San Diego Fire Victims Lawyers v.
Community Assistance Recovery
Filed 5/23/13 San Diego Fire Victims Lawyers v. Community Assistance Recovery
CA4/1
Reposted to provide correct version and file date
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
SAN DIEGO
FIRE VICTIMS LAWYERS et al.,
Plaintiffs and Respondents,
v.
COMMUNITY ASSISTANCE RECOVERY,
INC., et al.,
Defendants and Appellants.
D061182
(Super. Ct.
No. 37-2011-91440-CU-BT-CTL)
APPEAL from
an order of the Superior Court
of
County, Timothy B. Taylor, Judge. Reversed.
Connors
& Associates, G. Patrick Connors III, for Defendants and Appellants.
Dabney
Finch for Plaintiffs and Respondents.
Community
Assisting Recovery, Inc. (CARe)
name="_ftnref1" title="">[1]
and George Kehrer appeal from the trial court's order denying their special
action is a strategic lawsuit against public participation under Code of Civil
Procedure section 425.16 (commonly known as the anti-SLAPP statute, hereafter
section 425.16). As we will explain, we
conclude that the trial court erred in denying the special motion to strike,
and we therefore reverse.
I
FACTUAL AND
PROCEDURAL BACKGROUND
CARe is a
nonprofit corporation that provides assistance to disaster victims. Kehrer is CARe's executive director. According to Kehrer, "CARe's mission is
to help rebuild disaster damaged communities by providing the most up-to-date
information regarding the dynamic recovery issues as determined by the needs of
the impacted area. Through free classes
at schools, churches and similar donated meeting spaces, and continual email
and post card updates, CARe responds to the immediate information needs of
residents who have requested its information at CARe meetings or through the
CARe website."
CARe
provided assistance to victims of the 2007 wildfires in San
Diego County,
obtaining funding from local foundations to support its work. The 2007 San Diego wildfires gave rise to
litigation against San Diego Gas & Electric Company (SDG&E), with numerous
lawyers involved in the litigation on behalf of different fire victim clients
(the SDG&E Litigation).
One of the
group of lawyers involved in the SDG&E Litigation was comprised of Terry
Singleton, Tom Tosdal and Mitchell S. Wagner, who, in different combinations,
did business under the name San Diego Fire Victims Lawyers (SDFVL) or San Diego
Fire Lawyers (SDFL).
name="_ftnref2" title="">[2] Another law firm involved in the SDG&E
Litigation was Engstrom, Lipscomb & Lack, including attorney Brian
Heffernan.
As part of
its communications with victims of the 2007 San Diego
wildfires, CARe held informational meetings, which included presentations by
attorneys involved in the SDG&E Litigation, and sent out newsletters
containing information about the litigation.
In May 2011,
SDFVL, SDFL, Singleton, Tosdal and Wagner, along with law firms Hurst &
Hurst and the Law Offices of Robert Jackson (collectively, Plaintiffs) filed
suit against CARe and Kehrer under the unfair competition law (UCL) pursuant to
Business and Professions Code section 17200 et seq. The operative first amended complaint (the
complaint) alleges that, in the guise of providing the 2007 San
Diego wildfire victims with information about the
SDG&E Litigation, CARe and Kehrer were actually soliciting business for
Heffernan in exchange for a referral fee or payment. Specifically, the complaint alleges that
Kehrer would conduct "public and private meetings in which [he] would
endorse[] and recommend[] to those in attendance that they hire Attorney
Heffernan or his Law Firm of Engstrom, Lipscomb & Lack," and that CARe
sent written communications to 2007 San Diego wildfire victims recommending
Heffernan's services and setting forth testimonials from satisfied clients of
Heffernan. The written communications at
issue are attached as exhibits to the complaint.
One exhibit
to the complaint is a postcard mailed to victims of the 2007 San
Diego wildfires, with the heading "SDG&E
Lawsuit Update, Year 4." The
postcard stated:
"As we head
into the 4th year of the SDG&E lawsuit, CARe has seen progress. While two large groups represented by
attorney Brian Heffernan have received sizable awards, many of you are still in
litigation with insufficient funds to rebuild your home and lives. []Large Guejito, Witch Creek and Rice Awards
were recently received by a second group of fire victims represented by
attorney Brian Heffernan. Many reported
they had only joined the lawsuit a few months ago and were relieved with how
quickly and effortlessly their claims won awards — with no depositions, or
appearances at mediation or trial AND at minimal costs! []About 350 cases are completed — the
majority of these cases are the groups with attorney Brian Heffernan. []An SDG&E award significantly changes
lives! While some plaintiffs with other
attorneys have sporadically settled, homeowners in the large groups are the
only fire victims CARe is aware to consistently achieve significant awards from
SDG&E. Getting your SDG&E claim
fully resolved — seamlessly and with minimal costs — is the
occurring 'behind the scenes.' "
(Some capitalization altered.)
The
remaining space on the back of the postcard — as well as some of the space on
the front of the card — contained comments from fire victims praising the
positive litigation results they had obtained.
Approximately half of the comments mentioned Heffernan by name:
" 'The best decision I ever made was to
switch attorneys. A few months ago,
Brian Heffernan got me more than double the amount of what my former attorneys
said I could possibly get.' "
" 'My settlement is remarkable — It changed
our family's lives. Mr. Heffernan's
costs were almost nothing, far less than 1%.' "
" 'I appreciate SDG&E's fantastic
settlement and Brian Heffernan's high level of professionalism.' "
" 'The SDG&E award saved my life! And it
only took a few months after I changed attorneys to Mr. Heffernan and he
got me a great settlement.' "
Another
exhibit to the complaint is a page-long document prepared by CARe, with the title
"SDG&E Litigation Update[:] What is Really Going on with the SDG&E Litigation?" The document, which the complaint alleges was
distributed electronically, set forth statistics about the lawsuits being
handled by the lawyers involved in the SDG&E Litigation as of April and May
2011. Among other things, the document
showed that out of a total 3,165 cases, 820 were closed and 2,345 were
open. It set forth statistics, derived
from SDFVL's court filings, showing that as of April 4, 2011, 190 of SDFVL's cases had been mediated but
not settled, and 396 of SDFVL's cases had not been submitted to mediation. The document contained a chart showing the
percentage of cases completed for the different lawyers involved in the SDG&E
Litigation. According to the chart,
Heffernan was the only attorney who had completed 100 percent of his cases (368
out of 368). SDFVL had completed 34
percent of their 755 cases. In addition,
the document stated that ". . . Heffernan clients are
reporting substantial case resolutions that reflect sizable compensation for
the SDG&E litigation."
A final
exhibit to the complaint is an e‑mail that Kehrer sent to a single
individual, identified only as "Merilee," apparently as a reply to
her "update on the Poway 2007 fire recovery." In the course of the e‑mail, Kehrer
mentioned that Heffernan is "the attorney who has received accolades from
everyone who has contacted CARe," and he provided Heffernan's contact
information, explaining that "Heffernan is the ONLY attorney who
deliberately avoided the mediation process and developed a procedure that got
people substantial money quickly and without the mediation expenses and
headaches."
The
complaint contains three causes of action, each of which alleges unfair
business practices under Business and Professions Code section 17200 based on
different theories.
The first
cause of action alleges a violation of the UCL based on "false,
misleading, or deceptive advertising."
Specifically, the first cause of action alleges that the written
communications attached as exhibits to the complaint constituted false and
deceptive advertising on behalf of Heffernan that violated certain statutory
provisions governing legal advertising (Bus. & Prof. Code, § 6157 et
seq.). Those provisions include that an
advertisement (1) "shall disclose any business relationship, past or
present, between the member [of the State Bar] and the person paying for the
advertisement" (id.,
§ 6157.3); (2) shall not contain a "guarantee or warranty regarding
the outcome of a legal matter as a result of representation by the member"
(id., § 6157.2, subd. (a));
(3) shall not state "that the member featured in the advertisement
can generally obtain immediate cash or quick settlements" (
(4) if made by electronic media, must as a whole "not be false,
misleading, or deceptive," must be "factually substantiated" and
must contain certain disclaimers when the advertisement portrays a result in a
particular case or cases (id.,
§§ 6158, 6158.3).
The second
cause of action arises under the UCL based on the theory that CARe and Kehrer
were acting as a lawyer referral service without complying with the legal
requirements for such a service in violation of Business and Professions Code
section 6155.
title="">[3] As alleged in the second cause of action,
CARe and Kehrer acted as a lawyer referral service because they made the
positive statements about Heffernan identified in the complaint in exchange for
payment from Heffernan.
The
complaint's third cause of action alleges a violation of the UCL on the basis
that CARe and Kehrer unlawfully solicited business for Heffernan in violation
of Business and Professions Code sections 6151, subdivision (a) through
6154, subdivision (b).
name="_ftnref4" title="">[4]
CARe and
Kehrer filed a special motion to strike the complaint under the anti-SLAPP
statute. (§ 425.16.) The special motion to strike argued that the
complaint arose from activity protected by the anti-SLAPP statute because it
arose from "any written or oral statements or writing made in connection
with an issue under consideration or review by a . . . judicial
body" (Code Civ. Proc., § 425.16,
subd. (e)(2)) in that each cause of action was based on CARe and Kehrer's
statements about the performance of counsel in the pending SDG&E
Litigation. The trial court denied the
motion. CARe and Kehrer filed a
II.
DISCUSSION
A. Standard of Review
"Review
of an order granting or denying a motion to strike under section 425.16 is de
novo. [Citation.] We consider 'the pleadings, and supporting
and opposing affidavits . . . upon which the liability or defense is
based.' (§ 425.16,
subd. (b)(2).) However, we neither
'weigh credibility [nor] compare the weight of the evidence. Rather, [we] accept as true the evidence
favorable to the plaintiff [citation] and evaluate the defendant's evidence
only to determine if it has defeated that submitted by the plaintiff as a
matter of law.' " (Soukup
v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3.)
B. Applicable Legal
Standards
The
anti-SLAPP statute provides: "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 under the United
States Constitution or the California Constitution in connection with a public
issue shall be subject to a special motion to strike, unless the court
determines that the plaintiff has established that there is a probability that
the plaintiff will prevail on the claim."
(§ 425.16, subd. (b)(1).)
"The analysis of an anti-SLAPP motion thus involves two steps. 'First, the court decides whether the
defendant has made a threshold showing that the challenged cause of action is one
"arising from" protected activity.
(§ 425.16, subd. (b)(1).)
If the court finds such a showing has been made, it then must consider
whether the plaintiff has demonstrated a probability of prevailing on the
claim.' [Citation.] 'Only a cause of action that satisfies both
prongs of the anti-SLAPP statute—i.e., that arises from protected speech or
petitioning and lacks even minimal merit—is a SLAPP, subject to being
stricken under the statute.' " (Oasis
West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 819-820 (
Section
425.16, subdivision (e) specifies the type of activity protected by the
anti-SLAPP statute. As relevant here, an
" 'act in
furtherance of a person's right of petition or free speech . . . in
connection with a public issue' includes:
. . . (2) any
written or oral statement or writing made in connection with an issue under
consideration or review by a legislative, executive, or judicial body, or any
other official proceeding authorized by law." (Ibid.) Based on this provision, " 'statements,
writings and pleadings in connection with civil litigation are covered by the
anti-SLAPP statute, and that statute does not require any showing that the
litigated matter concerns a matter of public interest.' " (Neville
v. Chudacoff (2008) 160 Cal.App.4th 1255, 1261 (Neville).)
"[T]he
statutory phrase 'cause of action . . . arising from' means
. . . that the defendant's act underlying the plaintiff's cause of
action must itself have been an act in furtherance of the right of petition
or free speech." (
consideration is whether the cause of action is based on the defendant's
protected free speech or petitioning activity.' " (Episcopal
Church Cases (2009) 45 Cal.4th 467, 477.)
We inquire whether the activity giving rise to the complaint constitutes
" '[t]he
allegedly wrongful and injury-producing conduct . . . that provides
the foundation for the claim[s]' "
asserted in the lawsuit. (
(2009) 177 Cal.App.4th 1264, 1272.)
C.
Turning to
the first prong of the anti-SLAPP analysis, CARe and Kehrer argue that because
the complaint is based on statements about the performance of counsel in the
SDG&E Litigation, the complaint arises from "any written or oral
statement or writing made in connection with an issue under consideration or
review by a legislative, executive, or judicial body, or any other official
proceeding authorized by law."
(§ 425.16, subd. (e)(2).)
"[A] statement is 'in connection
with' litigation under section 425.16, subdivision (e)(2) if it relates to the
substantive issues in the litigation and is directed to persons having some
interest in the litigation," even though it is not made in the court
proceeding itself. (Neville, supra, 160
Cal.App.4th at p. 1266.) Thus, for
example as relevant here, a litigation update sent by a homeowner's association
to inform members of the association of pending litigation was a statement made
in connection with a judicial proceeding within the meaning of the anti-SLAPP
statute. (Healy v. Tuscany Hills
Landscape & Recreation Corp. (2006) 137 Cal.App.4th 1, 5-6.) Similarly, a company's e‑mail to a small
group of customers, informing them of the court's rulings and favorable
imposition of sanctions in litigation against the company's competitor fell
within the scope of protected activity in section 425.16, subdivision (e)(2)
because it was " 'in connection with an issue under consideration or review
by a . . . judicial body' " in connection with
litigation. (Contemporary Services Corp. v. Staff Pro Inc. (2007) 152
Cal.App.4th 1043, 1050-1051, 1055-1056 (Staff Pro).) Equally relevant here, a complaint alleging improper
solicitation of another attorney's client in a pending litigation by promising
a more favorable outcome in the litigation is subject to the protections of the
anti-SLAPP statute because such claims arise from statements made in connection
with issues before a judicial body. (Taheri
Law Group v. Evans (2008) 160 Cal.App.4th 482, 489 (Taheri).) Specifically, the
complaint in Taheri arose from
activity protected under the anti-SLAPP statute in that it alleged that the
defendant improperly solicited the plaintiff's client by "promising
'unobtainable and ethically improper litigation
in a pending litigation. (
that because the complaint's claims arose "directly from communications
between [the soliciting attorney and the potential client] about the
client]," it was "difficult to conjure a clearer scenario than the
case before us of a lawsuit arising from protected activity." (Id.
at p. 489.)
Here, the
claims against CARe and Kehrer fall squarely within this line of case law. First,
like the attempted client solicitation in Taheri, supra, 160
Cal.App.4th 482, the complaint's claims arise out of statements that were
allegedly made to solicit clients who were already represented by other lawyers
in a pending litigation by making promises about a more favorable outcome in
the litigation and criticizing current counsel's performance. Second, like the litigation updates in Healy, supra, 137 Cal.App.4th 1, and
1043, the complaint bases its claims against CARe and Kehrer on statements
providing updates about pending lawsuits, namely the SDG&E Litigation, and,
as required, those statements — made to the fire victims — were directed at "persons
having some interest in the litigation" (Neville, supra, 160
Cal.App.4th at p. 1266). The complaint
in the instant action therefore arises from protected activity because it
arises from statements "made in connection with an issue under
consideration or review by a . . . judicial body." (§ 425.16, subd. (e)(2).)
Plaintiffs
present two alternative arguments as to why the complaint does not arise from
protected activity. As we will explain,
neither has merit.
First,
Plaintiffs argue that although the complaint identifies CARe and Kehrer's
statements about the SDG&E Litigation, the complaint does not
To meet the
requirement that a cause of action arise from protected activity, "the
defendant's act underlying the plaintiff's cause of action must itself
have been an act in furtherance of the right of petition or free
speech." (Cotati, supra,
focus is not the form of the plaintiff's cause of action but, rather, the
defendant's activity that gives rise to his or her asserted liability —
and whether that activity constitutes protected speech or
petitioning." (Navellier v.
Sletten (2002) 29 Cal.4th 82, 92.)
Here, the exclusive activity identified as the basis for the complaint's
three causes is CARe and Kehrer's acts of making statements praising
Heffernan's result in the SDG&E Litigation.
As we have explained, that activity falls squarely under the anti-SLAPP
statute because it meets the definition of protected activity as set forth in
section 425.16, subdivision (e)(2).
Plaintiffs
attempt to recharacterize the
activity on which the complaint is based, contending that it is based
about Heffernan but instead on the
act of "funneling clients away from one attorney group to another law
firm." The trial court took a
similar view of the case, stating in its ruling that the gravamen of the
complaint was "an alleged scheme to steal clients away from
[P]laintiffs," rather than "defendants' speech."
This view
of the case improperly confuses the activity
on which the complaint is based (making statements about the SDG&E
Litigation favorable to Heffernan) with the alleged motive for that activity (stealing clients on behalf of
Heffernan). Case law is clear that an
analysis under the anti-SLAPP statute focuses on the activity itself, not the
motive. "[C]auses of action do not
arise from motives; they arise from acts."
(Wallace v. McCubbin (2011) 196 Cal.App.4th 1169, 1186.) The anti-SLAPP statute "applies to
claims 'based on' or 'arising from' statements or writings made in connection
with protected speech or petitioning activities, regardless of any motive the
defendant may have had in undertaking its activities, or the motive the
plaintiff may be ascribing to the defendant's activities." (Tuszynska v. Cunningham (2011) 199
Cal.App.4th 257, 269.) Thus, "the
defendant's purported motive in undertaking speech and petitioning activities
is irrelevant in determining whether the plaintiff's cause of action is based
on those activities." (
action are based on the statements that CARe and Kehrer made about the
performance of the attorneys in the SDG&E Litigation. It is irrelevant to our analysis whether
those statements were made as part of a scheme to steal clients.
Second,
Plaintiffs argue that the activity forming the basis of the complaint is not
protected by the anti-SLAPP statute because it is "illegal." Specifically, Plaintiffs point to case law
establishing that only a valid
exercise of constitutional rights are protected by the anti-SLAPP statute,
which means that illegal acts are excluded from protection. (Flatley
v. Mauro (2006) 39 Cal.4th 299, 321 (Flatley)
["the basic purpose of the anti-SLAPP statute [is] to prevent the chilling
of 'the valid exercise of the
constitutional rights of freedom of speech and petition for the redress of
grievances' 'through abuse of the judicial process,' "
italics added].) Plaintiffs argue that
because they have alleged that CARe
and Kehrer acted illegally by purportedly soliciting clients for Heffernan, the
anti-SLAPP statute does not apply. We
disagree.
Illegal
activity will bar the protection of the anti-SLAPP statute only when "the
defendant concedes, or
that the assertedly protected speech or petition activity was illegal as a
matter of law." (
conduct illegal as a matter of law—either through defendant's
evidence—is not the same showing as
the plaintiff's second prong showing of probability of prevailing." (Ibid.,
italics added.)
The exception
to the anti-SLAPP statute for activity illegal as a matter of law does not
apply here because the complaint does nothing more than allege improper activity by CARe and Kehrer, and the facts are
heavily disputed. As we have explained,
the illegality exception applies only when the facts that would establish
improper activity are uncontroverted
or illegal activity is conceded. (Flatley,
supra, 39 Cal.4th at
p. 320.) CARe and Kehrer strongly
deny that they had any financial relationship with Heffernan or were acting to
solicit business on his behalf, and they have submitted evidence, which if
credited by the jury, would support a finding that that none of CARe's income
came from Heffernan. This is simply not
a case where the defendant has engaged in conduct that is either concededly or
indisputably illegal as matter of law.
On the contrary, the legality of CARe and Kehrer's conduct is an issue
that is in serious dispute.
In sum,
CARe and Kehrer have met their burden to make a threshold showing that each of
the causes of action in the complaint arises from activity protected under the
anti-SLAPP statute, and they have accordingly satisfied their burden on the
first prong of the anti-SLAPP analysis.
D. On the Second Prong of
the Anti-SLAPP Analysis, Plaintiffs
Did Not Demonstrate a
Probability of Prevailing
Having
determined that CARe and Kehrer satisfied their burden on the first prong on
the anti-SLAPP analysis, we now turn to the second prong.
"To
satisfy the second prong, 'a plaintiff responding to an anti-SLAPP motion must
" 'state[] and substantiate[] a legally
sufficient claim.' "
[Citation.] Put another way, the
plaintiff "must demonstrate that the complaint is both legally sufficient
and supported by a sufficient prima facie showing of facts to sustain a
favorable judgment if the evidence submitted by the plaintiff is
credited." ' " (Oasis West, supra, 51 Cal.4th at
p. 820.) In short, a plaintiff must
" 'demonstrate[] a probability of prevailing on
the claim.' " (
CARe and
Kehrer contend that Plaintiffs have not demonstrated a probability of
prevailing on their claims — each of which is asserted under the UCL pursuant
to Business and Professions Code section 17200 — because they have submitted no
evidence to satisfy the standing requirements for bringing a claim under the
UCL. As we will explain, we agree.
A private
action for relief under the UCL can be brought only "by a person who has
suffered injury in fact
and has lost money or property as a result of the unfair
competition." (Bus. & Prof.
Code, § 17204.) Based on this
provision, our Supreme Court has established that to have standing in an action
under the UCL, a plaintiff "must demonstrate some form of economic injury." (Kwikset Corp. v. Superior Court
(2011) 51 Cal.4th 310, 323 (Kwikset).) In a UCL action, " 'each
element [of standing] must be supported in the same way as any other matter on
which the plaintiff bears the burden of proof, i.e., with the manner and degree of
evidence required at the successive stages of the litigation.' " (Id.
at p. 327.)
title="">[6]
When
seeking to meet its burden for the second prong of the anti-SLAPP analysis,
"a plaintiff opposing an anti-SLAPP motion cannot rely on allegations in
the complaint, but must set forth evidence that would be admissible at
trial." (Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 151
Cal.App.4th 688, 699.) Therefore, to
meet its burden to demonstrate a probability of prevailing on the merits in an
action brought under the UCL, a plaintiff opposing an anti-SLAPP motion must
submit admissible evidence to establish standing by showing that it suffered
injury in fact and lost money or property as a result of the unfair
competition. (Stewart v. Rolling
Stone LLC (2010) 181 Cal.App.4th 664, 690 [in analysis under the second
prong of the anti-SLAPP statute, concluding that "[p]laintiffs' UCL claim
. . . fails because they have not demonstrated they 'suffered injury
in fact and [have] lost money or property as a result of the unfair
competition' "].)
In this
case, the complaint alleges that Plaintiffs suffered economic injury due to
CARe and Kehrer's purported solicitation of clients on behalf of
Heffernan. According to the complaint,
the purported unlawful solicitation "result[ed] in Plaintiffs' suffering
injury and lost money and property, including loss of new Fire Victim clients,
loss of actual clients, loss of good will of current clients and the incurring
of additional costs." However,
Plaintiffs submitted no evidence to
support those allegations when opposing the special motion to strike. Despite Plaintiffs' lengthy evidentiary
submissions for their opposition to the special motion to strike, and despite
Plaintiffs' lack of economic injury being raised by CARe and Kehrer as one of
the grounds for their motion, Plaintiffs are unable to point to any evidence
supporting the complaint's allegations that they lost money or property as a
result of CARe and Kehrer's alleged wrongdoing.
Therefore, Plaintiffs have not demonstrated the standing necessary to
pursue and prevail on any of the causes of action in the complaint, all of
which are brought under the UCL.
Plaintiffs accordingly have not met their burden under the second prong
of the anti-SLAPP analysis to demonstrate a probability of prevailing on their
claims.
DISPOSITION
The order denying the special motion to strike is
reversed, and the trial court is directed to enter a new order granting the
motion and to entertain a motion for fees and costs pursuant to section 425.16,
subdivision (c)(1). Appellants are
awarded costs on appeal.
IRION, J.
WE CONCUR:
McCONNELL, P. J.
HUFFMAN,
J.
name="_ftn1" title="">[1] CARe was erroneously sued as Community Assistance Recovery,
Inc., rather than Community Assisting Recovery, Inc.
name="_ftn2" title="">[2] Specifically, the allegation is that Singleton, Tosdal and
Wagner collectively did business as SDFVL; and Singleton and Wagner
collectively did business as SDFL.
