Court Opinion

ID: 4021020
Source: CourtListenerOpinion
Date Created: 2016-08-02 20:04:43.659021+00
Date Added: 2024-06-11T12:19:06.397607
License: Public Domain

Filed 8/2/16
                            CERTIFIED FOR PUBLICATION

               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             SECOND APPELLATE DISTRICT

                                    DIVISION THREE

JOHN DOE 2,                                          B269087

        Petitioner,                                  (Los Angeles County
                                                     Super. Ct. No. BC575833)
        v.

THE SUPERIOR COURT OF LOS
ANGELES COUNTY,

        Respondent;

AVONGARD PRODUCTS U.S.A. LTD.,

        Real Party in Interest.

        PETITION for writ of mandate. Terry A. Green, Judge. Petition granted.

        Gerard Fox Law and Morgan E. Pietz for Petitioner.

        No appearance for Respondent.

        Greenberg Glusker Fields Claman & Machtinger, Bonnie E. Eskenazi, Jonathan B.
Sokol and Elizabeth Sbardellati for Real Party in Interest.

                                  _____________________
          Avongard Products U.S.A. Ltd., doing business as Hydraulx (Hydraulx), a
preeminent film industry visual special effects (vfx) provider, sued petitioner John Doe 2
(Doe 2) for libel, alleging Doe 2’s anonymous emails to a film producer and a film
industry executive harmed its reputation. After Doe 2 filed a special motion to strike
under California’s anti-SLAPP statute, Code of Civil Procedure section 425.16, the trial
court granted Hydraulx’s request to conduct special discovery that would reveal Doe 2’s
identity.1 Doe 2 filed a petition for writ of mandate seeking reversal of the discovery
order.
          We grant the petition. Under Krinsky v. Doe 6 (2008) 159 Cal. App. 4th 1154
(Krinsky), First Amendment protection for anonymous speech requires a libel plaintiff
seeking to discover an anonymous libel defendant’s identity to make a prima facie
showing of all elements of defamation. Paterno v. Superior Court (2008)
163 Cal. App. 4th 1342 (Paterno) similarly holds that a libel plaintiff cannot establish
good cause for special discovery under section 426.16, subdivision (g) without a prima
facie showing the allegedly libelous statements are false and unprivileged.
          Hydraulx failed to make a prima facie showing that Doe 2’s emails are provably
false and defamatory statements of fact or that the emails caused Hydraulx to suffer
actual damage. We therefore issue a writ of mandate ordering the trial court to vacate its
discovery order and issue a new order denying Hydraulx’s special discovery motion.
                                 FACTUAL BACKGROUND
          Hydraulx is a leading visual effects designer that provided visual effects services
for successful feature films such as The Avengers and Terminator 3; advertising for large
corporations such as Coca-Cola, Inc. and Ford Motor Company; and music videos for
famous pop and rock music stars including Jennifer Lopez, Britney Spears, Usher,
Aerosmith and U2, among others.

1
          Further statutory references are to the Code of Civil Procedure unless otherwise
stated.

                                                2
       In 2010, Hydraulx was embroiled in a highly publicized dispute with Sony
Pictures (Sony), arising out of Hydraulx’s alleged conflict of interest in producing the
motion picture Skyline, while simultaneously providing vfx services for Sony’s film,
Battle: Los Angeles. Both Skyline and Battle: Los Angeles involved a similar theme—an
alien invasion of Los Angeles—and Hydraulx’s scheduled release of Skyline in
November 2010—just a few months before Sony released Battle: Los Angeles in March
2011—led to accusations by Sony that Hydraulx had used Sony’s equipment and
resources to produce the movie in violation of the companies’ vfx agreement. After Sony
sued Hydraulx in arbitration, news articles reported Sony’s contention that “Hydraulx
concealed the competitive nature of their project [Skyline].” Sony dropped the arbitration
shortly after releasing Battle: Los Angeles in March 2011, reportedly “ ‘satisfied its
special effects were not used’ ” in Skyline.
       Doe 2 is an anonymous individual who sent two substantially identical emails to
business associates of Hydraulx in August 2015. The emails were sent from Google
Inc.’s web-based email service, Gmail, and identified the sender as “Greg Baktor” with
the email address “vfx.recruits@gmail.com.” Doe 2 sent one email to Lori Furie, an
executive at Sony involved in Sony’s movie project Goosebumps, and the other to Neil
Moritz, a producer who worked on Goosebumps and Sony’s earlier production, Battle:
Los Angeles.2 The email to Moritz read:

2
       “Goosebumps” refers to a motion picture produced by Sony based on the series of
children’s novels written by author R.L. Stein. As noted, Moritz worked with Sony
executive, Furie, on Goosebumps and an earlier film project, Battle: Los Angeles.

                                               3
              “I hoped I might whistle-blow on Vitality Visual Effects and Hydraulx. I
              was surprised to see ‘Goosebumps’ on Vitalitys [sic] IMDB[3] as Vitality is
              co-owned by Greg and Colin Strause of Hydraulx and I thought neither you
              nor Sony had[4] a good relationship with the Brothers after Skyline/Battle
              L.A.
              “Vitality and Hydraulx share owners (Greg & Colin), their Exec Guy
              Botham works for both companies - Vitality and Hydraulx even share L.A.
              and Vancouver offices, hardware, and infrastructure.
              “If Vitality misinformed you or Sony as to its ownership or profit
              participants in any way, please take my email into consideration.
              “I am a concerned vfx professional whom, myself, has been burned by
              Greg and Colin and I do not like people perpetuating what I consider bad
              business practices.
              “Thank you for your time in reading. I hope this email helps.
              “Regards,
              “A concerned VFX recruit.”
       Moritz forwarded the email to a Hydraulx client, visual effects producer Greg
Baxter, who worked with Furie and Moritz on the Goosebumps film. Baxter responded:
              “Not sure this is true. [¶] As I understand it, Guy [Botham] bought the
              hardware and software from (now defunct) Hydraulx. [¶] Strause
              Brothers, I was told, have zero involvement in Vitality, other than selling
              Guy their equipment and pipeline. [¶] I’ll confirm with Guy.”
       Baxter forwarded the email to Guy Botham, Vitality’s CEO, and Greg Strause,
who co-owns Hydraulx with his brother, Colin Strause.

3
       “IMDB” refers to the Internet Movie Database, a well known entertainment
industry website identifying the talent, crew, and entertainment companies working on
motion picture projects.
4
        The email to Furie stated, “I thought Sony did not have a good relationship . . . .”
(Italics added.) Otherwise the emails are identical.

                                              4
                               PROCEDURAL HISTORY
       1.     Hydraulx’s Complaint for Defamation
       When Doe 2 sent the emails at issue in this writ petition, Hydraulx was already
engaged in a law suit for defamation against several other anonymous individuals,
fictitiously named in its March 2015 complaint as Does 1 through 10. The complaint
alleged that Doe 1, “with the material assistance of Does 2 through 10,” used a
pseudonym and a private email account “to send a November 7, 2014 email to the motion
picture studio with which Hydraulx is presently engaged” describing Hydraulx as “ ‘on
the verge of financial collapse.’ ” The email asserted Hydraulx was “ ‘running on life
support with a skeleton crew,’ ” while it “ ‘missed payroll’ ” and had its “ ‘resources
consumed by many personal expenditures and various independent film projects.’ ”
       Several months after Hydraulx filed suit, Doe 2 sent his August 2015 emails to
Furie and Moritz. Based on those emails, Hydraulx amended its complaint to add
allegations against Doe 2.
       Doe 2 filed a special motion to strike the complaint under the anti-SLAPP statute,
section 425.16.5 Hydraulx responded by filing a special discovery motion under section
425.16, subdivision (g) seeking to discover Doe 2’s identity by taking his deposition and
enforcing a subpoena directed to Google, Inc., the operator of Doe 2’s Gmail account.6
       2. Hydraulx’s Special Discovery Motion
       Relying on the Paterno court’s holding that a prima facie showing of libel is
sufficient to entitle a plaintiff to special discovery under the anti-SLAPP statute (see
Paterno, supra, 163 Cal.App.4th at p. 1349), Hydraulx sought to demonstrate Doe 2’s
statements were provably false by submitting declarations from Greg Strause and Guy

5
      Doe 2 learned of the lawsuit after receiving notice from Google, Inc. that
Hydraulx had subpoenaed records related to the Gmail account used to transmit the
August 2015 emails.
6
      The anti-SLAPP statute stays all discovery pending determination of the special
motion to strike but allows the court to “order that specified discovery be conducted”
upon “noticed motion and good cause shown.” (§ 425.16, subd. (g).)

                                              5
Botham attesting to the independent ownership of Hydraulx and Vitality. Addressing
Doe 2’s statement, “Vitality is co-owned by Greg and Colin Strause of Hydraulx,” Greg
Strause declared, “Hydraulx does not now own and has never owned or controlled
Vitality, a visual effects company owned and controlled by Guy Botham” and “neither I
nor my brother . . . owns or has ever owned any interest in Vitality.” Botham identified
himself as the “sole shareholder, owner and operator” of two entities using the name
Vitality Visual Effects: Vitality Visual Effects, Inc., a California Corporation, and
Vitality Visual Effects Ltd., a British Columbia corporation, referring to them
collectively as Vitality. Botham further declared, “[n]either Greg Strause, Colin Strause
nor Hydraulx own, or have ever owned, any interest in Vitality.”
       Hydraulx also sought to establish the statements were defamatory in nature by
emphasizing the word “whistle-blow” in the emails, which Greg Strause declared had the
effect of “insinuating that Hydraulx has done something dishonest and/or is hiding
something, which it has not.” He also averred, “Hydraulx does not perpetuate bad
business practices, but rather follows the industry standard,” and “Hydraulx does not
believe it has unfairly treated or ‘burned’ anyone in the visual effects community.”
       Hydraulx argued it needed to discover Doe 2’s identity to oppose Doe 2’s anti-
SLAPP motion with evidence Doe 2 made false statements with actual malice and
thereby demonstrate a probability of success on the merits of its defamation claim.7 In
that regard, Hydraulx maintained Doe 2’s chosen pseudonym—“concerned vfx
professional”—suggested the writer was likely a “partner (or former partner), vendor,
employee (or former employee), consultant or competitor” of Hydraulx whose
relationship to the company would demonstrate the email had been “motivated by evil
intent.” Hydraulx also argued Doe 2’s identity was critical to a potential motion to
7
        When a defendant on an anti-SLAPP motion makes a threshold showing that a
challenged cause of action is one arising from protected activity, the burden shifts to the
plaintiff to demonstrate, with evidence, a probability of prevailing on the claim. If the
defendant fails to meet this evidentiary burden, a claim arising from protected activity
will be stricken. (Navellier v. Sletten (2002) 29 Cal. 4th 82, 88-89; § 425.16, subd.
(b)(1).)

                                             6
compel arbitration, citing Greg Strause’s declaration that “Hydraulx has agreements to
arbitrate with nearly all of its partners, vendors, employees, consultants and clients.”
       3.     Doe 2’s Opposition to the Special Discovery Motion
       Doe 2 argued, in opposition, that Hydraulx could not discover his identity without
making a prima facie showing on every element of its libel claim except those elements,
such as actual malice, that required evidence inaccessible to Hydraulx. Doe 2 argued that
each statement in the emails was non-actionable as a matter of law either because it was
not “of and concerning” Hydraulx or it was substantially true. Doe 2 also argued that his
statements about “bad business practices” and being “burned” were expressions of
constitutionally protected opinion. To provide context for his argument that the emails
were not defamatory, Doe 2 submitted news articles and internet postings about the
Strause brothers’ high profile careers, the Skyline/Battle: Los Angeles controversy and
Hydraulx’s alleged failure to compensate vfx professionals in compliance with wage and
hour laws.
       To demonstrate the truth of his statement concerning Hydraulx’s and Vitality’s
joint ownership, Doe 2 submitted online profiles for five professionals who identified
themselves as working for Hydraulx and Vitality and an IMDB resume for Guy Botham
listing his companies as Hydraulx and Vitality Visual Effects. Doe 2 also submitted
records from the Nevada Secretary of State’s website identifying David and Linda
Strause as the managing members of a third entity with Vitality Visual Effects in its
name, Vitality Visual Effects LLC, and records from the Illinois Secretary of State’s
website identifying Hydraulx as an Illinois corporation with the same principal officers,
David and Linda Strause. Doe 2 identified David and Linda Strause as Greg and Colin
Strause’s parents, and argued that the records from these state agencies demonstrated the
substantial truth of his allegation that Hydraulx and Vitality were co-owned by the
Strause family.
       Finally, to blunt the charge that Hydraulx needed to know his identity to establish
malice, Doe 2 offered the concession that Hydraulx “should be excused from having to
make a preliminary prima facie showing as to those elements of the claim for defamation

                                              7
where the relevant facts would identify Doe 2 and are out of [Hydraulx]’s control.”
Thus, Doe 2 continued, “[Hydraulx] will not have to produce evidence as to actual malice
on the part of Doe 2.” Doe 2 maintained this approach was consistent with the procedure
established in Krinsky for balancing the plaintiff’s right to seek redress for statements it
claims amount to defamation and the speaker’s First Amendment right to speak
anonymously. (See Krinsky, supra, 159 Cal.App.4th at p. 1172.)
       4.     The Hearing on the Special Discovery Motion
       After hearing extensive argument from both sides, the trial court granted
Hydraulx’s motion for special discovery. The court reasoned that the word “whistle-
blow” “impli[ed] civil or criminal wrongdoing,” which could support a finding of
defamation. Further, the court found all statements in Doe 2’s emails “[were] capable of
being proven true [or] false.” Weighing the due process concerns attendant to making
plaintiffs “prove a fact that they don’t have access to,” the court concluded Hydraulx had
made a sufficient prima facie showing of libel to obtain special discovery that would
reveal Doe 2’s identity.
       5.     Doe 2’s Petition for Writ of Mandate
       Doe 2 filed a petition for writ of mandate and request for immediate stay of the
discovery order with this court. On December 29, 2015, we issued a temporary stay
order pending determination of the petition. On February 20, 2016 we issued an order to
show cause inviting additional briefing and setting the matter for hearing.
                                STANDARD OF REVIEW
       We review the trial court’s ruling on a discovery motion for abuse of discretion.
However, because the relevant facts are undisputed, we review the trial court’s exercise
of discretion as a question of law. (Krinsky, supra, 159 Cal.App.4th at p. 1161.) Because
Doe 2 invokes the protection of the First Amendment, we also conduct an independent
review. (Ibid.) When called upon to draw “ ‘the line between speech unconditionally
guaranteed and speech [that] may legitimately be regulated,’ ” we “ ‘examine for
ourselves the statements in issue and the circumstances under which they were made to
see . . . whether they are of a character which the principles of the First Amendment, as

                                              8
adopted by the Due Process Clause of the Fourteenth Amendment, protect.’ ” (New York
Times Co. v. Sullivan (1964) 376 U.S. 254, 285, quoting Pennekamp v. Florida (1946)
328 U.S. 331, 335.)
                                        DISCUSSION
       1.     Hydraulx Must Make a Prima Facie Showing under Krinsky and Paterno
       Like Krinsky, this case presents a conflict between a plaintiff’s right to employ the
judicial process to discover the identity of an allegedly libelous speaker and the speaker’s
First Amendment right to remain anonymous. As explained in Krinsky, “[j]udicial
recognition of the constitutional right to publish anonymously is a long-standing
tradition. . . . ‘Persecuted groups and sects from time to time throughout history have
been able to criticize oppressive practices . . . either anonymously or not at all.’
[Citation.] ‘The decision in favor of anonymity may be motivated by fear of economic or
official retaliation, by concern about social ostracism, or merely by a desire to preserve as
much of one’s privacy as possible. Whatever the motivation may be, at least in the field
of literary endeavor, the interest in having anonymous works enter the marketplace of
ideas unquestionably outweighs any public interest in requiring disclosure as a condition
of entry.’ ” (Krinsky, supra, 159 Cal.App.4th at p. 1163.)
       Notwithstanding the constitutional right to anonymity, the Krinsky court
acknowledged that a libel plaintiff has a legitimate competing interest in discovering an
anonymous speaker’s identity in order to effectively prosecute the libel claim. (Krinsky,
supra, 159 Cal.App.4th at p. 1165.) After surveying standards adopted by other states
addressing these competing rights and interests, the Krinsky court articulated a rule of
general application.
       Balancing the longstanding First Amendment right to publish anonymously with a
libel plaintiff’s right to prosecute her case, the Krinsky court determined that a libel
plaintiff seeking to compel disclosure of an anonymous speaker’s identity must (1) give
notice to the anonymous speaker and (2) “make a prima facie showing of the elements of
libel,” limited to “only those material facts that are accessible to [the plaintiff].”
(Krinsky, supra, 159 Cal.App.4th at pp. 1171-1172.) Recognizing that certain elements

                                               9
of a libel claim, such as actual malice, may be difficult to establish without knowing the
defendant’s identity, the court limited the requisite prima facie showing to evidence
accessible to a libel plaintiff. (Id. at pp. 1171-1172 & fn. 12.) With this accommodation,
Krinsky concluded the burden “should not be insurmountable [where] plaintiff knows the
statement that was made and [can] produc[e] evidence of its falsity and the effect it had
on her.” (Id. at p. 1172.)
       In Paterno, the court explained that the prima facie showing required under
Krinsky is consistent with the prima facie showing required of a libel plaintiff seeking
special discovery under section 425.16, subdivision (g), to oppose an anti-SLAPP motion
subject to the constitutional malice standard. Citing the “self-executing protections of the
First Amendment” and Krinsky’s requirement that the “discovery proponent . . . make a
prima facie showing the . . . statement was libelous,” Paterno held that “plaintiffs who
bring defamation actions subject to the constitutional malice standard cannot show good
cause [under section 425.16, subdivision (g)] for discovery on the question of actual
malice without making a prima facie showing that the defendant’s published statements
contain provably false factual assertions.” (Paterno, supra, 163 Cal.App.4th at p. 1349.)
Thus, consistent with Krinsky, the Paterno court held a libel plaintiff may not obtain
special discovery under the anti-SLAPP statute (see fn. 7, ante) without first making a
prima facie showing of the elements of libel for which the material facts are available to
the plaintiff. (Paterno, at pp. 1349-1351; see also The Garment Workers Center v.
Superior Court (2004) 117 Cal. App. 4th 1156, 1162 [“Even if it looks as if the
defendant’s actual malice may be an issue in the case, if it appears from the SLAPP
motion there are significant issues as to falsity or publication—issues which the plaintiff
should be able to establish without discovery—the court should consider resolving those
issues before permitting what may otherwise turn out to be unnecessary, expensive and
burdensome discovery proceedings”].)

                                             10
       2.     A Prima Facie Showing of Libel Requires Proof of a Provably False
              Assertion of Fact That Is Susceptible of a Defamatory Meaning
       Libel is a form of defamation effected in writing. (Paterno, supra,
163 Cal.App.4th at p. 1349; Civ. Code, § 44.) “The elements of a defamation claim are
(1) a publication that is (2) false, (3) defamatory, (4) unprivileged, and (5) has a natural
tendency to injure or causes special damage.” (Wong v. Jing (2010) 189 Cal. App. 4th
1354, 1369.) The defamatory statement must specifically refer to, or be “ ‘of and
concerning,’ ” the plaintiff. (Blatty v. New York Times Co. (1986) 42 Cal. 3d 1033, 1042.)
       It is the province of the court to determine whether a statement is actionable as a
statement of fact susceptible of a defamatory meaning, versus a non-actionable statement
of opinion privileged under the First Amendment. “[I]t is a question of law for the court
whether a challenged statement is reasonably susceptible of an interpretation which
implies a provably false assertion of actual fact. If that question is answered in the
affirmative, the jury may be called upon to determine whether such an interpretation was
in fact conveyed.” (Kahn v. Bower (1991) 232 Cal. App. 3d 1599, 1608 (Kahn); Gregory
v. McDonnell Douglas Corp. (1976) 17 Cal. 3d 596, 601 (Gregory).)
       A court construing an allegedly defamatory statement must consider the statement
in the context in which it was made. “In determining whether statements are of a
defamatory nature, and therefore actionable, ‘ “a court is to place itself in the situation of
the hearer or reader, and determine the sense or meaning of the language of the complaint
for libelous publication according to its natural and popular construction.” That is to say,
the publication is to be measured not so much by its effect when subjected to the critical
analysis of a mind trained in the law, but by the natural and probable effect upon the
mind of the average reader.’ ” (Morningstar, Inc. v. Superior Court (1994)
23 Cal. App. 4th 676, 688.)
       “In determining the meaning of a communication, words, whether written or
spoken, are to be construed together with their context. Words which standing alone may
reasonably be understood as defamatory may be so explained or qualified by their context
as to make such an interpretation unreasonable. So too, words which alone are innocent

                                              11
may in their context clearly be capable of a defamatory meaning and may be so
understood. The context of a defamatory imputation includes all parts of the
communication that are ordinarily heard or read with it. . . . [T]he entire contents of a
personal letter are considered as the context of any part of it because a recipient of the
letter ordinarily reads the entire communication at one time.” (Rest.2dTorts, § 563,
com. d, p. ___.)
       “Under the First Amendment there is no such thing as a false idea.” (Gertz v.
Robert Welch, Inc. (1974) 418 U.S. 323, 339.) Hence, statements of opinion can never
subject the speaker to liability for making a false and defamatory statement. As the
United States Supreme Court explained in Gertz, “However pernicious an opinion may
seem, we depend for its correction not on the conscience of judges and juries but on the
competition of other ideas.” (Id. at pp. 339-340.)
       Consistent with Gertz, California courts have repeatedly held statements of
opinion are protected by the First Amendment. Thus, to be actionable, an allegedly
defamatory statement must make an assertion of fact that is provably false. “The
question is whether the statement is provably false in a court of law.” (Weller v.
American Broadcasting Companies, Inc. (1991) 232 Cal. App. 3d 991, 1006. As our
Supreme Court noted in Gregory, the critical distinction between “whether the allegedly
defamatory statement constitutes fact or opinion is . . . frequently a difficult one, and
what constitutes a statement of fact in one context may be treated as a statement of
opinion in another, in light of the nature and content of the communication taken as a
whole.” (Gregory, supra, 17 Cal.3d at p. 601.) The test, in California, to determine
whether an allegedly defamatory statement is fact or opinion is a “ ‘totality of the
circumstances’ ” test. (Baker v. Los Angeles Herald Examiner (1986) 42 Cal. 3d 254,
261 (Baker).)

                                             12
       In Milkovich v. Lorain Journal Co. (1990) 497 U.S. 1 (Milkovich), the United
States Supreme Court considered whether statements in a newspaper editorial about an
altercation at a wrestling match were actionable statements of fact defaming the wrestling
coach or protected expressions of opinion. It concluded the statement—“ ‘ “Anyone who
attended the meet . . . knows in his heart that [coach] Milkovich . . . lied at the hearing
after [giving] his solemn oath to tell the truth” ’ ”—was actionable because it implied a
provably false statement of fact—that Milkovich lied under oath. (Id. at pp. 5, 21.) In so
holding, the Milkovich court reasoned that “expressions of ‘opinion’ may often imply an
assertion of objective fact.” (Id. at p. 18) For example, the statement, “ ‘In my opinion
John Jones is a liar’ . . . ‘implies a knowledge of facts which lead to the conclusion Jones
told an untruth.’ ” (Ibid.)
       On the other hand, when a communication identifies non-defamatory facts
underlying an opinion, or the recipient is otherwise aware of those facts, a negative
statement of opinion is not defamatory. As explained in the Restatement Second of
Torts, a “pure type of expression of opinion” occurs “when both parties to the
communication know the facts or assume their existence and the comment is clearly
based on those assumed facts and does not imply the existence of other facts in order to
justify the comment. The assumption of the facts may come about because someone else
has stated them or because they were assumed by both parties as a result of their notoriety
or otherwise.” (Rest.2d Torts, § 566, com. b, p. 171.) Actionable statements of opinion
are “the mixed type, [where] an opinion in form or context, is apparently based on facts
regarding the plaintiff or his conduct that have not been stated by the defendant [but]
gives rise to the inference that there are undisclosed facts that justify the forming of the
opinion.”8 (Ibid.)

8
       The Restatement Second of Torts, section 566, comment c provides several
examples of actionable and non-actionable statements of opinion: “3. A writes to B
about his neighbor C: ‘I think he must be an alcoholic.’ A jury might find that this was
not just an expression of opinion but that it implied that A knew undisclosed facts that
would justify this opinion. [¶] 4. A writes to B about his neighbor C: ‘He moved in six
months ago. He works downtown, and I have seen him during that time only twice, in his

                                              13
       A court distinguishing between statements of fact and protected statements of
opinion must consider the effect of cautionary language in an allegedly defamatory
communication. “Where the language . . . is ‘cautiously phrased in terms of apparency’
the statement is less likely to be reasonably understood as a statement of fact rather than
opinion.” (Baker, supra, 42 Cal.3d at pp. 260-261, fn. omitted.) Thus, in Gregory, the
court focused on the word, “apparently” to determine that the statement—“ ‘Apparently
there were some internal politics within [the union] which certain individuals were using
to seek personal gain and political prestige rather than to serve the best interests of the
members they were supposed to represent’ ”—was opinion rather than fact. (Gregory,
supra, 17 Cal.3d at p. 599, italics added.) Likewise, in Baker, the court observed the
phrase “ ‘[m]y impression is . . . .’ ” would signal to a reasonable person that “a statement
of opinion rather than of fact was to follow.” (Baker, at pp. 261-262; see also, Carr v.
Warden (1984) 159 Cal. App. 3d 1166, 1168-1170 [statement premised by “I think . . . .”
was not a defamatory statement of fact].)
       With these principles in mind, we turn to whether the evidence presented by
Hydraulx established a prima facie case as to those elements of libel for which Hydraulx
had access to relevant material facts.
       3.     Doe 2’s Statements Did Not Assert or Imply Provably False Statements of
              Fact That, in Context, Are Susceptible of a Defamatory Meaning
       Hydraulx contends, and the trial court concluded, Doe 2’s use of the word
“whistle-blow” and statements that he was “burned by Greg and Colin” and “does not
like people perpetuating what [he] consider[s] bad business practices” are provably false

backyard around 5:30 seated in a deck chair with a portable radio listening to a news
broadcast, and with a drink in his hand. I think he must be an alcoholic.’ The statement
indicates the facts on which the expression of opinion was based and does not imply
others. These facts are not defamatory and A is not liable for defamation. [¶] 5. A says
to B about C, a city official: ‘He and his wife took a trip on city business a month ago
and he added her expenses in as a part of his own.’ B responds: ‘If he did that he is
really a thief.’ B’s expression of opinion does not assert by implication any defamatory
facts, and he is not liable to C for defamation.” (Rest.2dTorts, § 566, com. c, illus. 3-5,
p. ___.)

                                              14
and defamatory. We disagree. In the context in which they were made, Doe 2’s
statements are not reasonably susceptible of an interpretation implying defamatory
statements of fact beyond the facts disclosed in the emails or known to the recipients.
        The trial court expressed a concern that “in the language of the law,”
“whistleblower” implied Hydraulx engaged in criminal or wrongful conduct: “People
don’t whistle-blow fun, nice things that are meaningless. People whistle-blow
wrongdoing. . . . And the word whistle-blow . . . causes me to read it in a different light.”
While we agree that, in the context of litigation, the term “whistle-blow” can imply an
allegation of criminal or wrongful conduct, we must consider the word in the context of
Doe 2’s emails and measure its use “not so much by its effect when subjected to the
critical analysis of a mind trained in the law, but by the natural and probable effect upon
the mind of [the] reader.” (MacLeod v. Tribune Publishing Co. (1959) 52 Cal. 2d 536,
547.)
        The specific wording of the emails, and the order in which the information is
communicated, are instructive. Doe 2 opened his emails with cautionary language,
saying, “I hoped I might whistle-blow on Vitality Visual Effects and Hydraulx.” (Italics
added.) The words “hoped” and “might” before “whistle-blow” signal that Doe 2 is
using the term hyperbolically to introduce a communication of specific information that
the recipients may not know. In context, the term explains why he is writing and
introduces the information about Vitality and Hydraulx’s supposed shared ownership,
which, in and of itself, is not defamatory.9

9
       Although Greg Strause’s and Bothman’s declarations were sufficient to make a
prima facie showing of falsehood with respect to the statements associating Hydraulx
with Vitality, the allegation of common ownership is not defamatory on its face and
Hydraulx has not offered any extrinsic facts supporting a defamatory innuendo. To the
contrary, because Hydraulx’s complaint and declarations portray both companies in a
positive light, there is no indication that the inaccurate attribution of common ownership
was defamatory.

                                               15
       In the next statements, Doe 2 goes on to explain the impetus for the
communication, describing that he “was surprised to see ‘Goosebumps’ on Vitality’s
IMDB as Vitality is co-owned by Greg and Colin Strause of Hydraulx . . . .” Doe 2
continues in the same vein, explaining why he was surprised (“I thought neither you nor
Sony had a good relationship with the Brothers after Skyline/Battle L.A”) referring to
Sony’s highly publicized accusation that Hydraulx failed to disclose its conflict of
interest in working on Skyline while under contract to Sony for Battle: Los Angeles.
       After identifying the basis for his assumption about continuing bad relations
between Sony and Hydraulx, Doe 2 started a new paragraph to recite his non-defamatory
allegations of common ownership (see fn. 9, ante): “Vitality and Hydraulx share owners
(Greg and Colin), their Exec Guy Botham works for both companies - Vitality and
Hydraulx even share L.A. and Vancouver offices, hardware, and infrastructure.”
Referring to that disclosure, Doe 2’s next paragraph was about Vitality (not Hydraulx)
and expressly refrained from accusing Vitality of any failure to disclose: “If Vitality
misinformed you or Sony as to its ownership or profit participants in any way, please take
my email into consideration.” (Italics added.) This paragraph communicates no false or
defamatory facts “of and concerning” Hydraulx.
       To close the emails, Doe 2 communicated additional information about himself,
again explaining his motivation for contacting the recipients. Writing in the first person,
Doe 2 described himself as “a concerned vfx professional whom, myself, has been
burned by Greg and Colin and I do not like people perpetuating what I consider bad
business practices.” Doe 2 then thanked the recipients for their “time in reading” and
expressed his “hope this email helps” before signing off as a “concerned VFX recruit.”
       There is no dispute that the recipients knew about the prior conflict between Sony
and Hydraulx. Because they read the emails in the context of known facts about that
conflict, the conflict is important to the determination whether the emails are reasonably
susceptible of a defamatory meaning. “In determining the meaning of a communication,
account is to be taken of all the circumstances under which it is made so far as they were
known to the recipient. Words which if isolated from the circumstances under which

                                            16
they were uttered might appear defamatory, may in fact not have been so understood by
the person to whom they were published. (Rest.2dTorts, § 563, com. e, p. ___.)
       The gist of the various news articles describing the 2011 dispute between Sony
(the company that retained Vitality for visual special effects services on its Goosebumps
project) was that Sony perceived that Hydraulx had a conflict of interest working on
Skyline while under contract for Battle: Los Angeles and was surprised and angry about
it. That context explained the impetus for Doe 2’s uninvited emails about the potential
for a new conflict of interest and Doe 2’s expressed distaste for such business practices.
       Hydraulx argues that Doe 2’s offer to “whistle-blow” and references to “bad
business practices” and being “burned” imply a defamatory accusation Hydraulx engaged
in dishonesty or wrongful conduct beyond the conflicts of interest addressed in the
emails.10 We find that in context, the term “whistle-blow” was used hyperbolically to
introduce the disclosed and non-defamatory allegation of common ownership and that
Doe 2’s reference to “bad business practices” reasonably referred to the known or
disclosed facts: Hydraulx’s Skyline conflict of interest and Vitality’s potential conflict if
it failed to disclose common ownership. In context, the only reasonable interpretation of
“bad business practices” is in reference to facts known to the recipients of the emails
(Hydraulx’s prior conflict of interest) and facts disclosed in the emails (the false
allegation of common ownership and Vitality’s potential conflict of interest involving
Goosebumps.)

10
        Hydraulx argues in the alternative that Doe 2’s statements are not entitled to the
degree of First Amendment protection afforded opinions because the statements
constitute commercial speech. Hydraulx infers that as a “vfx professional” Doe 2 is
necessarily a competitor. Although that inference is belied by Doe 2’s further admission
he is a VFX recruit, Hydraulx’s commercial speech argument has no merit. As noted in
Central Hudson Gas & Elect. v. Public Serv. Comm’n, 447 U.S. 557, the diminished
protection for commercial speech applies to “ ‘ “speech proposing a commercial
transaction, which occurs in an area traditionally subject to government regulation.” ’ ”
(Id. at p. 589.) Doe 2’s emails do not propose a commercial transaction. They are not an
advertisement for services. Based on the content of the communications, there is no
reason to vitiate Doe 2’s right to speak freely and to remain anonymous.

                                              17
       Hydraulx’s libel allegations are not based on Doe 2’s statements about conflicts of
interest. (Cf. Savage v. Pacific Gas & Electric Co. (1993) 21 Cal. App. 4th 434, 445
[concluding statements about conflicts of interest inevitably involve “an application of an
ethical standard to facts, reflecting the exercise of judgment” that “[do] not imply an
objective fact that can be proved to be true or false”].) Instead, Hydraulx argues that the
terms “whistle-blow,” “bad business practices” and being “burned” communicated or
implied that Hydraulx engaged in some other undisclosed conduct involving dishonesty.
As noted above, we do not find the emails reasonably susceptible of such an
interpretation.
       Even if they were, the onus was on Hydraulx to introduce evidence that the
recipients of the emails interpreted them as accusations of wrongful conduct beyond the
conflicts of interest. (See Kahn, supra, 232 Cal.App.3d at p. 1608 [if court finds
statements are susceptible of a defamatory meaning, “the jury may be called upon to
determine whether such an interpretation was in fact conveyed” to the recipients].)
Hydraulx offered no evidence that Moritz, Furie, Baxter, or Botham interpreted the
emails as implying an accusation that Hydraulx engaged in any misconduct, aside from
the actual and potential conflicts of interest. (See Krinsky, supra, 159 Cal.App.4th at
pp. 1171-1172; Paterno, supra, 163 Cal.App.4th at pp. 1349-1351.) Although Botham,
in his declaration, averred that the allegation of common ownership was false, he did not
say that he understood the emails as conveying any defamatory information or implying
any undisclosed facts about Hydraulx.
       Neil Moritz’s comments when he forwarded an email “FYI” to Greg Baxter
suggests that he did not view the email as defamatory. Baxter’s response—“Not sure this
is true. [¶] . . . Guy [Botham] bought the hardware are software from (now defunct)
Hydraulx. [¶] Strause Brothers, I was told, have zero involvement in Vitality, other than
selling Guy their equipment and pipeline”—also offers no indication that Baxter read the
email as communicating anything other than the non-defamatory allegation of common
ownership. The record is therefore devoid of any evidence the recipients of the emails

                                             18
interpreted them as an accusation Hydraulx engaged in any deceit or wrongdoing aside
from the conflict of interest with Sony identified in Doe 2’s emails.11
       Outside the context of the conflicts of interest, the words “whistle-blow” “bad
business practices” and “burned” are too vague and amorphous to constitute an
accusation of specific wrongdoing. In McGarry v. University of San Diego (2007)
154 Cal. App. 4th 97, the court rejected the plaintiff’s argument that a similarly vague
implication he engaged in immoral conduct was actionable as an opinion based on an
undisclosed statement of false and defamatory facts. The court held a statement
“impliedly assert[ing] [the plaintiff] had engaged in some unspecified immoral
behavior . . . [was] incapable of being interpreted as implying a provably false assertion
of fact.” (Id. at p. 116.) The court explained, “Behavior that might qualify as immoral to
one person, although being perfectly acceptable to another person, demonstrates that an
amorphous assertion of immoral behavior is within the range of statements of opinion
that are not actionable.” (Id. at p. 117.) “Because [defendant’s] statement contain[ed] no
hint of what conduct she believed [the plaintiff] had engaged in that would be immoral,
her statement neither contained nor implied a provably false assertion of fact, but at most
implied an opinion.” (Ibid.)
       The same is true in this case because behavior one person regards as a “bad
business practice” may be acceptable to another person and conduct causing one person
to feel “burned” may not affect another person at all. Someone might regard something
as trivial as failures to return telephone calls as “bad business practices.” Another person

11
        Along the same lines, Hydraulx also failed to offer evidence that the statements
caused harm. Though Hydraulx argued in its motion that the reference to “bad business
practices” was a libel per se for which damages may be presumed, the United States
Supreme Court has held that a presumption of damages is inconsistent with the First
Amendment when a public figure libel plaintiff alleges defamation based on statements
concerning a matter of public interest. (New York Times Co. v. Sullivan, supra, 376 U.S.
at pp. 283-284.) Hydraulx premised its motion for special discovery on its need to
discover Doe 2’s actual malice. Although, as a libel plaintiff subject to proof of actual
malice, Hydraulx also had to prove actual damages, it did not plead or offer proof that
Doe 2’s emails caused it to suffer any harm.

                                             19
might use “bad business practices” to describe fraudulent or unlawful conduct. Similarly,
a person might feel “burned” by any range of behavior, from a social snub to a
fraudulent transaction. Without some reference to the type of undisclosed misconduct,
e.g., “In my opinion, John Jones is a liar,” these comments are too vague and uncertain to
be actionable as conveying a defamatory accusation. (Milkovich, supra, 497 U.S. at
pp. 19-20; see, e.g., Nygård, Inc. v. Uusi-Kerttula (2008) 159 Cal. App. 4th 1027, 1047
[employee’s statements about “ ‘ “horrible working experience” ’ ” with prominent
business man, being pestered “around-the-clock” and “[slaving] without a break” are
protected opinion about employer]; Moyer v. Amador Valley J. Union High School Dist.
(1990) 225 Cal. App. 3d 720. 722 [statement that plaintiff was the “ ‘worst’ ” teacher,
“ ‘babble[d]’ ” and was terrorized when a smoke bomb went off in his class were non-
actionable opinions].)
       This interpretation is supported by Doe 2’s extensive use of cautionary language,
emphasizing his communication of opinions rather than facts. The emails open with, “I
hoped I might whistle-blow,” vitiating any implication that he intended to make an
accusation of dishonesty or wrongdoing. His statement, “I thought neither you nor Sony
had a good relationship” underscores that his understanding about the relationship was
not certain or based on any first-hand knowledge. Doe 2 was careful not to accuse
Vitality of dishonesty. His statement, “If Vitality misinformed you . . .” declines to make
an accusation of dishonesty; the verb “misinform” rather than “lie” or “defraud” leaves
open the possibility of a negligent rather than intentional miscommunication. Doe 2
makes no statement suggesting Hydraulx had been dishonest in connection with
Goosebumps, or had a new conflict of interest or duty to disclose its supposed
relationship with Vitality.
       Doe 2 is even more cautionary in his statement about “bad business practices,”
inviting the reader to reject his allegation based on his admitted bias against the Strause
brothers—i.e., “I . . . myself [have] been burned.” His reference to himself twice in the
statement, “I do not like people perpetuating what I consider bad business practices,”
underscores his intention to communicate a personal opinion rather imply an objective

                                             20
and defamatory accusation of fact. (Cf. Gregory, supra, 17 Cal.3d at p. 599; Baker,
supra, 42 Cal.3d at p. 262. “Opinions that present only an individual’s personal
conclusions and do not imply a provably false assertion of fact are nonactionable.”
(Paterno, supra, 163 Cal.App.4th at p. 1356.)
       Nothing in the emails suggests Doe 2 had any inside information about Hydraulx
or professional expertise about industry business practices. As the Supreme Court
explained in Milkovich, “[s]imply couching . . . statements in terms of opinion does not
dispel [false and defamatory] implications” where the speaker implies “a knowledge of
facts which lead to the [defamatory] conclusion.” (Milkovich, supra, 497 U.S. at
pp. 18, 19; cf. Bose Corp. v. Consumer Union of U.S., Inc. (1984) 466 U.S. 485 [sound
engineer’s opinion plaintiff’s speakers generated sound that tended to “wander about the
room” implied knowledge of underlying defamatory facts]; Gill v. Hughes (1991)
227 Cal. App. 3d 1299, 1309 [hospital board’s statement plaintiff surgeon was
“ ‘incompetent’ ” and “ ‘needs more training’ ” actionable as implying undisclosed
facts].)
       There is no similar suggestion of superior knowledge or expertise in this case. By
identifying himself as a “vfx professional” and signing off as a “VFX Recruit,” Doe 2 let
the recipients of his emails know that he is a skilled worker who is new to the profession
rather than an executive in a position of power or another person with inside knowledge.
Doe 2’s self-identification as a “recruit” also belied any suggestion he was an attorney or
person with any particular knowledge about, or authority on, industry business practices.
(Cf. Franklin v. Dynamic Details, Inc. (2004) 116 Cal. App. 4th 375, 389 [non-attorney’s
charge that plaintiff “stole” and “plagiarized” copyright material were statements of
protected opinion based on disclosed facts].)
       We therefore conclude that Doe 2’s emails are not actionable as libel because the
expressed opinions are not reasonably susceptible of an interpretation implying any
undisclosed false and defamatory fact “of and concerning” Hydraulx. Therefore,
Hydraulx failed to make a prima facie showing of libel.

                                            21
       4.     The Possibility of an Arbitration Agreement Is Not an Adequate Basis for
              Compelling Discovery of Doe 2’s Identity
       Hydraulx argues in the alternative that it is entitled to discovery of Doe 2’s
identity as a means of potentially enforcing an arbitration agreement that it contends it
may have with Doe 2. The contention is entirely speculative and lacks a basis in
substantial evidence. Though Greg Strause’s declaration states, “Hydraulx has
agreements to arbitrate with nearly all of its partners, vendors, employees, consultants
and clients,” Hydraulx provided no evidence of the contents of the supposed agreements,
and made no showing that the agreements would apply to the circumstances of this case.
Without evidence of the specific provisions, it is impossible to determine whether any
Hydraulx arbitration agreement, even if signed by Doe 2, would be binding in this case.
       Krinsky’s requirement that a libel plaintiff make a prima facie showing before
invading a speaker’s constitutional right to remain anonymous makes no exception for
discovery pertaining to forum selection issues. Evidence that Hydraulx might have an
arbitration agreement with Doe 2 that may or may not be enforceable is not evidence of a
due process or contractual right sufficient to outweigh Doe 2’s right to free expression
and to protection under the First Amendment. Mindful that Hydraulx initiated this action
and that Doe 2 has invoked the protection of the anti-SLAPP statute in an effort to avoid
the expense of defending that lawsuit, we decline to make any exception to Krinsky’s
requirement, which was specifically calibrated to balance the libel plaintiff’s right to due
process in prosecuting his claim with the defendant’s First Amendment right to speak
anonymously.

                                             22
                                          DISPOSITION
       The petition is granted. Let a writ of mandate issue directing the trial court to
vacate its order granting Hydraulx’s motion for special discovery under section 425.16,
subdivision (g) and enter a new order consistent with this opinion. The stay of
proceedings in the trial court is lifted. John Doe 2 is awarded his costs in this writ
proceeding.
       CERTIFIED FOR PUBLICATION

                                                  HOGUE, J.

We concur:

                     EDMON, P. J.

                     ALDRICH, J.


        Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

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