In August 2013, Yelp sued McMillan for breach of contract, intentional interference with contract, unfair competition, and false advertising. Yelp believes that McMillan orchestrated fake reviews on the Yelp page for his bankruptcy law practice - an accusation McMillian denies. McMillan filed an anti-SLAPP motion in response to Yelp's suit. But McMillan's SLAPP motion appeared doomed to fail under the commercial speech exemption from SLAPP set forth in CCP 425.17(c). All of McMillan's statements that Yelp's suit alleged causes harm were statements of fact about McMillan's own services as a bankruptcy attorney designed to secure commercial transactions for his services and were published to actual or potential customers through Yelp's website. A recent ruling by Judge Joan M. Lewis confirmed this analysis denying the SLAPP motion under the commercial speech exemption of CCP 425.17(c). There will likely be an ensuing appeal but, in my opinion, it is not likely to succeed for the reasons set forth above. This appears to be a classic textbook example of a complaint alleging harm based on defendant's commercial speech activity as defined in CCP 425.17(c). Simpson-Strong-Tie v. Gore (2010) 49 Cal.4th 12.
Of more fundamental importance are the so-called extortion suits that have been filed against Yelp for burying or even deleting positive reviews unless the business buys advertising from Yelp. The Ninth Circuit has dismissed two such suits against Yelp over the past year holding that Yelp has the right to run its website as it sees fit - including the right to refuse to remove false entries, the right to bury positive reviews and bring negative ones to the top through its use of "filtered reviews" and in Levitt v. Yelp, the Ninth Circuit recently even went so far as to hold that Yelp could delete positive review/entries on its site.
What is a poor business owner to do in these cases of legalized "extortion" One Ninth Circuit Justice stated that Yelp's threat to bury or delete positive reviews is "hard bargaining" at best. But what about the unequal bargaining power between the small business and giant Yelp where the Yelp ratings are often the lifeblood of a small business. I think in some circumstances this kind of hard bargaining can rise to the level of unconscionability - both procedural and substantive. It would appear to be a contract of adhesion (procedural) and substantively so one-sided and oppressive as to shock the court's conscience in extreme cases. After all that business earned those positive reviews and that part of the Levitt holding that allows Yelp to altogether delete a positive review may sweep too far. Time will tell as this body of law develops along with the anti-SLAPP and other cyber laws.
Thursday, January 8, 2015
Sunday, September 7, 2014
COMPLAINT DISMISSED IN FACE OF PENDING SLAPP MOTION - CONFLICT
WHAT HAPPENS WHEN PLAINTIFF DISMISSES COMPLAINT IN RESPONSE TO A PENDING ANTI-SLAPP MOTION? CONFLICTS ABOUND!
What happens when a plaintiff dismisses the complaint in lieu of opposition to a pending SLAPP motion pursuant to CCP section 425.16? Very recently, I have experienced wide variation in what different trial judges will do when confronted with this situation. I filed two SLAPP motions, in two different cases, before two different trial judges in the same courthouse. Both cases involved defamation, internet libel, and malicious prosecution claims. In both cases, each plaintiff dismissed the complaint in lieu of opposition within weeks of each other. Judge A heard the SLAPP motion on its merits and granted it in order determine prevailing party status for purposes of a subsequent motion for an award of mandatory attorney's fees pursuant to the anti-SLAPP statute's fee provision relying principally on Liu v. Moore (1999) 69 Cal.App.4th 745, 750-752 and Pfeiffer Venice Properties v. Bernard (2002) 101 Cal.App.4th 211, 217-219. [CCP § 425.16, subd. (c)]. See also the most recent case on point, Tourgeman v. Nelson & Kennard (2014) 222 Cal.App.4th 1447, 1456-1457 [adopting the holdings and reasoning of Liu and Pfeiffer]. A few weeks later, a different judge down the hall, Judge B, ruled that the court had no jurisdiction to rule on the merits of the SLAPP motion, took the motion off calendar, and ordered defendants to argue the entitlement or prevailing party issue in defendant's subsequent motion for mandatory attorney's fees relying primarily on Kyle v. Carmon (1999) 71 Cal.App.4th at p. 908, fn. 4; and The Law Office of Andrew Ellis v. Yang (2009) 178 Cal.App.4th 869, 879. Judge B further ruled: "until defendant makes a motion for an award of attorneys fees and costs, the Court need not consider the merits." To Judge B's credit, however, His Honor ordered that the parties may not file any new briefing or evidence with respect to the merits of the SLAPP motion and that the preliminary question of who is the prevailing party shall be based solely upon the party's moving papers submitted in support of the initial anti-SLAPP motion as requested by defense counsel.
Even more perplexing is the palpable conflict of authority among a number of Second District cases. The approach taken in Liu v. Moore/Pfeiffer Venice Properties, supra, I believe, best comports with the plain language and policies undergirding the anti-SLAPP statute. Both cases hold, with the latter relying on the former, that the court is "required" to hear the SLAPP motion on its merits in order to determine the prevailing party on the anti-SLAPP motion before fees can be awarded. See also Tourgeman, supra. Moreover, it would seem to promote judicial economy for the court to resolve the merits issue while the SLAPP motion is teed up for the court rule on rather than have the parties wait and relitigate that issue as part of the fee motion - which is likely to be contentious in its own right. It definitely puts the specially moving SLAPP defendant at a significant disadvantage to have both motions ruled on in one fee motion. Furthermore, it is imperative to note that the Law Office of Andrew Ellis v. Yang (2009) 178 Cal.App.4th 869, 878 never even once mentioned the 1999 Liu v. Moore, supra, case, which is the landmark SLAPP case on this issue. This becomes more of an anomaly when one considers that all three of these cases (i.e. Liu, Pfeiffer, and Yang) are Second District cases. As shown below, Ellis and other similar cases do not comport with the plain language and policy of section 425.16.
As shown at length in Liu v. Moore (1999) 69 Cal.App.4th 745, inter alia, when plaintiff dismisses its action, with or without prejudice, in response to a pending section 425.16 anti-SLAPP motion, defendants have the right to a ruling on their special motion to strike as a necessary predicate to an award of attorney's fees. Id., at 751. The weight of authority in this situation holds that where a plaintiff dismisses its action in response to a SLAPP motion, the court must rule on the merits of the SLAPP motion as a predicate to an attorney fee award and retains jurisdiction to do so. Id.; Pfeiffer Venice Properties v. Bernard (2002) 101 Cal.App.4th 211, 218-219 [accord approving of Liu, supra]; Tourgeman v. Nelson & Kennard (2014) 222 Cal.App.4th 1447, 1456-1457 [adopting the holdings and reasoning of Liu and Pfeiffer]. See also South Sutter, LLC v. L.J. Sutter Partners, L.P. (2011) 193 Cal.App.4th 634, 667 [anti-SLAPP procedure provides "a mechanism whereby a complaint's lack of merit can be determined on the merits after the complaint is dismissed]. But see Ellis, supra, 178 Cal.App.4th at 879 citing (Kyle v. Carmon (1999) 71 Cal.App.4th 901, 908, contra, [court had no jurisdiction to rule on the merits of the SLAPP motion after complaint dismissed].
"The purpose of section 425.16 is clearly to give relief, including financial relief in the form of attorney's fees and costs, to persons who have been victimized by meritless retaliatory SLAPP suits because of their participation in matters of public significance (§ 425.16, subd. (a))" Liu., at 750. "We hold that a defendant who is voluntarily dismissed, with or without prejudice, after filing a section 425.16 motion to strike, is nevertheless entitled to have the merits of such motion heard as a predicate to an award of attorney's fees and costs under subdivision (c) of that section." Liu, supra; Pfeiffer Venice Properties v. Bernard (2002) 101 Cal.App.4th 211 [accord].
"Therefore, the trial court's adjudication of the merits of a defendant's special motion to strike is an `essential' predicate to a ruling on the defendant's request for an award of attorney's fees and costs. An award of these expenses under section 425.16 is only justified when a defendant demonstrates that plaintiff's action falls within the provisions of subdivision (b) and the plaintiff is unable to establish a reasonable probability of success. Until a court determines that these circumstances exist, a moving defendant is not entitled to fees and costs under section 425.16. If such judicial determinations were not first required, and a fair procedural opportunity to obtain it allowed, then a plaintiff's voluntary dismissal of the action could have the effect of (1) depriving the defendant statutorily authorized fees, or (2) entitling a defendant to such relief in a non-SLAPP action which was dismissed by plaintiff for entirely legitimate reasons. In both situations, the purpose of the statute's remedial provisions would be frustrated." Liu, supra,, at 752-753.
The Liu court's cogent reasoning plainly demonstrates that the approach taken in Ellis, Coltraine, and Kyle v. Carmon is fundamentally misguided because the moving party must first be adjudicated the prevailing party on the merits of the SLAPP motion before fees can be awarded according the terms of the statute. [Both Ellis and Kyle, supra, hold that the court lacks jurisdiction to rule on the merits of the SLAPP motion once plaintiff dismisses the complaint in response to a pending SLAPP motion and that the court must go back and decide which party would have prevailed on the SLAPP motion in connection with a subsequent fee motion]. While Coltraine, supra, holds that the court has jurisdiction to decide the prevailing party issue on the SLAPP motion, that case also holds that the court has "discretion" to either rule on the merits of the motion or simply decide who the prevailing party is without a ruling based solely on plaintiff's purported motives for dismissal. So if the court has "discretion" to decide the prevailing party issue without ruling on the SLAPP motion, then the court could easily end up depriving a worthy SLAPP defendant of fees and costs that Legislature intended them to have or it could award a windfall of SLAPP fees to an unworthy defendant without first requiring defendant to show that at least prong one of the anti-SLAPP statute has been satisfied. Thus, the Ellis/Kyle/Coltraine approach may result in both overbroad and underinclusive SLAPP fee awards. At minimum, the Ellis/Kyle/Coltraine approach unnecessarily frustrates the goal judicial economy and puts the fee applicant at an unfair disadvantage by forcing the applicant to brief and the court to, in effect, rule on two motions in one. In contrast, the Liu/Pfeiffer/Tourgeman approach best encourages participation in matters of public significance by encouraging attorneys to take on the defense of worthy SLAPP targets - without fear of plaintiff dismissing and evading SLAPP fees. On a final note, our High Court held that a plaintiff or cross-complainant can dismiss the complaint at any time before the SLAPP motion is filed without penalty. S.B. Beach Properties v. Berti (2006) 39 Cal.4th 374. So plaintiffs do have a ready escape hatch and a meaningful opportunity to screen and reevaluate their complaints for SLAPP issues before the defendants can get their motion on file - usually within the first 30-60 days after the complaint is served. [CCP § 425.16, subd. (f)].
For the foregoing reasons, I believe courts should follow the Liu/Pfeiffer/Tourgeman line of authority and resolve the merits of the anti-SLAPP motion where plaintiff dismisses the complaint in response to a pending SLAPP motion. But until the California Supreme Court weighs in on this issue, each party will have to argue cases that support their side, roll the dice, and hope the trial judge adopts the line of authority favorable to their client. This issue is in urgent need of High Court resolution - right up there with mixed causes of action on prong two. Based on recent denials of numerous petitions on these ripe SLAPP issues, it does not appear that our High Court will intervene anytime soon.
James J. Moneer, Esq. has been handling SLAPP motions, civil appeals, and SLAPP fee motions for plaintiffs and defendants throughout California since 1994. He has been a regular panelist on The Rutter Group anti-SLAPP seminars since 2003 and a panelist on Pincus Professional Education's anti-SLAPP seminars since 2009. He teaches anti-SLAPP law at the University of San Diego School of Law. He also testifies as an anti-SLAPP attorney fee and SLAPP legal malpractice expert and has published numerous articles on the subject. Web: www.slapplaw.com. Blog: www.slapplaw.blogspot.com
* NOTE:THIS ARTICLE WAS PREVIOUSLY PUBLISHED IN THE SEPTEMBER 5, 2014 EDITION OF THE LA DAILY JOURNAL
What happens when a plaintiff dismisses the complaint in lieu of opposition to a pending SLAPP motion pursuant to CCP section 425.16? Very recently, I have experienced wide variation in what different trial judges will do when confronted with this situation. I filed two SLAPP motions, in two different cases, before two different trial judges in the same courthouse. Both cases involved defamation, internet libel, and malicious prosecution claims. In both cases, each plaintiff dismissed the complaint in lieu of opposition within weeks of each other. Judge A heard the SLAPP motion on its merits and granted it in order determine prevailing party status for purposes of a subsequent motion for an award of mandatory attorney's fees pursuant to the anti-SLAPP statute's fee provision relying principally on Liu v. Moore (1999) 69 Cal.App.4th 745, 750-752 and Pfeiffer Venice Properties v. Bernard (2002) 101 Cal.App.4th 211, 217-219. [CCP § 425.16, subd. (c)]. See also the most recent case on point, Tourgeman v. Nelson & Kennard (2014) 222 Cal.App.4th 1447, 1456-1457 [adopting the holdings and reasoning of Liu and Pfeiffer]. A few weeks later, a different judge down the hall, Judge B, ruled that the court had no jurisdiction to rule on the merits of the SLAPP motion, took the motion off calendar, and ordered defendants to argue the entitlement or prevailing party issue in defendant's subsequent motion for mandatory attorney's fees relying primarily on Kyle v. Carmon (1999) 71 Cal.App.4th at p. 908, fn. 4; and The Law Office of Andrew Ellis v. Yang (2009) 178 Cal.App.4th 869, 879. Judge B further ruled: "until defendant makes a motion for an award of attorneys fees and costs, the Court need not consider the merits." To Judge B's credit, however, His Honor ordered that the parties may not file any new briefing or evidence with respect to the merits of the SLAPP motion and that the preliminary question of who is the prevailing party shall be based solely upon the party's moving papers submitted in support of the initial anti-SLAPP motion as requested by defense counsel.
Even more perplexing is the palpable conflict of authority among a number of Second District cases. The approach taken in Liu v. Moore/Pfeiffer Venice Properties, supra, I believe, best comports with the plain language and policies undergirding the anti-SLAPP statute. Both cases hold, with the latter relying on the former, that the court is "required" to hear the SLAPP motion on its merits in order to determine the prevailing party on the anti-SLAPP motion before fees can be awarded. See also Tourgeman, supra. Moreover, it would seem to promote judicial economy for the court to resolve the merits issue while the SLAPP motion is teed up for the court rule on rather than have the parties wait and relitigate that issue as part of the fee motion - which is likely to be contentious in its own right. It definitely puts the specially moving SLAPP defendant at a significant disadvantage to have both motions ruled on in one fee motion. Furthermore, it is imperative to note that the Law Office of Andrew Ellis v. Yang (2009) 178 Cal.App.4th 869, 878 never even once mentioned the 1999 Liu v. Moore, supra, case, which is the landmark SLAPP case on this issue. This becomes more of an anomaly when one considers that all three of these cases (i.e. Liu, Pfeiffer, and Yang) are Second District cases. As shown below, Ellis and other similar cases do not comport with the plain language and policy of section 425.16.
As shown at length in Liu v. Moore (1999) 69 Cal.App.4th 745, inter alia, when plaintiff dismisses its action, with or without prejudice, in response to a pending section 425.16 anti-SLAPP motion, defendants have the right to a ruling on their special motion to strike as a necessary predicate to an award of attorney's fees. Id., at 751. The weight of authority in this situation holds that where a plaintiff dismisses its action in response to a SLAPP motion, the court must rule on the merits of the SLAPP motion as a predicate to an attorney fee award and retains jurisdiction to do so. Id.; Pfeiffer Venice Properties v. Bernard (2002) 101 Cal.App.4th 211, 218-219 [accord approving of Liu, supra]; Tourgeman v. Nelson & Kennard (2014) 222 Cal.App.4th 1447, 1456-1457 [adopting the holdings and reasoning of Liu and Pfeiffer]. See also South Sutter, LLC v. L.J. Sutter Partners, L.P. (2011) 193 Cal.App.4th 634, 667 [anti-SLAPP procedure provides "a mechanism whereby a complaint's lack of merit can be determined on the merits after the complaint is dismissed]. But see Ellis, supra, 178 Cal.App.4th at 879 citing (Kyle v. Carmon (1999) 71 Cal.App.4th 901, 908, contra, [court had no jurisdiction to rule on the merits of the SLAPP motion after complaint dismissed].
"The purpose of section 425.16 is clearly to give relief, including financial relief in the form of attorney's fees and costs, to persons who have been victimized by meritless retaliatory SLAPP suits because of their participation in matters of public significance (§ 425.16, subd. (a))" Liu., at 750. "We hold that a defendant who is voluntarily dismissed, with or without prejudice, after filing a section 425.16 motion to strike, is nevertheless entitled to have the merits of such motion heard as a predicate to an award of attorney's fees and costs under subdivision (c) of that section." Liu, supra; Pfeiffer Venice Properties v. Bernard (2002) 101 Cal.App.4th 211 [accord].
"Therefore, the trial court's adjudication of the merits of a defendant's special motion to strike is an `essential' predicate to a ruling on the defendant's request for an award of attorney's fees and costs. An award of these expenses under section 425.16 is only justified when a defendant demonstrates that plaintiff's action falls within the provisions of subdivision (b) and the plaintiff is unable to establish a reasonable probability of success. Until a court determines that these circumstances exist, a moving defendant is not entitled to fees and costs under section 425.16. If such judicial determinations were not first required, and a fair procedural opportunity to obtain it allowed, then a plaintiff's voluntary dismissal of the action could have the effect of (1) depriving the defendant statutorily authorized fees, or (2) entitling a defendant to such relief in a non-SLAPP action which was dismissed by plaintiff for entirely legitimate reasons. In both situations, the purpose of the statute's remedial provisions would be frustrated." Liu, supra,, at 752-753.
The Liu court's cogent reasoning plainly demonstrates that the approach taken in Ellis, Coltraine, and Kyle v. Carmon is fundamentally misguided because the moving party must first be adjudicated the prevailing party on the merits of the SLAPP motion before fees can be awarded according the terms of the statute. [Both Ellis and Kyle, supra, hold that the court lacks jurisdiction to rule on the merits of the SLAPP motion once plaintiff dismisses the complaint in response to a pending SLAPP motion and that the court must go back and decide which party would have prevailed on the SLAPP motion in connection with a subsequent fee motion]. While Coltraine, supra, holds that the court has jurisdiction to decide the prevailing party issue on the SLAPP motion, that case also holds that the court has "discretion" to either rule on the merits of the motion or simply decide who the prevailing party is without a ruling based solely on plaintiff's purported motives for dismissal. So if the court has "discretion" to decide the prevailing party issue without ruling on the SLAPP motion, then the court could easily end up depriving a worthy SLAPP defendant of fees and costs that Legislature intended them to have or it could award a windfall of SLAPP fees to an unworthy defendant without first requiring defendant to show that at least prong one of the anti-SLAPP statute has been satisfied. Thus, the Ellis/Kyle/Coltraine approach may result in both overbroad and underinclusive SLAPP fee awards. At minimum, the Ellis/Kyle/Coltraine approach unnecessarily frustrates the goal judicial economy and puts the fee applicant at an unfair disadvantage by forcing the applicant to brief and the court to, in effect, rule on two motions in one. In contrast, the Liu/Pfeiffer/Tourgeman approach best encourages participation in matters of public significance by encouraging attorneys to take on the defense of worthy SLAPP targets - without fear of plaintiff dismissing and evading SLAPP fees. On a final note, our High Court held that a plaintiff or cross-complainant can dismiss the complaint at any time before the SLAPP motion is filed without penalty. S.B. Beach Properties v. Berti (2006) 39 Cal.4th 374. So plaintiffs do have a ready escape hatch and a meaningful opportunity to screen and reevaluate their complaints for SLAPP issues before the defendants can get their motion on file - usually within the first 30-60 days after the complaint is served. [CCP § 425.16, subd. (f)].
For the foregoing reasons, I believe courts should follow the Liu/Pfeiffer/Tourgeman line of authority and resolve the merits of the anti-SLAPP motion where plaintiff dismisses the complaint in response to a pending SLAPP motion. But until the California Supreme Court weighs in on this issue, each party will have to argue cases that support their side, roll the dice, and hope the trial judge adopts the line of authority favorable to their client. This issue is in urgent need of High Court resolution - right up there with mixed causes of action on prong two. Based on recent denials of numerous petitions on these ripe SLAPP issues, it does not appear that our High Court will intervene anytime soon.
James J. Moneer, Esq. has been handling SLAPP motions, civil appeals, and SLAPP fee motions for plaintiffs and defendants throughout California since 1994. He has been a regular panelist on The Rutter Group anti-SLAPP seminars since 2003 and a panelist on Pincus Professional Education's anti-SLAPP seminars since 2009. He teaches anti-SLAPP law at the University of San Diego School of Law. He also testifies as an anti-SLAPP attorney fee and SLAPP legal malpractice expert and has published numerous articles on the subject. Web: www.slapplaw.com. Blog: www.slapplaw.blogspot.com
* NOTE:THIS ARTICLE WAS PREVIOUSLY PUBLISHED IN THE SEPTEMBER 5, 2014 EDITION OF THE LA DAILY JOURNAL
Saturday, August 9, 2014
Giving Legal Advice Prior To Filing Suit Is Protected By SLAPP And Barred By Litigation Privilege
In a recent unpublished case before the Second Dist. California Court of Appeal, Div. One., Kirkland v. Rappaport (B243607), the court expounded on the breadth of both the anti-SLAPP statute of CCP section 425.16 and the litigation privilege of CC 47(b) in a libel action where a lawyer or nonlawyer consultant writes a report for the client and his/her legal team to use in determining the feasibility of filing a proposed lawsuit. This case illustrates the broad protection provided to attorneys and other consultants who advise their clients as to the merits of proposed litigation.
Kirkland, a Pacific Palisades attorney, filed a libel action against attorney Rapport and the Akin Gump S.F. firm. San Francisco sole practitioner Douglas Rapport, formerly with the firm of Akin Gump, had written a report for a client, U.S. Aerospace, Inc., in which he concluded that Kirkland"likely violated his professional responsibilities as USAE's outside general counsel" and violated his fiduciary duties of loyalty, good faith, and care to the company. The report was also critical of a Charles Arnold, a former consultant to the company. Arnold was also a plaintiff in the libel action and Rapport was a defendant.
Disputing plaintiff's contention that no litigation was imminent, Justice Rothschild said, " the record shows that the USAE officers were seriously considering litigation against plaintiffs if Rapport's report confirmed their suspicion of plaintiff's wrongdoing.
Justice Rothchild observed that plaintiffs had no chance of prevailing on the merits in light of the litigation privilege; remarking:
"This is a classic case for the application of the litigation privilege because plaintiff are suing an attorney and his law firm based on confidential legal advice they supplied to a client in anticipation of litigation."
Taheri Law Group v. Evans (2006) 160 Cal.App.4th 482, 489-492 is a landmark case similarly on point. Attorney A sued Attorney B for intentional interference with contract where client sought out attorney B for a second opinion as to how to settle his pending lawsuit. Attorney B advised client to discharge Attorney A and not to pay his fees due to various breaches of the duty of care and fiduciary duties. First, the court held the act of giving legal advice to a client in the course of pending litigation goes to the heart of the client and the lawyer's petition rights. Hence, the cause of action arose from Attorney B's communications with the prospective client regarding Attorney A's actions during the pending litigation and that as a result, the claim was also barred by the litigation privilege. Moreover, the court held that as a matter of public policy, the commercial speech exemption from the anti-SLAPP statute under CCP 425.17(c) did not apply even though the plain language would indicate otherwise. - Legal advice to client during pending litigation.
The Kirkland case is one step removed from Taheri as it involved attorneys and consultants supplying advice to clients to assess the merits of filing a prospective lawsuit that was imminent and seriously contemplated. No commercial speech issue was raised in Kirkland - legal advice to client in contemplation of lawsuit.
GOT SLAPP PROBLEMS? PLAINTIFF OR DEFENDANT? WE CREATE SOLUTIONS!!
* SLAPP MOTIONS, SLAPP APPEALS, SLAPP FEE MOTIONS
* MALICIOUS PROSECUTION/ABUSE OF PROCESS
* DEFAMATION/LIBEL/SLANDER/INTERNET LIBEL/OTHER SLAPP CLAIMS
* EXPERT CONSULTING AND SPECIAL COUNSEL WORK
* EXPERT TESTIMONY IN SLAPP FEE MOTIONS
* EXPERT TESTIMONY IN SLAPP MALPRACTICE CASES
For more information contact James J. Moneer, Esq. at (619) 723-7030
Kirkland, a Pacific Palisades attorney, filed a libel action against attorney Rapport and the Akin Gump S.F. firm. San Francisco sole practitioner Douglas Rapport, formerly with the firm of Akin Gump, had written a report for a client, U.S. Aerospace, Inc., in which he concluded that Kirkland"likely violated his professional responsibilities as USAE's outside general counsel" and violated his fiduciary duties of loyalty, good faith, and care to the company. The report was also critical of a Charles Arnold, a former consultant to the company. Arnold was also a plaintiff in the libel action and Rapport was a defendant.
Disputing plaintiff's contention that no litigation was imminent, Justice Rothschild said, " the record shows that the USAE officers were seriously considering litigation against plaintiffs if Rapport's report confirmed their suspicion of plaintiff's wrongdoing.
Justice Rothchild observed that plaintiffs had no chance of prevailing on the merits in light of the litigation privilege; remarking:
"This is a classic case for the application of the litigation privilege because plaintiff are suing an attorney and his law firm based on confidential legal advice they supplied to a client in anticipation of litigation."
Taheri Law Group v. Evans (2006) 160 Cal.App.4th 482, 489-492 is a landmark case similarly on point. Attorney A sued Attorney B for intentional interference with contract where client sought out attorney B for a second opinion as to how to settle his pending lawsuit. Attorney B advised client to discharge Attorney A and not to pay his fees due to various breaches of the duty of care and fiduciary duties. First, the court held the act of giving legal advice to a client in the course of pending litigation goes to the heart of the client and the lawyer's petition rights. Hence, the cause of action arose from Attorney B's communications with the prospective client regarding Attorney A's actions during the pending litigation and that as a result, the claim was also barred by the litigation privilege. Moreover, the court held that as a matter of public policy, the commercial speech exemption from the anti-SLAPP statute under CCP 425.17(c) did not apply even though the plain language would indicate otherwise. - Legal advice to client during pending litigation.
The Kirkland case is one step removed from Taheri as it involved attorneys and consultants supplying advice to clients to assess the merits of filing a prospective lawsuit that was imminent and seriously contemplated. No commercial speech issue was raised in Kirkland - legal advice to client in contemplation of lawsuit.
GOT SLAPP PROBLEMS? PLAINTIFF OR DEFENDANT? WE CREATE SOLUTIONS!!
* SLAPP MOTIONS, SLAPP APPEALS, SLAPP FEE MOTIONS
* MALICIOUS PROSECUTION/ABUSE OF PROCESS
* DEFAMATION/LIBEL/SLANDER/INTERNET LIBEL/OTHER SLAPP CLAIMS
* EXPERT CONSULTING AND SPECIAL COUNSEL WORK
* EXPERT TESTIMONY IN SLAPP FEE MOTIONS
* EXPERT TESTIMONY IN SLAPP MALPRACTICE CASES
For more information contact James J. Moneer, Esq. at (619) 723-7030
Wednesday, July 23, 2014
OLD REPUBLIC CLARIFIES "GRAVAMEN" TEST AND ADOPTS BROAD CONSTRUCTION
In a case that looks remarkably similar to Navellier v. Sletten (2002) 29 Cal.App.4th 82, the recent case of Old Republic Construction Program Group v. Boccardo Law Group (6/27/14 2014) 2014 WL 2900932, the court distinguished Navellier using the elusive "Gravamen" test. The question presented is whether the statute applies to claims alleging that defendants wrongfully withdrew settlement funds derived from a now-defunct lawsuit, which they had deposited into their trust account pursuant to a stipulation requiring Old Republic's consent prior to any withdrawal of funds. The thrust of all causes of action is that defendants Boccardo and Stein breached the contract and committed fraud and breach of fiduciary duty by dispersing the settlement proceeds without Old Republic's consent. The trial court granted the SLAPP motion based on Navellier, supra. But the Court of Appeal reversed. The court held that if the cause of action arose from the stipulation, then Navellier would apply and the motion should have been granted. The court, however, reasoned that the injury-producing conduct upon which the cause of action was based consisted of nothing more than than the withdrawal of funds - a noncommunicative act. By its plain language the first 3 subdivisions of section 425.16 only apply to oral or written statements - communicative acts. Because the withdrawal of funds was not communicative, that act could not be subject to anti-SLAPP treatment unless it were connected to a public issue under subd. (e)(4). Because there was no connection to a public issue, the court held that prong one was not met and denied the SLAPP motion accordingly.
The court reviewed prior cases and obeserved that a cause of action can only be said to arise from protected conduct if it alleges at least one wrongful act - conduct allegedly breaching a duty and injuring the plaintiff - that falls within the definition of protected conduct. This is a proper broad plain language construction of the gravamen/mixed cause of action test. Cases to the contrary, are repugnant to the statute's plain language and legislative purpose. But the CA High Court will have to weigh in to definitively resolve the conflict.
The lesson I have been teaching to students and lawyers for years is that simply because you see protected activity floating around in the cause of action, does not mean that the liability arises from it. It is the injury-producing conduct that must be the focus.
The court also canvassed a plethora of authorities and held that an order partially granting a SLAPP motion and partially denying a SLAPP motion is immediately appealable under CCP 904.1(a)(13).
Old Republic is an interesting case and provides much guidance and a clearer test for determining the gravamen of a cause of action.
GOT SLAPP PROBLEMS??
PLAINTIFF OR DEFENSE?
WE CREATE SOLUTIONS ANYWHERE IN CALIFORNIA OR OUT OF STATE!!
* SLAPP MOTIONS, SLAPP FEE MOTIONS, SLAPP APPEALS
* EXPERT CONSULTATION AND SPECIAL COUNSEL WORK
* EXPERT SLAPP FEE TESTIMONY
* EXPERT SLAPP MALPRACTICE TESTIMONY
James J. Moneer, Esq.
(619) 723-7030
The court reviewed prior cases and obeserved that a cause of action can only be said to arise from protected conduct if it alleges at least one wrongful act - conduct allegedly breaching a duty and injuring the plaintiff - that falls within the definition of protected conduct. This is a proper broad plain language construction of the gravamen/mixed cause of action test. Cases to the contrary, are repugnant to the statute's plain language and legislative purpose. But the CA High Court will have to weigh in to definitively resolve the conflict.
The lesson I have been teaching to students and lawyers for years is that simply because you see protected activity floating around in the cause of action, does not mean that the liability arises from it. It is the injury-producing conduct that must be the focus.
The court also canvassed a plethora of authorities and held that an order partially granting a SLAPP motion and partially denying a SLAPP motion is immediately appealable under CCP 904.1(a)(13).
Old Republic is an interesting case and provides much guidance and a clearer test for determining the gravamen of a cause of action.
GOT SLAPP PROBLEMS??
PLAINTIFF OR DEFENSE?
WE CREATE SOLUTIONS ANYWHERE IN CALIFORNIA OR OUT OF STATE!!
* SLAPP MOTIONS, SLAPP FEE MOTIONS, SLAPP APPEALS
* EXPERT CONSULTATION AND SPECIAL COUNSEL WORK
* EXPERT SLAPP FEE TESTIMONY
* EXPERT SLAPP MALPRACTICE TESTIMONY
James J. Moneer, Esq.
(619) 723-7030
Wednesday, April 2, 2014
CONCEALMENT OF CLIENT'S BANKRUPTCY IN SETTLEMENT IS PRIVILEGED ACTIVITY AND LAWSUIT WAS DISMISSED AS A SLAPP
In a recent SLAPP case, Livingiston v. Ballantine (B250110), attorney Ballantine failed to disclose his client's bankruptcy in the course of settlement negotiations in the underlying action. As a result, Livingston was never listed as a creditor in the Bankruptcy. Livingston then sued the attorney, Ballantine for fraud for concealing his client's bankruptcy in inducing the settlement. In a case, that reasons remarkably similar to Navellier v. Sletten (2002) 29 Cal.4th 82, the court of appeal held that the act of concealing the bankruptcy was protected activity under CCP 425.16, subdivision (e)(2), the anti-SLAPP statute, and that the fraud claim was barred by the litigation privilege of CC 47(b) - similar to Navellier v. Sletten. The most curious aspect of this case is that the court of appeal held that failure to disclose the bankruptcy (a negative fraud) was a "communicative act" for purposes of the litigation privilege. The litigation privilege has been held not to cover "noncomunicative" conduct in other contexts. But the significance of this case is that a lawyer has no legal duty to disclose his client's bankruptcy in the midst of settling pending litigation and may conceal the fact of the bankruptcy to induce the settlement without penalty because it is part and parcel of his right to petition on behalf of his client.
Wednesday, February 19, 2014
RECENT CASE ILLUSTRATING APPLICATION OF THE PUBLIC INTEREST EXEMPTION FROM SLAPP (CCP 425.17(b))
UNFAIR BUSINESS PRACTICE CLAIM EXEMPT FROM SLAPP UNDER PUBLIC INTEREST EXEMPTION OF CCP § 425.17(b)
In what is, perhaps, the most significant anti-SLAPP case of 2014 to date, Justice Aaron of the Fourth District, Division One Court of Appeal penned a highly instructive opinion in Tourgeman v. Nelson & Kennard (1/16/14) 2014 WL 171366, which examined in detail how to apply the public interest exemption to certain class action and representative actions that are brought solely in the public interest where three specified conditions are met. The secondary holding in Tourgeman rejected the approach taken in Coltraine v. Shewalter (1998) 66 Cal.App.4th 94, which allows a trial judge "discretion" to determine the prevailing party in cases where the plaintiff dismisses the complaint in lieu of opposition for purposes of an attorney fee award. Tourgeman, instead, adopted the approach taken in Liu v. Moore (1999) 69 Cal.App.4th 745, which held that the trial court must determine the merits of the anti-SLAPP motion as a predicate to an award of fees - i.e the defendant must prevail on the anti-SLAPP motion as a precondition to an award of fees thus depriving the court of discretion to determine the prevailing the party. Rather, the court must hear the anti-SLAPP motion or decide which party would have won the anti-SLAPP motion.
Tourgeman brought a putative class and representative action against Dell Financial Services and respondents, Nelson & Kennard. In his complaint, Tourgeman contended that respondents violated the Fair Debt Collection Practices Act (FDCPA) (15 U.S.C. § 1692 et. seq.) while attempting to collect a debt that Tourgeman incurred in connection with his purchase of a Dell computer. Tourgeman brought a single claim under the UCL (Bus. & Prof. Code § 17200) seeking an injunction to prevent respondents from engaging in unlawful, unfair, and/or fraudulent debt collection practices in the future. Respondents filed a special motion strike. Tourgeman voluntarily dismissed the action and respondents filed a motion for attorney's fees. The trial court determined that Tourgeman failed to establish the public interest exemption under CCP § 425.17(b), that he could not show a probability of prevailing on prong two because he presented no opposition, granted the SLAPP motion, and awarded fees.
The gravamen of Tourgeman's single cause of action was that Nelson & Kennard "generated a collection letter to Tourgeman on a sample form template" that misidentified the original creditor or Tourgeman's loan. Tourgeman further alleged that Scott Kennard "spent very little time reviewing this letter, and did not review Tourgeman's file or account notes, before signing it." Tourgeman claims that as a result, Kennard had not been "`meaningfully involved'" as required by the FDCPA. Tourgeman further alleged that Nelson & Kennard had "sent collections to hundreds of consumers that falsely identified the consumer's original creditor." Tourgeman also alleged that Kennard had not conducted any "meaningful review" before signing the letters. Tourgeman claimed that Nelson & Kennard had filed a lawsuit against that misidentified the original creditor or Tourgeman's loan, that he had incurred over $38,000.00 in legal fees defending the lawsuit, and that Nelson & Kennard had eventually dismissed the lawsuit without prejudice.
Tourgeman filed a single cause of action against Dell Financial and Nelson & Kennard (N&K) for violation of the UCL on behalf of himself, "members of the class, and of the general public." Tourgeman claimed that respondents, N&K, continued to send collection letters and file collection lawsuits without "enacting proper measures to ensure that they obtain complete and accurate information about consumers before sending out collection letters and/or filing suits."
It is clear that the acts of sending collection letters and filing lawsuits fall right into the anti-SLAPP statute's official proceeding prongs (§ 425.16, subds. (e)(1),(2)). Here, however, Tourgeman raised and supported the public interest exemption of CCP § 425.17(b) by analyzing the allegations of the complaint with reference to each of the elements of the public interest exemption, which mirror the elements of CCP 1021.5 for private attorney general attorney's fees. No extrinsic evidence was needed for plaintiff to establish the exemption under CCP § 425.17(b). Plaintiff bears the burden of establishing the exemption from SLAPP.
First, Tourgeman's lawsuit was brought "solely in the public interest or on behalf of the general public." "The term `public interest' is used to define suits brought solely for the public's good or on behalf of the public." The term "solely" in the statute expressly Legislative intent that section 425.17, subd. (b) not apply to an action that seeks a more narrow advantage for a particular plaintiff. Here, Tourgeman did not seek damages or restitution for himself or the general public. Rather, the sole remedy he sought was injunctive relief directed at preventing respondents from engaging in unlawful, unfair, and/or fraudulent debt collection practice in the future. In addition, "it highly unlikely Tourgeman will again be the subject of respondent's debt collection efforts.
Second, respondents conceded that Tourgeman did not seek any greater or different relief from that sought for the general public in this action. Respondents made a clever argument that because Tourgeman had a separate federal action in which he sought relief and damages for himself, that he failed to meet this requirement. The court of appeal, however, squarely rejected the argument holding that there is nothing in the statute or legislative history that makes plaintiff's actions in separate lawsuits relevant to the public interest exemption. In fact, the plain language is to the contrary - the exemption applies to "any action" as to which certain conditions exist. The court held Tourgeman met the second criteria of the exemption.
Third, the court found that Tourgeman's action, if successful, would enforce an important right affecting the public interest and would confer a significant benefit on the general public. Here, Tourgeman sought to enforce the Fair Debt collection practices law in the future by seeking injunctive relief against respondents that would require them to follow the law before the sent collection letters and before they filed lawsuits to collect on a debt. Respondents argued to no avail that Tourgeman failed to produce evidence that his action, if successful, would benefit the general public. This suggestion is unsupported by any authority. Whether Tourgeman's action would benefit the public is, instead, determined by examining his complaint to determine whether his lawsuit is of the kind that seeks to vindicate public policy goals.
Finally, private enforcement was necessary and placed a disproportionate financial on Tourgeman in relation to his stake in the matter. Private enforcement was necessary simply because the action was brought on behalf of the general public and because neither the attorney general nor the Insurance Commissioner intervened to prosecute the action. As to the disproportionate financial burden element, the court noted: "It has been said about this element that `the less direct or concrete a personal interest someone has, the more likely he or she will satisfy the element. Courts first focus on what sort of financial stake the plaintiff had in the outcome, i.e. what the plaintiff hoped to gain financially from the litigation in comparison to what it cost. The relevant inquiry is whether the "cost of the plaintiff's legal victory transcends their person interest." Blanchard v. Direct TV (2005) 123 Cal.App.4th at 915-916. In this case, the court found that Tourgeman did not seek any financial benefit from the lawsuit, and, as the trial court noted, it is unlikely that Tourgeman would have benefitted from any potential injunctive relief, since it is doubtful that he will again be the subject of respondent's collection efforts. This fact, alone, supports the conclusion that the financial burden on Tourgeman is disproportionate to his stake in the action. Compare Blanchard v. Direct TV, supra, 123 Cal.app.4th at 916 ["Plaintiffs seek an accounting to them and restitution to them of monies paid to Direct TV"].
The facts of Tourgeman are at the very epicenter of the public interest exemption and its three conditions. However, the statutory language and case law frame the disproportionate financial burden test in terms of a balancing test rather than requiring a purely altruistic cause of action where the plaintiff gets nothing for himself. One can easily imagine cases where the plaintiff seeks no greater or different relief for himself than that sought for the general public, where a significant benefit would be conferred on the public, if the action were successful, where private enforcement is necessary, and where the "cost of the plaintiff's legal victory transcends their personal interest." This does not necessarily mean that the plaintiff gets nothing for himself but the general public must benefit significantly more than the plaintiff. In sum, the public interest exemption from SLAPP - CCP § 425.17(b) does not apply to every class or representative action - it applies to any action brought solely in the public interest or on behalf of the general public so long as the action meets all three conditions set forth in the statute.
This article was printed in the Los Angeles Daily Journal in February 2014.
James J. Moneer, Esq. has been handling all aspects of anti-SLAPP motions and appeals for plaintiffs and defendants throughout California since 1994. He frequently testifies for both sides as an attorney fee and legal malpractice expert in SLAPP cases. He has been involved in six published anti-SLAPP decisions, including one before the CASC. He has been an anti-SLAPP panelist for The Rutter Group and Pincus Professional Education since 2003 and 2009, respectively. His website is www.slapplaw.com.
In what is, perhaps, the most significant anti-SLAPP case of 2014 to date, Justice Aaron of the Fourth District, Division One Court of Appeal penned a highly instructive opinion in Tourgeman v. Nelson & Kennard (1/16/14) 2014 WL 171366, which examined in detail how to apply the public interest exemption to certain class action and representative actions that are brought solely in the public interest where three specified conditions are met. The secondary holding in Tourgeman rejected the approach taken in Coltraine v. Shewalter (1998) 66 Cal.App.4th 94, which allows a trial judge "discretion" to determine the prevailing party in cases where the plaintiff dismisses the complaint in lieu of opposition for purposes of an attorney fee award. Tourgeman, instead, adopted the approach taken in Liu v. Moore (1999) 69 Cal.App.4th 745, which held that the trial court must determine the merits of the anti-SLAPP motion as a predicate to an award of fees - i.e the defendant must prevail on the anti-SLAPP motion as a precondition to an award of fees thus depriving the court of discretion to determine the prevailing the party. Rather, the court must hear the anti-SLAPP motion or decide which party would have won the anti-SLAPP motion.
Tourgeman brought a putative class and representative action against Dell Financial Services and respondents, Nelson & Kennard. In his complaint, Tourgeman contended that respondents violated the Fair Debt Collection Practices Act (FDCPA) (15 U.S.C. § 1692 et. seq.) while attempting to collect a debt that Tourgeman incurred in connection with his purchase of a Dell computer. Tourgeman brought a single claim under the UCL (Bus. & Prof. Code § 17200) seeking an injunction to prevent respondents from engaging in unlawful, unfair, and/or fraudulent debt collection practices in the future. Respondents filed a special motion strike. Tourgeman voluntarily dismissed the action and respondents filed a motion for attorney's fees. The trial court determined that Tourgeman failed to establish the public interest exemption under CCP § 425.17(b), that he could not show a probability of prevailing on prong two because he presented no opposition, granted the SLAPP motion, and awarded fees.
The gravamen of Tourgeman's single cause of action was that Nelson & Kennard "generated a collection letter to Tourgeman on a sample form template" that misidentified the original creditor or Tourgeman's loan. Tourgeman further alleged that Scott Kennard "spent very little time reviewing this letter, and did not review Tourgeman's file or account notes, before signing it." Tourgeman claims that as a result, Kennard had not been "`meaningfully involved'" as required by the FDCPA. Tourgeman further alleged that Nelson & Kennard had "sent collections to hundreds of consumers that falsely identified the consumer's original creditor." Tourgeman also alleged that Kennard had not conducted any "meaningful review" before signing the letters. Tourgeman claimed that Nelson & Kennard had filed a lawsuit against that misidentified the original creditor or Tourgeman's loan, that he had incurred over $38,000.00 in legal fees defending the lawsuit, and that Nelson & Kennard had eventually dismissed the lawsuit without prejudice.
Tourgeman filed a single cause of action against Dell Financial and Nelson & Kennard (N&K) for violation of the UCL on behalf of himself, "members of the class, and of the general public." Tourgeman claimed that respondents, N&K, continued to send collection letters and file collection lawsuits without "enacting proper measures to ensure that they obtain complete and accurate information about consumers before sending out collection letters and/or filing suits."
It is clear that the acts of sending collection letters and filing lawsuits fall right into the anti-SLAPP statute's official proceeding prongs (§ 425.16, subds. (e)(1),(2)). Here, however, Tourgeman raised and supported the public interest exemption of CCP § 425.17(b) by analyzing the allegations of the complaint with reference to each of the elements of the public interest exemption, which mirror the elements of CCP 1021.5 for private attorney general attorney's fees. No extrinsic evidence was needed for plaintiff to establish the exemption under CCP § 425.17(b). Plaintiff bears the burden of establishing the exemption from SLAPP.
First, Tourgeman's lawsuit was brought "solely in the public interest or on behalf of the general public." "The term `public interest' is used to define suits brought solely for the public's good or on behalf of the public." The term "solely" in the statute expressly Legislative intent that section 425.17, subd. (b) not apply to an action that seeks a more narrow advantage for a particular plaintiff. Here, Tourgeman did not seek damages or restitution for himself or the general public. Rather, the sole remedy he sought was injunctive relief directed at preventing respondents from engaging in unlawful, unfair, and/or fraudulent debt collection practice in the future. In addition, "it highly unlikely Tourgeman will again be the subject of respondent's debt collection efforts.
Second, respondents conceded that Tourgeman did not seek any greater or different relief from that sought for the general public in this action. Respondents made a clever argument that because Tourgeman had a separate federal action in which he sought relief and damages for himself, that he failed to meet this requirement. The court of appeal, however, squarely rejected the argument holding that there is nothing in the statute or legislative history that makes plaintiff's actions in separate lawsuits relevant to the public interest exemption. In fact, the plain language is to the contrary - the exemption applies to "any action" as to which certain conditions exist. The court held Tourgeman met the second criteria of the exemption.
Third, the court found that Tourgeman's action, if successful, would enforce an important right affecting the public interest and would confer a significant benefit on the general public. Here, Tourgeman sought to enforce the Fair Debt collection practices law in the future by seeking injunctive relief against respondents that would require them to follow the law before the sent collection letters and before they filed lawsuits to collect on a debt. Respondents argued to no avail that Tourgeman failed to produce evidence that his action, if successful, would benefit the general public. This suggestion is unsupported by any authority. Whether Tourgeman's action would benefit the public is, instead, determined by examining his complaint to determine whether his lawsuit is of the kind that seeks to vindicate public policy goals.
Finally, private enforcement was necessary and placed a disproportionate financial on Tourgeman in relation to his stake in the matter. Private enforcement was necessary simply because the action was brought on behalf of the general public and because neither the attorney general nor the Insurance Commissioner intervened to prosecute the action. As to the disproportionate financial burden element, the court noted: "It has been said about this element that `the less direct or concrete a personal interest someone has, the more likely he or she will satisfy the element. Courts first focus on what sort of financial stake the plaintiff had in the outcome, i.e. what the plaintiff hoped to gain financially from the litigation in comparison to what it cost. The relevant inquiry is whether the "cost of the plaintiff's legal victory transcends their person interest." Blanchard v. Direct TV (2005) 123 Cal.App.4th at 915-916. In this case, the court found that Tourgeman did not seek any financial benefit from the lawsuit, and, as the trial court noted, it is unlikely that Tourgeman would have benefitted from any potential injunctive relief, since it is doubtful that he will again be the subject of respondent's collection efforts. This fact, alone, supports the conclusion that the financial burden on Tourgeman is disproportionate to his stake in the action. Compare Blanchard v. Direct TV, supra, 123 Cal.app.4th at 916 ["Plaintiffs seek an accounting to them and restitution to them of monies paid to Direct TV"].
The facts of Tourgeman are at the very epicenter of the public interest exemption and its three conditions. However, the statutory language and case law frame the disproportionate financial burden test in terms of a balancing test rather than requiring a purely altruistic cause of action where the plaintiff gets nothing for himself. One can easily imagine cases where the plaintiff seeks no greater or different relief for himself than that sought for the general public, where a significant benefit would be conferred on the public, if the action were successful, where private enforcement is necessary, and where the "cost of the plaintiff's legal victory transcends their personal interest." This does not necessarily mean that the plaintiff gets nothing for himself but the general public must benefit significantly more than the plaintiff. In sum, the public interest exemption from SLAPP - CCP § 425.17(b) does not apply to every class or representative action - it applies to any action brought solely in the public interest or on behalf of the general public so long as the action meets all three conditions set forth in the statute.
This article was printed in the Los Angeles Daily Journal in February 2014.
James J. Moneer, Esq. has been handling all aspects of anti-SLAPP motions and appeals for plaintiffs and defendants throughout California since 1994. He frequently testifies for both sides as an attorney fee and legal malpractice expert in SLAPP cases. He has been involved in six published anti-SLAPP decisions, including one before the CASC. He has been an anti-SLAPP panelist for The Rutter Group and Pincus Professional Education since 2003 and 2009, respectively. His website is www.slapplaw.com.
Wednesday, December 11, 2013
SLAPPS: FINE LINE DISTINCTION BETWEEN LEGITIMATE CIVIL DEMAND LETTER AND CRIMINAL EXTORTION
The illegality as a matter of law doctrine, expounded by our High Court in Flatley v Mauro (2006) 39 Cal.4th 299, is, perhaps, the most overused and abused exemption from anti-SLAPP motions. While illegality can be a lifesaver for plaintiffs in those rare cases where it is an appropriate bar to a SLAPP motion, very often, illegality ends up being the typical SLAPP plaintiff's argument of last resort but ultimately unavailing. The general rule is that the anti-SLAPP statute is to be construed broadly. [CCP § 425.16, subd. (a)]. But the corollary to this rule is that exemptions from the anti-SLAPP statute, like illegality and those under CCP § 425.17, must be construed narrowly. Members for an Honest Election Club v. Sierra Club (2008) 45 Cal.4th 309; Hutton v. Hafif (2007) 150 Cal.App.4th 527, 543-545.
Malin v. Singer (filed 7/16/13; No. B237804) illustrates the extreme narrowness of Flatley's illegality doctrine in distinguishing the pre-litigation demand letter in Malin from the criminally extortionate demand letters in Flatley and Mendoza v. Hamzeh (2013) 215 Cal.App.4th 799. Malin, Moore, and defendant Arazm are general partners of Geisha House, LLC (company). In 2011, Arazm consulted her attorney, Martin Singer, regarding Malin and Moore's alleged misappropriation of company assets. Singer sent Malin a demand letter and draft of Arazm's proposed complaint. The demand letter contained what Malin contends was an extortionate threat to disclose certain personal information if he did not pay to settle Arazm's claims.
The demand letter stated in pertinent part: "As a result of your embezzlement, conversion, and breach of fiduciary duty, you have misappropriated more than a million dollars from my client. As a result, my client intends to file the enclosed lawsuit against you, Moore and [others]. `As alleged in the complaint', you, Mr. Moore, and [others] have been embezzling and stealing money from Ms. Arazm and Geisha House for years." In substance, the letter went on to detail the allegations of the civil complaint regarding the schemes Malin and Moore devised to embezzle money, information regarding insurance scams defendants perpetrated as part of the complaint, and illegal transfers of money embezzled in an effort to avoid taxing authorities. Finally, the letter set forth the allegation of the complaint charging Malin had misused company resources to arrange sexual liaisons with older men, including an unidentified L.A. Superior Court Judge (retired) (name intentionally left blank but provided a photo of judge and stated that the name would not be blank if the complaint were filed).
After he received the demand letter, Malin sued Singer and Arazm for civil extortion, violation of civil rights, and intentional and negligent infliction of emotional distress. The latter two causes of action were based on illegal computer hacking and wiretapping tapping activities. The Malin court held that the latter two causes of action were based on activity that was illegal as a matter of law relying on Gerbosi v. Gaims, Weil, West & Epstein (2011) 193 Cal.App.4th 435, 445-446. In contrast, Malin found that the civil extortion claim based on the demand letter did not constitute criminal extortion as a matter of law, that the demand letter constituted protected petition activity under the anti-SLAPP statute, and that the claim was barred by the litigation privilege on CC § 47(b) on prong two. Malin reversed the trial court order denying the SLAPP motion as to the civil extortion claim but affirmed in all other respects.
Malin distinguished a similar demand letter in Flatley, which constituted criminal extortion as a matter of law. Criminal extortion is defined as "obtaining of property from another, with his consent... induced by a `wrongful' use of force or fear ... (Pen. Code § 518). Fear for purposes of extortion may be induced by a threat, either:... 2. to accuse the individual threatened, or any relative of his, or member of his family, of any crime; or, 3. To expose, or impute to `him or them' ... any deformity, disgrace or crime; or, 4. To expose any secret affecting `him or them'. (Pen. Code § 519). ~Every person who, with intent to extort money or other property from another, sends or delivers to any person any letter or writing, ... expressing or implying... any threat such as specified in Section 519, is punishable in the same manner as if such money or property were actually obtained by means of such threat. (Pen. Code § 523). Indeed, the Rules of Professional Conduct specifically prohibit attorneys from `threatening to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute. Flatley, at 327.
Michael Flatley, "the Lord of the Dance" was threatened with rape allegations by Ms. Robertson. Her attorney, Mauro, sent Flatley a demand letter, which expressly threatened to go public (to the media worldwide) with rape allegations and report him to various immigration, taxing, and other authorities if Flatley did not pay $1,000,000 for Mauro and Robertson's silence within 30 days. This threat was reiterated in a phone call to Flatley's attorney.
The Flatley exemption holds that the plaintiff must show that the defendant has either "effectively conceded, or that the evidence `conclusively' establishes, that the assertedly protected speech or petition activity was illegal `as a matter of law'" - such there can be no factual dispute on the point. If such a showing is made, the defendant is barred from using the anti-SLAPP procedure to dismiss the case regardless of merit. Moreover, the illegality established must constitute a violation of a specific criminal statute. G.R. v. Intelligator (2010) 185 Cal.App.4th 606.
The Flatley court found that Mauro's demand letter constitutes criminal extortion as a matter of law and thus Mauro could not challenge Flatley's complaint with a SLAPP motion even though the court assumed, without deciding, that the litigation privilege of CC § 47(b) applied. Flatley observed that the two statutes are not co-extensive. Flatley, at 322.
A key to understanding the Malin/Flatley distinction is the precise relationship between the anti-SLAPP statute's official proceeding prongs and the litigation privilege of CC § 47(b). An informed anti-SLAPP analysis must begin with the general rule, articulated by our High Court in Briggs v. Eden Council for Hope and Opportunity (1999) 19 Cal.4th 1106, 1115 that where a communication is privileged under CC § 47(b), it will ordinarily be subject to a special motion to strike under the official proceeding prongs of subds. (e)(1),(2) of CCP § 425.16 as both statutes were intended to protect certain aspects of the First Amendment right of petition albeit in different ways. Malin, at 10. In contrast, the illegality exception in Flatley and Mendoza merely holds that simply because liability is based on a privileged communication under CC § 47(b), that does not, by itself, necessarily mean that the communication qualifies as a protected act under the anti-SLAPP statute and vice versa. Flatley v. Mauro (2006) 39 Cal.4th 299, 322-325. While the two statutes do not target precisely the same activity, there is significant overlapping coverage.
Malin observed that the "secret" that would allegedly expose Malin and others to disgrace was inextricably tied to Arazm's pending civil complaint. The demand letter accused him of embezzling money and simply informed him that Arazm knew how he had spent these funds. We cannot conclude that Malin's alleged activities [arranging sexual liaisons with old men] would subject him to any more disgrace than the claim that he was an embezzler. Second, to the extent Malin claims the threatened disclosure of secrets affecting a third party, his alleged sexual partner, necessarily constitutes extortion, he is mistaken. The third party - a retired judge - was neither a family member nor a relative under PC § 519. Most importantly, the Malin court concluded "We see a critical distinction between Singer's demand letter, which made no overt threat to report Malin to prosecuting authorities or the IRS, and the letters in Flatley and Mendoza, which contained those express threats and others that had no reasonable connection to the underlying dispute."
This article was previously published in the Los Angeles Daily Journal on July 23, 2013.
James J. Moneer, Esq. has been representing plaintiffs and defendants at all stages of anti-SLAPP litigation since 1994 and frequently testifies as an attorney fee expert. He has been a regular panelist on the The Rutter Group's Anti-SLAPP seminars and has been recognized as an expert in California anti-SLAPP law in Ramona Unified School Dist. v. Tsiknas (2005) 135 Cal.App.4th 510, 523-525. His website is www.slapplaw.com.
The illegality as a matter of law doctrine, expounded by our High Court in Flatley v Mauro (2006) 39 Cal.4th 299, is, perhaps, the most overused and abused exemption from anti-SLAPP motions. While illegality can be a lifesaver for plaintiffs in those rare cases where it is an appropriate bar to a SLAPP motion, very often, illegality ends up being the typical SLAPP plaintiff's argument of last resort but ultimately unavailing. The general rule is that the anti-SLAPP statute is to be construed broadly. [CCP § 425.16, subd. (a)]. But the corollary to this rule is that exemptions from the anti-SLAPP statute, like illegality and those under CCP § 425.17, must be construed narrowly. Members for an Honest Election Club v. Sierra Club (2008) 45 Cal.4th 309; Hutton v. Hafif (2007) 150 Cal.App.4th 527, 543-545.
Malin v. Singer (filed 7/16/13; No. B237804) illustrates the extreme narrowness of Flatley's illegality doctrine in distinguishing the pre-litigation demand letter in Malin from the criminally extortionate demand letters in Flatley and Mendoza v. Hamzeh (2013) 215 Cal.App.4th 799. Malin, Moore, and defendant Arazm are general partners of Geisha House, LLC (company). In 2011, Arazm consulted her attorney, Martin Singer, regarding Malin and Moore's alleged misappropriation of company assets. Singer sent Malin a demand letter and draft of Arazm's proposed complaint. The demand letter contained what Malin contends was an extortionate threat to disclose certain personal information if he did not pay to settle Arazm's claims.
The demand letter stated in pertinent part: "As a result of your embezzlement, conversion, and breach of fiduciary duty, you have misappropriated more than a million dollars from my client. As a result, my client intends to file the enclosed lawsuit against you, Moore and [others]. `As alleged in the complaint', you, Mr. Moore, and [others] have been embezzling and stealing money from Ms. Arazm and Geisha House for years." In substance, the letter went on to detail the allegations of the civil complaint regarding the schemes Malin and Moore devised to embezzle money, information regarding insurance scams defendants perpetrated as part of the complaint, and illegal transfers of money embezzled in an effort to avoid taxing authorities. Finally, the letter set forth the allegation of the complaint charging Malin had misused company resources to arrange sexual liaisons with older men, including an unidentified L.A. Superior Court Judge (retired) (name intentionally left blank but provided a photo of judge and stated that the name would not be blank if the complaint were filed).
After he received the demand letter, Malin sued Singer and Arazm for civil extortion, violation of civil rights, and intentional and negligent infliction of emotional distress. The latter two causes of action were based on illegal computer hacking and wiretapping tapping activities. The Malin court held that the latter two causes of action were based on activity that was illegal as a matter of law relying on Gerbosi v. Gaims, Weil, West & Epstein (2011) 193 Cal.App.4th 435, 445-446. In contrast, Malin found that the civil extortion claim based on the demand letter did not constitute criminal extortion as a matter of law, that the demand letter constituted protected petition activity under the anti-SLAPP statute, and that the claim was barred by the litigation privilege on CC § 47(b) on prong two. Malin reversed the trial court order denying the SLAPP motion as to the civil extortion claim but affirmed in all other respects.
Malin distinguished a similar demand letter in Flatley, which constituted criminal extortion as a matter of law. Criminal extortion is defined as "obtaining of property from another, with his consent... induced by a `wrongful' use of force or fear ... (Pen. Code § 518). Fear for purposes of extortion may be induced by a threat, either:... 2. to accuse the individual threatened, or any relative of his, or member of his family, of any crime; or, 3. To expose, or impute to `him or them' ... any deformity, disgrace or crime; or, 4. To expose any secret affecting `him or them'. (Pen. Code § 519). ~Every person who, with intent to extort money or other property from another, sends or delivers to any person any letter or writing, ... expressing or implying... any threat such as specified in Section 519, is punishable in the same manner as if such money or property were actually obtained by means of such threat. (Pen. Code § 523). Indeed, the Rules of Professional Conduct specifically prohibit attorneys from `threatening to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute. Flatley, at 327.
Michael Flatley, "the Lord of the Dance" was threatened with rape allegations by Ms. Robertson. Her attorney, Mauro, sent Flatley a demand letter, which expressly threatened to go public (to the media worldwide) with rape allegations and report him to various immigration, taxing, and other authorities if Flatley did not pay $1,000,000 for Mauro and Robertson's silence within 30 days. This threat was reiterated in a phone call to Flatley's attorney.
The Flatley exemption holds that the plaintiff must show that the defendant has either "effectively conceded, or that the evidence `conclusively' establishes, that the assertedly protected speech or petition activity was illegal `as a matter of law'" - such there can be no factual dispute on the point. If such a showing is made, the defendant is barred from using the anti-SLAPP procedure to dismiss the case regardless of merit. Moreover, the illegality established must constitute a violation of a specific criminal statute. G.R. v. Intelligator (2010) 185 Cal.App.4th 606.
The Flatley court found that Mauro's demand letter constitutes criminal extortion as a matter of law and thus Mauro could not challenge Flatley's complaint with a SLAPP motion even though the court assumed, without deciding, that the litigation privilege of CC § 47(b) applied. Flatley observed that the two statutes are not co-extensive. Flatley, at 322.
A key to understanding the Malin/Flatley distinction is the precise relationship between the anti-SLAPP statute's official proceeding prongs and the litigation privilege of CC § 47(b). An informed anti-SLAPP analysis must begin with the general rule, articulated by our High Court in Briggs v. Eden Council for Hope and Opportunity (1999) 19 Cal.4th 1106, 1115 that where a communication is privileged under CC § 47(b), it will ordinarily be subject to a special motion to strike under the official proceeding prongs of subds. (e)(1),(2) of CCP § 425.16 as both statutes were intended to protect certain aspects of the First Amendment right of petition albeit in different ways. Malin, at 10. In contrast, the illegality exception in Flatley and Mendoza merely holds that simply because liability is based on a privileged communication under CC § 47(b), that does not, by itself, necessarily mean that the communication qualifies as a protected act under the anti-SLAPP statute and vice versa. Flatley v. Mauro (2006) 39 Cal.4th 299, 322-325. While the two statutes do not target precisely the same activity, there is significant overlapping coverage.
Malin observed that the "secret" that would allegedly expose Malin and others to disgrace was inextricably tied to Arazm's pending civil complaint. The demand letter accused him of embezzling money and simply informed him that Arazm knew how he had spent these funds. We cannot conclude that Malin's alleged activities [arranging sexual liaisons with old men] would subject him to any more disgrace than the claim that he was an embezzler. Second, to the extent Malin claims the threatened disclosure of secrets affecting a third party, his alleged sexual partner, necessarily constitutes extortion, he is mistaken. The third party - a retired judge - was neither a family member nor a relative under PC § 519. Most importantly, the Malin court concluded "We see a critical distinction between Singer's demand letter, which made no overt threat to report Malin to prosecuting authorities or the IRS, and the letters in Flatley and Mendoza, which contained those express threats and others that had no reasonable connection to the underlying dispute."
This article was previously published in the Los Angeles Daily Journal on July 23, 2013.
James J. Moneer, Esq. has been representing plaintiffs and defendants at all stages of anti-SLAPP litigation since 1994 and frequently testifies as an attorney fee expert. He has been a regular panelist on the The Rutter Group's Anti-SLAPP seminars and has been recognized as an expert in California anti-SLAPP law in Ramona Unified School Dist. v. Tsiknas (2005) 135 Cal.App.4th 510, 523-525. His website is www.slapplaw.com.
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