Filed 1/4/21 Masimo Corp. v. Bauche CA4/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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 This opinion has not been certified for publication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

FOURTH APPELLATE DISTRICT

DIVISION THREE

MASIMO CORPORATION,

 Plaintiff and Respondent,

v.

JOHN BAUCHE, et al.,

 Defendants and Appellants.

 G058662

 (Super. Ct. No. 30-2019-01081908)

 O P I N I O N

Appeal from an order of the Superior Court of Orange County, Theodore R. 

Howard, Judge. Affirmed. Motion for sanctions denied.

The Vanderpool Law Firm, Douglas B. Vanderpool, Michael J. Fairchild, 

and Ryan E. Pinkney, for Defendants and Appellants.

Latham & Watkins, David J. Schindler, Robert J. Ellison, and Alice R. 

Hoesterey for Plaintiff and Respondent.
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Defendants John Bauche (Bauche), BoundlessRise LLC, and Skyward 

Investments LLC appeal from an order denying their anti-SLAPP motion and imposing 

sanctions against them. Defendants argue plaintiff Masimo Corporation’s lawsuit against 

them is based on protected speech that occurred in criminal proceedings against Bauche. 

We disagree, and therefore need not reach defendants’ contentions on the merits of the 

lawsuit itself. Defendants’ sole challenge to the trial court’s sanctions award is premised 

upon acceptance of the same argument, and we therefore reject it as well. Last, we deny 

plaintiff’s motion for sanctions.

FACTS

Plaintiff is a Delaware corporation operating in Irvine in the medical 

technology business. Plaintiff employed Bauche as a social media strategist, working on 

search engine and Web site optimization. As part of his employment, Bauche signed a 

nondisclosure agreement, wherein he promised not to disclose any of plaintiff’s 

confidential information without plaintiff’s permission. 

Plaintiff alleges Bauche engineered a scheme to embezzle money from 

plaintiff. The alleged scheme worked like this: Bauche told his superiors there were 

certain aspects of his job that he needed the help of an outside vendor to perform. 

Bauche then “found” a well-qualified vendor (BoundlessRise LLC) to perform these 

services, with a bid 30 percent cheaper than the other options he surveyed. Relying on 

Bauche, plaintiff hired BoundlessRise to perform these services and paid it nearly 

$1,000,000. But BoundlessRise was just Bauche in another guise; it had no employees 

other than Bauche and performed no services for plaintiff. 

When plaintiff discovered the scheme, it hired an investigator, who elicited 

a confession from Bauche. Bauche then told the investigator he was still in possession of 

some of the funds belonging to plaintiff and would return them. Bauche paid plaintiff 

$27,000 from BoundlessRise’s bank account, but transferred another $710,000 (all 

arising from the scheme) to another entity he controlled: Skyward Investments LLC. 
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Plaintiff fired Bauche, reported him to law enforcement, and filed an insurance claim for 

its losses. Bauche was subsequently indicted in federal court for various offenses arising 

from the scheme. 

As part of his defense of the criminal case, Bauche subpoenaed various 

documents from plaintiff. A discovery dispute ensued and plaintiff’s attorney met and 

conferred with Bauche’s criminal defense attorney to discuss the matter. During that 

discussion, plaintiff alleges Bauche’s criminal defense attorney said “she and Bauche 

were attempting ‘to get [plaintiff] prosecuted for insurance fraud,’” evidently with respect 

to plaintiff’s insurance claim for its losses from the scheme, and would use the 

documents subpoenaed in the criminal case, and confidential information contained 

therein, to accomplish that end. 

In response, plaintiff filed this lawsuit against defendants. In its complaint, 

plaintiff used the nondisclosure agreement to seek an injunction to prevent Bauche from 

disseminating its confidential information to third parties except as necessary to defend 

the criminal case. Plaintiff also sought damages for Bauche’s embezzlement through 

causes of action for fraud, conversion, and breach of duty of loyalty. 

Defendants responded to the lawsuit with an anti-SLAPP motion. 

Defendants argued plaintiff’s lawsuit was based on Bauche’s criminal defense lawyer’s 

statement in connection with the discovery dispute, triggering application of the antiSLAPP statute. Defendants also argued plaintiff’s claims must fail because Bauche’s 

lawyer’s statements were covered by the litigation privilege, and because plaintiff lacked 

standing to pursue its claims, having assigned any such claims to its insurer. 

The trial court denied the motion. The trial court concluded the threats to 

“get [plaintiff] prosecuted for insurance fraud” were not related to the defense of the 

criminal case and were not public statements regarding a matter of public interest. The 

trial court also rejected defendants’ arguments on the merits of the case. Finally, the trial 
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court found the motion frivolous and awarded fees to plaintiff, albeit substantially less 

than plaintiff requested.

Defendants timely appealed. Plaintiff filed a motion for sanctions, which 

we took under submission.

DISCUSSION

The Anti-SLAPP Motion

Code of Civil Procedure section 425.16,1the anti-SLAPP statute, creates a 

special motion to strike “‘“where the trial court evaluates the merits of the lawsuit using a 

summary-judgment-like procedure at an early stage of the litigation.”’” (Flatley v. 

Mauro (2006) 39 Cal.4th 299, 312.) This procedure applies to any lawsuit containing 

“[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 . . . in connection with a public issue . . . .” 

(§ 425.16, subd. (b)(1).) The anti-SLAPP statute “shall be construed broadly.”2 

(§ 425.16, subd. (a).)

“Resolution of an anti-SLAPP motion involves two steps. First, the 

defendant must establish that the challenged claim arises from activity protected by 

section 425.16. [Citation.] If the defendant makes the required showing, the burden 

shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of 

success.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 384.) We review an order granting or 

denying an anti-SLAPP motion under the de novo standard. (Newport Harbor Ventures, 

LLC v. Morris Cerullo World Evangelism (2016) 6 Cal.App.5th 1207, 1216.)

1

 All statutory references are to the Code of Civil Procedure.

2

 Defendants contend the trial court erred by citing federal cases for the 

proposition that motions to strike are disfavored. These citations, though certainly 

inapplicable to anti-SLAPP motions, do not appear to have played a significant role in the 

trial court’s decision. And, in any event, we review the result of the trial court’s decision, 

not its rationale. (Paniagua v. Orange County Fire Authority (2007) 149 Cal.App.4th 83, 

87.)
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The anti-SLAPP statute defines an “‘act in furtherance of a person’s right 

of petition or free speech . . . in connection with a public issue’” as including “(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 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, or (4) 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).)

Defendants argue the breach of contract cause of action arose out of 

protected speech. Specifically, defendants contend the alleged statements by Bauche’s 

criminal defense attorney were oral statements “‘made “in connection with an issue under 

consideration or review by a . . . judicial body,”’” because they were made in the context 

of meeting and conferring over a discovery dispute in the criminal case. (Neville v. 

Chudacoff (2008) 160 Cal.App.4th 1255, 1266 (Neville).) Statements are “made in 

connection with an issue under consideration or review by a . . . judicial body” when they 

relate to the substantive issues in the litigation and are directed to persons having some 

interest in the litigation.3 (Ibid.) 

Here, the “litigation” in question is the criminal matter against Bauche. 

Plaintiff’s insurance claim and any claims relating thereto are separate and apart from 

Bauche’s alleged criminal conduct. Put another way, the existence or nonexistence of an 

3

 Defendants contend the trial court applied the wrong standard to this question by 

citing City of Costa Mesa v. D’Alessio Investments, LLC (2013) 214 Cal.App.4th 358 

instead of the Neville case. But the Costa Mesa case quotes the Neville case and applies 

the same standard. (City of Costa Mesa, at p. 373.)
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insurance coverage dispute between plaintiff and its insurer has little or nothing to do 

with whether Bauche committed any of the various federal crimes with which he has 

been charged. As such, the statements in question were not “made in connection with an 

issue under consideration or review by a . . . judicial body,” even though they were made 

while meeting and conferring over a subpoena.

Nor do the statements fall into any of the other categories of protected 

activity. They were not made before any governmental proceeding. They were not made 

in a place open to the public or a public forum. And most crucially, they were not made 

on an issue of public interest.

Defendants cite Cabral v. Martins (2009) 177 Cal.App.4th 471, 479-480 

(Cabral), Finton Construction, Inc. v. Bidna & Keys, APLC (2015) 238 Cal.App.4th 200, 

210 (Finton), and Optional Capital, Inc. v. Akin Gump Strauss, Hauer & Feld LLP

(2017) 18 Cal.App.5th 95, 114 (Optional Capital) for the proposition that any 

communication by an attorney as part of the attorney’s representation of their client in a 

judicial proceeding is automatically protected by the anti-SLAPP statute. The isolated 

quote relied upon by defendants sounds compelling: “Under the plain language of 

section 425.16, subdivisions (e)(1) and (2), as well as the case law interpreting those 

provisions, all communicative acts performed by attorneys as part of their representation 

of a client in a judicial proceeding or other petitioning context are per se protected as 

petitioning activity by the anti-SLAPP statute.” (Cabral, at pp. 479-480.)

However, the most recent of the cases cited by defendants, Optional 

Capital, explains the limits of this rule: “As we observed previously, ‘conduct is not 

automatically protected merely because it is related to pending litigation; the conduct 

must arise from the litigation.’ [Citation.] Paul v. Friedman (2002) 95 Cal.App.4th 853, 

(Paul) is illustrative. In that case, a securities broker alleged that an attorney, in litigating 

a prior arbitration proceeding, conducted an intrusive investigation into the broker’s 

personal life and disclosed details of the broker’s life that were not relevant to issues in 
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the arbitration proceedings. [Citation.] The Paul court found that the attorney’s conduct 

was not protected activity within section 425.16 because the communication must occur 

in connection with an issue under consideration or review in the proceeding. Thus, while 

the attorney’s investigative conduct may have been “‘“in connection with” 

a[] . . . proceeding,’ it was not ‘[in] connection with an issue under review in that 

proceeding,’ and therefore was not protected activity.” (Optional Capital, supra, 18 

Cal.App.5th at p. 114.)

The instant case, which involves threats made by an attorney on issues 

unrelated to those being considered by the court, is closely analogous to the Paul case, 

and is factually distinct from Cabral, Finton, and Optional Capital, all of which involved 

lawsuits against lawyers arising from work performed for their clients. Thus, we 

conclude Bauche’s lawyer’s statements are not protected by the anti-SLAPP statute. 

Further, even if the statements were made in connection with an issue under 

review by a judicial body, plaintiff’s challenged cause of action for breach of contract 

does not “arise from” the statements. Instead, it arises from plaintiff’s belief that Bauche 

had disclosed plaintiff’s confidential information to third parties other than as necessary 

for his defense in the criminal case. This is a fine distinction, but a critical one: the 

statements themselves do not create liability, but the conduct they threaten would, if 

proven. Therefore, as plaintiff correctly points out, the statements are evidence of breach 

of contract, rather than themselves constituting a breach, and plaintiff’s cause of action 

does not “arise from” them. (See City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79-80 

[complaint alleging existence of an actual controversy based upon related lawsuit did not 

trigger anti-SLAPP statute because related lawsuit was only evidence of an underlying 

controversy, not the controversy itself].)

Having concluded defendants cannot show plaintiff’s claims arise from 

speech protected by the anti-SLAPP statute, we need not consider the parties’ arguments 

with respect to the plaintiff’s probability of success on the merits of the subject claims.
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Attorney Fees

When an anti-SLAPP motion is denied, the trial court may award costs and 

reasonable attorney fees against the moving party if it finds the motion was frivolous or 

solely intended to cause unnecessary delay. (§ 425.16, subd. (c)(1).) We review such an 

award for abuse of discretion. (Moore v. Shaw (2004) 116 Cal.App.4th 182, 199.)

Defendants’ argument against the trial court’s award of attorney fees 

consists of a single paragraph in their opening brief and a single paragraph in their reply 

brief, both of which presume success on appeal on the first prong of the anti-SLAPP 

motion. Defendants’ argument is also supported only by a single citation—to an 

unpublished case, in violation of California Rules of Court, rule 8.1115. Having rejected 

defendants’ arguments as to the anti-SLAPP motion, we cannot conclude the trial court 

abused its discretion in awarding fees.

Motion for Sanctions on Appeal

Before any briefs were filed in this appeal, plaintiff moved for sanctions 

against defendants, arguing this appeal is frivolous because it lacks merit and is solely 

intended to delay proceedings. Sanctions are appropriate where any reasonable attorney 

would agree the appeal is totally and completely without merit (objective frivolousness), 

and where the appeal is prosecuted for an improper motive, including for the purpose of 

delay (subjective frivolousness). (Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 192.) 

“Sanctions are to be ‘used most sparingly to deter only the most egregious conduct.’” 

(Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 

1422.) An unsuccessful appeal “‘should not be penalized as frivolous if it presents a 

unique issue which is not indisputably without merit, or involves facts which are not 

amenable to easy analysis in terms of existing law, or makes a reasoned argument for the 

extension, modification, or reversal of existing law.’” (Ibid.)

As we described above, though we agree with plaintiff and the trial court 

that defendants’ anti-SLAPP motion was without merit and was properly denied, our 
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conclusion rests upon some fine distinctions between statements as the basis for liability 

and statements as evidence of liability. The matter also involves unusual facts—neither 

party cited any prior anti-SLAPP case in which statements made in meeting and 

conferring over a discovery dispute were evidence for or formed the basis of a cause of 

action. Thus, we do not find defendants’ arguments objectively frivolous.

Plaintiff also argues the appeal is subjectively frivolous because its sole 

purpose is to delay discovery through application of the automatic discovery stay 

associated with anti-SLAPP motions. Specifically, plaintiff points to the timing of the 

appeal, which prevented the trial court from entering its tentative ruling compelling 

Bauche’s deposition. Certainly, it would be understandable for Bauche and his attorneys 

to prefer Bauche not be deposed before the resolution of the criminal charges against 

him. And indeed, the record contains ample evidence of defendants attempting to 

achieve that outcome, both by resisting plaintiff’s motion to compel and by filing a 

separate motion for stay (the result of which does not appear in the record).

But the record is more consistent with a good faith, if mistaken, belief in 

the arguable merits of the motion. Defendants applied ex parte to the trial court to 

advance the hearing date on the anti-SLAPP motion—hardly an act consistent with intent 

to delay. Defendants also moved quickly on the appeal itself. Defendants filed their 

notice of appeal within days of the issuance of the court’s decision on the motion, rather 

than delaying to buy additional time. Defendants timely designated the record, attaching 

a certified reporter’s transcript, which further expedited the appeal.

At the briefing stage, defendants timely filed their opening brief without 

seeking any extensions of time. Defendants did seek an extension of time on the reply 

brief, but can hardly be blamed for doing so under the circumstances at the time, which 

included both a global pandemic and nationwide protests against police brutality. 

Defendants’ briefs are substantial, contain ample citations to authority, and raise 
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arguments that are not objectively frivolous. The balance of the evidence does not 

support an inference of an improper purpose. As such, we decline to award sanctions.

DISPOSITION

The order is affirmed. The motion for sanctions is denied.

Plaintiff shall recover costs on appeal.

THOMPSON, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

GOETHALS, J.