2:17-cv-05309
C.D. Cal.Aug 7, 2019Background
- Deborah M. Manchester (counterdefendant) signed an independent-contractor agreement to serve as Director of Hearing Services for Auralcare’s Torrance clinic in 2013; the clinic sale fell through but Manchester continued working with Auralcare patients and later solicited investment for her invention (HARP).
- Manchester sued Sivantos entities in May 2017 for trade-secret and contract-related claims and later added Auralcare and its owner Larsen in her Second Amended Complaint (SAC).
- Auralcare filed a countercomplaint against Manchester alleging breach of contract, breach of the implied covenant of good faith and fair dealing, trade-secret misappropriation, and UCL violations.
- Manchester moved to strike Auralcare’s countercomplaint under California’s anti-SLAPP statute (Cal. Civ. Proc. Code §425.16), arguing her SAC is protected petitioning activity.
- The Court treated Manchester’s filing of the SAC as an act in furtherance of the constitutional right to petition and therefore within anti-SLAPP protection, shifting the burden to Auralcare to show a probability of prevailing on its counterclaims.
- The Court found Auralcare failed to show admissible evidence of damages (relying largely on speculative attorneys’ fees), and granted Manchester’s motion to strike; Manchester is entitled to fees and costs and may move to recover them.
Issues
| Issue | Plaintiff's Argument (Manchester) | Defendant's Argument (Auralcare) | Held |
|---|---|---|---|
| Whether Manchester’s filing of the Second Amended Complaint is protected activity under the anti‑SLAPP statute | The SAC is a writing made in a judicial proceeding and is protected petitioning activity | The filing is not subject to anti‑SLAPP protection (Auralcare contested application) | Court held the SAC is protected activity under §425.16(e)(1) |
| Whether Auralcare demonstrated a probability of prevailing on its breach of contract claim | N/A (burden on Auralcare to show probability) | Auralcare asserted breach and sought damages (primarily attorneys’ fees) | Court held Auralcare failed to show probable success because it did not establish recoverable damages |
| Whether Auralcare’s other claims (implied covenant, trade secret, UCL) survive anti‑SLAPP given damages issue | N/A | Auralcare argued damages exist and flow from alleged misconduct | Court held those claims fail for lack of demonstrated damages and causation |
| Entitlement to attorney’s fees for prevailing on anti‑SLAPP motion | Manchester sought fees and costs under §425.16(c)(1) | Auralcare opposed striking claims | Court awarded Manchester fees and costs; Manchester may file a noticed motion quantifying them |
Key Cases Cited
- Newsham v. Lockheed Missiles & Space Co., 190 F.3d 963 (9th Cir.) (supports application of California anti‑SLAPP statute in federal court)
- Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832 (9th Cir.) (plaintiff must show probability of prevailing with admissible evidence)
- Navellier v. Sletten, 29 Cal.4th 82 (Cal.) (anti‑SLAPP requires plaintiff to show minimal merit/probability of success)
- Monster, LLC v. Superior Court, 12 Cal. App. 5th 1214 (Cal. Ct. App.) (distinguishes attorney’s fees as damages vs. fees incidental to cause of action)
- Mabee v. Nurseryland Garden Centers, Inc., 88 Cal. App. 3d 420 (Cal. Ct. App.) (discusses circumstances when attorney’s fees can be claimed as damages)
- Ingles v. Westwood One Broad. Servs., Inc., 129 Cal. App. 4th 1050 (Cal. Ct. App.) (describes anti‑SLAPP two‑step analysis)
- HMS Capital v. Lawyers Title Co., 118 Cal. App. 4th 204 (Cal. Ct. App.) (requires admissible evidence at anti‑SLAPP stage)
- Coretronic Corp. v. Cozen O’Connor, 192 Cal. App. 4th 1381 (Cal. Ct. App.) (courts do not assess the merits of claims in the first prong of anti‑SLAPP analysis)