Pacaso Inc. v. City of St. Helena, 3:21-cv-02493

Background

Pacaso operates a fractional co-ownership model for second homes (property-specific LLCs with up to eight co-owners), and owned/managed five homes in St. Helena.
St. Helena has a municipal timeshare prohibition (St. Helena Mun. Code § 17.112.130); City officials investigated whether fractional ownership arrangements like Pacaso’s implicate that ordinance.
After prior exchanges in 2020–early 2021 between Pacaso and city staff, City Attorney Ethan Walsh sent a February 10, 2021 letter to Pacaso asserting Pacaso likely operated as a timeshare and giving a deadline to respond.
On March 16, 2021 Walsh sent a letter to all local real-estate agents summarizing the City’s timeshare and short-term rental rules and warning transactions might create zoning violations; Pacaso alleges this chilled agents and buyers and sued for intentional interference with prospective economic advantage (fifth cause of action).
Defendants moved to strike that claim under California’s anti-SLAPP statute (§ 425.16); the court found the March 2021 letter was protected activity under § 425.16(e)(2), and that Walsh’s communication was privileged under Civil Code § 47(a) (official duty privilege), so Pacaso could not show a probability of prevailing; the court granted the anti-SLAPP motion and awarded defendants $20,126.50 in fees.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1) Whether the March 2021 letter is protected activity under § 425.16(e)(2)	The letter intimidated agents and was an unlawful interference, not protected political/legislative petitioning	The letter was a communication made in connection with an issue under consideration by the City (scope of timeshare/STR regulation) and thus is protected	Held: Protected under § 425.16(e)(2) — the letter related to an issue under review by a legislative/executive body
2) Whether Pacaso can show a probability of prevailing on its tortious-interference claim	The letter was operational/ministerial (not policy-making) and not privileged; Pacaso should be permitted to prove facts	Walsh sent the letter in discharge of official duties as city attorney and is protected by the official-duty privilege (Civil Code § 47(a))	Held: Pacaso cannot show probability of success because the March 2021 letter is privileged under § 47(a)
3) Whether limited discovery is warranted before deciding the anti-SLAPP motion	Pacaso sought discovery to test whether Walsh’s action was policymaking (to overcome § 47(a))	Defendants argued discovery unnecessary and the record showed Walsh acted within his duties	Held: Discovery denied as unnecessary and too general; privilege applied on the record
4) Entitlement to fees and costs under anti-SLAPP § 425.16(c)	Pacaso argued fee award premature because it might amend the complaint	Defendants sought mandatory fees for prevailing on the anti-SLAPP motion	Held: Fees awarded to defendants as the prevailing SLAPP movants; $20,126.50 granted (amendment would be futile)

Key Cases Cited

Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832 (9th Cir. 2001) (anti‑SLAPP purpose and early dismissal of meritless First Amendment cases)
Makaeff v. Trump Univ., LLC, 715 F.3d 254 (9th Cir. 2013) (anti‑SLAPP standards and burden shifting)
Baral v. Schnitt, 1 Cal.5th 376 (2016) (clarifying two‑step anti‑SLAPP framework and burdens)
City of Costa Mesa v. D’Alessio Invs., LLC, 214 Cal. App. 4th 358 (2013) (communications made in connection with issues under consideration by governmental bodies are protected under § 425.16(e)(2))
Maranatha Corr., LLC v. Dep’t of Corr. & Rehab., 158 Cal. App. 4th 1075 (2008) (public statements by government decisionmakers about matters under consideration qualify as protected activity)
Tutor‑Saliba Corp. v. Herrera, 136 Cal. App. 4th 604 (2006) (city attorney statements tied to policy‑making/official duties are privileged under Civ. Code § 47(a))
Kilgore v. Younger, 30 Cal.3d 770 (1982) (official‑duty privilege applies to high‑ranking public officers in discharge of official duties)
Rohde v. Wolf, 154 Cal. App. 4th 28 (2007) (statutory privilege is relevant to step two of anti‑SLAPP analysis)
Ketchum v. Moses, 24 Cal.4th 1122 (2001) (prevailing defendant on a SLAPP motion is entitled to mandatory attorney’s fees)