Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-03883/USCOURTS-cand-3_07-cv-03883-2/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1441 Petition for Removal

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

BILLIE J. SMITH,

Plaintiff,

 v.

FIRESIDE THRIFT COMPANY, a.k.a.

FIRESIDE BANK, and DOES 1–50, 

Defendants. /

No. C 07-03883 WHA

ORDER GRANTING 

MOTION TO STRIKE

INTRODUCTION

In this action for abuse of process, unfair business practices, and other claims,

defendants move to strike plaintiff’s third and fifth claims under California Code of Civil

Procedure § 425.16, the anti-Strategic Lawsuits Against Public Participation statute. 

Defendants have shown that plaintiff’s claims arise from protected free speech or petitioning

activities, and that plaintiff does not have a fair probability of success on those claims. 

Moreover, plaintiff’s third and fifth claims do not fit in to any of the exceptions to the antiSLAPP statute. Accordingly, defendants’ special motion to strike plaintiff’s third and fifth

claims is GRANTED. 

STATEMENT

Plaintiff Billie J. Smith purchased a 1997 Nissan Sentra from a dealership in

approximately January 2000 (Not. of Removal Exh. B, ¶ 1). Defendant Fireside Thrift

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Company extended financing to Smith for the purchase (id. at ¶ 2). Plaintiff alleges that she

became ill at some at “some time between the years 1999 and 2003” and that she discovered

that she had terminal cancer (id. at ¶ 5). She decided that she could no longer make the

payments on her car loan, so she delivered the car to a dealership for repossession (id. at ¶ 5). 

Plaintiff ultimately survived, but alleges that she experienced a period of legal incompetence

from 2003 to 2006 (id. at ¶ 6). 

Unbeknownst to plaintiff, defendants filed a lawsuit against her regarding the car loan in

state court on August 15, 2003 (id. at ¶ 7). Smith never appeared in that action, and a default

judgment was entered for defendants on March 1, 2004, in the amount of approximately

$12,121.30 (ibid.). Plaintiff alleges that she was never served in that action. She allegedly first

learned of it at some time in 2006 because her wages were being garnished (id. at ¶ 8). 

Thereafter, plaintiff’s counsel asked defendants’ counsel for the proof of service in that action,

but it was allegedly never provided (id. at ¶ 9). Smith pleads that Fireside breached its contract

for financing with her by failing to repossess her vehicle and instead opting to file suit (id. at ¶

12). Plaintiff also alleges that Fireside unlawfully represented to the Contra Costa County

Superior Court that it had served her with the summons and complaint in the prior action (id. at

¶ 23). Fireside then allegedly used that false proof of service to obtain a default judgment

against Smith and an order to garnish her wages (id. at ¶ 24–25). 

Plaintiff filed this action in state court on June 28, 2007. The complaint alleges claims

for: (1) violation of California’s Fair Debt Collection Practices Act; (2) violation of the federal

Fair Debt Collection Practices Act; (3) abuse of process; (4) breach of contract; and (5) unfair

business practices under California Civil Code § 17200. Defendants timely removed on July

30, 2007, based on federal-question jurisdiction. This motion was filed on August 6, 2007. 

ANALYSIS

Defendants move to strike plaintiff’s third claim for abuse of process and plaintiff’s fifth

claim for unfair business practices under California Civil Procedure Code § 425.16, the antiSLAPP statute. The Ninth Circuit has “determined that California anti-SLAPP motions to

strike and entitlement to fees and costs are available to litigants proceeding in federal court, and

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that these provisions do not conflict with the Federal Rules of Civil Procedure.” Thomas v.

Fry’s Electronics, Inc., 400 F.3d 1206, 1206–07 (9th Cir. 2005) (citing United States ex rel

Newsham v. Lockheed Missiles & Space Co., 190 F.3d 963, 972–73 (9th Cir. 1999)). The antiSLAPP statute was passed in response to concern over an increase in meritless lawsuits brought

against private individuals to gain economic advantage and to deter them from exercising their

political and legal rights. Wilcox v. Superior Court, 27 Cal. App. 4th 809, 816 (1994). The

anti-SLAPP statute permits a special motion to strike such claims. It states:

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.

Cal. Civ. Proc. Code § 425.16(b)(1). Corporations are included in the definition of “person”

under the statute. Mattell, Inc. v. Luce, Forward, Hamilton & Scripps, 99 Cal. App. 4th 1179,

1188 (2002). 

A court deciding an anti-SLAPP motion to strike engages in the following two-part

inquiry. 

First, in order to prevail on a motion to strike, the moving party

must make an initial prima facie showing that the claimant’s suit

arises from an act in furtherance of its rights of petition or free

speech in connection with a public issue . . . .

Second, once the defendant has made a prima facie showing, the

burden shifts to the plaintiff to demonstrate a probability of

prevailing on the challenged claims. To do this, the plaintiff must

demonstrate that the complaint is legally sufficient and supported

by a prima facie showing of facts to sustain a favorable judgment

if the evidence submitted by the plaintiff is credited. 

New.Net, Inc. v. Lavasoft, 356 F. Supp. 2d 1090,1098–99 (C.D. Cal. 2004) (Feess, J.) (citations

and quotations omitted). 

1. ACT IN FURTHERANCE OF RIGHT OF PETITION.

As to the first prong of the inquiry, defendants contend that their filing an action in state

court against plaintiff constitutes an act in furtherance of the right of petition. Acts in

furtherance of a person’s right of petition or free speech include:

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(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; 

Cal. Civ. Proc. Code § 425.16(e). “A cause of action ‘arising from’ defendant’s litigation

activity may appropriately be the subject of a Section 425.16 motion to strike.” Church of

Scientology v. Wollersheim, 42 Cal. App. 4th 628, 648 (1996). Acts in furtherance of free

speech or the right of petition include “communicative conduct such as the filing, funding, and

prosecution of a civil action.” Rusheen v. Cohen, 37 Cal. 4th 1048, 1056 (2005) (holding that a

creditor’s actions taken in collecting a judgment constituted communicative conduct in

furtherance of the right of petition). 

Defendants bring an anti-SLAPP motion to strike plaintiff’s claims for abuse of process

and for unfair business practices under § 17200. The thrust of both of these claims is that

defendants filed suit against her, failed to serve her with the summons and complaint, and filed

a false proof of service with the Contra Costa County Superior Court in order to obtain a default

judgment against plaintiff. Filing a lawsuit and filing an allegedly false proof of service

constitute communicative conduct under § 425.16(e). See Rusheen, 37 Cal. 4th at 1056. 

Here, the communicative conduct that forms the basis of plaintiff’s third and fifth claims

is the filing of a lawsuit and a false proof of service to secure a default judgment. Defendants

represented to the Contra Costa County Superior Court that they had served Smith with the

notice of default judgment. Plaintiff argued at the hearing that the gravamen of the complaint

was actually that she was improperly served. Irrespective of whether defendants misrepresented

that they had properly served plaintiff, or if they had simply not done so at all, defendants still

had to file a proof of service with the court to obtain a judgment and an order to garnish her

wages. Under Rusheen, filing a proof of service to collect on a judgment constitutes

communicative conduct. Ibid. 

Plaintiff argues that her complaint is actually based on the physical act of filing a false

proof of service. The harm that plaintiff suffers, however, does not flow from filing a proof of

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service itself, it comes from defendants’ allegedly false statements in that document. She also

argues that her § 17200 claim is actually based on breach of the contract between herself and

defendants. The heart of that claim is that Fireside allegedly intentionally decides not to

repossess the vehicles to which it holds title pursuant to financing agreements. Instead Fireside

files suit in breach of the contract. This alleged business practice arises directly from

defendants’ decision to file a lawsuit against plaintiff. It too constitutes communicative conduct

under the anti-SLAPP statute. 

2. PROBABILITY OF SUCCESS AND CALIFORNIA’S LITIGATION PRIVILEGE.

On the second prong of the anti-SLAPP analysis, 

[o]nce it is determined that an act in furtherance of protected

expression is being challenged, the plaintiff must show a

“reasonable probability” of prevailing in its claims for those

claims to survive dismissal. To do this, the plaintiff must

demonstrate that “the complaint is legally sufficient and

supported by a prima facie showing of facts to sustain a favorable

judgment if the evidence submitted by the plaintiff is credited.” 

This burden is “much like that used in determining a motion for

nonsuit or directed verdict,” which mandates dismissal when “no

reasonable jury” could find for the plaintiff. Thus, a defendant’s

anti-SLAPP motion should be granted when a plaintiff presents an

insufficient legal basis for the claims or “when no evidence of

sufficient substantiality exists to support a judgment for the

plaintiff.” 

Metabolife Intern., Inc. v. Wornick, 264 F.3d 832, 840 (9th Cir. 2001).

Defendants argue that plaintiff has no reasonable probability of prevailing because the

communications at issue, the allegedly false proof of service, are covered by California’s

litigation privilege. Plaintiff does not present argument on this issue. Moreover, plaintiff has

presented no evidence in her favor that would indicate that she has a reasonable probability of

prevailing on her third and fifth claims. Still, this order examines defendants’ arguments based

on California’s litigation privilege.

The litigation privilege, California Civil Code § 47(b), provides that:

A privileged publication or broadcast is one made in any (1)

legislative proceeding, (2) judicial proceeding, (3) in any other

official proceeding authorized by law, or (4) in the initiation or

course of any other proceeding authorized by law . . . .

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“Although originally enacted with reference to defamation, the privilege is now held applicable

to any communication, whether or not it amounts to a publication, and all torts except malicious

prosecution. Further, it applies to any publication required or permitted by law in the course of

a judicial proceeding to achieve the objects of the litigation, even though the publication is

made outside the courtroom and no function of the court or its officers is involved.” Silberg v.

Anderson, 50 Cal. 3d 205, 212 (1990) (citations omitted). The litigation privilege also covers

the filing of false or perjured testimony or declarations. Pollock v. University of Southern

California, 112 Cal. App. 4th 1416, 1431 (2003). 

The California Supreme Court has explicitly held that the litigation privilege applies to

actions taken in collecting a judgment. Rusheen v. Cohen, 37 Cal. 4th 1048, 1058 (2005). 

Extending the litigation privilege to post-judgment activities is consistent with the litigation

privilege’s policy of giving litigants and witnesses free access to the courts and promoting

finality in judgments. Id. at 1063. In Rusheen, the plaintiff filed a claim for abuse of process

alleging that the defendant had filed a false proof of service in order to collect a judgment. The

California Supreme Court held that communications surrounding the collection of a judgment

were privileged under California Civil Procedure Code § 47(b). Where the allegations were

based on post-judgment communications to the court, such as a proof of service for a default

judgment, the privilege applied. Id. at 1062–63. 

Before the hearing on this motion, parties were asked if any cases existed that applied

the logic of Rusheen to an unfair business practices claim under § 17200. This order recognizes

that no published authority extends Rusheen to § 17200 claims, but the rationale seems to be

sufficiently persuasive to do so, particularly since the litigation privilege focuses on the nature

of conduct at issue, not the claim in which it is asserted. The facts of Rusheen are very similar

to the ones at issue here. Smith alleges that Fireside filed a false proof of service to collect on a

judgment against her. Those communications are privileged, and thus cannot form the basis of

either an abuse of process claim or a § 17200 claim. Accordingly, plaintiff cannot show that

she has a reasonable probability of success on those claims. 

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*

 At the hearing on this motion, parties disagreed as to whether plaintiff had ever appeared in this

action. Parties were asked to submit declaration regarding the chronology of events in the prior state-court

action. Defendants’ submission revealed that Smith filed a claim of exemption to the order garnishing her

wages with the Orange County Sheriff on September 2, 2004 (Defendants’ Chronology Exh. D). Smith had

notice of the judgment against her and could have timely moved to set aside the default, so the above-identified

scenario is not a concern in this action. 

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This could produce a troubling result in some situations. It invites the possibility of an

unscrupulous creditor fraudulently obtaining judgments by either failing to properly serve

debtors or filing fraudulent proofs of service. The creditor could then obtain a default judgment

and garnish the debtor’s wages. Under California law, a defendant has six months after entry to

default judgment to move to set it aside. Cal. Civ. Proc. Code § 473. The time limit under the

Federal Rules of Civil Procedure is one year, however, California law controls as to the

state-court action. Fed. R. Civ. P. 60(b). This practice could be made even worse where the

unscrupulous creditor allows the judgment to rest for a sufficiently long time to not be set aside. 

Still, the anti-SLAPP statute, together with the litigation privilege, seem to compel this result. 

Defendants’ motion to strike under California’s anti-SLAPP statute is GRANTED.

*

 

3. EXCEPTION TO THE ANTI-SLAPP STATUTE.

Plaintiff argues that the anti-SLAPP statute should not apply because this is an action

brought on behalf of the public. After the anti-SLAPP statute was passed, the California

legislature expressed concern that it had been abused. See Cal. Civ. Proc. Code § 425.17(a). 

The legislature carved out two exceptions to the anti-SLAPP statute, both of which plaintiff

argues apply here. 

The first exception is for actions brought on behalf of the general public. It requires:

Section 425.16 does not apply to any action brought solely in the

public interest or on behalf of the general public if all of the

following conditions exist:

(1) The plaintiff does not seek any relief greater than or different

from the relief sought for the general public or a class of which

the plaintiff is a member . . . .

(2) The action, if successful, would enforce an important right

affecting the public interest, and would confer a significant

benefit, whether pecuniary or nonpecuniary, on the general public

or a large class of persons.

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(3) Private enforcement is necessary and places a disproportionate

financial burden on the plaintiff in relation to plaintiff’s stake in

the matter. 

Cal. Civ. Proc. Code § 425.17(b). Plaintiff argues that she brought this action on behalf of and

for the benefit of the general public. It is difficult to see how this is possible given that it is not

styled as a class action and plaintiff seeks no relief on behalf any person but herself. She does

not even appear to seek injunctive relief. She seeks damages on behalf of herself only, so even

if she did seek injunctive relief, she would be receiving a benefit over and above what was

sought for the general public. Moreover, she does not identify any significant public benefit

that would be conferred by this action. This exception does not apply.

Plaintiff also argues that the second exception applies. It provides: 

Section 425.16 does not apply to any cause of action brought

against a person primarily engaged in the business of selling or

leasing goods or services, including, but not limited to, insurance,

securities, or financial instruments, arising from any statement or

conduct by that person if both of the following conditions exist:

(1) The 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 sales or leases of,

or commercial transactions in, the person’s goods or services, or

the state or conduct was made in the course of delivering the

person’s goods or services. 

(2) The intended audience is an actual or potential buyer or

customer, or a person likely to repeat the statement to, or

otherwise influence, an actual or potential buyer or customer . . . .

Cal. Civ. Proc. Code § 425.17(c). Assuming, arguendo, that Fireside was in the business of

selling goods or services, filing a lawsuit and filing a false proof of service are not

representations of fact about Fireside’s products, they are statements made in the course of

litigation. Additionally, the intended audience for those statements was the court, not at any

potential buyer or customer. Accordingly, plaintiff’s claims do not fall into any of the

exceptions to the anti-SLAPP statute. 

4. PLAINTIFF’S CONSTITUTIONAL ARGUMENTS AGAINST THE ANTI-SLAPP

STATUTE.

Plaintiff makes a number of arguments that California’s anti-SLAPP statute should be

held unconstitutional. She contends that there is no chilling of free speech in this instance, so

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the statute should not apply. Plaintiff also argues that the statute is unconstitutional because it

is mandatory and imposes attorney’s fees and costs only on one side. Plaintiff presents no

authority in support of her argument. It is worth noting that some courts have expressed

concern about whether the application of the anti-SLAPP statute chills First Amendment rights. 

See, e.g., Shalaby v. Jacobowitz, 2003 WL 21557930, *4 (N.D. Cal. 2003) (Breyer, J.). 

Individuals, such as Fireside, do not have standing to defend the constitutionality of statutes. 

See Diamond v. Charles, 476 U.S. 54, 62 (1986). Accordingly, plaintiff’s arguments that the

fee-shifting provision is unconstitutional cannot be litigated here by defendants. Defendants’

motion to strike is GRANTED. 

CONCLUSION

For all of the above-stated reasons, defendants’ special motion to strike plaintiff’s third

and fifth claims is GRANTED. Defendants are awarded attorney’s fees pursuant to California

Civil Procedure Code § 427.16(c). Defendants may only recover fees for attorney’s fees and

costs incurred in defending plaintiff’s third and fifth claims. Parties must follow the procedure

set out in the accompanying order. 

IT IS SO ORDERED.

Dated: September 18, 2007. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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