SLAPP009 – Scope of Discovery after Anti-SLAPP Motion
It was a great anti-SLAPP week at Morris & Stone. Today we discuss two of our motions, and the result of last week’s Evil Yogurt Maker case. We will examine the scope of discovery following the filing of an anti-SLAPP motion, and apply those standards to a pending motion.
Specifically, I discuss the case of Britts v. Superior Court (2006) 145 Cal.App.4th 1112. In Britts, the defendant filed an anti-SLAPP motion on the same day that his opposition to a motion to compel was due. He argued that under the plain wording of CCP section 425.16(g), the motion stays all discovery “proceedings”, and therefore he was not required to file any opposition to the motion. The trial court disagreed, and granted the unopposed motion to compel, and awarded $5,000 in sanctions.
Britts took the matter up on a writ, and the Court of Appeal ordered the trial court to vacate the ruling on the motion to compel and for sanctions, holding that the statute means exactly what it says; an anti-SLAPP motion stops all discovery proceedings, including any pending discovery motions.
The trial court had also made a strange ruling (on an earlier anti-SLAPP motion in the case) that the defendant was not entitled to all the attorney fees incurred on the motion, because he had failed to meet and confer with opposing counsel. In other words, the court felt that if plaintiff’s counsel had simply been informed that one of the causes of action was a SLAPP, the complaint could have been amended and the motion avoided. That was not a holding from the case, but I explain why that reasoning is terrible and, if followed, could constitute malpractice.
I also discuss the case of Blanchard v. DirecTV (2004) 123 Cal.App.4th 903. In Blanchard, the court deliniated the scope of permissible discovery after an anti-SLAPP motion has been filed. As set forth in CCP section 425.16(g), a plaintiff must show good cause before taking ANY discovery after an anti-SLAPP motion has been filed. Good cause means ONLY discovery relevant to the Plaintiff’s burden of establishing a reasonable probability of prevailing on the claim. Discovery that is NOT relevant to a legal defense being asserted by the Defendant in the anti-SLAPP motion is not permitted.
Given that Blanchard permits only discovery related to potential defenses by the defendant, the case of Balzaga v. Fox News (2009) 173 Cal.App.4th 1325 came to the logical conclusion that if a plaintiff seeks leave to pursue discovery on a given defense, the defendant can prevent that discovery by informing the court that it is waiving that defense.
Finally, I discuss the case of Tutor-Saliba Corp v. Herrara (2006) 136 Cal.App.4th 604. This case sets forth the discretionary standard for granting leave to permit discovery following the filing of an anti-SLAPP motion, and held that a trial court’s decision to disallow discovery “will not be disturbed unless it is arbitrary, capricious, or patently ABSURD.” (Emphasis added.)
Podcast: Play in new window | Embed
Subscribe: RSS
SLAPPs: Birds do it, bees do it, even big law firms that should know better, do it.
I’m not so sure about that title, but it made me chuckle. The point of this article is that attorneys who create SLAPPs run the gamut, including large firms, who would presumably have an attorney or two who should know better. This latest case in my office is an object lesson as to how SLAPPs come about, and why the California’s SLAPP statute was such a great idea.
The case is the typical scenario where my client went off and started a business to compete with his former employer, and the former employer doesn’t like that one bit. The company sued, claiming the usual misappropriation of trade secrets, interference with prospective economic advantage and the like. My client cross-complained for breach of contract, because the company stopped paying certain significant residuals to which he is entitled. We will ultimately win, but the company is going to do what it’s going to do.
“Don’t you dare tell the world about how we’re going out of business.”
One thing it decided to do was to use the action to silence any criticism by my client. My client sent out a cautionary email to employees of the company, warning them about the shenanigans of the company. He explained that the company had not only breached contracts by cutting off his residuals, it had done the same to someone else. The email then directed the recipients to reports about the company published by Moody’s and Bloomberg, as well as press releases by the company itself, which all stated that the company is in some pretty dire financial straights.
He also sent out a press release, summarizing some events in the litigation. Specifically, when we took the deposition of the former vice president of the company, he took the Fifth and refused to answer any questions. The press release accurately reported those facts.
The company is represented by a law firm I had never heard of before this case, but according to its letterhead, it has some 30 offices, with five or six of them right here in California. It must be a pretty big firm.
The company and its attorneys apparently decided that while they were doing what they were going to do, my client is not allowed to tell anybody about the litigation or point to news stories about the finances of the company. They amended their complaint, adding four cause of action for libel, trade libel*, false advertising and unfair competition, all based on the email and the press release.
Under the heading of you can’t make this stuff up, here are some of the things they alleged were defamatory.
“It’s not 100% certain we are going to fail, it’s only close to 100%.”
My client provided a link to the article by Moody’s, and he said, “as one analyst says, the chances of [the company] defaulting on its [debts] is 100%.”
That’s defamatory, according to the complaint, because the analyst actually said, “the chances of [the company] defaulting on its [debts] is close to 100%.” So, apparently in opposing counsels’ world, that difference is defamatory because someone wanting to invest in the company would be put off by reading that the chance of default is 100%, but if they knew it was only “close to 100%” then they would be pulling out their checkbooks.
My client also wrote that his “complaint against [the company] alleges twelve causes of action, including . . . breach of the covenant of good faith and fair dealing . . . among others.”
Why is that defamatory? Because according to the complaint, my client did NOT file a complaint, he filed a CROSS-complaint, and the cause of action for breach of the covenant of good faith and fair dealing was thrown out on demurrer (before I was involved).
So, again, for that to have caused any loss of reputation, we have to assume that someone considering working for the company or investing in it would say, “I’m fine with a company that doesn’t pay its employees, so long as that’s only alleged in a cross-complaint, and so long as there is no cause of action for breach of the implied covenant. But if there’s a COMPLAINT that alleges breach of the implied covenant, the deal’s off!
This is the precise sort of case for which the anti-SLAPP statute was designed. In my never to be humble opinion, the causes of action were added purely out of a desire to gain leverage in the action, and a quick disposal of that sort of claim is the purpose of the anti-SLAPP statute. This was the quintessential SLAPP, and you are left scratching your head as to how a firm could have blundered into it, unless . . .
Crazy like a fox?
Since the SLAPP was so obvious, it has not escaped me that the firm may be crazy like a fox. It just smacks of a set-up. As stated, at the end of the day the company will be writing my client a substantial check. When I first came into the case, opposing counsel was fighting to postpone the trial, trying to put off that eventuality. It takes about six months to have a motion heard in this courtroom, and the judge does not move up motions on an ex parte application unless there has been a cancellation. If opposing counsel checked my background and saw that anti-SLAPPs are a big part of my practice, they may have filed an intentional SLAPP as a means to delay the action. That may seem crazy given the attorney fees that will come from the successful motion, but given the finances of the company, the goal might just be to push this case beyond a bankruptcy filing.
Still, I was recently retained to handle an appeal in a case where the judge improperly denied an anti-SLAPP motion, and then compuounded the error by refusing to give a jury instruction on protected speech. The jury awarded substantial damages based on protected speech. That case illustrates why it is crucial to get protected activities out of the action, even if it is clear that the plaintiff may have filed a SLAPP for purposes of delay.
*A rookie mistake to allege trade libel. It seldom makes sense to allege trade libel because the elements are far harder to meet than an action for libel, and it certainly doesn’t make sense to allege trade libel when you are already alleging libel.
SLAPP008 – An Anti-SLAPP Motion Against an Evil Yogurt Shop
A client found me while searching for information about California Code of Civil Procedure section 425.17, proving that clients do some very sophisticated research on their legal issues. Changing the facts to protect the privacy of my client, he had warned the public about an evil yogurt maker who was falsely claiming to sell organic yogurt, and for that good deed he was hit with a lawsuit for defamation and interference with business.
In today’s podcast, we discuss the elements of CCP section 425.17, which under the proper circumstances will exempt a business versus business claim from the anti-SLAPP statute. In the most basic sense, section 425.17 applies when one business is talking about another business’s goods or services, AND the audience that the business is talking to consists of potential customers, AND the point of the talking is to promote the speaker’s own business.
Will section 425.17 defeat the anti-SLAPP motion, and allow the evil yogurt maker to go forward with his bogus defamation claim? Listen to episode 8 of The California SLAPP Law Podcast and find out.
Case cited: Sharper Image Corporation v. Target Corporation, 425 F.Supp.2d 1056 (N.D. CA 2006). In this case, Sharper Image, manufacturer of tower air purifier brought action against Target, manufacturers and retailers of competing product, alleging patent and trade dress infringement. Target moved for summary adjudication of plaintiff’s claims and their counterclaims for non-infringement of the asserted patents. Sharper Image separately moved to strike defendants’ tort and state law counterclaims, and in the alternative, moved for judgment on the pleadings of the counterclaims, and for partial summary adjudication on its utility patent infringement claim. Of note for today’s discussion, the court found that the anti-SLAPP motion was excluded by CCP section 425.17, but nonetheless threw out the claim under the alternative motions.
Podcast: Play in new window | Embed
Subscribe: RSS
Council spent £200,000 trying to unmask anonymous blogger
A council has dropped a five-year, £200,000 legal campaign trying to unmask a blogger called Mr Monkey, who made allegations of impropriety against four senior members of the authority. A Freedom of Information request has forced South Tyneside council to admit how much they spent trying (and failing) to discover the identity of Mr Monkey, who made allegations of impropriety against four senior members of the authority. They've dropped the curious case after the Guardian started asking questions
Source: www.theguardian.com
The Council suspected the blog was authored by Ahmed Khan, but Khan has always vehemently denied being Mr Monkey and unsuccessfully filed an ‘anti-SLAPP’ (Strategic Lawsuits against Public Participation) motion in 2011, which would have prevented the council from obtaining more of his details. But this claim was dismissed by a judge as “frivolous”, as the nature of the John Doe suit meant he was never named as a defendant.
There are procedures by which an anonymous blogger can oppose a subpoena that would expose his identity, but you can't simply bring an anti-SLAPP motion claiming you're not the defendants.
Read the rest of this entry »
Posted in Anti-SLAPP motion, Defamation, Internet Defamation, Scoop.it | Tags: anti-SLAPP motion | No Comments »
Cooley Law School Loses Defamation Suit Against New York Law Firm
Cooley Law School has lost an appeal in their defamation lawsuit against a law firm that posted criticism of the school's reporting of student debt on a popular law school message board.
The school had filed a $17 million lawsuit against Kurzon Strauss LLC, a New York firm, and two attorneys associated with the firm, Jesse Strauss and David Anziska, accusing them of posting defamatory statements on the popular law school message board "JD Underground". The post said that federal regulators were investigating Cooley Law School over student loan default rates and employment for graduates.
Those statements were later retracted, but the firm then began preparing a proposed class-action lawsuit against the school, at which point Cooley filed its suit against the firm accusing them of defamation, breach of contract and interference with business relations, among other claims.
A trial court granted judgment to Kurzon Strauss before trial, saying that Cooley Law School was a "public figure" and therefore would have to prove that the firm acted with a disregard for the truth, a bar the court said Cooley could not clear
Source: www.mlive.com
When in individual or entity is deemed to be a "limited public figure", the theory is that such a person has greater access to the media, and therefore tell their side of the story. Therefore, when a limited public figure sues for defamation, they have a higher standard of proof to show that defamation. Specifically, they must show the person who allegedly defamed them acted with "actual malice" or "reckless disregard for the truth".
Here, the court concluded that Cooley Law School would not be able to meet that burden.
Go here for more Internet Defamation cases.
Read the rest of this entry »SLAPP007 – Proving Actual Malice in a Defamation Action – Makaeff v. Trump University
A great anti-SLAPP decision that has been five years in the making. In this podcast, we discuss the case of Makaeff v. Trump University, which contains an outstanding discussion of limited public figures and meeting the standard for showing actual malice. Here are the facts:
Between August 2008 and June 2009, Tarla Makaeff attended approximately seven real estate investing and finance seminars, workshops, and classes hosted by Trump University and spent a total of approximately $60,000 on the programs. Although Trump University asserted Makaeff was satisfied with the services Trump University provided to her, noting that Makaeff frequently provided excellent reviews of the programs, Makaeff stated the Trump University programs she attended were unsatisfactory. Specifically, Makaeff alleged the programs were shorter than advertised, she was provided only a toll-free telephone number instead of a one-year mentorship of “expert, interactive support,” and her Trump University mentors were largely unavailable and offered no practical advice when she did speak with them.
In addition, Makaeff alleged she was told by Trump University staff to raise her credit card limits to purchase real estate, but once she did, she was pressured by Trump University staff to instead use her elevated credit to purchase the Trump Gold Elite seminar for $34,995. Makaeff also claimed she was told by Trump University staff that her first real estate transaction after signing up for the Trump Gold Elite program would earn her approximately the amount she spent on the Trump Gold Elite program, which it did not. Additionally, Makaeff alleged Trump University instructed her to engage in illegal real estate practices, such as posting advertising “bandit signs” on the sides of roadways. On June 18, 2009, Makaeff received a letter from the Orange County District Attorney’s Office informing her that posting bandit signs in California without lawful permission could subject her to fines, a misdemeanor charge, and up to six months in jail.
Makaeff brought a class action lawsuit against Trump University on April 30, 2010. On May 26, 2010, Trump University filed a defamation counterclaim against Makaeff, alleging Makaeff “published statements to third parties about Trump University orally, in writing and on the Internet that are per se defamatory, including many completely spurious accusations of actual crimes.” Trump University alleged Makaeff’s defamatory statements were a substantial factor in causing actual and significant economic damages amounting to or exceeding $1,000,000. Madaeff responded with an anti-SLAPP motion, which was originally denied, but on appeal the Ninth Circuit determined that Trump University was a limited public figure, and send the case back to the District Court for a determination as to whether Trump University could still state a prima facie case, given the higher “actual malice” standard.
How was the case decided? Listen to the podcast to find out.
Cases discussed in the podcast (in bold), taken from the opinion:
To prove actual malice, a defamation plaintiff must show by clear and convincing evidence that the defendant knew her statements were false at the time she made them, or that she acted with reckless disregard of the truth or falsity of the statements made. Gertz v. Robert Welch, Inc., 418 U.S. 323, 328, 94 S. Ct. 2997, 41 L. Ed. 2d 789 (1974). The clear and convincing standard “requires that the evidence be such as to command the unhesitating assent of every reasonable mind.” Rosenaur v. Scherer, 88 Cal. App. 4th 260, 105 Cal. Rptr. 2d 674, 684 (Ct. App. 2001). “A defamation plaintiff may rely on inferences drawn from circumstantial evidence to show actual malice.” Christian Research Inst. v. Alnor, 148 Cal. App. 4th 71, 55 Cal. Rptr. 3d 600, 612 (Ct. App. 2007) (citing Reader’s Digest Assn v. Superior Ct., 37 Cal. 3d 244, 208 Cal. Rptr. 137, 145-46, 690 P.2d 610 (1984)).
Actual malice is a subjective standard. See St. Amant v. Thompson, 390 U.S. 727, 731, 88 S. Ct. 1323, 20 L. Ed. 2d 262 (1968). “[R]eckless conduct is not measured by whether a reasonably prudent man would have published, or would have investigated before publishing. There must be sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of [her] publication.” Id.
Actual malice “has nothing to do with bad motive or ill will,” and “may not be inferred alone from evidence of personal spite, ill will or intention to injure on the part of the writer.” Harte-Hanks Commc’ns, Inc. v. Connaughton, 491 U.S. 657, 666 n.7, 109 S. Ct. 2678, 105 L. Ed. 2d 562 (1989). However, in appropriate cases, factors such as “[a] failure to investigate, anger and hostility toward the plaintiff, reliance upon sources known to be unreliable, or known to be biased against the plaintiff . . . may . . . indicate that the publisher [herself] had serious doubts regarding the truth of [her] publication.” Reader’s Digest, 208 Cal. Rptr. at 145-46 (citations omitted).
Trump University claims this case is similar to Nguyen-Lam v. Cao, 171 Cal. App. 4th 858, 90 Cal. Rptr. 3d 205 (2009), in which the California Court of Appeals upheld a trial court’s conclusion that malice could be inferred “where, for example, a story is fabricated by the defendant, is the product of his imagination, or is based wholly on an unverified anonymous telephone call.” Id. at 869 (citing Christian Research Institute v. Alnor, 148 Cal. App. 4th 71, 85, 55 Cal. Rptr. 3d 600 (2007)) (internal quotation marks omitted). Trump University argues Makaeff, like the defamation defendant in Nguyen-Lam, “has no ‘place to go for her belief’ that Trump University illegally took the property of anyone, stole anyone’s identity, or opened any credit card without approval.” (Dkt. No. 300 at 15-16.)
The Court finds Nguyen-Lam distinguishable from the present matter. In that case, the California Court of Appeals considered a defamation defendant who had learned about the defamation plaintiff, then a candidate for a public position, only through media reports yet accused her of being a Communist. 171 Cal. App. 4th at 868-69. The evidence in Nguyen-Lam indicated the defamation defendant had no personal knowledge of the defamation outside of the media reports, none of which had mentioned Communism, and thus had no basis for his claim that the defamation plaintiff was in fact a Communist. Id. at 869.
Trump University points to evidence of Makaeff’s anger and hostility toward Trump University, as well as a motive to get a refund, as evidence of actual malice. (Dkt. No. 300 at 17) (citing Christian Research Institute v. Alnor, 148 Cal. App. 4th 71, 84-85, 55 Cal. Rptr. 3d 600 (2007) (“anger and hostility toward the plaintiff . . . may, in an appropriate case, indicate that the publisher himself had serious doubts regarding the truth of his publication”); Harte-Hanks Commc’ns, Inc., 491 U.S. 657, 669, 109 S. Ct. 2678, 105 L. Ed. 2d 562 (“it cannot be said that evidence concerning motive or care never bears any relation to the actual malice inquiry”); Widener v. Pacific Gas & Elec. Co., 75 Cal. App. 3d 415, 436, 142 Cal. Rptr. 304 (1977) (finding an engineer’s motive of wanting to suppress the making of a film and his anger with the film’s producer “sufficient evidence from which the jury could have found that [the engineer] knew [his libelous statement about the producer] was false, or was recklessly indifferent as to whether his statement was accurate or not”)).
Ninth Circuit Opinion finding that Trump University was a limited public figure.
Podcast: Play in new window | Embed
Subscribe: RSS
C.A. Says Ex-Employee’s Settlement Demand Was Extortion
A fired worker who sued his ex-employer for defamation and wrongful termination committed extortion when he threatened to instigate a federal investigation of the company’s business practices if his demands were not met, the Sixth District Court of Appeal ruled. Read the rest of this entry »
SLAPP006 – CalPERS v. Moody’s – Is an Opinion Always Protected Speech Under the Anti-SLAPP Statute?
With the wisdom of a penny-stock investor trying out day-trading for the first time, the brilliant financial minds at CalPERS (California Public Employees’ Retirement System) decided to dump more than a billion dollars into three “structured investment vehicles” or SIVs, backed by subprime mortgages. After all, Standard & Poors had given these three SIVs AAA ratings, even though they were “stuffed full of toxic, subprime mortgages, home equity loans, and other types of structured-finance securities linked to subprime mortgages,” as CalPERS now alleges.
As most do when they make really bone-headed investment decisions, CalPERS looked for someone to blame, and settled on Standard & Poors for that AAA rating. It sued Standard & Poors for negligent misrepresentation, asserting that the ratings company should be held responsible for the losses suffered by CalPERS.
“But wait a cotton-picking minute,” said some fictional attorney representing Standard & Poors, “I read somewhere in law school that opinion is protected speech, and won’t support an action.” On that basis, Standard & Poor’s filed an anti-SLAPP motion, but a San Francisco judge denied the motion, finding that CalPERS had provided sufficient evidence to meet the second prong of the anti-SLAPP analysis.
Today’s podcast examines the opinion of the Court of Appeal as regards the anti-SLAPP motion. Is an opinion about the worth and safety of an investment inherently protected opinion speech?
California Public Employees’ Retirement System, Inc. v. Moody’s Investors Services, Inc., 14 S.O.S. 2584 (A134912). For a copy of the opinion as well as a copy of the original complaint, go here.
Podcast: Play in new window | Embed
Subscribe: RSS
Conflict-of-Interest Suit Against Lawmakers No SLAPP, C.A. Rules
See on Scoop.it – California SLAPP Law
Anti-SLAPP motion denied.
A suit against a public official who is accused of acting on a contract in which he or she has a personal financial interest does not implicate speech or petition rights for purposes of the anti-SLAPP statute, the Court of Appeal for this district has ruled.
Similar to the HOA case I reported yesterday, the fact that the defendant is voting or acting in an official capacity does not successfully invoke the anti-SLAPP statute if the basis of the action is fraud or breach of fiduciary duty.
Here, members of the Los Angeles City Council voted 3-2 to award a 15-year, $150 million contract to a company in which one of the members had a financial interest.
The Court of Appeal, said the a council member’s vote is an act on behalf of the public, not the individual, and thus does not implicate free speech and petition rights.
See on www.metnews.com
Eddie Murphy Beats Comedian’s Defamation Lawsuit
See on Scoop.it – California SLAPP Law
Eddie Murphy has prevailed in a strange $50 million defamation lawsuit brought by a comedian named Brando Murphy.
The bigger question is how plaintiffs find attorneys willing to represent them in cases like this.
A comedian named Brando Murphy allegedly insinuated that he was the son of Eddie Murphy, to the point that he appeared with Richard Pryor’s son on the “Sons of Comedy” tour. When Eddie Murphy’s attorney sent a cease and desist letter (and accused him of stalking), Brando sued Eddie for defamation.
Eddie responded with an anti-SLAPP motion, and Brando was unable to show that he was more likely than not to prevail on his action. Motion granted. Brando has already appealed.
For all important anti-SLAPP news, go to California SLAPP Law.
See on www.hollywoodreporter.com
Click "Amazon Music" for all episodes of California SLAPP Law Podcast