Healthsmart Pacific, Inc. v. Kabateck
7 Cal. App. 5th 416
| Cal. Ct. App. | 2016Background
- Michael Drobot owned Healthsmart Pacific, operator of Pacific Hospital; in Feb. 2014 he pled guilty in federal court to conspiracy and health-care kickback offenses involving inflated billing and bribery schemes.
- In July 2014 plaintiffs’ counsel (Kabateck, Hutchinson and firms) filed the Cavalieri complaint alleging, among other things, that plaintiffs and others used counterfeit/non‑FDA spinal hardware, paid kickbacks (including prostitutes) and defrauded insurers.
- Media reports (Fox 11 TV and a CBS radio program) featured interviews with Kabateck and Hutchinson summarizing allegations in the Cavalieri complaint (counterfeit screws, kickbacks, legislative bribery).
- Drobot and Healthsmart sued the attorney-defendants for defamation and related claims based on those media statements; defendants moved to strike under California’s anti‑SLAPP statute (Code Civ. Proc. § 425.16).
- The trial court granted the anti‑SLAPP motion and awarded defendants attorneys’ fees; plaintiffs appealed.
- The Court of Appeal affirmed, holding the statements were protected activity and were shielded by the fair‑report privilege (Civ. Code § 47(d)), so plaintiffs failed to show a probability of prevailing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the challenged media statements are protected activity under the anti‑SLAPP statute | Statements were not on a matter of public interest and thus not protected | Statements were made in furtherance of free speech on issues of public interest (healthcare fraud, public safety, legislative bribery) | Protected activity: yes — the statements concerned issues of public interest |
| Whether the fair‑report privilege covers defendants’ communications to the media about the filed complaint | Privilege does not apply because the statements went beyond allegations in the complaint and asserted facts (e.g., counterfeit hardware used; prostitutes supplied) | Communications to public journals accurately conveyed allegations in the complaint and thus are fair and true reports of a judicial proceeding | Privilege applies: statements, read in context, reasonably conveyed allegations in the complaint and were fair and true reports, so absolute privilege attached |
| Whether reporting on initial pleadings (prior to other judicial action) is outside the fair‑report privilege | Relying on out‑of‑state authority and Burrill, plaintiffs argued initial pleadings are not privileged absent further judicial action | California precedent treats filed complaints/pleadings as part of a judicial proceeding; fair‑report privilege extends to reports of pleadings | Court follows California line: reports of filed complaints are within the fair‑report privilege |
| Whether plaintiffs showed a probability of prevailing (anti‑SLAPP second prong) | Plaintiffs argued defendants’ statements were false and defamatory and not privileged, so claims have at least minimal merit | Because the fair‑report privilege applies, the claims lack even minimal merit and must be struck | Plaintiffs failed to show probability of success; anti‑SLAPP motion properly granted; attorneys’ fees affirmed |
Key Cases Cited
- Flatley v. Mauro, 39 Cal.4th 299 (Cal. 2006) (anti‑SLAPP purpose and construction)
- Taus v. Loftus, 40 Cal.4th 683 (Cal. 2007) (two‑step anti‑SLAPP framework)
- Jarrow Formulas, Inc. v. LaMarche, 31 Cal.4th 728 (Cal. 2003) (plaintiff’s burden to show probability of prevailing)
- Baral v. Schnitt, 1 Cal.5th 376 (Cal. 2016) (standard for evaluating claims in anti‑SLAPP context)
- J‑M Mfg. Co., Inc. v. Phillips & Cohen LLP, 247 Cal.App.4th 87 (Cal. Ct. App.) (fair‑report privilege protects intermediaries who communicate pleadings to press)
- Rusheen v. Cohen, 37 Cal.4th 1048 (Cal. 2006) (privileged conduct negates probability of prevailing on SLAPP)
- McClatchy Newspapers, Inc. v. Superior Court, 189 Cal.App.3d 961 (Cal. Ct. App.) (distinction between court deciding privileged occasion and jury deciding fairness of report)
- Kurata v. Los Angeles News Pub. Co., 4 Cal.App.2d 224 (Cal. Ct. App. 1935) (filed complaint as judicial proceeding)
- Handelsman v. San Francisco Chronicle, 11 Cal.App.3d 381 (Cal. Ct. App. 1970) (reports about complaints are privileged)
- Kilgore v. Younger, 30 Cal.3d 770 (Cal. 1982) (assessing natural and probable effect of report)
- Jennings v. Telegram‑Tribune Co., 164 Cal.App.3d 119 (Cal. Ct. App. 1985) (gist/sting comparison for privilege)
- Carver v. Bonds, 135 Cal.App.4th 328 (Cal. Ct. App. 2005) (newsworthy physician conduct as matter of public interest)