Xera Health v. Scheele CA4/1
D077600
| Cal. Ct. App. | Jul 15, 2021Background
- Plaintiff-in-intervention Xera and intervener VEBA contracted to buy and run a weight-loss program using a product developed by Dr. George Scheele; disputes arose over licensing, consulting, and ~9,750 unused product containers.
- Scheele (and his company NovaLife) sued Xera and others; VEBA later interpleaded the remaining product and filed a complaint in intervention.
- Scheele filed a cross-complaint in intervention against VEBA and McGregor alleging three core claims (pleaded repeatedly across 11 causes of action): fraudulent inducement (2017), defamation (allegedly in early 2018 to the San Diego medical community), and abuse of process (alleging defendants used Xera’s suit to steal patents).
- VEBA moved under Cal. Code Civ. Proc. § 425.16 (anti-SLAPP) to strike seven of the eleven causes, relying in part on a declaration from McGregor to recharacterize Scheele’s allegations as litigation-related statements. The trial court granted the motion and struck those causes.
- The Court of Appeal reversed in part: it held defendants may not use their own declarations to rewrite the complaint for prong one; defamation and fraud claims do not arise from protected activity as pleaded and thus should not have been stricken; the abuse-of-process claim was properly struck for failure to show a probability of prevailing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the defamation claim "arises from" protected activity (prong one) | Scheele: defamation claims are based on McGregor’s extrajudicial statements to the San Diego medical community in early 2018 (pre-litigation) | VEBA: statements are litigation-related (in VEBA’s complaint and related communications); McGregor's declaration shows the claim rests on pleadings/protected activity | Reversed: prong one must be determined from the pleading; VEBA failed to show the defamation claim arises from protected activity; trial court erred in relying on defendant’s declaration to redefine the claim |
| Whether the fraud (fraudulent inducement) claim arises from protected activity | Scheele: fraud based on prelitigation 2017 false promises inducing license; not protected | VEBA: treated other counts as based on litigation-related activity; sought to characterize claims as stemming from litigation statements | Reversed: fraud claim does not arise from protected activity and should not have been stricken |
| Whether the abuse-of-process claim survives prong two (probability of prevailing) | Scheele: alleged ulterior motive to use Xera’s suit to take patents; submits declaration/evidence | VEBA: filing and prosecution of suit are protected; plaintiff must show a probability of prevailing; attacked Scheele’s evidence and had many objections sustained | Affirmed as to this claim: court properly struck abuse of process because Scheele failed to present admissible evidence showing probability of prevailing |
| Proper role of defendant declarations at prong one | Scheele: complaint controls; defendants cannot use their declarations to rewrite the pleading’s factual basis | VEBA: court may consider supporting affidavits under §425.16(b)(2) and the declaration shows the statements were litigation-related | Held: declarations may be considered to expose artful pleading but cannot be used to hijack or redefine what plaintiff actually pleaded; trial court erred in relying on McGregor’s declaration to convert the pleaded claims into protected activity |
Key Cases Cited
- Baral v. Schnitt, 1 Cal.5th 376 (clarifies distinction between "cause of action" and "claim" for anti-SLAPP analysis)
- Park v. Board of Trustees of California State Univ., 2 Cal.5th 1057 (two-step anti-SLAPP framework; what actions supply claim elements)
- Central Valley Hospitalists v. Dignity Health, 19 Cal.App.5th 203 (a defendant cannot use its own declarations to redefine plaintiff’s pleaded claim)
- Bel Air Internet, LLC v. Morales, 20 Cal.App.5th 924 (limits defendant’s ability to recast pleadings via extrinsic evidence; complaint defines contours)
- Dziubla v. Piazza II, 59 Cal.App.5th 140 (discussion of anti-SLAPP procedure and "probability" standard)
- Medical Marijuana, Inc. v. ProjectCBD.com, 6 Cal.App.5th 602 (court will not rewrite a complaint based on parties’ post-hoc characterizations)
- Navellier v. Sletten, 29 Cal.4th 82 (pleadings and supporting affidavits may be considered but within limits)