United States: Calif. Supreme Court Resolves Conflict In Anti-SLAPP Procedure, Provides Guidance To Litigants

Stacey H. Wang is a Partner in our Los Angeles office.

HIGHLIGHTS:

  • The California Supreme Court has resolved a long-standing conflict among lower appellate courts in how to treat so-called "mixed" causes of action involving allegations of protected and unprotected activity.
  • Defendants now may bring anti-SLAPP motions to strike distinct claims within a cause of action, even if the cause of action itself cannot be dismissed in its entirety. The early dismissal of claims may limit the scope and expense of discovery in the case.
  • Plaintiffs may no longer defeat anti-SLAPP motions through artful pleading of causes of action containing mixed allegations of protected and unprotected activity. Instead of relying on allegations of unprotected activity in opposing an anti-SLAPP motion, plaintiffs must demonstrate that each challenged claim that is based on protected activity is "legally sufficient" and "factually substantiated."
  • Courts now must scrutinize claims based on protected activity when adjudicating an anti-SLAPP motion challenging causes of action that implicate both protected and unprotected activity. Whereas courts previously could deny an anti-SLAPP motion by finding that a cause of action is supported by allegations of unprotected activity, courts now must set aside the unprotected activity in its initial analysis and address the merits relating to the protected activity head on.

The California Supreme Court resolved a decade-long conflict among lower appellate courts in its watershed opinion Baral v. Schnitt, Case No. S225090, 2016 WL 4074081, *1 (Cal. Sup. Ct. Aug. 1, 2016). Now, courts must allow a special motion to strike under California Civil Code Section 425.16(b)(1) against claims in cases in which allegations of protected and unprotected activity are combined. Defendants may bring motions to strike allegations pertaining to protected activity even if it will not eliminate the entire cause of action.

California's Anti-SLAPP Provision

Among California's protections of the right to petition is a statute that provides for expedited dismissals of meritless claims constituting "strategic lawsuits against public participation" (SLAPP) through so-called "anti-SLAPP" motions. Under California's anti-SLAPP statute,"[a] cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech . . . shall be subject to a special motion to strike, unless the court determines . . . there is a probability that the plaintiff will prevail on the claim." Cal. Code Civ. Proc. §425.16 (b)(1). In practice, the defendant files an early motion in the case, asserting that one or more causes of action brought against it are protected by the right to petition or of speech. Once this is established, the burden shifts to the plaintiff to demonstrate the merit of the causes of action by showing their probability of success.

As the Baral Court observed, a "cause of action" usually contains specific allegations upon which the plaintiff relies to establish a right to relief. "If the supporting allegations include conduct furthering the defendant's exercise of the constitutional rights of free speech or petition, the pleaded cause of action ? 'aris[es] from' protected activity, at least in part, and is subject to the special motion to strike authorized by section 425.16(b)(1)."

For much of the last decade, the lower courts split on how to handle causes of action supported by allegations of both protected and unprotected activity. One line of cases, followed by the lower courts in Baral, interpreted the statute to mean that courts may only dismiss an entire "cause of action," not just the allegation of protected activity. See, e.g., Mann v. Quality Old Time Service, Inc., 120 Cal. App. 4th 90 (2004). By that reasoning, where a cause of action includes both allegations of protected and unprotected activity, the motion must be denied because no cause of action can be stricken.

Other cases have more recently held that the allegations of protected activity may be stricken from a cause of action without affecting the allegations of unprotected activity. See, e.g., City of Colton v. Singletary, 206 Cal. App. 4th 751 (2012); Cho v. Chang, 219 Cal. App. 4th 521 (2013).

Baral's Claims and the Lower Court Rulings

The facts of the case are unremarkable, but presented the classic "mixed" cause of action in which protected and unprotected activity are alleged in support. The plaintiff, Robert Baral, owned and managed a company together with the defendant, David Schnitt. Baral's operative second amended complaint asserted breach of fiduciary duty, constructive fraud, negligent misrepresentation and declaratory relief. Among the allegations was the accusation that Schnitt hired and gave false information to an accounting firm in its audit and investigation of possible misappropriation of corporate assets by Baral. Baral contended that Schnitt controlled the audit and deliberately prevented Baral from participating in his own defense.

In response to Schnitt's anti-SLAPP motion to strike all references to the audit as protected communications in a pre-litigation investigation, the trial court "ruled that the motion to strike applied only to entire causes of action as pleaded in the complaint, or to the complaint as a whole, not to isolated allegations within causes of action..." The Court of Appeal affirmed. Although it found that the audit arose from protected activity, "anti-SLAPP relief was not available because no cause of action enumerated in the second amended complaint would be eliminated if the allegations of protected activity were stricken."  

The Baral Holding and Its Implications

The California Supreme Court reversed, stating that "it is not the general rule that a plaintiff may defeat an anti-SLAPP motion by establishing a probability of prevailing on any part of a pleaded cause of action. Rather, the plaintiff must make the requisite showing as to each challenged claim that is based on allegations of protected activity." In fact, the Court held that an anti-SLAPP motion may operate like a conventional motion to strike, i.e., it may be used to strike parts of a cause of action. In so holding, the Court disapproved of Mann.

The Court ended its opinion by providing some guidance to litigants. A defendant making an anti-SLAPP motion must first identify "all allegations of protected activity, and the claims for relief supported by them." At this stage, any allegations of unprotected activity are disregarded. If the relief sought is based on protected activity, then the burden shifts to the plaintiff to "demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated." If not, the allegations of protected activity are stricken from the complaint, unless they otherwise support another claim on which the plaintiff can show a probability of prevailing.

Baral likely will lead to an increase in anti-SLAPP motions against causes of action supported by both protected and unprotected activity. Even if an entire cause of action cannot be eliminated, the motion could provide an early opportunity to limit discovery in the case, which may result in cost savings in the long run. Moreover, the motion provides the added benefits of staying discovery pending adjudication of the motion while simultaneously forcing the plaintiff to substantiate its claims before the parties become fully engaged in discovery, as well as the availability of attorneys' fees if the motion prevails.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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