The California Court of Appeal’s recent decision in Renewable Resources Coalition, Inc. v. Pebble Mines Corporation, et al., 218 Cal.App.4th 384 (July 20, 2013), illustrates perfectly the importance of careful drafting of claims as a means to successfully fend off a special motion to strike under Cal. Civ. Proc. Code § 425.16, the anti-SLAPP statute. Careful drafting is particularly key in cases where the underlying facts directly or indirectly implicate other litigation proceedings, since those allegations are easily characterized as protected conduct in furtherance of the defendant’s right of petition or free speech in connection with a public issue, and as conduct potentially protected as well by the litigation privilege.
The dispute in Renewable Resources related to a mining project proposed for Bristol Bay, Alaska. The plaintiff, Renewable Resources Coalition, Inc. (the “Coalition”), is an Alaskan nonprofit which promotes the preservation of Alaska’s fishing and hunting resources. The Coalition for years has opposed plans for the development of the Pebble Mine in Alaska by the defendant Pebble LP and its general partner (“Pebble”).
According to the Coalition’s complaint, as part of its support of a 2008 Alaska ballot initiative which would have impeded the mine’s development, the Coalition hired a professional fundraiser under a contract which restricted the fundraiser’s ability to disclose its confidential communications with the Coalition. After the ballot initiative was defeated, the Coalition terminated the fundraiser’s contract, and a dispute arose as to payments allegedly due under the contract.
The Coalition’s complaint alleged that the fundraiser contacted the Alaska attorneys who represented the Pebble Mine interests in the ballot initiative, as part of its alleged plan to threaten the disclosure of the Coalition’s confidential campaign communications and to sell those confidential communications to the Coalition’s opponents if it was not paid all amounts it considered due under the contract. The Coalition alleged that, in fact, the fundraiser did turn over confidential communications to Pebble’s lawyer and was paid $50,000 in exchange. Pebble’s lawyer then allegedly used those documents to prepare and file a complaint with the Alaska Public Offices Commission (“APOC”), which asserted that the Coalition and other nonprofits were used to conceal the fact that substantial contributions in support of the ballot initiative had been made by one particular individual, allegedly in violation of Alaska election law.
After defending the APOC action, which it eventually settled for $100,000 and a finding of no liability, the Coalition sued the fundraiser and Pebble defendants, including their attorney. As against the Pebble defendants, the Coalition alleged causes of action for interference with contract and interference with prospective economic advantage. The Coalition specifically alleged that the lawyer, as counsel and agent for its mining clients, induced the fundraiser to breach its contract with Coalition by paying it for the confidential documents. It also alleged that, as a result of the wrongful sale of its confidential documents, it was damaged by (1) having to defend the APOC proceeding at substantial expense and (2) a dramatic loss in contributions and grant money that resulted from adverse publicity generated by defendants’ use of the confidential documents in a public “smear campaign.”
Not surprisingly, the Pebble defendants immediately filed a special motion to strike the interference claims alleged against them. They claimed that both causes of action arose from protected conduct, namely, activities in furtherance of their right of petition or free speech in connection with a public issue. According to the moving papers, “[b]ecause [the Coalition’s] causes of action against [them] arise from the APOC complaint, they fall squarely under the anti-SLAPP statute.”
The trial court agreed. Rejecting the Coalition’s claim that it was not suing defendants for bringing the APOC action, but rather for inducing the fundraiser to sell its confidential documents, the trial court ruled that both causes of action arose from the filing of the APOC complaint and that the Coalition’s position to the contrary was “belied by its damages allegations.” Granting the motion to strike, the trial court ruled that the Pebble defendants had satisfied their threshold burden of showing the complaint arose from constitutionally protected activity and that the Coalition failed to meet its burden of showing a probability of prevailing on either of its claims, based principally on the bar of the litigation privilege.
The Court of Appeal reversed the trial court’s grant of the special motion to strike. Citing City of Cotati v. Cashman, 29 Cal.4th 69 (2002), it focused on whether the Pebble defendants’ act underlying the Coalition’s causes of action was an act in furtherance of defendants’ right of petition or free speech. Starting from the established premise that it is the “principal thrust or gravamen” of the plaintiff’s cause of action that determines whether section 425.16 applies, it held that “the gravamen is defined by the acts on which liability is based ….'”
As is often the case, particularly given its de novo review, the Court of Appeal’s reversal turned on its characterization of the “gravamen” of the Coalition’s causes of action. It specifically found that the Coalition did not sue the Pebble defendants for having prosecuted the APOC complaint, but rather for having wrongfully purchased the Coalition’s confidential documents, which allegedly gave rise to both its litigation and other damages. According to the appellate court, the trial court erred by focusing on the Coalition’s damages allegations, instead of properly focusing on the “allegedly wrongful and injury-producing conduct.” It also rejected the Pebble defendants’ argument that their use of the alleged confidential documents to prepare the APOC complaint qualified as protected evidence gathering, finding that “the SLAPP statute does not protect illegal activity in preparing for a lawsuit.”
In concluding that the gravamen of both the Coalition’s claims was the wrongful purchase of the Coalition’s confidential documents, the appellate court did not even consider whether the Coalition’s factual allegations relating to the APOC complaint were at least partially based on non-incidental protected activity, within the meaning of Haight Ashbury Free Clinics, Inc. v. Happening House Ventures, 184 Cal.App.4th 1539 (2010), and other cases considering “mixed causes of action.” See, e.g., Salma v. Capon, 161 Cal.App.4th 1275, 1287 (2008) (“mixed cause of action is subject to section 425.16 if at least one of the underlying activities is protected conduct, unless the allegations of protected conduct are merely incidental to the unprotected activity”).
The lesson to be learned from the case is simple but well worth keeping in mind. There is no doubt that the Coalition’s damages were caused in substantial part from the Pebble defendants’ filing of the APOC complaint. However, by carefully crafting its causes of action to focus on actionable misconduct separate and apart from the filing of the APOC lawsuit, the Coalition was able to steer clear of the protections of the anti-SLAPP statute and avoid the early dismissal of its claims.
Susan Allison is a partner in JMBM’s Litigation Department. Reach her at SAllison@JMBM.com or 310.785.5303.