Court Opinion

ID: 4156244
Source: CourtListenerOpinion
Date Created: 2017-03-28 21:02:33.414173+00
Date Added: 2024-06-11T07:46:40.035029
License: Public Domain

Filed 3/28/17
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                SECOND APPELLATE DISTRICT

                         DIVISION FIVE

DOV CHARNEY,                        B268928

       Plaintiff and Appellant,     (Los Angeles County
                                    Super. Ct. No.
       v.                           BC581130)

STANDARD GENERAL, L.P., et
al.,

     Defendants and
Respondents.

      APPEAL from an order of the Superior Court of Los
Angeles County, Terry A. Green, Judge. Affirmed.
      Keith A. Fink & Associates, Keith A. Fink and Olaf J.
Muller for Plaintiff and Appellant.
      Munger, Tolles & Olson, Mark B. Helm and John F. Muller
for Defendants and Respondents.
      Plaintiff and appellant Dov Charney appeals the trial
court’s order granting an anti-SLAPP1 motion (Code Civ.
Proc., § 425.16)2 filed by defendants and respondents Standard
General, L.P., Standard General Master Fund L.P., and P.
Standard General LTD.3
     Charney was the president and chief executive officer
(CEO) of American Apparel, Inc. (American Apparel).4 Charney’s
employment was ultimately terminated following an
investigation into allegations that he engaged in various types of
misconduct. Standard General then issued a press release which
read as follows:

      “As we have stated previously, our objective is to help
      American Apparel grow and succeed. We supported
      the independent, third-party and very thorough
      investigation into the allegations against Mr.
      Charney, and respect the Board of Directors’ decision

      1 “SLAPP is an acronym for strategic lawsuit against public
participation. [Citation.]” (Kenne v. Stennis (2014) 230
Cal.App.4th 953, 957, fn. 3.)

      2 Allstatutory references are to the Code of Civil Procedure
unless otherwise stated.

      3
      Defendants are collectively referred to as “Standard
General.”
      4 Although not expressly stated in the briefs, the parties
give the impression that, as alleged in the complaint, Standard
General gained control of American Apparel.

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      to terminate him based on the results of that
      investigation.”
      Charney filed a lawsuit alleging several causes of action
rooted in his claim that the press release contained false and
defamatory information about him. Standard General’s anti-
SLAPP motion was successful, prompting this appeal by
Charney. We hold Charney did not satisfy his burden of showing
there was a minimal chance his claims would succeed at trial
and, for that reason, affirm the trial court’s order granting the
anti-SLAPP motion.

                        THE COMPLAINT

      Defamation. Charney alleged the press release contained
“falsehoods, exaggerations and/or inaccuracies about
[him] . . . namely that he was terminated from American
Apparel’s employment for ‘cause’ based on the results of an
‘independent’ ‘investigation’ conducted by a ‘third party.’” (Italics
added.)5
      He claimed the statements “portrayed [him] as someone
found liable and/or guilty by ‘independent’ and ‘third party’
investigators of committing financial malfeasance and illegal
sexual harassment and discrimination sufficient to terminate his
employment for ‘cause.’” (Italics added.) Charney maintained
the press release charged him with “engaging in illegal and
criminal misconduct, clearly exposed [him] to hatred, contempt,

      5 The complaint alleged that, because the investigation of
Charney was overseen by counsel for American Apparel (the law
firm of Jones Day), it was not conducted by an independent third
party.

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ridicule, and obloquy, and charge[d] [him] with improper and
immoral conduct.”
       It was alleged that Standard General committed this act
with knowledge of the falsity or defamatory nature of the
statements or with reckless disregard for whether they were false
and defamatory.
       False Light. Charney realleged the press release contained
falsehoods and claimed these statements were repeated
throughout media outlets causing him to be “placed . . . in a false
light in the public eye.” He again claimed Standard General
acted with knowledge of, or reckless disregard for, the false and
defamatory nature of the statements.
       Intentional Interference With Actual Economic Relations.
Charney alleged Standard General made the aforementioned
false and defamatory statements with the intent to disrupt his
ongoing negotiations to obtain third party assistance to regain
control of American Apparel.
       Intentional Interference With Prospective Economic
Relations. Charney claimed he had negotiated with others to
obtain financing to purchase shares of American Apparel and
reinstall himself as CEO. He also maintained he had negotiated
with others to “potentially work for other clothing companies, to
engage in passive investments within the apparel industry, to
start another competing clothing company, and to obtain
financing for the same.” Charney alleged Standard General
made the false and defamatory statements with the intent to
“destroy, hinder and/or otherwise stop” these business efforts.
       Unfair Business Acts/False Advertising (Bus. & Prof. Code,
§ 17200 et. seq.). Charney sought declaratory and injunctive
relief, alleging Standard General would continue to republish

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their false and defamatory statements causing others to refrain
from engaging in business transactions with him.

                        DECLARATIONS

Charney’s Declaration

       To support his position that the anti-SLAPP motion should
be denied on the ground that there was sufficient merit to his
claims, Charney submitted a declaration providing his version of
the events leading up to the press release. The declaration
detailed a long history of the relationship Charney had with
American Apparel and Standard General. Because most of the
facts asserted in Charney’s declaration are not necessary to
resolve the current appeal, we provide a brief overview of its
relevant contents.
       Charney, the founder of American Apparel, declared he was
improperly terminated as CEO. On or about June 18, 2014, the
Board of Directors (the Board) presented Charney with two
options: (1) resign and sign over his voting rights to the Board in
exchange for a severance package, an opportunity to remain with
the company as a consultant, and a positive press release; or (2)
be terminated for cause with his “Termination Notice,” i.e., a
document providing the reasons for his termination, being leaked
to the press. He was provided with a copy of this notice which
indicated he was being terminated for breaching his fiduciary
duty, violating company policy, and misusing corporate assets.
Charney was told the Board would take over American Apparel
with or without his acquiescence.

                                5
         Charney ultimately “settled” with the Board, in such a way
that Standard General “effectively took over American Apparel
by and through its control of the company stock and the Board
. . . .” Standard General promised Charney that there would be a
fair investigation into the allegations about him and that he
would be reinstated as CEO unless “something profoundly
egregious” was uncovered.
         Standard General and Charney entered a “Standstill
Agreement,” which documented the nature of the impending
investigation. The agreement provided that FTI Consulting, Inc.
(FTI) would conduct the investigation under the oversight of a
specially elected “Suitability Committee” within American
Apparel. Despite the agreement, Charney learned the law firm
that represented American Apparel (Jones Day) was overseeing
and conducting the investigation. Charney was concerned about
the impartiality of the investigation, in part, because Jones Day
was defense counsel in an ongoing arbitration with Charney.
         In early December 2014, the Board offered to terminate the
investigation, provide him with a severance package, and hire
him as a consultant as long as he relinquished his fight for
control of American Apparel. The Board indicated the Suitability
Committee would terminate his employment within 10 days if he
did not accept the offer.
         Charney rejected the offer. He was terminated on
December 15, 2014, but remained the majority shareholder. The
statements to the press that are the subject of this appeal
followed on or about December 22, 2014.6

      6 Inhis reply brief, Charney argues the trial court
improperly sustained some of Standard General’s objections to
portions of his declaration. We decline to consider the claim for

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Board Member’s Declaration

     Among the declarations submitted by Standard General
was that of David Danziger, a member of the Board.7 We
summarize its pertinent contents below.
      While Danziger was a Board member he also served as a
member of the Audit Committee and the Suitability Committee.
In the spring of 2014, the Audit Committee conducted an
investigation of Charney. During the investigation, information
was uncovered that led a majority of the Board to consider

two reasons: (1) while it provides some examples, it lacks
specificity in that it references “big [objectionable] chunks”
without further explanation or development (Dills v. Redwoods
Associates, Ltd. (1994) 28 Cal.App.4th 888, 890, fn. 1 (Dills)
[undeveloped argument may be treated as abandoned]); and (2) it
was not raised in Charney’s opening brief (see People v. Newton
(2007) 155 Cal.App.4th 1000, 1005).

     7  Standard General also filed declarations of American
Apparel executives David Glazek, Allan Mayer, and Colleen
Brown. Charney asserts the trial court “denied the bulk of [his]
[e]videntiary [o]bjections” to these declarations. He maintains
“much of” the evidence contained therein was “inadmissible
hearsay” and “violated the best evidence rule.” The argument
lacks specificity and is undeveloped. (Benach v. County of Los
Angeles (2007) 149 Cal.App.4th 836, 852 [appealing party
required to make a reasoned legal argument]; Dills, supra, 28
Cal.App.4th at p. 890, fn. 1.)
      In any event, the cited declarations are from executives
who either attested to the specific misconduct engaged in by
Charney or corroborated what was in the declaration of Danziger.
They have no bearing on our holding that Charney failed to
establish minimal merit to his causes of action.

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suspending Charney pending completion of the investigation. In
mid-June 2014, the Board gave Charney the option of remaining
with American Apparel as a paid consultant without supervisory
or financial authority, or be suspended pending completion of the
investigation. When no agreement was reached, the Board
unanimously voted to suspend Charney.
       Charney was sent a “suspension letter” documenting the
reasons for the suspension. Among the reasons stated for
suspension were: (1) the failure to take steps to prevent a
supervisee from creating and maintaining false and defamatory
“blog posts” about former employees; (2) authorizing the payment
of significant severance packages to employees to ensure his
misconduct directed toward them would not subject him to
personal liability; (3) repeated violations of the company’s sexual
harassment and anti-discrimination policies; (4) directing
derogatory and disparaging comments to others; and (5) using
corporate assets for personal non-business reasons without
approval of the Board.
       In December 2014, following an investigation of over six
months, the Suitability Committee unanimously concluded that
Charney was not suitable to return to American Apparel as an
officer or employee. The Board then voted to terminate Charney
for cause.

                          DISCUSSION

The Components of a SLAPP

      “‘A SLAPP suit—a strategic lawsuit against public
participation—seeks to chill or punish a party’s exercise of

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constitutional rights to free speech and to petition the
government for redress of grievances. [Citation.] The
Legislature enacted Code of Civil Procedure section 425.16—
known as the anti-SLAPP statute—to provide a procedural
remedy to dispose of lawsuits that are brought to chill the valid
exercise of constitutional rights. [Citation.]’ [Citation.]” (Rohde
v. Wolf (2007) 154 Cal.App.4th 28, 34.) “The goal [of section
425.16] is to eliminate meritless or retaliatory litigation at an
early stage of the proceedings.” (Seelig v. Infinity Broadcasting
Corp. (2002) 97 Cal.App.4th 798, 806.) That section provides, “[a]
cause of action against a person arising from any act of that
person in furtherance of the person’s right of petition or free
speech under the United States Constitution or the California
Constitution in connection with a public issue shall be subject to
a special motion to strike, unless the court determines that the
plaintiff has established that there is a probability that the
plaintiff will prevail on the claim.” (§ 425.16, subd. (b)(1).)
       In considering the application of the anti-SLAPP statute,
courts engage in a two-step process. “‘First, the court decides
whether the defendant has made a threshold showing that the
challenged cause of action is one arising from protected
activity. . . . If the court finds such a showing has been made, it
then determines whether the plaintiff has demonstrated a
probability of prevailing on the claim.’ [Citation.]” (Taus v.
Loftus (2007) 40 Cal.4th 683, 712.) The defendant bears the
burden on the threshold showing whereas the plaintiff bears the
burden on the second prong. (Rohde v. Wolf, supra, 154
Cal.App.4th at pp. 34-35.) “Only a cause of action that satisfies
both prongs of the anti-SLAPP statute . . . is a SLAPP, subject to
being stricken under the statute.” (Navellier v. Sletten (2002) 29

                                 9
Cal.4th 82, 89.) We review de novo the trial court’s order denying
an anti-SLAPP motion. (Flatley v. Mauro (2006) 39 Cal.4th 299,
325-326; Christian Research Institute v. Alnor (2007) 148
Cal.App.4th 71, 79.)

Analysis

       Charney concedes Standard General satisfied the threshold
burden of proving the complaint filed amounted to a SLAPP. He
maintains the trial court erred because he satisfied his burden of
showing his case had merit. We accept Charney’s concession and
concern ourselves only with the issue of whether Charney
established sufficient merit to his lawsuit.
       Charney’s causes of action shared the same foundation—in
order to be successful, they all required the press release to
constitute a defamatory statement. As we will explain, the
evidence fell short of meeting the minimal merit necessary to
establish this predicate and defeat Standard General’s anti-
SLAPP motion.
       To meet his burden of establishing merit to his claims, a
plaintiff opposing an anti-SLAPP motion “cannot rely on
allegations in the complaint, but must set forth evidence that
would be admissible at trial. [Citation.] Precisely because the
statute (1) permits early intervention in lawsuits alleging
unmeritorious causes of action that implicate free speech
concerns, and (2) limits opportunity to conduct discovery, the
plaintiff’s burden of establishing a probability of prevailing is not
high: We do not weigh credibility, nor do we evaluate the weight
of the evidence. Instead, we accept as true all evidence favorable
to the plaintiff and assess the defendant’s evidence only to

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determine if it defeats the plaintiff’s submission as a matter of
law. [Citation.] Only a cause of action that lacks ‘even minimal
merit’ constitutes a SLAPP. [Citation.]” (Overstock.com, Inc. v.
Gradient Analytics, Inc. (2007) 151 Cal.App.4th 688, 699-700.)
       “Defamation is the intentional publication of a statement of
fact that is false, unprivileged, and has a natural tendency to
injure or that causes special damage. [Citation.] Thus, to state a
defamation claim, the plaintiff must present evidence of a
statement of fact that is provably false. [Citation.] False
statements that accuse the plaintiff of criminal conduct are
defamatory on their face. [Citation.] [¶] However, statements
cannot form the basis of a defamation action if they cannot be
reasonably interpreted as stating actual facts about an
individual. Thus, rhetorical hyperbole, vigorous epithets, lusty
and imaginative expressions of contempt and language used in a
loose, figurative sense will not support a defamation action.
[Citation.]” (Grenier v. Taylor (2015) 234 Cal.App.4th 471, 486.)8
      Charney appears to denote what he considers to be the core
defamatory falsehoods by placing quotations around certain
words in the cause of action for defamation. We previously
quoted and italicized those words when summarizing the
defamation cause of action as it appears in the complaint. After
considering the complaint as a whole, and in light of Charney’s

      8 Itis undisputed Charney is a public figure. Thus, in order
for him to recover damages for defamation he has the additional
burden of establishing the person or entity issuing the false
statement did so with actual malice. (Curtis Publishing Co. v.
Butts (1967) 388 U.S. 130, 134; Khawar v. Globe Internat. (1998)
19 Cal.4th 254, 262-263.)

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declaration, it appears Charney attempts to make the case for
two fundamental falsities in the press release.
       Charney begins by claiming the press release falsely states
he was investigated by an independent third party. But, such a
claim does not allege a falsehood about Charney himself. Rather,
it asserts the investigative body was not a legitimate “third
party” and was not “independent.” “Statements do not imply a
provably false factual assertion and thus cannot form the basis of
a defamation action if they cannot ‘“reasonably [be] interpreted
as stating actual facts” about an individual.’ [Citations.]”
(Ferlauto v. Hamsher (1999) 74 Cal.App.4th 1394, 1401.)
Moreover, Charney’s argument that the investigation was not
“independent” or impartial is a matter of opinion or subjective
judgment and therefore cannot support an action for defamation.
(See Morningstar, Inc. v. Superior Court (1994) 23 Cal.App.4th
676, 686-687; see also Standing Committee v. Yagman (9th Cir.
1995) 55 F.3d 1430, 1439.)
       Next, Charney takes the position that the press release
wrongly indicates he was terminated for cause. This claim is also
problematic as the press release does not state the underlying
reasons for terminating Charney. It does mention “allegations”
were made and investigated. It also indicates Charney was
terminated as a result of that investigation. But, the key missing
component is the specific factual findings of that investigation.
The statement cannot be proven false as it does not state that
Charney engaged in criminal conduct or that his conduct violated
certain standards, or even that there existed any particular
conduct that caused his termination.9 Because the press release

      9 Charney’s defamation cause of action does allege the press
release gave the impression he was terminated for committing

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does not articulate why Charney was terminated, Charney’s
allegation that it falsely states he was terminated for “cause”
does not constitute an actionable defamation.10
       After conducting a de novo review, we hold the trial court
properly granted the anti-SLAPP motion on the ground that
Charney did not satisfy his burden of showing minimal merit to
his claim that the press release was defamatory. We therefore
decline to address Charney’s remaining arguments and need not
respond to the parties’ competing views on whether Charney
established the publication was made with actual malice.

“financial malfeasance,” “illegal sexual harassment,” and
“discrimination.” We see nothing in the press release to support
this allegation.

      10 Even   if the press release could be interpreted as
somehow stating Charney was terminated for unidentified
improper conduct, the fact that there may be some dispute over
whether there was “improper” conduct that justified termination
is a matter of opinion. (See, e.g., Gregory v. McDonnell Douglas
Corp. (1976) 17 Cal.3d 596, 604 [statements concerning the
fitness of a vice president and president of a union to hold office
are opinions not subject to an action for libel].)

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                          DISPOSITION

     The order granting defendants’ special motion to strike the
complaint (Code Civ. Proc., § 425.16) is affirmed. Defendants
may recover costs on appeal.

             KUMAR, J.

We concur:

             TURNER, P. J.

             KRIEGLER, 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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