Posts Tagged ‘SLAPP’

Blogger Hit With $2.5 Million Judgment

I guess she could consider it a victory.  A blogger by the name of Crystal Cox was sued for $10 million by Obsidian Finance Group for comments Ms. Cox posted on  Representing herself, she managed to keep the judgment to just $2.5 million.

Seriously though, nothing in the case went Ms. Cox’ way.  She brought an anti-SLAPP motion and claimed that she was protected by the New York Times actual malice rule, as well as the reporter’s shield.  But the judge was not convinced.  Judge Marco Hernandez of the U.S. District Court in Portland held that a blogger is not a journalist.  As such, Cox was caught in a catch-22.  She would not be required to reveal her source if she fell under the shield law as a journalist, but without such protection she could not reveal her source without subjecting him to liability, and without that background information, could not prove what she was saying was true.

As to the New York Times actual malice rule, which holds that defamation can be found only upon a showing of actual malice where the plaintiff is a public figure, the court concluded that the plaintiffs were not public figures.

Complicating the matter further, Cox was late in bringing her anti-SLAPP motion (although the judge stated the result would have been the same even if it had been filed on time).

The concerning part of the decision arises from the court’s discussion of what makes one “media.”   Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974), held that a plaintiff should not be able to recover damages from a media organization without proof that the reporter was at least negligent and may not recover presumed damages absent proof of “actual malice.”  After rebuking Cox for failing to specify any authority for the proposition that a blogger can be media, the court then proceeds to set forth seven indicators that make one “media” without absolutely no authority for those points.

According to Judge Hernandez, Cox failed to show she was media because there was no evidence of “(1) any education in journalism; (2) any credentials or proof of any affiliation with any recognized news entity; (3) proof of adherence to journalistic standards such as editing, fact-checking, or disclosures of conflicts of interest; (4) keeping notes of conversations and interviews conducted; (5) mutual understanding or agreement of confidentiality between the defendant and his/her sources; (6) creation of an independent product rather than assembling writings and postings of others; or (7) contacting ‘the other side’ to get both sides of a story. Without evidence of this nature, defendant is not ‘media.'”

In my never to be humble opinion, those made-up criteria by Judge Hernandez are about 20 years out of date.  “Affiliation with a recognized news entity”?  The reason that so many “traditional” news outlets are folding is because of the rise of citizen reporters, with no affiliation with any organization and who may or may not have any journalistic background or education.

Nonetheless, the takeaway here is that bloggers are not immune from liability if they stray across the line and engage in defamation.  I don’t know what Cox reported about Obsidian Finance Group, so the judgment may have been well deserved.  Still, it gives pause to know that a blogger is now straddled with a huge judgment that cannot be discharged in bankruptcy and therefore will likely dog Ms. Cox for at least the next 20 years.

Go here for a more detailed discussion of the judgment, as well as a copy of that judgment.

Lawyer Demand Letter Found to Step Over the Line

Los Angeles Superior Court Judge Mary Strobel denied an anti-SLAPP motion brought by attorney Martin Singer, finding that a demand letter sent by Singer was not protected speech.

As you can see from the letter, Singer threatened to file a complaint “dealing with your using company resources to arrange [redacted] liaisons with [names redacted] (see enclosed photo) . . . .”  The defendant took exception with this threat, and filed his own action against Singer for Civil Extortion.

As would be expected, Singer brought an anti-SLAPP motion since under normal circumstances an attorney’s demand letter would fall under the Litigation Privilege and would be protected speech. 

But not so fast.  In 2006 the California Supreme Court held in Flatly v. Mauro that the SLAPP statute does not protect extortion, and that case also involved an attorney demand letter.  Singer’s letter closely tracked the same points that the Supreme Court in Flatly held stepped over the line.  Like the demand letter in Flatly, the Singer letter threatened exposure of sexual conduct (to the point of including a photo) and made reference to taxing authorities (thereby implying that if the defendant does not pay he will be turned over to the IRS).   On that basis, the court ruled that “the activities giving rise to the claims in the Complaint are illegal as a matter of law as extortion, and as allegations of illegal wiretapping . . . .” 

MOTION DENIED.  No doubt Singer will utilize the automatic appeal process written into the anti-SLAPP statute, but if the court follows Flatly, the appeal will be unsuccessful.  Unless the case somehow settles, Singer will have the opportunity to explain his actions to a jury.

Paul Alan Levy provides a nice summary of this motion on his blog, as does Jacky Jasper.

SLAPP Law Applies to Foreign Litigation

The California Court of Appeal has interpreted the term “official proceeding” as used in Code of Civil Procedure section 426.16 to include even foreign litigation.

The fact pattern here is rather involved, but to summarize, the action began in Zimbabwe when a wife allegedly took marital property to various locations in that country and then fled with her children to Northern California. The husband was convinced that his sister-in-law had assisted with the removal of the property, so he obtained a “writ of arrest” against her and she spent the night in jail. After a contested hearing, the Zimbabwe court found that there was insufficient evidence to prove that the sister-in-law had assisted in the removal of the property.

The sister-in-law then filed a civil action against the husband in Los Angeles Superior Court for false arrest. A jury found in favor of the husband, but the Court of Appeal reversed and ordered a new trial for various reasons. Back in Zimbabwe, the husband filed for permission to appeal from the final judgment on the arrest case. That application was supported by several declarations, including one from the husband’s California attorney, Donald C. Randolph of Randolph & Associates. The Zimbabwe court denied the application, and the sister-in-law then sued Randolph for malicious prosecution back here in California.

Quite appropriately, Randolph brought an anti-SLAPP motion seeking to strike the malicious prosecution complaint. Clearly, the declaration provided by Randolph was related to litigation and was in furtherance of a right of redress, even if that right was being pursued in Zimbabwe. Unfortunately for Randolph, Los Angeles Superior Court Judge Mel Red Recana was unwilling to take Section 426.16 that far, and denied the anti-SLAPP motion, concluding that it did not apply to activity in a foreign country.

But the Court of Appeal looked at the controversy from a slightly different angle. Although the declaration was provided to a court in Zimbabwe, it “contained statements about the effect of the Zimbabwe order in the Los Angeles case and the facts supporting probable cause for the writ of arrest,” which “were made in connection with issues under consideration in the Los Angeles case.” On that basis, the justices concluded, the statements were made “to influence the determination of issues pending in the Los Angeles case,” and therefore were a part of the right of petition in the Los Angeles case.

The story was reported by the Metropolitan News-Enterprise and can be found here.

Lawyer Misses “Stealth” SLAPP Action

One of our latest anti-SLAPP victories provides a beautiful illustration of a “stealth” SLAPP suit that the plaintiff’s attorney failed to recognize, to the great expense of his client.

In this case our (future) client’s business partner, we’ll call him Freddy Fraudster, opened a credit card account at a local bank using our client’s personal information. When our client discovered what Freddy had done, he contacted the bank and informed the personnel there that Freddy had committed fraud, and based on this report the bank closed the account and reported the matter to the police. Our client also filed a police report, and filed for a restraining order against Freddy.

Freddy was not happy. He had a long term relationship with the bank, and based on the report by our client, the bank closed his accounts and would have nothing further to do with him. Apparently thinking the best defense is a good offense, and hoping that winning the race to the courthouse might give him some leverage, Freddy filed an action against our client. He claimed that our client had authorized him to open the account, and that the report to the bank was therefore defamatory since it accused him of fraud.

Do you see why Freddy’s action in Superior Court was a SLAPP suit? We did, and we successfully brought an anti-SLAPP motion. You see, a SLAPP suit is one that tries to block a person’s right of petition. Freddy’s attorney realized that the report to the police and the application for the restraining order were protected rights of petition, but he mistakenly thought that the report to the bank, requesting that the credit card be cancelled, was not a petition for redress and therefore did not fall under the SLAPP statute because it did not involve any government agency. No doubt, he thought that by suing our client for defamation, he could make all his evil deeds go away and get back in good stead with the bank by offering to dismiss the case if our client would withdraw his remarks to the bank, court and police. Now it sounds like a SLAPP, doesn’t it?

The interpretation of the SLAPP statutes by Freddy’s attorney was far too narrow. Consider. One day you run a credit report on yourself and you find that someone has fraudulently opened a credit card in your name. What is the first thing you are going to do? Call an official government agency? You might do that eventually, but first you are going to call the credit card company and tell them to cancel the card. Thus, contacting the credit card company, or in our case the bank, is a natural part of the entire “right of petition.”

It’s very similar to the litigation privilege. I occasionally see cases where a defendant tries to sue the plaintiff and his attorney, claiming that the demand letter sent by the attorney was defamatory because it falsely claimed the defendant did something illegal. But under Civil Code section 47, anything said in conjunction with litigation is privileged and therefore not defamatory. The demand letter from the attorney takes place before legal action is ever filed, but it is still part of the litigation process.

So it was here. The report to the bank occurred before any “right of petition” was pursued with a government agency, but calling to cancel the credit card was a natural part of that process. If a plaintiff were permitted to SLAPP a defendant by focusing on the activities leading up to the actual right of petition, then the intent of the anti-SLAPP statutes would be subverted. We explained that to the court, and our motion was granted.

SLAPP Plaintiff Escapes Attorney Fees

There is a basic concept concerning legal fees that some attorneys never seem to understand, so the same issue comes up in many variations. Say, for example, that Joe Attorney and Paul Plumber enter into a contract for some plumbing work at the attorney’s home. The contract provides for attorney fees to the prevailing party if they ever get into a contract dispute. Joe Attorney is not happy with the plumbing work, so he sues, and both parties represent themselves at the trial.

Under this scenario, regardless of who wins, neither party will recover any attorney fees, because there are no attorney fees. Paul represented himself, so it’s pretty obvious he has no basis for attorney fees, but often an attorney in these circumstances will improperly seek fees, claiming that he should be reimbursed for the time he spent on the case, just as though he had hired an attorney (so-called “opportunity costs”).  California courts have always rejected this argument, since no attorney was paid for the work, and there are therefore no attorney fees to recover. The fact that the prevailing party happened to be an attorney does not make him eligible for the money he lost fighting the case, anymore than the plumber should be paid for the time he spent prosecuting the case if he prevails.

But this simple reasoning does not keep attorneys from trying. In the latest example, the firm of Carpenter & Zuckerman sued attorney Paul Cohen and his professional corporation Personal Injury Solutions, Inc. Cohen cross-complained back against Carpenter & Zuckerman, alleging, among other things, defamation.

Carpenter & Zuckerman properly responded with an anti-SLAPP motion, which was granted. Cohen appealed, but lost, and Carpenter & Zuckerman filed a memorandum of costs under the anti-SLAPP statute for the attorney fees incurred on appeal (about $33,000). Here is where it gets interesting.

According to the opinion by the Court of Appeal, Carpenter & Zuckerman submitted a declaration from one of the firm’s associates, Candice Klein, attesting to the fact that she had been “retained” by her firm to represent it on appeal. She pointed out that she was not a partner in the firm, had no financial interest in the outcome of the appeal, and asserted that she was hired on an “independent contractor basis”.

It was a valiant effort to distance Ms. Klein from the firm, to create sufficient independence that the court might treat her as a retained attorney, but it didn’t fly with the trial court or the Court of Appeal. A law firm representing itself is not entitled to recover attorney fees, and that does not change when an associate is used. No attorney fees for Carpenter & Zuckerman. It probably didn’t help that Ms. Klien is a graduate of Southwestern University School of Law, one of the finest law schools in the country, creating the automatic assumption that she is really the one running the firm, partner or not.

In defense of Carpenter & Zuckerman, the argument had some merit. In a 2001 case called Gilbert v. Master Washer & Stamping Co., Inc., the Court of Appeal permitted an attorney fee award to a firm that was representing one of its own partners, but in that case the matter involved the partner’s “personal interests”. Similarly, Carpenter and Zuckerman were named individually in this case, but other cases have already held that that is not sufficient if the issues are the same as those asserted against the firm.

Anytime a law firm is sued, any recovery against it will detrimentally affect any partner. And when a law firm is sued in tort for the act of one or more of its lawyers, those lawyers are exposed to liability. In order to recover attorney fees for work done on behalf of individual attorneys in a law firm, there must be a showing that the fees sought to be recovered are not attributable to representation of the law firm. No such showing was made here. Thus, there was not sufficient evidence to overturn the trial court’s conclusion that the individual plaintiffs were not entitled to recover any attorney fees.

A Suggestion for the California Legislature

I had a relatively rare moment of brilliance today that may well cure many of the problems with the anti-SLAPP process.

Here is how it came about. I was retained as an expert to opine on the reasonableness of the attorney fees being sought by a law firm that prevailed on an anti-SLAPP motion. As is common, especially among large firms, a victory on an anti-SLAPP motion is viewed as a winning lottery ticket, and the following motion for attorney fees reaches into the stratosphere. In this instance, defense counsel was claiming that 331 hours were spent on the special motion to strike. This was a very basic motion with no special factors to increase the time spent on the motion, such as protracted discovery on the SLAPP issues; just a motion and a reply brief.  My expert declaration resulted in a significant reduction in the fees awarded to the firm, but the firm still received far too much.  It was another typical example where a large firm inflates its bill by 500%, knowing that even if the court cuts the bill in half, the firm will still have a very good pay day.

It’s not supposed to work this way, but the courts simply do not adhere to the controlling authority.  Case authority holds that when an inflated bill is submitted, the offending firm should receive nothing.  Ketchum v. Moses (2001) 24 Cal.4th 1122, 1138.  Consider the impact on this firm if the court had followed the law and denied all the fees because of the inflated request.  Undoubtedly the firm would have been far more reasonable with its next request.  But that never happens.  Instead, if the court is offended by the inflated amount, at most it will adjust the amount down as occurred in this case.

The failure of the courts to follow the law in this area has created an additional detrimental effect that I previously witnessed in the bankruptcy court.  At the conclusion of a bankruptcy, the attorney must ask for his fees to be approved by the court.  In an effort to be fair to all the creditors, the bankruptcy judges would often cut the fees in half, so that the attorney along with all the other creditors was taking a hit.  It didn’t take long for bankruptcy attorneys to find a way around this practice.  They all doubled their hourly rates, so if the judge cut the fees they would still be left with their “real” rate.  And so it has become in the anti-SLAPP process.  So many unethical attorneys are inflating their fee bills and asking for $100,000 for a simple anti-SLAPP motion, that some judges automatically reduce them.  But then what happens to attorneys like me that submit an honest fee bill of, say, $18,000?  Some judges are so jaded that they will reduce that bill as well.  This is unfair to the client who now does not receive the full amount paid, and as a result the court is creating another bankruptcy approach where attorneys will be incentivized to inflate their bills as protection against unwarranted reductions.

So, back to my brilliant idea. The California Legislature should change the procedure for recovery of attorney fees on an anti-SLAPP motion. Instead of waiting until after the motion is granted, the new procedure would require that the attorney fees be set forth in the motion. Then (here comes the good part), if the motion is denied, then the party bringing the motion must pay the amount it set forth in its motion to the other side. In this way, padding is greatly discouraged. Every dollar sought in the motion is a dollar the party might have to pay to the other side. The requested fees would likely be far closer to the actual amount of fees.

“But that flies in the face of the anti-SLAPP process, which is supposed to offer defendants a way to dispose of SLAPP actions and recover the fees in doing so”, you say. Well, let’s look at that. If the motion is denied, and assuming the court’s decision to deny the motion was correct, then the action was not a SLAPP action to begin with and the motion should not have been brought. Indeed, that is one of the concerns being expressed by the courts; that anti-SLAPP motions are being brought far too frequently in cases where they do not apply. Further, knowing that the attorney fees may have to be paid to the other side, the incentive to spend many hours on an anti-SLAPP motion is removed, and instead the incentive becomes to do the motion as efficiently as possible.

OK, admittedly I am saying this slightly tongue in cheek. Such a procedure is contrary to the American Rule, and would provide attorney fees to the opposition with no consideration of how much time was spent opposing the motion. So, if my proposal is too bold, a similar result could be achieved by tweaking the anti-SLAPP statutes. Add a provision which states that where the fee bill is inflated, the party receives nothing. You may still end up with situations where a firm will submit a greatly inflated bill in the hope that the court will approve it without review, but on the other hand, a firm claiming 331 hours for a single motion will know that the outlandishness of the claim will result in no fees. Also, in tweaking the statute, lower the threshold for receiving attorney fees for successfully opposing an anti-SLAPP motion.

Anti-SLAPP Statute Can Be Used In Federal Court

There is currently no federal anti-SLAPP statute, but that does not mean the anti-SLAPP remedy is not available in federal court. In federal diversity cases brought in California, applying California law, a defendant still maintains the right to bring a motion to strike under Civil Procedure section 425.16. But overlaying this statute onto federal procedures has created some issues.

The right to amend.

In California, it is now clear that once an anti-SLAPP motion has been filed, the plaintiff cannot amend the complaint in an attempt to fix the problems that made the complaint a SLAPP.  But in the recent case of Greensprings Baptist Christian Fellowhip Trust v. Cilley, the Ninth Circuit saw things differently.

That case arose from a malicious prosecution action.  The defendant filed an anti-SLAPP motion which was granted by the court, but with leave to amend.  The court ruled that under the very liberal amendment standards of federal court, leave was proper.

As a side note, the decision made little sense, again illustrating that many courts struggle with the hybrid nature of an anti-SLAPP motion. Even though demurrers are not permitted in federal court, that in essence was the standard applied by the District Court.  When a demurrer is sustained because the complaint fails to allege essential elements, leave to amend is normally granted to afford the opportunity to allege the missing elements. In Greensprings, the court determined that plaintiff had failed to meet the second prong of the anti-SLAPP analysis – providing sufficient evidence to show a likelihood of success.  But why grant leave to amend?  If the issue is evidence, then no amount of amending will provide more evidence.

And that takes us to the next difference between state and federal court as regards the treatment of the anti-SLAPP process:

The right to appeal.

California’s anti-SLAPP statute provides for an immediate appeal from a denial, so the defendant did just that; appealing the court’s decision to permit amendment.  But that raised another issue. Federal courts do not like interim appeals, state statute or not.  The Court of Appeals held that as a matter of first impression, the order granting anti-SLAPP motion to strike complaint with leave to amend did not conclusively determine the disputed question of the anti-SLAPP statute’s applicability, and thus the order was not immediately appealable.  “Accordingly, we hold that we lack jurisdiction under the collateral order doctrine to entertain an appeal from the portion of a district court’s order granting a defendant’s anti-SLAPP motion which gives a plaintiff leave to amend her complaint.”

However, the decision was a narrow one limited to the specific circumstances. The Court of Appeal confirmed that California’s right of appeal is available when immediate review is necessary to safeguard the right protected by the state’s statute. Thus, while Greensprings denied the right to appeal, it affirmed that immediate appeal is available under the proper circumstances.

“Who you calling a thief?” said the cannibal.

Donner Party having some funA story in this month’s California Lawyer magazine caught my eye as an excellent case study on a point I try to explain to clients, sometimes unsuccessfully, about defamation actions.

Travel with me back to 1847 to the ill-fated Donner Party. While crossing the Sierra Nevada Mountains near present day Truckee, the wagon train could go no further and the travelers had to hunker down and try to wait out the extreme winter weather. Of the original 89 pioneers, only 45 were rescued, and it was soon learned that they had survived by eating the others.

One of the survivors was a German immigrant name Lewis Keseberg.  Keseberg admitted to cannibalism, but the authorities became convinced that Keseberg had not always waited for someone to die from exposure before using them as a food source, and he was put on trial for six murders.  Although he was acquitted for lack of evidence, one of the rescuers told gruesome stories about Keseberg’s cannibalistic ways, and those stories were printed in the newspaper.

Keseberg sued for defamation, which was an amazing feat in and of itself because California was not yet a state, so such a suit must have been a procedural nightmare. He sought $1,000 in damages.

In what may have been the first defamation action on state soil, Keseberg won his lawsuit, but the court awarded only $1, and ordered Keseberg to pay the court costs.

And therein lies the lesson that some potential clients refuse to accept. Winning a defamation action is more than just proving each of the elements of libel or slander. Context is everything. The damages in a defamation action arise from the loss of reputation. A person can have a reputation that is so bad, that defamatory statements simply don’t make it any worse.

In Keseberg v. Coffeemeyer, Keseberg had been falsely accused of stealing from the people he ate. He was very offended by that accusation, and headlines in the paper that read, “Where Did Keseberg Hide the Donner Treasure?” But here’s the thing, Keseberg, YOU ATE DEAD PEOPLE!  You are already off most dinner invitation lists.  The added claim that you took the money of the DEAD PEOPLE YOU ATE is not a big blow to your reputation.

I’m reminded of the line from Star Wars.

Princess Leia shouts at Han Solo, “Why, you stuck up, half-witted, scruffy-looking, nerf-herder.”

To which Han Solo responds, “Who’s scruffy-looking?”

I once received a telephone call from a business owner, who had been the subject of a news report on television. The report had to do with the fact that he was putting unauthorized charges on customers’ credit cards. The story had reported that he did this to at least 12 customers, but after checking his records, he determined that he had only done so nine times. He wanted to sue for defamation, based on the fact that he had only cheated nine customers, and not 12. I politely declined. (I changed the facts slightly to protect the privacy of the caller.)

You will not succeed in a defamation action if you are a horrible person, but just not quite as horrible as is claimed, or if out of five terrible things said about you, only one is false.

A Recent Victory Illustrates anti-SLAPP Motion Application

A recent anti-SLAPP victory by our office serves to illustrate the application of the anti-SLAPP laws and how the process, that was meant to quickly dispose of SLAPP cases, can get so convoluted.

The Case of the Outraged City Council Member

In this case, our (future) client addressed a city council meeting on a matter she felt was important to the city. Specifically, the city had been rocked by some controversy involving city council members, and our client was speaking to the issue of how the newly-elected council members should go about performing their duties. To illustrate the point, she cited the example of a former council member who had taken money from special interests. The city council member in question took umbrage with the accusation that she had acted unethically, and sued our client for defamation. We were retained to fight the defamation action.

It is seldom that we are presented with such a clear SLAPP suit. Remember, SLAPP stands for Strategic Lawsuit Against Public Participation. What better example of public participation is there than a citizen addressing their city council? Indeed, under Civil Code section 47, any comments made during a “legislative proceeding” are absolutely privileged (meaning they can never be defamatory). Better yet from the standpoint of an anti-SLAPP motion, section 425.16(e)(1) provides that statements made before a legislative proceeding are protected speech.

So let’s run the facts through the two prongs of the anti-SLAPP analysis. First, as counsel for the defendant, it was our burden to show that the speech was protected within the meaning of the anti-SLAPP statute. That was a no-brainer in this instance, since the words were spoken at a city council meeting. And since the conduct falls under a specific anti-SLAPP section of 425.16, there was no need to show that the topic was a matter of public interest. “Any matter pending before an official proceeding possesses some measure of ‘public significance’ owing solely to the public nature of the proceeding, and free discussion of such matters furthers effective exercise of the petition rights § 425.16 was intended to protect.” (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1118.)

Our having shown that the speech was protected, the second prong of the anti-SLAPP analysis requires plaintiff to show a reasonable likelihood of success on her claim, which in this case would be impossible. Since section 47 makes speech at a city council meeting absolutely privileged, the speech by definition cannot constitute defamation.

So a slam-dunk anti-SLAPP motion, right? Not quite.

A SLAPP motion puts a stay on all discovery, which is one of the primary benefits of an anti-SLAPP motion because it keeps the plaintiff from using the discovery process as a sledgehammer to try to wear down the defendant. In this case, counsel for Plaintiff had served discovery prior to the anti-SLAPP motion, and argued that the court should permit that discovery prior to ruling on the anti-SLAPP. There is authority for the proposition that a plaintiff should be permitted to conduct discovery to determine whether the defendant acted with malice, because that takes away certain privileges under section 47. However, there is no malice exception for words spoken at a city council meeting, so no amount of discovery by the Plaintiff could have revealed information that would have defeated the anti-SLAPP motion.

Nonetheless, the court granted Plaintiff’s request for discovery, and that added two months to the process. It could have been that the court just did not understand the authorities we provided, but more likely the court was bending over backwards to give the plaintiff access to discovery, specifically because the judge knew she was going to grant the motion, and did not want Plaintiff to have any possible basis for appeal. In that sense, the judge might have done us a favor, but it is frustrating to deal with a frivolous action for an additional two months. We were successful, though, in limiting greatly limiting the discovery. The court denied Plaintiff’s request to take our client’s deposition.

As expected, the discovery revealed nothing useful to the Plaintiff. Instead, the Plaintiff attempted to argue that the conduct by Defendant was “illegal” and therefor not protected. This was another instance where there is authority for the proposition being claimed, but that legal theory had no application to the case at hand. In the case of Flatley v. Mauro, an attorney had sent threatening letters to someone, threatening to sue him if he did not pay a large settlement to a client. Normally, a letter from an attorney in anticipation of litigation would be protected speech under the litigation privilege, but the Flatley court ruled that the attorney’s letters had risen to the level of extortion, and were therefor illegal and unprotected.

Plaintiff was trying to say that our client’s speech at the city council meeting was illegal and therefor unprotected according to Flatley. And how could speech at a city council meeting ever be illegal, you ask? According to Plaintiff, it was illegal because the city council’s own guidelines state that comments should be civil, and Defendant’s comments had not been civil.

Predictably, the court understood that even if the words were interpreted to be rude, a city council’s guidelines do not amount to law, and violating them does not amount to criminal conduct. The court granted our anti-SLAPP motion, striking the defamation complaint and entering judgment in our favor. The court also awarded us over $18,000 in attorney fees against the Plaintiff.

— Aaron Morris
Morris & Stone

A Primer on SLAPP Suits and Anti-SLAPP Motions

I routinely receive calls from parties and attorneys who have run afoul of California’s anti-SLAPP statute. It is clear that business people need to have at least a cursory understanding of what constitutes a SLAPP action before pursuing litigation, since it is equally clear that many attorneys are not conversant with this area of the law.

What is a SLAPP suit, and what is an anti-SLAPP motion?

A “SLAPP suit” is a lawsuit that is intended to censor, intimidate and silence critics by burdening them with the cost of a legal defense until they abandon their criticism or opposition. I use the expression Spurious Litigation Against Public Participation, since that better captures both the goal of the plaintiff and the nature of the lawsuit, but the standard verbiage is “strategic lawsuit against public participation”.

The action is spurious and frivolous because the typical SLAPP plaintiff does not care whether he wins the lawsuit, and often knows he has no chance of prevailing. The plaintiff’s goals are accomplished if the defendant succumbs to fear, intimidation, mounting legal costs or simple exhaustion and abandons the criticism. The heart of California’s anti-SLAPP legislation is set forth in subpart (e) of Code of Civil Procedure section 425.16, which provides:

(e) As used in this section, “act in furtherance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue” includes:

(1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law;

(2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law;

(3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest;

(4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.

To win an anti-SLAPP motion, the defendant must first show that the speech in question falls under one of the four sections set forth above. But that is just the first prong of the analysis. If the defendant proves the speech was protected, the plaintiff can show that he is still likely to prevail on the action. In other words, defamatory speech is not protected simply because it falls under one of the four sections.

So how do you know a SLAPP action when you see it? That is not always obvious, and as many attorneys and their clients have painfully learned, failing to recognize they have created a SLAPP can be extremely costly. One of my recent anti-SLAPP successes provides a good example of how an attorney can be caught in this trap.

I’ll Sue You if You Sue Me.

In this case, our (future) client had entered into a settlement agreement with the defendant in a prior action. The settlement agreement required the defendant company to pay damages to our client, and contained a confidentiality agreement. Two years after the settlement agreement was signed, the defendant had still not paid the damages to the plaintiff, so he retained our firm to sue to collect the money due under the agreement.

We filed the action for breach of contract, attaching a copy of the settlement agreement. The defendant answered the complaint and also filed a cross-complaint, claiming that it was a breach of the confidentially agreement to attach the settlement agreement to the complaint. Incidentally, counsel for defendant had discussed with me his intention to cross-complain on this basis, and I had warned him that would be a really bad idea. He did so anyway.

The reason the cross-complaint was a bad idea was because it was a SLAPP. Do you see why? Remember again what SLAPP stands for – Spurious Litigation Against Public Participation. Under section 42516(e)(1), “any . . . writing made before a . . . judicial proceeding” is an “act in furtherance of person’s right of petition.” Defendant had breached the settlement agreement, so clearly we were entitled to sue for breach of that contract. That is the public participation – taking a case before a court for redress of a grievance. By claiming that we had breached the agreement by attaching the confidential settlement agreement, Defendant was just suing our client for suing. Stated another way, the defendant company was in essence saying, “for daring to make our breach of the agreement public, I’m going to sue you.” I filed an anti-SLAPP motion against the company for the cross-complaint.

So let’s run this case through the two-prong, anti-SLAPP analysis. Our burden was to show that the speech was protected under the anti-SLAPP statute. The speech here was the complaint itself, with the settlement agreement attached. Filing a complaint is a specifically protected activity under the anti-SLAPP statute, and comments made in conjunction with litigation are protected under Section 47. There was no issue that our complaint was a protected activity.

That takes us to the second prong, by which the plaintiff, here the cross-complainant, must show a reasonable likelihood of success on the merits of the case, even if the speech is a protected activity. The company had failed to pay our client the money due under the agreement, so it was clearly in breach, and therefore could not possibly prevail on its own breach of contract claim, since one of the elements of a breach claim is performance.

The court granted our anti-SLAPP motion, to the utter shock of opposing counsel. Counsel had argued that the motion could not be granted because the facts were in dispute. He erroneously thought that, like a motion for summary judgment, the evidence cannot be weighed. But an anti-SLAPP motion is supported by evidence. We provided evidence that the money owed had never been paid, and there was no evidence that could be presented to the contrary.

The company must now pay all of our client’s attorney fees. Fortunately for the company, I am very efficient at these motions, but I have received calls from attorneys facing fees exceeding $100,000 after they unwittingly created a SLAPP action.

Bottom line for businesses: You probably have no desire to become acquainted with the minutia of California’s anti-SLAPP laws, but if you are going to be involved with any litigation, whether bringing or defending an action, the possibility of a SLAPP action needs to be on your mental checklist. As the above example illustrates, it may never be a thought to your attorney, and you will be the one to pay the price.

— Aaron Morris
Morris & Stone

Aaron Morris, Attorney
Aaron Morris
Morris & Stone, LLP

Orchard Technology Park
11 Orchard Road, Suite 106
Lake Forest, CA 92630

(714) 954-0700

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NOTICE PURSUANT TO BUSINESS & PROFESSIONS CODE SECTION 6158.3: The outcome of any case will depend on the facts specific to that case. Nothing contained in any portion of this web site should be taken as a representation of how your particular case would be concluded, or even that a case with similar facts will have a similar result. The result of any case discussed herein was dependent on the facts of that case, and the results will differ if based on different facts.

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