Singh v.
Coop.
Filed 5/9/13 Singh v. L.A. Checker Cab Coop. CA2/7
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
SEVEN
AVTAR SINGH, et al.,
Plaintiffs and Respondents,
v.
L.A. CHECKER CAB COOPERATIVE,
INC., et al.,
Defendants and Appellants.
B239532
(Los Angeles
County
Super. Ct.
No. BC468948)
APPEAL from an order of
the Superior Court of
County, Gregory W. Alarcon, Judge. Reversed.
Neil C. Evans for
Defendants and Appellants.
Kimberly D. Jaimez for Plaintiffs
and Respondents.
_____________________________
INTRODUCTION
Minority shareholders of a
cooperative filed a complaint against the cooperative, claiming its voting
procedures violated the Corporations Code.
The cooperative responded by filing a special
Procedure section 425.16. The trial
court denied the motion. The cooperative
appeals from the order of denial, contending the trial court erred in concluding
the challenged conduct did not arise from protected activity. We reverse.
FACTUAL AND
PROCEDURAL SUMMARY
In September 2011, Avtar Singh and
Mikhail Gershman filed a verified complaint against LA Checker Cab Cooperative,
Inc. (Checker Cab), Yuriy Bartel, Arsen Derderian, Igor Shteynberg, Mikail
Shef, Mikail Sher, Suren Gevorkian, Boris Rozman, Roman Petrossian, Marat
Khavkin and Robert Moussalian, seeking to (1) declare invalid under
Corporations Code section 12480 the December 2010 Checker Cab Board of
Directors election; (2) to order a new election of the Board of Directors as
provided in Corporations Code section 12485; (3) to prohibit further use of
illegal bylaws and (4) to award payment of legal fees and costs.
complaint, in conducting its most recent election of its board of directors,
Checker Cab did not comply with Corporations Code section 12480 which applies
to cooperatives exclusively and mandates “each member entitled to vote shall be
entitled to one vote on each matter submitted to a vote of the members.†Instead, Singh alleged, Checker Cab
administered proportional voting based on each member’s number of shares, and
shares equated to cabs owned. Consequently,
Checker Cab members with more cabs -- and therefore more shares--had stronger
voting power during the last election of its board of directors than members
with fewer cabs, in contravention of the egalitarian “one-member, one-voteâ€
directive of the Corporations Code.
According to Singh’s complaint,
Checker Cab became a cooperative in December 2001, and according to its
Articles of Incorporation, “The voting power and proprietary interest of the
members/shareholders of this corporation are equal.†Under its Bylaws, however, “Voting Rights,â€
are “One Vote Per Share,†with “shares []corresponding to a maximum of 290
vehicles to be operated by [Checker Cab],†such that a member “may own one
road, and its 130 members each own one or more of these taxis. Therefore, the voting procedure governing
Checker Cab elections since 2001 to and including the most recent election is
in clear violation of Corporations Code section 12480.
At the time of the December 2010
election and at present, Singh held three Checker Cabs shares/taxis and
Gershman held one share/taxi. Together
these shares comprised roughly 1.4 percent of the issued shares/taxis of
Checker Cab. Notwithstanding their
objection to the procedures, Singh and Gershman voted at the December 2010
election. Bertel, Derderian, Shteynberg,
Shef, Sher, Gevorkian, Rozman, Petrossian, Khavkin, Moussalian and Gershman
were elected to the board. Singh and
Gershman believe the outcome would have been different had individual votes
been counted per member, rather than per share.
The pool of candidates would have been larger because more members would
have run for election if proper egalitarian voting had been in place. At the very least, Singh would have run for
the board, but he knew certain large shareholders would block his election due
to his history of advocating for egalitarian voting. Prior to and following the December 2010
election, Singh and Gershman attempted to persuade Checker Cab to amend its
voting procedure so it would comply with the Corporations Code and its own
Articles of Incorporation without success.
Before filing their complaint, Singh
and Gershman sought to remedy the illegal voting process—first, by
communication with Checker Cab management and second, by exhausting administrative
remedies by reporting Checker Cab to the appropriate regulatory
authorities. In early November 2010,
with the assistance of the Legal Aid Foundation of Los Angeles, Singh and
Gershman formally notified Checker Cab’s board of the requirement that cooperatives
conduct elections on a one-member, one-vote basis, but Checker Cab indicated
the December 2010 election would be held as before, in accord with the “One
Vote Per Share†procedure. Singh and
Gershman then wrote letters to the California Attorney General and Department
of Transportation for the City of Los Angeles, but the Attorney General
suggested Singh and Gershman contact a private attorney, and the City indicated
it could not take action until Singh and Gershman obtained a superior court ruling
declaring Checker Cab’s voting process violates California law. Singh and Gershman alleged Legal Aid counsel
spent more than 150 hours and accrued substantial legal fees; in June 2011,
Singh and Gershman retained pro bono counsel to pursue their action.
In response, Checker Cab filed a
special motion to strike the complaint in this case (Code Civ. Proc., §425.16
[all undesignated statutory references are to the Code of Civil Procedure]),
arguing Singh’s conduct created “public interest†by involving two governmental
agencies prior to the election, and Singh could not prevail as both he and
Gershman had voted in the election they challenged as illegal and Gershman was
elected to the board; therefore, Checker Cab asserted, Singh and Gershman had
unclean hands or were in pari delicto with the defendants so they could not
obtain the equitable relief they sought.
In support of its motion, Checker
Cab submitted the declaration of its corporate president (Yevgeny Smolyar) who
said he had attended the public meeting and election of December 8, 2010, and, at that time, all
candidates for the Board (including Singh and Gershman) spoke in support of
their respective candidacies. Smolyar
said he witnessed their receipt of their ballots and voting of those ballots. Because Singh owned five Checker Cab taxis,
Smolyar stated, Singh was entitled to and did vote five ballots. He further stated Checker Cab is a taxi
company with a government issued franchise, issued by the City of Los
Angeles.
Pursuant to this franchise, the shareholders of Checker Cab operate
almost 300 taxis providing transportation services to the citizens of and
visitors to the City of Los Angeles. These taxis are driven by more than 500
drivers and provide rides to as many as 1 million passengers annually.
Singh filed opposition, arguing
section 425.16 does not apply in this case, and Checker Cab could not show a
probability of prevailing as its voting procedures violated the Corporations
Code. Checker Cab objected to Singh’s
opposition as untimely but also filed a reply with objections to Singh’s
evidence.
After hearing argument and taking
the matter under submission, the trial court denied Checker Cab’s motion.
Checker Cab appeals.
DISCUSSION
Section 425.16
Special Motions to Strike and the Nature of a SLAPP Suit
“In
enacting section 425.16, the Legislature intended a remedy for the ‘disturbing
increase in lawsuits brought primarily to chill the valid exercise of the
constitutional rights of freedom of speech and petition for the redress of
grievances.’ (§ 425.16, subd. (a).) To that end, the anti-SLAPP statute provides
a mechanism for quickly identifying and eliminating civil actions filed for the
purpose of chilling the exercise of free speech. Under section 425.16,
subdivision (b)(1), ‘[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 or 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.’â€
(City of Riverside v. Stansbury (2007)
155 Cal.App.4th 1582, 1588.)
“Under the
statute, an ‘“act in furtherance of a person’s right of petition or free speech
under the United States or California Constitution in connection with a public
issue†includes: (1) any written or oral statement or writing made before a
legislative, executive, or judicial proceeding, or any other official
proceeding authorized by law; (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; (3) any written or oral statement or writing made in a place
open to the public or a public forum in connection with an issue of public
interest; (4) or any other conduct in furtherance of the exercise of the
constitutional right of petition or the constitutional right of free speech in
connection with a public issue or an issue of public interest.’ (§ 425.16, subd. (e).)
“In interpreting section
425.16, courts have described the nature of SLAPP suits. ‘“SLAPP plaintiffs do
not intend to win their suits; rather, they are filed solely for delay and
distraction [citation], and to punish activists by imposing litigation costs on
them for exercising their constitutional right to speak and petition the
government for redress of grievances.
[Citation.] [Citation.] SLAPP suits are filed to prevent citizens
from exercising their political rights, and to harm those who have exercised
those rights. [Citation.] “SLAPP suits
are brought to obtain an economic advantage over the defendant, not to
vindicate a legally cognizable right of the plaintiff. [Citations.]â€
[Citation.] “As long as the
defendant is forced to devote its time, energy and financial resources to
combating the lawsuit its ability to combat the plaintiff in the political
arena is substantially diminished.
[Citations.]†[Citation.]’ (Paul
for Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1363-1364 [102 Cal.
Rptr. 2d 864][, disapproved on other grounds in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53,
68, fn. 5].)
“‘The SLAPP strategy also
works even if the matter is already in litigation because the
defendant/cross-complainant hopes to drive up the cost of litigation to the
point where the plaintiff/cross-defendant will abandon its case or have less
resources available to prosecute its action against the
defendant/cross-complainant and to deter future litigation.’ (Wilcox
v. Superior Court[ (1994)] 27 Cal.App.4th [809,] 816[, disapproved on
another ground in Equilon Enterprises v.
Consumer Cause, Inc., supra, 29 Cal.4th at p. 68, fn. 5]; see § 425.16,
subd. (h) [making cross-complaints subject to the anti-SLAPP statute].)
“SLAPP suits therefore
‘“masquerade as ordinary lawsuitsâ€â€™ but ‘are generally meritless suits
brought by large private interests to deter common citizens from exercising
their political or legal rights or to punish them for doing so.’ (Wilcox
v. Superior Court, supra, 27 Cal.App.4th at p. 816.) ‘The favored causes of action in SLAPP suits
are defamation, various business torts such as interference with prospective
economic advantage, nuisance and intentional infliction of emotional
distress.’ (Ibid.)
“To combat
these suits, section 425.16 permits a special motion to strike, thereby
‘provid[ing] an efficient means of dispatching, early on in a lawsuit, a
plaintiff’s meritless claims, and thus encourages, to use the Legislature’s
words, “continued participation in matters of public significance.†(§ 425.16, subd. (a).)’ (Paul
for Council v. Hanyecz, supra, 85 Cal.App.4th at p. 1364.)†(Kajima
Engineering & Construction, Inc. v. City of Los Angeles (2002) 95
Cal.App.4th 921, 926-928 (Kajima).)
Burdens of Proof and
Standard of Review
“‘[S]ection
425.16, subdivision (b)(1), requires that a court engage in a two-step process
when determining whether a defendant’s section 425.16 motion to strike should
be granted. First, the court decides
whether the defendant has made a threshold prima facie showing that the
defendant’s acts, of which the plaintiff complains, were ones taken
speech in connection with a public issue.
[Citation.] If the court finds
that such a showing has been made, then the plaintiff will be required to
demonstrate that “there is a probability that the plaintiff will prevail on the
claim.†(§ 425.16, subd. (b)(1);
[citation].) The defendant has the
burden on the first issue, the threshold issue; the plaintiff has the burden on
the second issue. [Citation.]’ (Paul
for Council v. Hanyecz, supra, 85 Cal.App.4th at p. 1364, fn. omitted[,
disapproved on other grounds in Equilon
Enterprises v. Consumer Cause, Inc..)
The court can strike a single cause of action, while allowing other
causes of action to remain. (
(2001) 89 Cal.App.4th 141, 150 [106 Cal.Rptr.2d 843].)
“‘In terms of the so-called
threshold issue, the moving defendant’s burden is to show the challenged cause
of action “arises†from protected activity.
[Citations.] Once [but only if]
it is demonstrated the cause of action arises from the exercise of the
defendant’s free expression or petition rights, then the burden shifts to
the plaintiff to show a probability of prevailing in the litigation.’ (Shekhter
v. Financial Indemnity Co., supra, 89 Cal.App.4th at p. 151; see also
(2001) 89 Cal.App.4th 294, 307 [106 Cal.Rptr. 2d 906] [‘to invoke the
protection of the SLAPP statute [defendant must show] the challenged lawsuit
arose from an act on the part of the defendant in furtherance of her right of
petition or free speech’ (italics added)]; Paul
for Council v. Hanyecz, supra, 85 Cal.App.4th at p. 1365 [‘defendant must
present a prima facie showing that the plaintiff’s causes of action arise from
acts of the defendant taken to further the defendant’s rights of free speech or
petition in connection with a public issue’ (italics added)].)
“‘The phrase “arising from†in
section 425.16, subdivision (b)(1) has been interpreted to mean that “the act
underlying the plaintiff’s cause†or “the act which forms the basis for the
plaintiff’s cause of action†must have been an act in furtherance of the
right of petition or free speech.’ (
93 Cal.App.4th 993, 1001 [113 Cal.Rptr.2d 625]; see also
Court (2000) 78 Cal.App.4th 562, 565 [92 Cal.Rptr.2d 755] [courts consider
‘whether the complaint alleges acts in furtherance of defendant’s right of
petition or free speech in connection with a public issue’].)
“We review the trial court’s
rulings on a SLAPP motion independently under a de novo standard of
review. (ComputerXpress, Inc. v. Jackson, supra, 93 Cal.App.4th at
p. 999.)†(Kajima, supra, 95 Cal.App.4th at pp. 928-929, italics added.) “In determining whether the anti-SLAPP
statute applies in a given situation, we must remember that ‘the mere fact an
action was filed after protected activity took place does not mean it arose
from that activity.’†(
Cal.4th 69, 76.)
Checker Cab Met Its Threshold Burden to Show the Conduct Alleged in
Singh’s Complaint Was in Furtherance of Checker Cab’s Right of Petition or Free
Speech in Connection with a Public Issue.
As Checker
Cab notes, in addressing the first prong of the statute, the “focus is not the
form of the plaintiff’s cause of action but, rather, the defendant’s
asserted liability—and whether that activity constitutes protected speech or
petitioning.†(Navellier v. Sletten (2002) 29 Cal.4th 82, 92, original
italics.) Because Singh’s complaint does
not challenge oral or written communications by Checker Cab, but rather its
conduct in implementing voting procedures and electing its board of directors
in a manner Singh argues is in contravention of section 12480 of the
Corporations Code, Checker Cab necessarily relies on subdivision (e)(4) of
section 425.16, which protects “any other conduct
in furtherance of the exercise of the constitutional right of petition or the
constitutional right of free speech
in connection with a public issue or an issue of public interest.†(Italics added.)
Citing
204 Cal.App.4th 1500 (Donovan), Singh
says Checker Cab’s conduct does not constitute protected activity within the
meaning of section 425.16. In
particular, Singh emphasizes the following text from Donovan: “The mere act of
voting . . . is insufficient to demonstrate that conduct
challenged in a cause of action arose from protected activity. (See San
Ramon Valley Fire Protection Dist. v. Contra Costa County Employees’ Retirement
Assn. (2004) 125 Cal.App.4th 343, 354 [22 Cal.Rptr.3d 724] [litigation
challenging public entity’s action in passing a measure, after a public hearing
and a majority vote of its constituent members, not subject to anti-SLAPP
statute where the measure itself was not an exercise of free speech or
petition].) Similarly, the fact that protected
activity may have triggered a cause of action does not necessarily mean the
cause of action arose from the protected activity. (City
of Cotati v. Cashman[, supra, 29
Cal.4th at pp.] 76–77 [124 Cal. Rptr. 2d 519, 52 P.3d 695]; see, e.g.,
Literary Agency, Inc. (2009) 175 Cal.App.4th 169, 176–177 [96 Cal. Rptr. 3d
1] [conduct underlying plaintiff’s claims of retaliation and wrongful
termination was that of preventing plaintiff from working by imposing
restrictive work conditions, not a prelitigation letter written by employer’s
attorney imposing conditions]; Santa
Monica Rent Control Bd. v. Pearl Street, LLC (2003) 109 Cal.App.4th
1308, 1318 [135 Cal.Rptr.2d 903]
[defendants were not sued for their conduct in exercising their
constitutional rights, but to compel their compliance with the provisions of
the rent control law]; Graffiti
Protective Coatings, Inc. v. City of Pico Rivera (2010)
181 Cal.App.4th 1207 [104 Cal.Rptr.2d 692]
[conduct challenged in action alleging city failed to comply with competitive
bidding requirement was not officials’ communications or deliberations, but
their failure to obey state and local laws].)â€
(Donovan, 204 Cal.App.4th at
pp.1506-1507.)
However,
the Donovan court distinguished the
case of Damon v. Ocean Hills Journalism
Club (2000) 85 Cal.App.4th 468 (Damon),
in which the court concluded certain statements made during a homeowners
association board meeting by two members of the board of directors disagreeing
with the plaintiff’s management of the association, were protected because,
among other reasons, the statements were made in a “public forum.†(Donovan, supra, 204 Cal.App.4th at p. 1507, fn. 3,
citing Damon, supra, 85 Cal.App.4th
at pp. 471-473.) “In reaching this
determination, the court found that (1) the board meetings were televised and
open to the public and (2) a homeowners association is in effect ‘“a
quasi-government entity paralleling in almost every case the powers, duties,
and responsibilities of a municipal government.â€â€™ (Id.
at p. 475, quoting Cohen v. Kite Hill
Community Assn. (1983) 142 Cal.App.3d 642, 651 [191 Cal. Rptr. 209].)†(Donovan,
supra, 204 Cal.App.4th at p. 1507, fn. 3.)
“The
definition of ‘public interest’ within the meaning of the anti-SLAPP statute
has been broadly construed to include not only governmental matters, but also
private conduct that impacts a broad segment of society and/or that affects a
community in a manner similar to that of a governmental entity. (See Macias
v. Hartwell [(1997)] 55 Cal.App.4th [669,] 674; Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628,
650-651 [49 Cal.Rptr.2d 620][, disapproved on another ground in
supra, 29 Cal.4th at p. 68, fn. 5].)
‘“[M]atters of public interest . . . include activities that involve
private persons and entities, especially when a large, powerful organization
may impact the lives of many individuals.â€â€™
(Macias v. Hartwell, supra, 55
Cal.App.4th at p. 674.) In
statements made during a union election constituted a “public†issue because
the statements affected 10,000 union members and concerned a fundamental
political matter—the qualifications of a candidate to run for office. (Id.
at pp. 673-674.)†(Damon, supra, 85 Cal.App.4th at p. 479.)
In
court concluded the statements at issue pertained to issues of “public
interest†within the Ocean Hills community because “they concerned the very
manner in which this group of more than 3,000 individuals would be governed—an
inherently political question of vital importance to each individual and to the
community as a whole. (See
Homeowners Assn. (1995) 37 Cal.App.4th 914, 922 [45 Cal.Rptr.2d 1].) Moreover, the statements were made in
connection with the Board elections and recall campaigns. ‘The right to speak on political matters is
the quintessential subject of our constitutional protections of the right of
free speech. “Public discussion about
the qualifications of those who hold or who wish to hold positions of public
trust presents the strongest possible case for applications of the safeguards
afforded by the First Amendment.â€â€™ (Matson
v. Dvorak[ (1995)] 40 Cal.App.4th [539,] 548; accord, Conroy v. Spitzer (1999) 70 Cal.App.4th 1446, 1451 [83 Cal.Rptr.2d
443] [the defendant’s ‘statements obviously fell within the purview of section
425.16 because they addressed a matter of public concern—a candidate’s
qualifications and conduct in office’].)
[¶] Although the allegedly
defamatory statements were made in connection with the management of a private
homeowners association, they concerned issues of critical importance to a large
segment of our local population.†(
479.)
According
to the record in this case, Checker Cab operates a taxi cab franchise issued by
the City of Los Angeles. It operates
nearly 300 taxis providing transportation to the citizens of and visitors to
the City of Los Angeles; its taxis are driven by more than 500 drivers; and it
provides as many as 1 million rides annually to passengers within the City of
Los Angeles.
Subdivision
(e)(4) of section 425.16 protects “any other conduct [(1)] in furtherance of
the exercise of the constitutional right of petition or the constitutional
right of free speech [(2)] in connection with a public issue or an issue of
public interest.†Unlike
which the plaintiff’s challenge was to the outcome
of an election, in this case, Singh challenges Checker Cab’s voting conduct
itself, satisfying the first element of subdivision (e)(4), as voting is an
element of First Amendment free speech.
(See Schroeder v. Irvine City Council (2002) 97 Cal.App.4th 174,
183, fn. 3, citations omitted [“voting is conduct qualifying for the protections afforded by
the First Amendmentâ€]; and see Stella v. Kelley (1st Cir. 1995) 63 F.3d
71, 75 [“Voting by members of municipal boards, commissions, and
authorities comes within the heartland of First Amendment
doctrineâ€].) Moreover, we
conclude a government issued franchise’s operation of 300 taxis, driven by 500
drivers for the benefit of 1 million passengers within the City of Los Angeles
each year satisfies the second “public interest†element of subdivision
(e)(4). (Damon, supra, 85 Cal.App.4th at p. 479 [“The definition of ‘public
interest’ within the meaning of the anti-SLAPP statute has been broadly
construed to include not only governmental matters, but also private conduct
that impacts a broad segment of society and/or that affects a community in a
manner similar to that of a governmental entityâ€].)
Because the
trial court found Checker Cab had failed to satisfy the first prong of section
425.16, subdivision (b), and did not reach the second prong of this analysis,
remand is appropriate for the trial court to make this determination in the
first instance.
DISPOSITION
The order is reversed. Checker Cab is to recover its costs on
appeal.
We concur:
PERLUSS, P. J. JACKSON,
J.
include Gershman in our further references to Singh unless otherwise indicated;
we include all defendants in our references to Checker Cab unless otherwise
indicated.
Cab also claimed entitlement to $29,790 for attorney’s fees (59 hours at $450
per hour, without including research and preparation of the anticipated reply)
and costs.
