Court Opinion

ID: 9782266
Source: CourtListenerOpinion
Date Created: 2023-08-30 18:14:45.823059+00
Date Added: 2024-06-11T07:34:54.551461
License: Public Domain

BROWN, J., Dissenting.
The Legislature designed Code of Civil Procedure section 425.16 (hereafter section 425.16) to address a specific problem: Lawsuits, a traditional right that enables parties to shape law and government policy, could be deployed as a weapon barring rivals from meaningful access to judicial redress. (California Transport v. Trucking Unlimited (1972) 404 U.S. 508, 512 [92 S.Ct. 609, 612-613, 30 L.Ed.2d 642].) This strategic litigation could ensure parties prevailed by intimidating rivals instead of persuading judges and juries. Because traditional remedies for abusive litigation were ineffective (Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 817 [33 Cal.Rptr.2d 446]), the SLAPP (strategic lawsuits against public participation) law was enacted to protect legitimate litigants from procedurally coercive tactics.
The specific SLAPP problem warrants a specific remedy. Unfortunately, the majority opts for an all-inclusive definition of SLAPP’s, which ignores the practical impact of legal rules, treats identical cases differently, and may chill the right of petitioning the law was designed to protect. Rather than engage in the “subtle inquiry” necessary to distinguish proper petitioning from suppressive SLAPP’s (Braun, Increasing SLAPP Protection: Unburdening the Right of Petition in California (1999) 32 U.C. Davis L.Rev. 965, 972), the majority appears willing to consider any suit a SLAPP, based largely on when it was filed. To the majority this is not problematic because courts will dismiss only meritless suits under the law. But its presumptive application of section 425.16 will burden parties with meritorious claims and chill parties with nonfrivolous ones.
The cure has become the disease—SLAPP motions are now just the latest form of abusive litigation. I respectfully dissent.
I. Navellier’s Suit Did Not “Arise from” Sletten’s Suit
After a conflict between Navellier and Sletten had spilled into court, Sletten traded his right to sue Navellier in exchange for Navellier’s return to the Navellier Series Fund. (See Navellier v. Sletten (9th Cir. 2001) 262 F.3d 923, 933 (Navellier).) After Navellier continued to pursue his suit, Sletten *97filed counterclaims. (See id. at p. 934.) Navellier, in turn, filed claims in state court for fraud and breach of contract.
Sletten filed a special motion pursuant to section 425.16 to strike Navellier’s claims, asserting those claims “arose from” Sletten’s protected First Amendment activity: i.e., filing his own counterclaims. In fact, neither of Navellier’s claims properly falls under the SLAPP law. The breach of contract claim is not a SLAPP because Sletten had exchanged his right to sue through the release for consideration, and thus his petitioning was not a “valid exercise” of that right. (§ 425.16, subd. (a).) The fraud claim is not a SLAPP because, as the parallel companion case of City of Cotati v. Cashman (2002) 29 Cal.4th 69 [124 Cal.Rptr.2d 519, 52 P.3d 695] (City of Cotati) explains, the second suit was based not on the first suit, but on the underlying dispute between the parties.
A. The Breach of Contract Claim Is Not a SLAPP
Navellier correctly claims that a suit alleging a breach of contract for violating a release does not implicate the right to petition, and thus falls outside the scope of section 425.16. His position is supported by Duracraft Corp. v. Holmes Products Corp. (1998) 427 Mass. 156 [691 N.E.2d 935] (Duracraft).1 Like section 425.16, Massachusetts’ anti-SLAPP statute is designed for broad application, and is not limited to matters of public concern. (Duracraft, at p. 941.) The Duracraft court nonetheless found the law inapplicable in a case comparable to Navellier, supra, 262 F.3d 923. The plaintiff and defendant were two producers that, at different times, both employed an individual named Marino. The plaintiff contended Marino breached a nondisclosure and confidentiality agreement; the defendant contended that suit was barred as a SLAPP. (Duracraft, at pp. 937-939.)
The court found the law did not restrict the plaintiffs suit, ruling the statute was not a license to breach a contract. “Many preexisting legal relationships may properly limit a party’s right to petition, including enforceable contracts in which parties waive rights to otherwise legitimate petitioning. A quintessential example of such a waiver is a settlement agreement, in which a party releases legal claims against an adversary that otherwise properly could be prosecuted by petitioning the court. But neither this example nor contractual or fiduciary relationships in general exhaust the conceivable occasions in which a party assumes obligations that in turn limit *98the party’s subsequent free exercise of speech and petitioning rights. Furthermore, we are aware of no case that has immunized alleged breaches of preexisting legal obligations based on constitutional protection for the right to petition . . . .” (Duracraft, supra, 691 N.E.2d at pp. 942-943, fn. omitted, italics added.)
Like Marino, Sletten traded his right to engage in specified First Amendment activity (litigating) in exchange for consideration. After that waiver, his suit was not what section 425.16, subdivision (a), characterizes as a “valid exercise” of his right to petition. (See also Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 648, fn. 4 [49 Cal.Rptr.2d 620] [statute protects “legitimate petition rights”].) Sletten no longer possessed the lawful right to sue Navellier, and thus his nonexistent right could not be chilled or abridged. (See also Paul for Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1367 [102 Cal.Rptr.2d 864] [improper campaign financing is not a valid exercise of First Amendment right and is thus excluded from the scope of § 425.16].)
The distinctive nature of Massachusetts’ law required the Duracraft court to exclude the case from the law’s scope altogether to validate the waiver. But even though California has a “second prong” that enables meritorious claims to survive, the threshold question is whether we should consider the release presumptively invalid and thus force Navellier to bear the burdens and costs of establishing its validity. Sletten may certainly seek relief from the release on the basis of duress, fraud, or other unconscionable means of obtaining his agreement, but this task does not require the extraordinary remedy of section 425.16.
B. The Fraud Claim Is Not a SLAPP
Even if the breach claim were properly subject to a motion to strike, the fraud claim is not, for the reasons we cited in City of Cotati. There, the City of Cotati (City) filed a declaratory action regarding the validity of its rent control ordinance, after the property owners (Owners) had challenged the ordinance in court. (City of Cotati, supra, 29 Cal.4th at p. 72.) We explained the City’s suit did not “arise from” the Owners’ suit, but that both arose from the underlying controversy regarding the ordinance and its validity. (Id. at p. 81.) The same analysis applies to this case: Both Sletten’s and Navellier’s suits arose from the underlying dispute concerning the validity of the release and Sletten’s conduct in accepting it.
In City of Cotati, we note “the mere fact an action was filed after protected activity [petitioning] took place does not mean it arose from that activity.” *99(City of Cotati, supra, 29 Cal.4th at pp. 76-77.) We note the City’s response resembled a cross-complaint, which may “ ‘arise[] out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges.’ ” (Id. at p. 77, quoting Code Civ. Proc., § 426.10, subd. (c).) We even credit the concession that the “City’s action could not be a SLAPP if City had filed it as a counterclaim” to the initial suit. (City of Cotati, at p. 77, fn. omitted.)
Navellier’s fraud claim arose not from Sletten’s suit but from the alleged deception that occurred in July 1997, when Sletten signed the release. Navellier contends, inter alia, that Sletten averred he was represented by counsel who had reviewed and approved the release. Navellier allegedly relied on Sletten’s averrals to return as a trustee. But Navellier subsequently learned Sletten had not been represented by counsel, and that Sletten had never intended to abide by the release. The facts constituting the gravamen of Navellier’s claim therefore predated Sletten’s suit.
The majority asserts “Sletten’s negotiation and execution of the Release, therefore, involved ‘statements] or writing[s] made in connection with an issue under consideration or review by a . . . judicial body.’ ” (Maj. opn., ante, at p. 90.) Of course, the only litigation pending at the time was Navellier’s initial suit seeking to prevent his removal as trustee. There was no litigation concerning the validity of the release; the release itself was designed to forestall further litigation. The majority therefore recognizes Navellier’s claim was based on and arose from “the same transaction, occurrence, or series of transactions or occurrences” that was initially litigated in the April 1997 suit.2
Were we to conclude otherwise, and decline to hold each suit related back to the underlying dispute, then Sletten’s own counterclaim to Navellier’s suit would be a SLAPP. As the Ninth Circuit Court of Appeals recalled, Navellier sued for breach of fiduciary duty, negligence, waste, and intentional interference with prospective economic advantage; Sletten answered by filing counterclaims for breach of contract and bad faith. (Navellier, supra, 262 F.3d at pp. 933-934.) The counterclaims stand on the same legal footing as Navellier’s state court claims of breach of contract and fraud; either both parties’ breach of contract claims relate back to the underlying dispute and the overall “transaction” (in which case neither party’s suit is a SLAPP), or neither party’s claim relates back, and thus both are SLAPP’s.
*100Navellier stands in the exact same position as the City in the companion case of City of Cotati. We have this on the authority of the City itself, which essentially recognized the congruence, although it described a hypothetical claim for breach of contract claim rather than one for fraud: “[A] person may sue another for breach of contract. The other person, however, may believe that there is no contract, and may sue the first person for declaratory relief to that effect. The second action is not barred by any litigation privilege; nor is it retaliatory. It merely seeks a declaration of the second person’s rights as to the controversy raised in the first suit.”3
The majority offers no basis for distinguishing this case from City of Cotati. In that case, we observe the City’s complaint refers to the underlying controversy and does not mention Owners’ suit itself. (City of Cotati, supra, 29 Cal.4th at pp. 77, 80.) But the same is true for Navellier’s fraud claim, which cites the underlying controversy but does not mention Sletten’s suit. There is thus no basis for reaching conflicting results in these cases. If the City’s suit is not a SLAPP, neither is Navellier’s. Neither arises from the preceding suit.
II. The “Second Prong” Does Not Remedy the Error of Applying the Law to Navellier
The majority dismisses any objection to its unrestricted application of section 425.16 by noting a suit does not officially become a SLAPP until the party fails to comply with the “second prong” of that provision. (Maj. opn., ante, at pp. 89, 93-94.) This ensures that suits possessing “minimal merit” will proceed, and thus, we are told, this construction poses no obstacle to meritorious plaintiffs. (Id. at pp. 93-94.) But although plaintiffs with clearly meritorious claims will indeed prevail—eventually—the second prong’s required showing nevertheless imposes costs and burdens for which these plaintiffs will never be made whole.
Furthermore, the rule devised by the majority encourages a “race to the courthouse” to enjoy the benefit of favorable procedural rules. Finally, these provisions actually create disincentives for many individuals to bring petitions to seek redress. Although the Legislature enacted section 425.16 to *101protect petitioning from any “chill,” our unrestricted application of the law, which relies on the probability showing to eliminate true SLAPP’s, will actually chill petitioning activity that is constitutionally protected.
The opinion’s reliance on the “second prong” amounts to a rewriting of California summary judgment law in a way that significantly disadvantages plaintiffs. Plaintiffs now have the burden of proving the viability of their claims, without benefit of discovery. Furthermore, the statute provides defendants with the means to delay the proceedings, through both the initial motion and the consequent appeal. Plaintiffs will necessarily incur additional expense in defending against even meritless motions to strike.4 Meritorious plaintiffs will ultimately prevail, but the presumptive application of section 425.16, which requires an early, affirmative showing of merit, without benefit of discovery, will impose costs on plaintiffs that will never be recouped.
Additionally, the presumptive application of section 425.16, pending the “second prong” analysis, creates an inappropriate incentive to “race to the courthouse.” A party benefits merely by filing first.5
For example, Sletten’s counterclaim was so devoid of merit that the federal district court properly granted Navellier’s motion for summary judgment. (Navellier, supra, 262 F.3d at pp. 940-941.) But this defeat cost Sletten nothing but his own time and money, which he might have considered a worthwhile investment for his effort to overturn the release. By contrast, had he filed his suit after Navellier had filed a declaratory action as to the validity of the release, Sletten would have been liable for Navellier’s fees and costs when the court determined Sletten’s claim was baseless.
Similarly, Navellier was harmed by his delay. If he had filed first, he would not have needed to make an affirmative showing of his case without benefit of discovery. Furthermore, he could have collected costs and fees from Sletten for the latter’s filing of a claim that both the federal district court and the Ninth Circuit Court of Appeals deemed fit for summary judgment, and thus one “ ‘ “any reasonable attorney would agree . . . [was] *102totally and completely without merit.” ’ ” (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821 [123 Cal.Rptr.2d 19, 50 P.3d 733] (Wilson), quoting Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 885 [254 Cal.Rptr. 336, 765 P.2d 498].) The disparate standards applied to parties based on when they arrive at the courthouse make a mockery of the legitimate statutory purpose of protecting litigants from coercive practices.
Finally, the majority’s decision will chill the right to petition, which the SLAPP law was designed to protect. Parties with novel claims will now confront two layers of uncertainty: whether the court will deem the claim as arising from a former suit and whether the court will find a probability of success. Unfavorable findings to these questions will prove costly. Many parties, especially those with limited resources, will hesitate to file under these conditions.
This result will reduce petitioning and thus contradict the law’s purpose. As the United States Supreme Court has observed, “In a representative democracy such as this . . . [the] government act[s] on behalf of the people and, to a very large extent, the whole concept of representation depends upon the ability of the people to make their wishes known . . . .” (Eastern R. Conf. v. Noerr Motors (1961) 365 U.S. 127, 137 [81 S.Ct. 523, 529, 5 L.Ed.2d 464].) For this reason, the Legislature found and declared “that it is in the public interest to encourage continued participation in matters of public significance.” (§ 425.16, subd. (a).) We have thus broadly protected the right. Although friyolous actions are subject to sanction, “ ‘[A]ny definition [of frivolous] must be read so as to avoid a serious chilling effect on the assertion of litigants’ rights .... Counsel and their clients have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win . ... [A claim] that is simply without merit is not by definition frivolous and should not incur sanctions. Counsel should not be deterred from filing such [claims] out of a fear of reprisals. ’ ” (California Teachers Assn. v. State of California (1999) 20 Cal.4th 327, 340 [84 Cal.Rptr.2d 425, 975 P.2d 622], quoting In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650 [183 Cal.Rptr. 508, 646 P.2d 179].) In Wilson, we recognized that the potential imposition of tort liability for malicious prosecution would “unduly burden[]” legitimate nonfrivolous petitioning. (Wilson, supra, 28 Cal.4th at p. 820.) These burdens chill legitimate litigants.
This chill will now fall upon plaintiffs who have a novel, untested claim that is not obviously devoid of merit but for which there is not yet any supporting legal authority. The proper functioning of our legal system may depend on the bringing of such suits, which courts may reject if they indeed lack merit. But now that parties may be subject to the additional burden of their opponents’ fees and costs, they will hesitate to do so.
*103III. Conclusion
The United States Supreme Court has distinguished between “situations in which persons use the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon.” (City of Columbia v. Omni Outdoor Advertising, Inc. (1991) 499 U.S. 365, 380 [111 S.Ct. 1344, 1354, 113 L.Ed.2d 382].) The SLAPP law aimed to prevent the former: “[Participation should not be chilled through abuse of the judicial process.” (§ 425.16, subd. (a), italics added.) Thus, SLAPP’s were distinctive and worthy of special sanction. “SLAPP suits are brought to obtain an economic advantage over the defendant, not to vindicate a legally cognizable right of the plaintiff. . . . [T]he plaintiff does not expect to succeed in the lawsuit, only to tie up the defendant’s resources . . . .” (Wilcox v. Superior Court, supra, 27 Cal.App.4th at p. 816.) The SLAPP law was necessary because the law was otherwise impotent to stop such abuses of process. “[L]ack of merit [in one’s claims] is not of concern to [a SLAPPing] plaintiff because the plaintiff does not expect to succeed in the lawsuit, only to tie up the defendant’s resources for a sufficient length of time to accomplish plaintiff s underlying objective. [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. . . . flj] . . . Because winning is not a SLAPP plaintiff’s primary motivation, defendants’ traditional safeguards against meritless actions (suits for malicious prosecution and abuse of process, requests for sanctions) are inadequate to counter SLAPP’s. Instead, the SLAPPer considers any damage or sanction award which the SLAPPee might eventually recover as merely a cost of doing business. [Citation.] By the time a SLAPP victim can win a ‘SLAPP-back’ suit years later the SLAPP plaintiff will probably already have accomplished its underlying objective.” (Id. at pp. 816-817, fn. omitted.)
By contrast, as the Court of Appeal below observed, the instant case involved merely an attempt to obtain a favorable outcome. “The complaint herein is nothing more than a dogged effort to obtain damages for Sletten’s alleged breach of the release he signed. A legitimate dispute exists between the parties over the validity of the release. Navellier and NMI have not engaged in oppressive litigation to bludgeon Sletten into submission. Each party is utilizing the federal and state judicial systems in a permissible manner to achieve its economic goals. Accordingly, the complaint is not subject to section 425.16.”
Distinguishing SLAPP’s from legitimate petitioning is challenging but essential. Our proper solicitude for one party’s right to petition cannot come *104at the expense of the other party’s parallel right. “[T]he right to seek judicial relief for redress of grievances [is] too fundamental in character to permit petitioning activity to be turned against the petitioning party in the absence of a showing that the petitioning activity had lost its constitutionally privileged status. . . .” (Protect Our Mountain v. District Court (Colo. 1984) 677 P.2d 1361, 1367.)6 For this reason, the Supreme Court of New Hampshire invalidated that state’s law for unduly restricting the rights of the alleged SLAPPer: “A solution cannot strengthen the constitutional rights of one group of citizens by infringing upon the rights of another group.” (Opinion of the Justices (1994) 138 N.H. 445 [641 A.2d 1012, 1015].)
Under the majority’s rule, suits are presumptively SLAPP’s until the plaintiff affirmatively makes a requisite showing. This will deter parties with novel claims, burden parties with meritorious ones, and prevent courts from hearing legal theories that warrant consideration. Frivolous filers will gain a new bargaining chip for settlement; a threatened motion to strike, even if unsuccessful, will cost meritorious litigants time and money. In short, the majority’s holding helps unmeritorious parties like Sletten who file first and harms meritorious parties like Navellier who file second. This undermines a litigant’s right to petition and our justice system as a whole.
Baxter, J., and Chin, J., concurred.

 Massachusetts law covers litigation based on protected activity, a phrase that is functionally equivalent to arising from. (See Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1114 [81 Cal.Rptr.2d 471, 969 P.2d 564].) Like our opinion in City of Cotati, the high court of Massachusetts recognized that “ ‘based on’ does not mean ‘in response to.’ ” (Duracraft, supra, 691 N.E.2d at p. 943, fn. 20.)

 A “ ‘transaction’ ... is not confined to a single, isolated act or occurrence [like] a contract [citation], [or] a lease [citation]... but may embrace a series of acts or occurrences logically interrelated . . . .” (Saunders v. New Capital for Small Business, Inc. (1964) 231 Cal.App.2d 324, 336 [41 Cal.Rptr. 703].)

 This analysis conforms to our having drawn “a careful distinction between a cause of action based squarely on a privileged communication, such as an action for defamation, and one based upon an underlying course of conduct evidenced by the communication.” (White v. Western Title Ins. Co. (1985) 40 Cal.3d 870, 888 [221 Cal.Rptr. 509, 710 P.2d 309].) Thus, where defendants counterclaimed, alleging that plaintiff Microsoft had abused judicial process by applying to freeze defendants’ assets, the court relied on White in rejecting Microsoft’s claim that the application was privileged, finding the allegedly privileged application was “only being used to prove the abuse of process claim, and is not the claim itself.” (Microsoft Corp. v. A-Tech Corp. (C.D.Cal. 1994) 855 F.Supp. 308, 314.)

The provisions for costs are not favorable to the plaintiff (the object of the motion to strike). Although the court shall impose costs and reasonable fees if it deems frivolous the motion to strike, the provisions also reward successful motions with costs and actual fees. (§ 425.16, subd. (c).) The plaintiff, asked to present only a prima facie case, is unlikely to present evidence that appears so overwhelming as to show the motion to strike was frivolous.

Sletten actually benefited by filing the first motion to strike, although the procedural history below was unusual, as it involved litigation in both federal and state court. Although both parties had filed breach of contract claims, Sletten was the first party to characterize his opponent’s claim as a SLAPP. The result of Sletten’s motion to strike was that procedural standards were tilted to his advantage.

 Professor Pring considered this case a “model” for anti-SLAPP legislation. (Pring, SLAPPs: Strategic Lawsuits Against Public Participation (1989) 7 Pace Envtl. L.Rev. 3, 18.)