Mann v. Quality Old Time Service, Inc.Mann v. Quality Old Time Service, Inc.
In this case we hold that where a defendant has shown that a substantial part of a cause of action constitutes speech or petitioning activity protected by the anti-SLAPP (strategic lawsuit against public participation) statute (
We further conclude that subdivision (c) of section 425.17, excluding certain claims from the anti-SLAPP statute, does not apply where the portion of the cause of action possibly implicating section 425.17 is not protected by the anti-SLAPP statute.
FACTUAL AND PROCEDURAL BACKGROUND
Water Systems Support Inc. and its president, Richard Mann, Jr. (together, WSSI) sued Quality Old Time Service, Inc. (Quality), Kent Radford and Robert Caslava (collectively, defendants) and another
WSSI is in the business of maintaining industrial water systems. Pursuant to an oral agreement, WSSI hired Caslava and Radford as independent contractors to service some of its customers after they agreed to keep WSSI‘s customer information and work guidelines confidential. Caslava entered into a written contract with WSSI, but Radford refused to sign the contract, although he verbally agreed to abide by the same terms and conditions required of Caslava. These representations were false and defendants had no intention of honoring the terms of their written and oral agreements.
Defendants worked for WSSI for about three years, thereby acquiring confidential client, pricing and servicing information, and then terminated their contract with WSSI to form a competing company. Defendants solicited WSSI‘s customers by using its confidential information and making fraudulent and disparaging statements about WSSI, including that it used illegal and carcinogenic chemicals in its cleaning process. Defendants serviced WSSI‘s customers, claiming they still worked for WSSI, and then replaced WSSI‘s service stickers with their own stickers to mislead these customers.
Defendants engaged in numerous acts of harassment, including reporting WSSI to the National Response Cеnter and the National Terrorist Hotline, falsely claiming that WSSI was “pouring illegal carcinogenic chemicals into public drainage systems throughout Southern California.” These agencies then “flash faxed” this information to various regulatory and law enforcement agencies, causing WSSI to be investigated. WSSI also began receiving large volumes of unsolicited facsimiles, telephone calls, e-mails, magazine subscriptions, junk mail and pornography, all initiated by defendants.
The foregoing allegations form the factual basis underlying WSSI‘s 13 causes of action, including, in relevant part, claims for interference with contractual relatiоnship; intentional interference with prospective economic advantage; defamation; and trade libel. Defendants filed a special motion to strike these causes of action, arguing these claims were subject to section 425.16 because (1) their calls to the National Response Center and the National Terrorist Hotline were in furtherance of their constitutional right to petition the government (
In support of their motion, defendants submitted Caslava‘s declaration, which states: (A) he called the Environmental Protection Agency (EPA) to inform it that he believed WSSI had improperly disposed of water laced with D-Trol, a disinfectant, into storm drains and culverts and directly onto soil and paved surfaces; (B) the EPA suggested that he direct concerns he had regarding WSSI‘s transportation of D-Trol to the California Highway Patrol Hazardous Materials division (CHP HazMat); and (C) he followed this suggestion and during the next several weeks he received numerous telephone calls regarding his concerns from the EPA, the Water Quality Control Board and other public agencies.
In opposition to the motion, WSSI filed Mann‘s declaration, repeating the allegations of the complaint that defendants hаd made false reports about WSSI to the National Response Center and the National Terrorist Hotline. Mann denied knowing anything about defendants’ reports to the EPA and CHP HazMat until the instant motion, and denied using illegal chemicals or pouring them into city or
WSSI also filed a declaration from Paul Wingert, a WSSI client and referral source, stating that Caslava and Radford informed him that WSSI was using an illegal chemical and illegally dumping the sanitizing solution down storm drains. He further deсlared that Caslava and Radford never informed him that they had requested an investigation of these practices by the EPA or CHP HazMat, nor did they ask him to participate in any such investigation.
The trial court denied the motion to strike, finding that the challenged claims did not “arise from” an act in furtherance of defendants’ right of petition or free speech. Defendants appeal from this order. (
DISCUSSION
I
Anti-SLAPP Law
The purpose of the anti-SLAPP statute is to encourage participation in matters of public significance by allowing a court to promptly dismiss unmeritorious actions or claims that are brought to chill another‘s valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. (
To determine whether a defendant has met its initial burden, we consider the pleadings and any supporting and opposing affidavits stating facts upon which the liability is based. (
If the challenged causes of action arise from protected activity, the court “must then determine whether the plaintiff has demonstrated a probability of prevailing on the claim. [Citations.]” (Navellier, supra, 29 Cal.4th at p. 88, 124 Cal.Rptr.2d 530, 52 P.3d 703.) We apply the de novo standard of review to both prongs of the anti-SLAPP statute. (Rivero v. American Federation of State, County and Municipal Employees, AFL-CIO (2003) 105 Cal.App.4th 913, 919, 130 Cal.Rptr.2d 81 (Rivero).)
II
Analysis
A. DEFAMATION AND TRADE LIBEL CLAIMS
1. Constitutionally Protected Speech Under Section 425.16, Subdivision (e)(2)
Speech is protected if it is “made in connection with an issue under consideration or review” in an official proceeding (
Defamation and trade libel both require the intentional publication of a false and unprivileged statement of fact. (Smith v. Maldonado (1999) 72 Cal.App.4th 637, 645, 85 Cal.Rptr.2d 397; ComputerXpress, supra, 93 Cal.App.4th at p. 1010, 113 Cal.Rptr.2d 625.) WSSI alleged in these claims that defendants published false and nonprivileged communications that reflected negatively on its business reputation and caused it economic losses, incorporating by reference the factual allegations that defendants (1) told WSSI‘s customers that WSSI used illegal carcinogenic chemicals in its cleaning process, and (2) reported these alleged business practices to the National Response
In concluding that the complaint did not allege protected conduct, the trial court relied, in part, on statements in the complaint indicating these claims were based on defendants’ “non-privilegеd communications,” and indicated that defendants failed to meet their burden of showing any privilege applied. In response to the trial court‘s inquiry at oral argument as to whether it was suing defendants based on their reports to governmental agencies, WSSI (not surprisingly) stated its claims were not based on this allegation. Thereafter, contrary to its prior telephonic ruling, the trial court concluded that defendants’ statements to governmental agencies could not, as a matter of law, give rise to SLAPP claims because the conduct was privileged. As we explain below, the trial court‘s ruling and comments reveal a misunderstanding of the parties’ respective burdens in litigating a special motion to strike under the anti-SLAPP statute.
Although WSSI specified that its claims were based on “non-privileged communications,” the complaint was not limited as WSSI suggests. Stated differently, WSSI could have, but did not narrow the reach of these claims by specifically alleging that defendants defamed it by making false statements to its “customers.” Moreover, our high court has rejected the argument that the “validity” of the speech is a proper inquiry when determining whether the anti-SLAPP statute potentially applies. (Navellier, supra, 29 Cal.4th at p. 94, 124 Cal.Rptr.2d 530, 52 P.3d 703.) Here, the clear allegations of the complaint that defendants contactеd governmental agencies to solicit an investigation of WSSI‘s activities were sufficient to bring these claims within the ambit of section 425.16, and defendants were not required to also demonstrate that their activity was privileged as a matter of law. (Navellier, at pp. 94-95, 124 Cal.Rptr.2d 530, 52 P.3d 703.) The merits of WSSI‘s claims become relevant only at the second step of the anti-SLAPP analysis, when it must present evidence showing a reasonable probability of success on its claims, and defendants must present evidence defeating WSSI‘s evidence as a matter of law. (Ibid.; Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821, 123 Cal.Rptr.2d 19, 50 P.3d 733 (Wilson); Chavez v. Mendoza (2001) 94 Cal.App.4th 1083, 1089-1090, 114 Cal.Rptr.2d 825.)
We conclude the trial court erred in determining that WSSI‘s defamation and trade libel claims were not based on defendаnts’ constitutional petitioning activity as defined in the anti-SLAPP statute. Because these mixed claims fall within the purview of subdivision (e)(2) of section 425.16, there is no need to address whether these claims are also protected under subdivision (e)(4).
2. Likelihood of Success on the Merits
a. Governing Principles
A cause of action is subject to being stricken under the anti-SLAPP statute
In deciding this question the court again considers the pleadings and evidentiary submissions of both the plaintiff and the defendant (
The Legislature enacted section 425.16 to address problems created by meritless lawsuits brought to harass those who have exercised their First Amendment constitutional rights of free speеch and petition. (Church of Scientology v. Wollersheim, supra, 42 Cal.App.4th at p. 644, 49 Cal.Rptr.2d 620; see also
Stated differently, the anti-SLAPP procedure may not be used like a motion to strike under section 436, eliminating those parts of a cause of action that a plaintiff cannot substantiate. Rather, оnce a plaintiff shows a probability of prevailing on any part of its claim, the plaintiff has established that its cause of action has some merit and the entire cause of action stands. Thus, a court need not engage in the time-consuming task of determining whether the plaintiff can substantiate all theories presented within a single cause of action and need not parse the cause of action so as to leave only those portions it has determined have merit.
Moreover, a defendant has other options to eliminate theories within a cause of action that lack merit or cannot be proven. For example, a defendant can file a motion to strike a particular claim under section 436 concurrently with its anti-SLAPP motion, or it can move for summary adjudication of any distinct claim within a cause of action. (Edward Fineman Co. v. Superior Court (1998) 66 Cal.App.4th 1110, 1118, 78 Cal.Rptr.2d 478; Lilienthal & Fowler v. Superior Court (1993) 12 Cal.App.4th 1848, 1854, 16 Cal.Rptr.2d 458.)
b. Defamation
Slander is a form of defamation (
Applying the above standards to WSSI‘s evidence, we conclude that WSSI has established a prima facie claim for slander per se. Wingert‘s sworn declaration states that Caslava and Radford informed him that Mann and WSSI were using an illegal chemical and illegally dumping the solution down city and storm drains. However, he was not informed that they had requested an investigation of these practices with the EPA or CHP HazMat. Mann denied using illegal chemicals or pouring them into city or storm drains. This evidence, if proven, is sufficient to establish a prima facie case of slander per se because the alleged statements tend to injure WSSI in its business reputation. As a result, WSSI was not required to prove that it suffered any damages.
Defendants objected to this evidence on numerous grounds; however, the trial court overruled the objections to the extent it relied on the evidence and impliedly declined to rule upon the remaining objections. Defendants failed to raise these evidentiary issues in their opening brief and made only a passing reference to the existence of their evidentiary objections in a footnote in their reply brief. Issues not raised in an appellant‘s brief are deemed waived or abandoned. (Tan v. California Fed. Sav. & Loan Assn. (1983) 140 Cal.App.3d 800, 811, 189 Cal.Rptr. 775; see also People v. Stanley (1995) 10 Cal.4th 764, 793, 42 Cal.Rptr.2d 543, 897 P.2d 481.) In any event, we have examined the defendants’ objections to the relevant evidence and conclude they are without merit.
Defendants argue WSSI cannot prevail on this claim because complete defenses exist, namely, that their statements were: (1) absolutely privileged under
i. Absolute Privilege and Noerr-Pennington Doctrine
For the absolute privilege to apply, the challenged communication must be logically related to the proceeding. (Silberg v. Anderson (1990) 50 Cal.3d 205, 219-220, 266 Cal.Rptr. 638, 786 P.2d 365.) Here, defendants presented no evidence showing the allegedly defamatory comments made to WSSI‘s customers had any relationship to their reports to the government. In contrast, Wingert‘s declaration states that Caslava and Radford did not inform him that they had requested an official investigation regarding WSSI‘s activities and he did not particiрate or have an interest in any such investigation. This evidence was sufficient to show that the absolute privilege does not apply to defendants’ comments to WSSI‘s customers.
The Noerr-Pennington doctrine protects private parties from tort liability when they engage in the constitutional right to petition the government. (Ludwig v. Superior Court (1995) 37 Cal.App.4th 8, 21, 43 Cal.Rptr.2d 350.) This doctrine cannot apply to defendants’ statements to WSSI‘s customers because there is no evidence showing that the statements had any relationship to defendants’ petitioning activity.
ii. Conditional Privilege
The conditional privilege “is recognized where the communicator and the recipient have a common interest and the communication is of a kind reasonably calculated to protect or further that interest.” (Deaile v. General Telephone Co. of California (1974) 40 Cal.App.3d 841, 846, 115 Cal.Rptr. 582.) The “interest” must be something other than mere general or idle curiosity, such as where the parties to the communication share a contractual, business or similar relationship or the defendant is protecting his own pecuniary interest. (Rancho La Costa, Inc. v. Superior Court (1980) 106 Cal.App.3d 646, 664-665, 165 Cal.Rptr. 347.)
Defendants assert that the conditional privilege applies to all of their alleged defamatory statements because the governmental agenciеs and WSSI customers that they contacted were interested in their statements, and WSSI presented no evidence of malice. Based on the evidence presented, we conclude that the conditional privilege does not apply.
Defendants presented no evidence showing they had any type of relationship with WSSI‘s customers or that WSSI‘s customers
Because defendants failed to meet their the burden of establishing that their allegedly defamatory statements to WSSI‘s customers fell within the conditional privilege of
c. Trade Libel
To prevail on its trade libel claim, WSSI must present evidence showing it suffered some pecuniary loss. (Erlich v. Etner (1964) 224 Cal.App.2d 69, 73, 36 Cal.Rptr. 256.) It may not rely on a general decline in business arising from the falsehood, and must instead identify particular customers and transactions of which it was deprived as a result of the libel. (Id. at pp. 73-74, 36 Cal.Rptr. 256.) WSSI presented no evidence showing it suffered any pecuniary loss as a result of defendants’ actions and it may not rely on the unsupported allegations in its complaint. (Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 613-614, 129 Cal.Rptr.2d 546.) Thus, the motion to strike is properly granted as to the trade libel claim because WSSI made no showing of a probability that it would prevail on this cause of action.
B. INTERFERENCE CLAIMS
1. Constitutionally Protected Speech Under Section 425.16, Subdivision (e)(2)
A claim for interference with contractual relationship requirеs a valid contract between the plaintiff and a third party, defendant‘s knowledge of this contract, intentional acts by a defendant designed to induce the disruption of the contractual relationship and actual disruption of the contractual relationship resulting in damage. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55, 77 Cal.Rptr.2d 709, 960 P.2d 513.) A claim for intentional interference with prospective economic advantage includes the same elements, but involves an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff and the additional element that the defendant‘s action must have been wrongful apart from the interference itself. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153-1154, 131 Cal.Rptr.2d 29, 63 P.3d 937.)
WSSI alleged that defendants’ actions induced existing and potential customers to disrupt contractual or potential future business relationships with it, thereby causing it damages. These claims also incorporated by reference the allegations that defendants disparaged WSSI and solicited its customers. These allegations form the factual basis of defendants’ alleged liability on the interference claims. While these claims also incorporated by reference WSSI‘s allegation that defendants made false claims about its business practices to the National Response Center and the National Terrorist Hotline, this allegation cannot form the basis of defendants’ liability on these interference claims because WSSI did not allege, nor did the parties present any evidence showing, that
2. Constitutionally Protected Speech Under Section 425.16, Subdivision (e)(4)
Defendants argue that their statements to governmental agencies concerning WSSI‘s unlawful dumping of toxic chemicals and their subsequent alleged statements to plaintiffs’ customers about this activity were matters of “public interest” within the meaning of section 425.16, subdivision (e)(4). However, they presented no argument or evidence that WSSI is an entity in the public eye. Although pollution can affect large numbers of people and is a matter of general public interest, the focus of the anti-SLAPP statute must be on the specific nature of the speech rather than on generalities that might be abstracted from it. (Consumer Justice Center v. Trimedica International, Inc. (2003) 107 Cal.App.4th 595, 601, 132 Cal.Rptr.2d 191 (Consumer Justice).) In Consumer Justice, the court held that advertising claims made on behalf of an herbal supplement promising breast enlargement did not involve a public issue or an issue of public interest because the speech was not about “herbal supplements in general,” but about “the specific properties and efficacy of a particular product.” (Id. at pp. 600-603, 132 Cal.Rptr.2d 191.)
Similarly here, defendants’ alleged statements were not about pollution or potential public health and safety issues in general, but about WSSI‘s specific business practices. “If we were to accept [defendants‘] argument that we should examine the nature of the speech in terms of generalities instead of specifics, then nearly any claim could be sufficiently abstracted to fall within the anti-SLAPP statute.” (Consumer Justice, supra, 107 Cal.App.4th p. 601, 132 Cal.Rptr.2d 191.) We conclude that defendants’ speech was not made “in connection with a public issue or an issue of public interest” as that phrase is used in section 425.16, subdivision (e)(4). Thus, the trial court properly denied the special motion to strike thе two interference claims because the gravamen of these claims “did not consist of any act in furtherance of anyone‘s right of petition or free speech.” (Jespersen v. Zubiate-Beauchamp (2003) 114 Cal.App.4th 624, 631, 7 Cal.Rptr.3d 715.)
C. APPLICABILITY OF SECTION 425.17
The Legislature enacted section 425.17, effective January 1, 2004, to address
Section 425.17 expressly excludes certain types of claims from the anti-SLAPP special motion to strike procedure and, as relevant to this action, provides that the anti-SLAPP statute does not apply to claims brought against a person primarily engaged in the business of selling goods or services, arising from any statement or conduct by that person if both of the following conditions exist: (1) “[t]he statement or conduct consists of representations of fact about that person‘s or a business competitor‘s business operations, goods, or services, that is made for the purpose of obtaining approval for, promoting, or securing... commercial transactions in, the person‘s goods or services, ...“; and (2) “[t]he intended audience is an actual оr potential buyer or customer, or a person likely to repeat the statement to, or otherwise influence, an actual or potential buyer or customer....” (
WSSI contends subdivision (c) of section 425.17 provides an independent basis for upholding the trial court‘s denial of the motion because defendants disseminated the alleged false statements regarding WSSI‘s business practices to WSSI clients for the purpose of gaining these clients for their competing business. However, the function of section 425.17 is to exclude certain claims that would otherwise fall within the reach of the anti-SLAPP statute. (
D. CONCLUSION
In summary, we conclude that the anti-SLAPP statute does not apply to WSSI‘s interference causes of action, but that it potentially applied to WSSI‘s defamation and trade libel causes of action, requiring WSSI to present evidence showing a probability of prevailing on these causes of action. WSSI presented such evidence for its defamation cause of action, but it failed to do so for its trade libel cause of actiоn, and hence the trade libel cause of action must be stricken.
Because we announce a new rule of law regarding the proper analysis of the second prong of the anti-SLAPP procedure, defendants shall have the opportunity to file a motion to strike any claim they perceive lacks merit under section 436 upon remand.
DISPOSITION
The order denying the motion to strike is reversed insofar as it denied defendants’ special motion to strike the trade libel cause of action; otherwise, the order is affirmed. The matter is remanded to the superior court with directions to enter a new order consistent herewith and for further proceedings consistent with this opinion. Defendants are awarded their costs on appeal.
WE CONCUR: McCONNELL, P.J., a