Sixth District Court of Appeal offers the legislature some advice on amending the anti-SLAPP statute

232/365 - Smack!

A different kind of SLAP (Photo courtesy of Gabe via Compfight)

If you just lost your appeal, handled by attorneys at a high-powered law firm, with fees approaching – oh, heck, who knows, but three lawyers billing at a “BigLaw” firm have to run up a pretty hefty bill on a case potentially worth billions of dollars – you might not be happy with language in the introduction of the opinion characterizing your appeal as “utterly without merit” and noting that the court declined imposing sanctions only because the court did “not wish to further delay the long-overdue trial of the merits of [the] action.”

That’s exactly how the court opened its opinion in Hewlett-Packard Co. v. Oracle Corp., case no. H039507 (6th Dist. Aug. 27, 2015). If you guessed that the case is an appeal from the denial of an anti-SLAPP motion (Code Civ. Proc., § 425.16), give yourself a gold star. (Or maybe not — I mentioned anti-SLAPP in the title of this post, after all.)

The opinion is a good read if, like many, you believe that use of the anti-SLAPP statute has gotten out of hand. Indeed, the opinion cites another case’s reference to the “explosion of anti-SLAPP motions.” There’s simply too much in the opinion to try to summarize it here, so I’ll refer you to it for the nitty-gritty, and note just a few highlights.

On what does the Court of Appeal blame this explosion? The availability of immediate appeal when the motion is denied, that’s what:

A major reason for this explosion is that the statute rewards the filer of an unsuccessful anti-SLAPP motion with what one court has called a “free time-out” from further litigation in the trial court.The statute does this by entitling the unsuccessful movant to immediately appeal the denial of such a motion—even one like Oracle’s, which wholly lacks merit, attacks only a small part of the plaintiff’s case, and is heard nearly two years into the lawsuit, and on the day before a scheduled trial. Such an appeal automatically stays all further trial proceedings on causes of action “affected by the motion.” This means that however unsound an anti-SLAPP motion may be, it will typically stop the entire lawsuit dead in its tracks until an appellate court completes its review.

(Footnotes and citations omitted.)

The court argues that the anti-SLAPP “cure” is worse than the disease it was meant to address — the filing of meritless suits designed to chill participation in the public arena. “It is as if a city had decided to cure an illness afflicting a few of its residents by lacing the water supply with a chemical that would indeed cure those sufferers, but would sicken a larger number of previously healthy citizens.”

The opinion closes with the court’s recommendation for amendment of the anti-SLAPP statute:

In this regard, we offer the suggestion that one simple fix might substantially reduce the motivation to abuse the anti-SLAPP procedure: Limit the right to  interlocutory appeal to denials, and allow them only where the motion (1) is filed within the allotted 60 days, and (2) would—if granted—dispose of the entire action. Where either of those conditions is lacking, the motion can rarely if ever achieve any real saving of time or money, and an appeal can only have the opposite effect. Such an amendment would limit invocation of the statute to cases where it may serve its stated purpose and greatly reduce its tactical utility in many if not most of the situations where it is now being most sorely abused.

As a “BigLaw” refugee, my favorite part of the opinion is the court’s lament that sanctions for frivolous appeals are not a very good deterrent against abuse of the anti-SLAPP statute:

But a prompt dismissal, even of a frivolous appeal, is not always feasible. In this case, HP’s motion to dismiss the appeal was supported by four volumes of exhibits, which Oracle answered with another five volumes, with the result that the motion essentially duplicated the appeal itself. Top-drawer legal representation, such as both parties have engaged here, can obscure the core frivolousness of an appeal beneath layers of artful obfuscation which only the most painstaking examination can peel away. And where the stakes are high enough—as they certainly are here, judging from the multi-billion-dollar figures put forward by HP’s experts on damages—the threat or even the certain prospect of sanctions may not alter the economic calculus that makes an anti-SLAPP motion, and ensuing appeal, so attractive.

(Emphasis added.) Sounds like Maybe Oracle got its money’s worth after all.

One last thing. Remember how it looked like Oracle had dodged the bullet of having to pay Hewlett-Packard’s attorney fees, since the Court of Appeal declined to impose sanctions? If I were Oracle, I wouldn’t quite count on it.

When it comes to the anti-SLAPP statute, there’s no such thing as “just a little” criminal extortion

The courts’ application of California’s “anti-SLAPP statute” — Code of Civil Procedure section 425.16 — has been heavily criticized as being too broad. Section 425.16 authorizes a “special motion to strike” one or more causes of action in a complaint. A defendant succeeds on such a motion if he can demonstrate that (1) the suit is a SLAPP — i.e., a Strategic Lawsuit Against Public Participation — because the causes of action are based on free speech on a public issue or on petitioning of the government and (2) that the plaintiff is not likely to prevail in the action.

Witkin describes the type of lawsuits section 425.16 was designed to thwart:

Strategic Lawsuits Against Public Participation (SLAPP suits) are brought to obtain an economic advantage, not to vindicate a legally cognizable right. They typically seek damages that would be ruinous to the defendant. They pretend to be ordinary lawsuits, but are distinguishable in that they are generally meritless suits brought by large private interests to deter common citizens from exercising their political or legal rights or to punish them for doing so. Because winning is not a SLAPP plaintiff’s primary motivation, the traditional safeguards against meritless actions are inadequate

(5 Witkin, Cal. Procedure (5th ed. 2008), Pleading, § 1017, pp. 426-427 [citation omitted].)

Criticism of the anti-SLAPP statute usually centers around  the contention that it is much broader than needed to serve its purpose. According to Matthew Gould, a seasoned eye on the matter, while many actions might technically fit within the statutory definition of a SLAPP, the same action might also be one genuinely brought to vindicate a legally cognizable right. To some, the statute seems almost limitless in this regard.

Consider Mendoza v. Hamzeh, case no. B239245 (2d. Dist., April 22, 2013). When Mendoza’s employer believed that Mendoza had committed fraud, conversion, and breaches of contract costing the employer in excess of $75,000, the employer’s lawyer Hamzeh (who is known for being one of the best Criminal Lawyers Perth), sent a letter to Mendoza threatening to report him to multiple authorities unless Mendoza cooperated in the employer’s investigation and paid back all the damages disclosed by the investigation. Mendoza sued Hamzeh for civil extortion, intentional infliction of emotional distress and unfair business practices, and Hamzeh moved to strike under section 425.16, claiming that his threatening letter constituted a protected litigation communication under the anti-SLAPP statute.

Nice try. The Supreme Court — in Flatley v. Mauro (2006) 39 Cal.4th 299, a case Hamzeh did not even bother to cite in his motion — had already decided that criminal extortion is not covered by the anti-SLAPP statute. Confronted by Flatley, Hamzeh resorted to claiming that at least he wasn’t as bad as that no-good defendant in Flatley, who sent a whole lot of threatening communications. The gist of his argument was “Compared to that guy in Flatley, I’m a boy scout; surely, the protection of the anti-SLAPP statute should be extended to me.”

The court did not buy it. Hamzeh’s conduct constituted criminal extortion as a matter of law because it coupled a demand for payment with a threat to accuse Mendoza of a crime and report him to authorities. Once that threshold is reached, it doesn’t matter whether the extortion is mild or extreme, the anti-SLAPP statute simply does not afford any protection:

We do not read Flatley to mean the anti-SLAPP statute applies to some litigation communications which satisfy the criteria for criminal extortion if such communications are not particularly extreme or egregious. The rule must be a bright line rule. The antiSLAPP statute does not apply to litigation communications which constitute criminal extortion as a matter of law.
Extortion is extortion. The degree might make a difference in a criminal sentence or in damages in a civil suit, but when it comes to anti-SLAPP protection, degree does not matter at all.

Self-Represented Attorney May Not Recover Fees on Anti-SLAPP Motion

In Taheri Law Group v. Neil C. Evans, case no. B192828 (2d Dist. Feb. 26, 2008), the Court of Appeal holds that the attorney fee provision in the anti-SLAPP statute (Code Civ. Proc., § 425.16) does not entitle a self-represented attorney to recover fees for bringing a successful anti-SLAPP motion.

This is merely an extension of the similar holding in Trope v. Katz (1995) 11 Cal.4th 274, which held that a self-represented attorney could not recover fees under a contractual fee provision. The Taheri court makes clear that an attorney-client relationship is necessary before fees may be recovered.

The identical issue of anti-SLAPP attorney fees was treated in much greater detail, and with the same result, in a 2004 decision by the same district (but different division) of the Court of Appeal. That decision was depublished when the Supreme Court granted review on a different issue. But you can find the case in the California Reporter (at least on Westlaw), and I recommend doing so if you are interested in a more detailed rationale than the Taheri opinion provides. Soukup v. Stock (2004) 15 Cal.Rptr.3d 303.

It would be a mistake to extrapolate from Taheri and Trope that fees are not recoverable in every situation in which they are not actually “incurred.” Regular readers will remember that when it comes to attorney fees, “incurred” doesn’t always mean “become obligated to pay” for. Courts have awarded fees in pro bono cases under fee shifting statutes, and will probably do the same someday under a contractual fee provision. As Taheri notes, the touchstone for recovery is an attorney-client relationship.

Probable Success on an Anti-SLAPP Claim

The standard for demonstrating a probability of success on a claim that a party seeks to dismiss on anti-SLAPP grounds has defied any clear definition.  In Booker v. Rountree, case no. G038083 (4th Dist. Oct. 4, 2007), the court finds the standard is met under a quasi-summary judgment analysis — it is enough that the parties’ declarations gave competing versions of the facts and that Booker’s version, if believed, would lead to success.

First, the facts.  Two wheelchair-bound plaintiffs — Gunther and Rountree — filed separate lawsuits against Booker for violations of the Unruh Act relating to inaccessibility of Booker’s restaurant to persons in wheelchairs.  Both were represented by the same lawyer.  However, Rountree did not file his case until Booker had already settled with Gunther.  Booker cross-claimed for abuse of process, alleging that Rountree deliberately delayed filing suit until after Booker settled with Gunther in order to obtain a second settlement for the same violations.  The trial court denied Rountree’s anti-SLAPP motion under Code of Civil Procedure section 425.16, and the Court of Appeal affirms.

The cross-claim meets the first prong of the anti-SLAPP test for dismissal because the cross claim arises from the underlying litigation. However, Booker succeeded at demonstrating a probability of success on the merits.

The evidence produced is sufficient to permit inferences that Rountree knew of the Gunther suit but deliberately delayed in order to avoid consolidation of the suits and to enhance recovery through multiple settlements. Rountree’s declaration that he had no knowledge of the Gunther suit until after he filed his own is not necessarily the version of events that will prevail at trial. Further, the litigation privilege of Civil Code section 47 is no obstacle because the alleged conduct is not a communicative act and therefore is not included within the privilege.

CORRECTION (10/9/07): Thanks to commenter Richard, who points out that Rountree had actually filed his case while Gunther’s was still pending and that the delay was in not serving the summons until after Gunther settled.

Anti-SLAPP Attorney Fee and Costs Application is Timely any Time Prior to Final Judgment

In Carpenter v. Jack in the Box Corp., case no. B188707 (May 25, 2007) the Second District Court of Appeal holds that an application for anti-SLAPP attorney fees and costs under Code of Civil Procedure section 425.16(c) by a plaintiff who prevails against an anti-SLAPP motion is timely so long as it is made before entry of final judgment in the action, even if it is not made until after resolution of the appeal of the order denying the anti-SLAPP motion.

Carpenter brought an action for wrongful termination, defamation, and other tort and contract claims related to the termination of employment by Jack in the Box.  Jack in the Box brought an anti-SLAPP motion (special motion to strike) under Code of Civil Procedure section 425.16, claiming that plaintiff’s claims targeted Jack in the Box’s actions in the course of an investigation into allegations that plaintiff had sexually harassed another employee and that such actions were protected under the First Amendment.  The trial court denied the special motion to strike, and the Court of Appeal affirmed.

After remittitur to the trial court, plaintiff filed his application for fees and costs under section 425.16(c).  The court held that the trial court did not lose jurisdiction over the application simply because the remittitur of the case after the denial of the anti-SLAPP motion did not include instructions to determine attorney fees and costs.  The trial court retains jurisdiction to decide a motion for fees and costs even while the appeal is pending, and a statute authorizing an award of attorney fees in the trial court includes appellate fees unless the statute explicitly states otherwise.

Finding jurisdiction, the court next turned to the issue of whether the application was timely under rules 3.1702 and 8.104 of the California Rules of Court.  After a rigorous and complicated analysis of the rules to resolve a facial ambiguity, the court concludes that an application for fees under section 425.16(c) is timely so long as it is brought any time before final judgment in the action.

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California Anti-SLAPP Statute Does Not Protect Acts in Furtherance of Free Exercise of Religion

When defendants were sued by their neighbors for nuisance arising from smoke and ash entering the neighbors’ properties from fires defendants regularly lit as part of religious rituals in their backyard, they filed a motion to dismiss under the anti-SLAPP statute (Code of Civil Procedure section 425.16). The Court of Appeal affirmed the trial court’s denial of the motion, rejecting the defendant’s contention that section 425.16 was intended to protect acts associated with the free exercise of religion. Section 425.16 “did not import wholesale the protections of the First Amendment.” The statute mentions only two of the rights enumerated in the First Amendment — freedom of speech and the right to petition — and extending the statute to cover religious acts such as the ritual fires would run counter to the legislative intent. The California Supreme Court has issued seven anti-SLAPP decisions since the beginning of last year. Might this eventually be another? The case is Castillo v. Pacheco, 2nd Dist. Ct. of App. case no. B188991 (April 25, 2007).