exponentially. [CCP 425.16(c)] Every civil litigation attorney who files an action on behalf of a plaintiff or cross-complainant is now at an ever increasing risk of being hit with a malpractice suit filed by an irate client who lost an anti-SLAPP motion and got hit hard with a hefty SLAPP fee award. To make the point eminently clear, every time an attorney represents a losing plaintiff in a SLAPP case, SLAPP fees are mandatory and often exceed $100K. If this state of affairs is not enough to make an angry client sue for malpractice, the losing SLAPP plaintiff and the attorney are also simultaneously exposed to a SLAPPback malicious prosecution suit from the prevailing SLAPP defendant in the underlying action under CCP 425.18. Soukup v. Hafif (2006) 39 Cal.4th 260. So the former client's potential damages against his attorney for malpractice have now escalated dramatically. And even if the attorney is able to successfully defend the malpractice action, it can irreparabley ruin the attorney's reputation even if the attorney successfully defends the action years later. Moreover, defending a malpractice action is a a major expense, time waster, and source of stress for attorneys facing such an action. What follows is a case in point.

In January of 2011, I testified as a defense expert in a case that resulted in what is believed to be the first anti-SLAPP malpractice verdict in California. In a case called Lefkowitz v. Gruenberg (Case No. 37-2009-00101969-CU-PN-CTL) San Diego Superior Court, I was retained by Lewis Brisbois, San Diego to testify as a standard of care and attorney fee/ethics expert for the defense in a legal malpractice/breach of fiduciary duty action against an attorney where the key allegation was that the attorney allegedly mishandled the underlying defamation action by failing oppose the motion SLAPP motion properly and failing to spot the SLAPP issue and properly advise the client/plaintiff that he would be liable for substantial attorney's fees and costs if he lost the SLAPP motion and appeal. In the underlying defamation action, the court awarded the prevailing SLAPP defendant $86,000.00 in SLAPP fees against plaintiff after losing SLAPP motion on appeal. Even though the attorney obtained a net positive settlement of $35, 000.00 in a related whistleblower cause of action, the former client/defamation plaintiff sued his attorney claiming he would have obtained a better settlement had he not been saddled with the $86K SLAPP fee award against him.

We believe that Lefkowitz is the first SLAPP malpractice verdict in the State of California as the LA Daily Journal and other verdict commentators are unaware of any other legal malpractice verdicts arising from the attorney's representation of a client in an underlying SLAPP case.

DEFENSE VERDICT - 1/6/11 - HON. JOHN S. MEYER SAN DIEGO SUPERIOR COURT

The jury found "no negligence" as to whether the attorney failed to timely and properly advise his former client of the risk of paying the defendant's attorney's fees if the employer's SLAPP appeal was successful. The jury did not reach the issues of causation and damage. Mr. Moneer testified that two attorneys and one trial judge misapplied the anti-SLAPP law to the defamation claim in the prior action. Simply because the Court of Appeal reversed and remanded for mandatory SLAPP fees does not mean that the attorney fell below the standard of care in handling the defamation/SLAPP action for the ordinary employment litigation practitioner.

ATTORNEYS: Peter Garchie, Esq. , Lewis Brisbois, San Diego - Defense
Shauna Hagan, Esq., Lewis Brisbois, San Diego - Defense

Alicia I . Dearn, San Diego - Plaintiff

EXPERTS: James J. Moneer, Esq. San Diego - Defense

Peter R. Thompson, Esq. - Plaintiff


For more facts and details about the case see www.slapplaw.com and click on attorney profile and scroll down to Lefkowitz v. Gruenberg.

WHAT CAN PLAINTIFF'S CIVIL LITIGATION ATTORNEYS DO?

1. SCREEN, SCREEN, SCREEN FOR SLAPP ISSUES BEFORE THE PLEADING IS FILED.

2. ADVISE YOUR CLIENTS IN WRITING REGARDING SLAPP FEES

3. CONSULT AN EXPERT TO SCREEN THE COMPLAINT, ASSIST WITH OPPOSITION, AND/OR GIVE EXPERT TESTIMONY TO CUT THE FEE AWARD DOWN SUBSTANTIALLY

CALIFORNIA SHOULD ADOPT D.C. ANTI-SLAPP LAW'S PROTECTION FOR ANONYMOUS ONLINE POSTERS

The District of Columbia anti-SLAPP legislation just went into effect on 3/31/11. The new law was modeled after California's anti-SLAPP legislation with one added feature - a special motion to quash a subpoena seeking to discover the identity of online posters. California's anti-SLAPP laws are the strongest in the nation with this one loophole. Unlike the California law, the D.C. law makes attorney's fees to a prevailing SLAPP defendant merely discretionary instead of mandatory as it is in California. But the big strength of the D.C. statute is its provision for a special motion to quash subpoenas and other discovery in suits filed against "Doe" defendants who are alleged to have published defamatory material on the internet. California's anti-SLAPP laws (CCP 425.16, 425.17, 425.18) do not have any such special motion to quash provision and recent California case law has held that an anti-SLAPP motion cannot be used to challenge a motion or a subpoena that arises from the exercise of First Amendment speech or petition rights - SLAPP motions challenge only "causes of action" in a complaint, cross-complaint, or petition (CCP 425.16, subd. (h)). Moreover, because the anonymous online poster is named only as Doe and not as a named defendant, the anonymous poster served with a subpoena demanding production of their computer hard drive is defenseless for the poster cannot file an anti-SLAPP motion and stay the discovery until they are sued as a named defendant. So the discovery stay provision that benefits traditional SLAPP defendants who are named in the action provide no protection for the Doe defendant who happens to get served with a subpoena to produce such private and highly sensitive information. Subpoenas designed to disclose the identity of online posters can be highly intimidating to anonymous online posters because of the excessive scope, cost, and intrusiveness of such demands.

Th D.C. statute counters this problem by providing online posters with an additional weapon to combat SLAPPs - they special motion to quash a subpoena or discovery aimed at disclosing an anonymous poster's real identity. It is a burden shifting motion to quash that works similarly to the two step process of the anti-SLAPP motion. The plaintiff/propounding party must show a probability of prevailing on the claim and that such probability outweighs the intrusiveness of the discovery sought and the method used. If the plaintiff/propounding party is unsuccessful in meeting this burden, the anonymous poster can recover attorney's fees and costs.

Many public interest commentators have observed that the rise in web-based commentary and the ever increasing number of lawsuits that ensue are a motivating force behind many other states enacting their own anti-SLAPP legislation. Texas became the 30th state to adopt their own anti-SLAPP laws in June 2011. Another commentator found that with the explosion of the internet, there are many more of these sorts of suits. Moreover, anonymous posters now feel empowered to say things they wouldn't otherwise say. They don't often realize that their identities can be uncovered.

AGREE OR DISAGREE?? YOUR COMMENTS APPRECIATED. I THINK THIS IS SOMETHING OUR CALIFORNIA LEGISLATURE SHOULD SERIOUSLY CONSIDER.