“SLAPP” is an acronym for “strategic lawsuit against public participation.” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57.) SLAPP suits are lawsuits that seek damages for making public statements and thus are arguably designed to intimidate or silence parties. Like many states, California has an “anti-SLAPP statute” (Code of Civil Procedure § 425.16) that allows a defendant to seek an early dismissal of a SLAPP suit. California’s anti-SLAPP statute states that “a cause of action against a person arising from any act of that person in furtherance of that person’s right of petition or free speech…shall be subject to a special motion to strike, unless the Court determines…there is a probability that the plaintiff would prevail on the claim.”
August was a busy time for California Courts and SLAPP suits. On three successive days, the Supreme Court in Baral v. Schnitt (Aug. 1, 2016) 2016 WL 4074081, the California Court of Appeal in John Doe 2 v. Superior Court (Aug. 2, 2016) 2016 WL 4097089, and the Ninth Circuit in Travelers Casualty Insurance Company of America v. Hirsh (Aug. 3, 2016) 2016 WL 4120689, interpreted and applied California’s anti-SLAPP statute. Then, the next week, the Supreme Court opined on the statute again in City of Montebello v. Vasquez (Aug. 8, 2016) 2016 WL 4169258 and the Court of Appeal issued a modification of a prior Opinion in Cruz v. City Of Culver City (July 15, 2016) 2016 WL 4182502, as modified (Aug. 8, 2016).
This additional guidance from the Courts is useful as we have experienced an increase in the use of SLAPP suits by disgruntled claimants seeking a way around California’s prohibition on third party suits against insurers, as well as in the use of anti-SLAPP motions by insureds and their counsel seeking to avoid lawsuits by insurers.
The goal of anti-SLAPP statutes is to eliminate, at the pleading stage, “meritless claims arising from protected activity.” (Baral at p. *3.) In Baral, the Supreme Court was faced with deciding whether the anti-SLAPP statute is limited to defeating the entirety of a “cause of action” or whether a Special Motion to Strike under section 425.16 may be used to eliminate allegations within a “cause of action” when that cause of action includes allegations of both protected and unprotected activity. The California Courts of Appeal had reached different conclusions on the issue. In Mann v. Quality Old Time Service, Inc. (2004)120 Cal.App.4th 90, the Court held that an anti-SLAPP motion had to address and defeat the entire cause of action as it was pled and could not be used to strike parts of the claim or certain allegations. In City of Colton v. Singletary (2012) 206 Cal.App.4th 751, the majority concluded to the contrary, holding that an anti-SLAPP motion could be used to strike allegations of protected activity from a cause of action that also included allegations of unprotected activity, leaving the latter to stand. Subsequent cases led to further confusion. The Supreme Court opinion in Baral ends the argument.
The Baral Court rejected the analysis in Mann and concluded that the Legislature intended the term “cause of action” as used in the anti-SLAPP statute to apply to “claims” or allegations, not to the entirety of a “cause of action.” The Supreme Court held: “Courts may rule on plaintiffs’ specific claims of protected activity, rather than reward artful pleading by ignoring such claims if they are mixed with assertions of unprotected activity.” (Baral, 2016 WL 4074081 at p. *11.) The Court stressed, however, that “allegations of protected activity that merely provide context…cannot be stricken under the anti-SLAPP statute.” (Id.) The Supreme Court explained that the “targeted claim must amount to a ‘cause of action’ in a sense that it is alleged to justify a remedy.” (Id. at p. *12.) In short, “claims for relief that are based on allegations of protected activity” are subject to anti-SLAPP motions, even if they are joined with allegations of unprotected activity. (Ibid.)
The Supreme Court then set forth a road map for anti-SLAPP motions: (1) the moving defendant must identify all allegations of protected activity and the claims for relief supported by them; (2) if relief is sought on allegations of both protected and unprotected activity, the Court is to ignore the unprotected activity; and (3) if relief is sought based upon protected activity, the Court must proceed to the burden shifting phase where (a) the plaintiff must demonstrate that the claims based upon protected activity are “legally sufficient and factually substantiated;” and (b) if the plaintiff cannot make out a prima facie case for a favorable judgment, the allegations are stricken. (Id. at p. *13.)
The day after Baral, the Court of Appeal for the Second Appellate District issued its opinion in John Doe 2 v. Superior Court. The question was whether a plaintiff alleging libel against an anonymous e-mail sender was entitled to discovery under the statute to support its prima facie showing of merit. The Court was required to address the interplay between First Amendment protection of anonymous speech, the obligation imposed on the libel plaintiff to make the prima facie showing of the elements of defamation, and prior case law that holds that the plaintiff cannot seek discovery without a prima facie showing that the statement at issue is false and unprivileged. Although the Court of Appeal found that the statements in the email were not themselves defamatory and further that there was no evidence of harm, the Court of Appeal concluded that the plaintiff’s burden was only to establish the necessary prima facie showing of libel for which it had accessible evidence. The Court of Appeal thus denied the right to discovery.
Travelers Casualty Insurance Company of America v. Hirsh, was a per curiam opinion of the Ninth Circuit. Travelers’ claims against Hirsh arose from Travelers’ defense and indemnity of an action for which Hirsh acted as “independent counsel” for Travelers’ insured. Travelers filed suit against Hirsh, alleging that he had participated in a scheme to deny Travelers material non-privileged information concerning the settlement of the underlying suit and to deny Travelers a set off in fees allegedly owed to Hirsh. Hirsh moved to strike the complaint against him under section 425.16. The District Court denied the motion. The Ninth Circuit affirmed.
The Ninth Circuit held that Travelers’ claims did not involve protected activity or litigation-related speech, but was simply a suit over the wrongful retention of settlement funds and the impact of those settlement funds on Hirsh’s fees. The Court held that the matters at issue arose from “post-settlement conduct,” not litigation-related conduct, so that the communications at issue were not protected and the suit was, therefore, not a “SLAPP suit.”
More interesting, in a concurring opinion, in which a second Judge joined, Judge Kozinski argued that that California’s anti-SLAPP statute was inapplicable in federal courts because it directly conflicts with the Federal Rules of Civil Procedure, and he denounced prior Ninth Circuit case law holding otherwise as wrong. Judge Kozinski complained that “anti-SLAPP cases have spread like kudzu through the federal vineyards.” (2016 WL 4120689 at p. 3.) Judge Kozinski thus urged the Ninth Circuit to reverse course and refuse to permit anti-SLAPP motions under California law in the federal courts of this State.
The California Supreme Court’s most recent SLAPP decision, City of Montebello v. Vasquez, involved a suit by the City against three former City Council members and the former City Administrator. The City alleged conflicts of interest in connection with the approval of a contract between a waste hauler and the City on which the Council Members had voted or acted favorably and alleged that some or all of the Council Members had received improper campaign contributions from the waste hauler. The defendants moved to dismiss under the anti-SLAPP statute, arguing that the suit was an effort to punish them for exercising the right of free speech in connection with their official duties. The trial court denied the motion; the Court of Appeal affirmed, but the Supreme Court reversed.
The Supreme Court first examined and held inapplicable the “public enforcement exception” to the anti-SLAPP statute. The Court then proceeded to evaluate whether the process for deciding the anti-SLAPP motion outlined in Baral above had been satisfied by the trial court. Finding that the anti-SLAPP statute is not limited to “activity protected by the constitutional rights of free speech and petition,” but includes acts “in furtherance of those rights,” it held that the statutory protections “may extend beyond the contours of the constitutional rights themselves.” (2016 WL 4169258 at p. *7.) The Court concluded that the “council member defendants’ votes were cast in furtherance of their rights of advocacy and communication with their constituents on the subject of the [ ] contract.” (Id. at p. *9.) Having determined that the movants had met the requirement of identifying a claim based on protected activity, the Court then remanded for the trial court to evaluate whether the City could demonstrate a likelihood of success on the merits.
In the last case in line, Cruz v. City Of Culver City, the Court of Appeal involved a dispute over parking restrictions. The Court of Appeal affirmed the dismissal of the action pursuant to an anti-SLAPP motion after it found that the public interest exception did not apply because the plaintiffs sought “personal relief,” not a vindication of rights for the general public.
These cases point out what appears to be a divergence of opinion as to the benefits of anti-SLAPP motions between the federal and state courts. The California Supreme Court appears to be encouraging and expanding the use of anti-SLAPP motions to attack portions of a cause of action or simply allegations of activity protected under the anti-SLAPP statute, and interpreting the statute to extend beyond free speech and petition rights themselves to acts in furtherance of those rights. The Courts of Appeal have seemed similarly more receptive to anti-SLAPP motions. In contrast, apparently inundated with anti-SLAPP motions in diversity cases filed in federal courts in California, the Ninth Circuit appears to have reached a cross-roads and may very soon join with other federal Circuit Courts of Appeals to hold that California’s anti-SLAPP statute is inconsistent with the Federal Rules of Civil Procedure and that anti-SLAPP motions may no longer be entertained by the District Courts of this State.
Susan Field is a partner with Musick, Peeler & Garrett in its Los Angeles office. Her full bio and contact information can be found at: http://www.musickpeeler.com/professional/Susan_Field.