Court Opinion

ID: 6342325
Source: CourtListenerOpinion
Date Created: 2022-05-19 18:02:11.348571+00
Date Added: 2024-06-11T09:16:21.886132
License: Public Domain

Filed 5/19/22 Sweetflower Pasadena v. City of Pasadena CA2/7
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                      DIVISION SEVEN

 SWEETFLOWER PASADENA                                         B312412
 LLC,
                                                              (Los Angeles County
           Plaintiff and Respondent,                          Super. Ct. No.
                                                              20STCP03212)
           v.

 CITY OF PASADENA,
           Defendant,

 INTEGRAL ASSOCIATES
 DENA, LLC,
           Real Party in Interest
           and Appellant.

      APPEAL from an order of the Superior Court of
Los Angeles County, Mitchell L. Beckloff, Judge. Affirmed.
      Carlson & Nicholas, Richard A. McDonald for Real Party in
Interest and Appellant.
      No appearance for Defendant.
     Nossaman, Artin N. Shaverdian, Gabriela S. Pérez,
Gregory W. Sanders and John J. Flynn III for Plaintiff and
Respondent.
                        __________________
      SweetFlower Pasadena, LLC filed a verified petition for
writ of mandate and complaint seeking to compel the City of
Pasadena to set aside any permits the City had granted to
SweetFlower’s competitor, Integral Associates Dena, LLC,
pertaining to Integral’s operation of a retail cannabis store in the
City and to obtain a judicial declaration that the City had erred
in concluding Integral remained eligible to participate in the
permitting process following a material change in its ownership.
Integral, named in SweetFlower’s petition/complaint as real
party in interest, filed a special motion to strike pursuant to Code
                                  1
of Civil Procedure section 425.16. The trial court denied
Integral’s motion, concluding none of SweetFlower’s claims arose
from protected speech or petitioning activity. We affirm.
      FACTUAL AND PROCEDURAL BACKGROUND
      1. Integral’s Applications for Cannabis-related City Permits
      According to SweetFlower’s petition/complaint, in June
2018 City voters approved two initiative measures to legalize and
regulate commercial cannabis businesses within City boundaries.
(See Pas. Mun. Code, §§ 5.28.010 et seq., 5.78.010 et seq.,

1
      Statutory references are to this code unless otherwise
stated.

                                 2
                            2
8.11.010 et seq., 17.50.066.) The initiative measures authorized
the City’s manager or his or her designee to promulgate the rules
and procedures governing the application process for the
necessary City permits.
       After a detailed vetting process that involved an
independent selection committee reviewing and scoring more
than 120 applications, in June 2019 the City selected
SweetFlower, Integral and four other candidates to apply for a
retail cannabis conditional use permit. Pursuant to the City’s
procedures, applicants that were successful in obtaining a
conditional use permit could then apply for a commercial
cannabis permit and related operational permits. In January
2020 the City approved Integral’s application for a conditional
use permit. Sweetflower’s application was rejected as incomplete
and ultimately denied after Integral and other SweetFlower
competitors secured the only available spots for cannabis-related
businesses in the City’s districts.
       On June 18, 2020, after questions emerged whether a
change of ownership or control at the selected candidates’
businesses during the permitting process should invalidate that
applicant’s application and continued eligibility to obtain further
cannabis-related permits, the city manager, Steven Mermell,
issued new rules for reviewing cannabis-related permit
applications following a change in a candidate’s ownership or
management. The new rules declared that “a material change in
either ownership or management during the permitting process

2
      Some of the City’s cannabis-related ordinances were
amended in November 2021. Those amendments, the subject of
ongoing litigation between Integral and the City in the
Los Angeles Superior Court, are not at issue in this appeal.

                                 3
would undermine the legislative intent in [Pas. Mun. Code]
Section 5.78.080[] where qualities specific to both were evaluated
and directly impacted the scoring and ranking of permitees as
part of the selection process. [Thus,] as a matter of equity to all
applicants, a material change in ownership and/or management
should be evaluated. [¶] A change in ownership and/or
management is not allowed and is considered material where it
constitutes a ‘change of control.’ ‘Change of control’ shall refer to
a transaction whereby a new party acquires a beneficial
ownership interest in applicant (or in an existing owner of a
beneficial ownership interest in applicant), or a new party is
identified as a manager of applicant, such that after such
transaction there is a change of identity of the person or entity
that has the power to direct or cause the direction of the
management and policies of applicant, and therefore would have
impacted the substantive scoring of the application such that a
different outcome would have been likely.”
       Under the new rules, in undertaking a review of a change
of ownership or management the City compares the “application
materials regarding ownership and management submitted at
the beginning of the permittee selection process” with “potential
evidence of a change of control.” “The applicant shall have an
opportunity to rebut such evidence, and/or offer evidence of no
change of control within 10 days of written notice.” “Within
10 days of review of all evidence, the City Manager shall issue a
decision in writing as to whether or not any change in ownership
and/or management is a change of control and notify the
applicant of such conclusion. If there was a change of control, the
applicant shall lose the right to proceed through the cannabis
permitting process and its application will be rejected.”

                                  4
       On June 30, 2020 SweetFlower wrote to the City alleging
Integral had undergone a material change in ownership and/or
management since it filed its screening application. In
particular, SweetFlower alleged (1) Alex Yemenidjian, Armen
Yemenidjian and Brian Greenspun had owned and/or controlled
various entities that, in turn, owned and controlled Integral at
the time Integral filed its initial application in January 2019;
(2) in June 2019 Green Thumb Industries, Inc., acquired the
Yemenidjians’ and Greenspun’s ownership interests in Integral
and its controlling entities; (3) following Green Thumb’s
acquisition of the Yemenidjians and Greenspun’s interests,
neither the Yemenidjians nor Greenspun remained significantly
involved in the operations of Integral.
       Integral responded that the Yemenidjians were still
involved in the operations of Integral after the sale of their
interests and Greenspun remained available to Integral as a
consultant.
       In July 2020 the City found no material change of control
at Integral and allowed Integral to continue participating in the
permitting process to open a cannabis retail store.
       2. SweetFlower’s Petition/Complaint
       In October 2020 SweetFlower filed a verified petition for
writ of mandate pursuant to sections 1085 and/or 1094.5 and
complaint for declaratory relief. In support of its petition,
SweetFlower asserted the City had arbitrarily, and without
substantial evidence, found Green Thumb’s acquisition of the
Yemenidjians’ and Greenspun’s interests had not resulted in a
material change of control at Integral. SweetFlower asserted
substantially the same allegations to support its claim for a
judicial declaration that, based on City rules, Integral’s material

                                 5
change in ownership during the permitting process disqualified it
from its participation and rendered any and all cannabis-related
                                 3
permits it received null and void.
       3. Integral’s Special Motion To Strike
       Integral filed a special motion to strike the
petition/complaint under section 425.16. Integral argued
SweetFlower’s action arose from statements and writings made
by Integral in connection with its application for cannabis-related
City permits, protected speech or petitioning activity within the
meaning of section 425.16, subdivision (e)(1) and (e)(2). In
support Integral cited several paragraphs in the
petition/complaint and its attached exhibits quoting statements
Integral had made in its initial screening application and in its

3
      In addition to this lawsuit SweetFlower filed at least three
other petitions for writs of mandate involving the City’s cannabis-
related permit decisions. (See Super. Ct. L.A. County
no. 20STCP00038 [challenging the City’s denial of SweetFlower’s
own conditional use permit application] (the SweetFlower permit
action); Super. Ct. L.A. County no. 20STCP01048 [challenging
the City’s approval of a conditional use permit for Harvest of
Pasadena LLC, a SweetFlower competitor] (the Harvest action);
Super. Ct. L.A. County no. 20STCP01456 [challenging the City’s
approval of a conditional use permit for Integral] (the Integral
permit action).)

       SweetFlower dismissed its appeal from the judgment
entered against it in the SweetFlower permit action (case
no. B312571). Integral has appealed from the trial court’s orders
denying the special motions to strike it filed in the Integral
permit action (case no. B308897); and Harvest has appealed from
the trial court’s order denying its special motion to strike in the
Harvest action (case no. B308645).

                                 6
responses to City inquiries following Green Thumb’s acquisition,
primarily that Yemenidjians and Greenspun continued to be
involved in the operations of Integral in some meaningful
capacity even after Green Thumb’s acquisition of their interests.
Integral argued these statements—protected activity—formed
the basis of SweetFlower’s claims. Integral also argued
SweetFlower could not demonstrate its action had even minimal
merit.
       In its opposition SweetFlower argued its claims were
directed to the City’s arbitrary and flawed decision that no
material change of ownership and control at Integral had
occurred. The statements highlighted in its petition/complaint
supplied evidence relating to the City’s arbitrary and
unsubstantiated nature of that finding, SweetFlower argued, but
none of those statements was the wrong alleged.
       The trial court denied Integral’s special motion to strike,
ruling the causes of action arose from the City’s decision
following an investigation, not protected speech or petitioning
activity. Because Integral failed to carry its threshold burden to
demonstrate the claims arose from protected speech or
petitioning activity, the court denied Integral’s special motion to
strike without addressing whether SweetFlower could
demonstrate its claims had minimal merit.
       Integral filed a timely notice of appeal. (§§ 425.16,
subd. (i), 904.1, subd. (a)(13).)

                                 7
                            DISCUSSION
       1. Governing Law and Standard of Review
       Section 425.16, commonly known as the anti-SLAPP
statute, makes available a special motion to strike certain
meritless claims early in the litigation: “A cause of action against
a person arising from any act of that person in furtherance of a
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); see Rand Resources, LLC v. City of Carson
(2019) 6 Cal.5th 610, 619-620 [“[a] court may strike a cause of
action only if the cause of action (1) arises from an act in
furtherance of the right of petition or free speech ‘in connection
with a public issue,’ and (2) the plaintiff has not established ‘a
probability’ of prevailing on the claim”].)
       Pursuant to section 425.16, subdivision (e), an “‘act in
furtherance of a person’s right of petition or free speech under the
United States or California Constitution in connection with a
public issue’ includes: (1) any written or oral statement or
writing made before a legislative, executive, or judicial
proceeding, or any other official proceeding authorized by law,
(2) any written or oral statement or writing made in connection
with an issue under consideration or review by a legislative,
executive, or judicial body, or any other official proceeding
authorized by law, (3) any written or oral statement or writing
made in a place open to the public or a public forum in connection
with an issue of public interest, or (4) any other conduct in
furtherance of the exercise of the constitutional right of petition

                                 8
or the constitutional right of free speech in connection with a
public issue or an issue of public interest.”
       In ruling on a motion under section 425.16, the trial court
engages in a now-familiar two-step process. “First, the defendant
must establish that the challenged claim arises from activity
protected by section 425.16. [Citation.] If the defendant makes
the required showing, the burden shifts to the plaintiff to
demonstrate the merit of the claim by establishing a probability
of success.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 384 (Baral);
accord, Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995,
1009 (Bonni); Park v. Board of Trustees of California State
University (2017) 2 Cal.5th 1057, 1061 (Park).) If the moving
party fails to demonstrate that any of the challenged claims for
relief arise from protected activity (the first step), the court
properly denies the motion to strike without addressing the
probability of success (the second step). (City of Cotati v.
Cashman (2002) 29 Cal.4th 69, 80-81; Verceles v. Los Angeles
United School Dist. (2021) 63 Cal.App.5th 776, 784.)
       “A claim arises from protected activity when that activity
underlies or forms the basis for the claim.” (Park, supra,
2 Cal.5th at pp. 1062-1063; accord, Bonni, supra, 11 Cal.5th at
p. 1009.) Thus, “[t]he defendant’s first-step burden is to identify
the activity each challenged claim rests on and demonstrate that
that activity is protected by the anti-SLAPP statute. A ‘claim
may be struck only if the speech or petitioning activity itself is
the wrong complained of, and not just evidence of liability or a
step leading to some different act for which liability is asserted.’”
(Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 884
(Wilson); see Bonni, at p. 1009 [“[t]he defendant’s burden is to
identify what acts each challenged claim rests on and to show

                                  9
how those acts are protected under a statutorily defined category
of protected activity”]; Park, at p. 1060 [same].)
       A motion pursuant to section 425.16 need not challenge an
entire cause of action as pleaded in the complaint. (Bonni, supra,
11 Cal.5th at p. 1010; Baral, supra, 1 Cal.5th at p. 382.) Rather,
“courts should analyze each claim for relief—each act or set of
acts supplying a basis for relief, of which there may be several in
a single pleaded cause of action—to determine whether the acts
are protected and, if so, whether the claim they give rise to has
the requisite degree of merit to survive the motion.” (Bonni, at
p. 1010; accord, Baral, at p. 395; Musero v. Creative Artists
Agency, LLC (2021) 72 Cal.App.5th 802, 815; see Park, supra,
2 Cal.5th at p. 1063 [in determining whether a claim arises from
protected activity, “courts should consider the elements of the
challenged claim and what actions by the defendant supply those
elements and consequently form the basis for liability”].)
       We review do novo an order granting or denying a special
motion to strike under section 425.16. (Wilson, supra, 7 Cal.5th
at p. 884; Park, supra, 2 Cal.5th at p. 1067.)
      2. The Court Properly Concluded SweetFlower’s Claims
         Did Not Arise From Protected Speech or Petitioning
         Activity
      Integral contends SweetFlower’s claims are based on
documents Integral presented to the City in its initial screening
application or in response to the City’s requests for further
information concerning the change in ownership following
Green Thumb’s acquisition of the Yemenidjians’ and Greenspun’s

                                 10
                     4
interests in Integral. Because those documents/statements were
submitted to the City in connection with a matter before the City,
by definition, Integral argues, they constitute acts in furtherance
of the right to petition or free speech in connection with a public
issue. (§ 425.16, subd. (e)(2); see Sugarman v. Brown (2021)
73 Cal.App.5th 152 [documents filed with the Securities and
Exchange Commission were protected petitioning and speech
activity within the meaning of section 425.16, subdivision (e)(2).)
       Integral’s entirely accurate characterization of the
documents Integral and SweetFlower submitted to the City as
protected within the meaning of section 425.16, subdivision (e)(2),
satisfies only part of the first step inquiry. As discussed, to be
subject to a special motion to strike, the claim must arise from
the protected activity. (§ 425.16, subd. (b)(1); see Wilson, supra,
7 Cal.5th at p. 884 [the protected activity must itself be the
wrong complained of and not just evidence of liability]; Park,
supra, 2 Cal.5th at p. 1060 [same].)
       SweetFlower’s petition for writ of mandate alleged the
City’s finding that no change of control at Integral had occurred
was arbitrary and unsupported by the evidence. (See § 1085,
subd. (a) [court issues a writ of mandate to compel compliance
with the law by “any inferior tribunal, corporation, board, or

4
       Those documents submitted to the City, which are
mentioned throughout the petition/complaint, include
(1) Integral’s initial screening application; (2) a June 6, 2019
letter from Armen Yemenidjian; (3) an April 2020 written
statement from Integral’s counsel; and (4) statements from
Integral on May 6, 2020, June 17, 2020 and June 23, 2020 in
response to the City’s request for further information.
SweetFlower alleged Integral relied on Integral’s statements
even when confronted with evidence of their falsity.

                                  11
person”].) Its claim for declaratory relief was essentially the
same. The documentation cited throughout SweetFlower’s
petition/complaint may well provide evidence relating to those
claims, but neither the documents, nor the statements Integral’s
agents made in them, are an element of those claims, let alone
the basis for the City’s liability. In short, they are not the wrong
alleged. (See Park, supra, 2 Cal.5th at p. 1068 [“Park’s complaint
is ‘based on the act of denying plaintiff tenure based on national
origin. Plaintiff could have omitted allegations regarding
communicative acts . . . and still state the same claims’”]; Area 51
Productions, Inc. v. City of Alameda (2018) 20 Cal.App.5th 581,
596 [communications from the city “that led to and that followed”
the alleged breach—the city’s refusal to issue a license—were
“merely incidental to the asserted claims” against the city for
breach, interference and unfair business practices]; cf. Rand
Resources, LLC v. City of Carson, supra, 6 Cal.5th at pp. 622-623
[in claim for fraudulent misrepresentation, mayor and city
officials’ statements are “themselves the ‘wrong[s] complained
of’”]; City of Montebello v. Vasquez (2016) 1 Cal.5th 409, 425
[distinguishing between complaints against a public entity for
“acts of governance” preceding or following statements by
government officials, which would not be subject to a special
motion to strike, and a complaint against the officials based on
their statements themselves, which could be].)
        Integral responds that, because SweetFlower’s
petition/complaint alleged the City relied on Integral’s
statements in reaching its decision, the City’s decision, and
Integral’s statements, are “inextricably intertwined.” The
Supreme Court has soundly rejected such attempts to conflate
statements preceding a government decision with the challenge

                                 12
to the decision itself. (See Park, supra, 2 Cal.5th p. 1070
[rejecting the university’s argument that “all aspects of its tenure
process, including its ultimate decision, are inextricably
intertwined protected activity”]; id. at p. 1060 [“a claim is not
subject to a [special] motion to strike simply because it contests
an action or decision that was arrived at following speech or
petitioning activity, or that was thereafter communicated by
speech or petitioning activity”]; see also Graffiti Protective
Coatings, Inc. v. City of Pico Rivera (2010) 181 Cal.App.4th 1207,
                           5
1211 (Graffiti Protective).)
       Finally, relying on language in Rudisill v. California
Coastal Com. (2019) 35 Cal.App.5th 1062, 1075, a case decided by
Division Two of this court, Integral contends that, by seeking an
order setting aside the cannabis-related permits it received,
SweetFlower’s petition/complaint is fundamentally a direct
attack on its petitioning activity. (See ibid. [“[n]or did Petitioners
seek an order directly affecting Real Parties in Interest’s
participation in the government process underlying the
government entities’ decisions (such as, for example, an order
precluding Real Parties in Interest from submitting any further
permits”].) At the threshold, SweetFlower’s request for an order
to set aside the issuance of a permit, without more, does not
make it subject to a special motion to strike. (See Shahbazian v.
City of Rancho Palos Verdes (2017) 17 Cal.App.5th 823, 835; cf.

5
       That SweetFlower alleged Integral’s responses to City
inquiries following Green Thumb’s acquisition were false, which
the City would have discovered had it conducted any
investigation, also does not alter our analysis. Integral is not
being sued for its statements. Rather, SweetFlower sued the City
for its governmental decision, the only alleged basis for liability.

                                  13
Graffiti Protective, supra, 181 Cal.App.4th at p. 1211.) And,
whatever merit there may be to the implication in the Rudisill
dictum that a petition’s request for an injunction preventing
further petitioning activity would necessarily subject the petition
to a special motion to strike—a proposition about which we have
              6
serious doubts —that is not the request here. The
petition/complaint challenges the City’s decision following its
finding; it does not seek an order or injunction prohibiting
                                                      7
Integral from engaging in future petitioning activity.
      In sum, Integral did not carry its threshold burden to
demonstrate SweetFlower’s claims arose from protected activity

6
       When considering whether a claim arises from protected
speech or petitioning activity within the meaning of
section 425.16, the focus is on the “‘“acts on which liability is
based”’” (Bonni, supra, 11 Cal.5th at p. 1012, italics omitted), not
the damages suffered (Renewable Resources Coalition, Inc. v.
Pebble Mines Corp. (2013) 218 Cal.App.4th 384, 396) or any other
type of remedy sought, including an injunction (see Guessous v.
Chrome Hearts, LLC (2009) 179 Cal.App.4th 1177, 1187 [anti-
SLAPP motion is properly directed to a cause of action, not the
relief sought; an “‘[i]njunction relief is a remedy, not a cause of
action’”]; Marlin v. Aimco Venezia, LLC (2007) 154 Cal.App.4th
154, 162 [same]; see generally Baral, supra, 1 Cal.5th at p. 395
[anti-SLAPP motion is properly directed to “allegations of
protected activity that are asserted as grounds for relief”; “[t]he
targeted claim must amount to a ‘cause of action’ in the sense
that it is alleged to justify a remedy,” italics omitted].)
7
       SweetFlower’s requests for judicial notice of the operative
complaints Integral filed in other actions and the minutes of the
November 1, 2021 Pasadena City Council meeting are denied as
irrelevant. (See Bacoka v. Best Buy Stores, L.P. (2021)
71 Cal.App.5th 126, 135.)

                                 14
under section 425.16. Accordingly, the trial court did not err in
denying the special motion to strike.
                          DISPOSITION
      The trial court’s order denying Integral’s special motion to
strike is affirmed. SweetFlower is to recover its costs on appeal.

                                      PERLUSS, P. J.
      We concur:

            SEGAL, J.

            FEUER, J.

                                 15