Judge: Daniel M. Crowley, Case: 24STCV00908, Date: 2024-12-12 Tentative Ruling

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Case Number: 24STCV00908    Hearing Date: December 12, 2024    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Defendants Yong Chul Lee’s, Hye Young Moon’s, and Hong Gi Kim’s special motion to strike portions of Plaintiff Sunna Kim’s First Amended Complaint is denied in part and granted in part.  Moving Defendants’ special motion to strike FAC ¶¶40-41, lines 15-22 including n.1 is denied.  Moving Defendants’ special motion to strike FAC ¶2, lines 25-27; ¶25, lines 21-23; ¶¶27-28, lines 9-21; and ¶49, lines 1-5 is granted.

Moving Defendants may separately move for attorneys’ fees and costs incurred on the instant motion.

Defendants Young Chul Lee (“Lee”), He Young Moon (“Moon”), and Hong Gi Kim (“Hong Gi”) (collectively, “Moving Defendants”) move for a special motion to strike the following portions of Plaintiff Sunna Kim’s (“Sunna”) (“Plaintiff”) first amended complaint (“FAC”): (1) ¶2 (“Majority Director Defendants used the Company as an instrumentality to engage in a wasteful and tortious campaign of harassment against Plaintiff and others”); (2) ¶25 (“Following Majority Director Defendants’ awareness that Plaintiff would exercise her put option, the Company, at the behest of Majority Director Defendants, initiated a wasteful campaign to harass and intimidate Plaintiff and third parties.”); (3) ¶¶27-28[1]; ¶¶40-41 & n.1[2]; and (4) ¶49 (“by (i) engaging in a wasteful and vindicative harassment campaign against Plaintiff, her family, and former employees of the Company for the purpose of devaluing the Company; (ii) entering into conflicted and self-dealing transactions; and (iii) misusing Company marketing and business channels to spread falsities for the purpose of devaluing the Company.”).  (Notice of Motion, pgs. 2-3; C.C.P. §§425.16 et seq.)  Moving Defendants move on the grounds that Plaintiff’s claims arise from acts of Defendants in furtherance of their right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue, under C.C.P. §§425.16(b) and (e) and that Plaintiff’s action is brought to chill the valid exercise of those constitutional rights, and that it is not probable that Plaintiff will prevail on her claims.  (Notice of Motion, pg. 3.) 

Moving Defendants also seek an order assessing their attorneys’ fees and costs against Plaintiff incurred by Moving Defendants in connection with the instant motion.  (Notice of Motion, pg. 3; CRC, Rule 3.1702; C.C.P. §425.16(c).)

Request for Judicial Notice

Moving Defendants’ June 11, 2024, request for judicial notice of (1) the Complaint filed in The Crème Shop, Inc. v. Sunna (“Olive”) Kim, et al., LASC Case No. 23STCV27922 (“Employment Action”) (D-RJN, Exh. A); (2) The Crème Shop’s Memorandum of Points and Authorities in Support of Ex Parte Application for a Temporary Restraining Order and Order to Show Cause Re Preliminary Injunction filed on November 28, 2023, in the Employment Action (D-RJN, Exh. B); (3) the Declaration of Lee in Support of The Crème Shop’s Ex Parte Application for a Temporary Restraining Order and Order to Show Cause Re Preliminary Injunction filed on November 28, 2023, in the Employment Action (D-RJN, Exh. C); and (4) the Stipulated Preliminary Injunction and the Court’s order thereon filed and entered by the Court on December 6, 2023, in the Employment Action (D-RJN, Exh. C), is granted, but the Court does not take judicial notice of the truth of the matters asserted in the filings.

Moving Defendants’ June 11, 2024, request for judicial notice of the initial complaint in this matter and the Notice and Acknowledgment of Receipt-Civil, dated and signed by Defendant Hye Young Moon “…at the City of Seattle, WA” filed in this matter is denied because this Court does not need to take judicial notice of filings on the instant docket.

Moving Defendants’ August 13, 2024, request for judicial notice of (1) a news article published in Time Magazine (Online) dated June 27, 2024, entitled “The Secret of Hello Kitty’s Half-Century of Success”; and (2) a news article published on Forbes (Online) dated April 8, 2019, entitled “45 Years After Its Debut, Can Hello Kitty Finally Conquer Hollywood?” is denied as irrelevant.

Moving Defendants’ August 13, 2024, request for judicial notice of Sanrio’s Summary of Financial Results for the Fiscal Year Ended March 31, 2024 (FY2023) [Japanese GAAP], for Sanrio Company, Ltd. [Listed Stock Exchange: Tokyo Stock Exchange], dated May 14, 2024, publicly available at (https://ssl4.eirparts.net/doc/8136/ir_material_for_fiscal_ym3/156599/00.pdf) and (https://corporate.sanrio.co.jp/en/ir/news/) (D-Supp. RJN, Exh. I), is granted.

Background

          Plaintiff filed her initial Complaint on January 12, 2024.  (See Complaint.)

          Plaintiff filed the operative FAC on May 10, 2024, individually and derivatively on behalf of Crème Shop, against Moving Defendants and Non-moving Defendant The Crème Shop, Inc. (“Company”) (collectively, “Defendants”) alleging two causes of action: (1) breach of fiduciary duty; and (2) accounting.  Plaintiff’s causes of action arise from her and her mother, non-party Christina Kim’s (“Christina”), April 2022 entry into a share purchase agreement (“SPA”) with LG H&H Co., Ltd. (“LG H&H”) to sell 65% of the shares of the Company to LG H&H while retaining a 35% ownership interest.  (FAC ¶¶2, 13.)

 Plaintiff alleges thereafter, LG H&H appointed three directors to the Company’s board to represent its majority ownership interest: Defendants Lee, Defendant Hong Gi, and Defendant Moon.  (FAC ¶2.)  Plaintiff alleges that she and Christina served as directors representing their minority ownership interest, and Plaintiff continued to operate the Company as co-CEO alongside Defendant Lee, who also served as the LG H&H-appointed co-CEO.  (FAC ¶2.)  Plaintiff alleges personnel issues quickly arose between Plaintiff and Defendant Lee, resulting in Moving Defendants taking actions to divest Plaintiff of her managerial powers as co-CEO of the Company.  (FAC ¶2.)  Plaintiff alleges those actions of Moving Defendants satisfied contractual conditions permitting Plaintiff to resign as co-CEO and, along with Christina, to exercise a put option requiring LG H&H to purchase their minority shareholder interests.   (FAC ¶¶2, 13.)

Plaintiff alleges that coinciding with the execution of the SPA, she, Christina, and LG H&H entered a Shareholder Agreement (“SA”) which provided certain duties and responsibilities between Plaintiff and Christina, on the one hand, and LG H&H, on the other, in their capacities as minority shareholders and majority shareholders, respectively.  (FAC ¶14.)

Plaintiff alleges that coinciding with the execution of the SPA, she and the Company entered an Employment Agreement setting forth the obligations and duties of Plaintiff in her role as co-CEO of the Company.  (FAC ¶15.)  Plaintiff alleges that among other things, the Employment Agreement provides that Plaintiff has “Good Reason” to resign from her position as co-CEO if the Company “materially diminishes [Plaintiff]’s authority, duties or responsibilities, except where such diminution is: (x) in connection with the termination of [her] employment for Cause, (y) a result of [her] death or disability, or (z) temporary as a result of [her] illness or other absence; provided that changes to [Plaintiff]’s reporting structure that otherwise comply with the requirements of [the Employment Agreement] shall not be considered a material diminution of [her] authority, duties or responsibilities hereunder[.]”  (FAC ¶16.)  Plaintiff alleges that per the Employment Agreement, Plaintiff must notify the Company of an event constituting within thirty calendar days of its occurrence, and the Company has sixty calendar days to cure any Good Reason.”  (FAC ¶16.)

Plaintiff alleges that among other things, the Employment Agreement provides that “Cause” for termination of Plaintiff’s employment exists if Plaintiff: (i) is convicted of a felony or crime involving dishonest or moral turpitude; (ii) commits material breach of Plaintiff’s duties to the Company where such breach is documented in writing; (iii) engages in gross neglect or willful misconduct (including, but not limited to, any theft, embezzlement, or other criminal misappropriation of Funds by Plaintiff from Company), which causes material harm to the property, business, goodwill, or reputation of the Company; or (iv) commits breach of any provision of the Employment Agreement, any articles of incorporation, bylaws or policy of the Company or SHA, where such breach is documented in writing and causes material harm to the property, business, goodwill, or reputation of the Company.  (FAC ¶17.)  Plaintiff alleges that she disputes that the Company had any basis to terminate her employment for “Cause.” (FAC ¶17.)

Plaintiff alleges that submitted a notice of her resignation with Good Reason on July 1, 2023.  (FAC ¶22.)  Plaintiff alleges that despite her numerous offers to work with the Company and Moving Defendants to create an effective transition plan over the following months, the Company ignored her overtures and her resignation became effective on October 6, 2023.  (FAC ¶22, Exh. A.)

Plaintiff alleges the Company purported to provide notice to Plaintiff that she would be terminated for Cause without ability or opportunity to cure on September 27, 2023, just days before her resignation was to be effective.  (FAC ¶23, Exh. B.)

Plaintiff alleges LG H&H initiated an arbitration in the International Chamber of Commerce (“ICC”) against Plaintiff and Christina on June 19, 2023.  (FAC ¶24.)  Plaintiff alleges that she and Christina filed a cross-complaint against LG H&H seeking a determination of their entitlement to exercise the put option on July 24, 2023.  (FAC ¶24.)  Plaintiff alleges LG H&H amended its claim to seek a determination that it is entitled to exercise a call option based upon its purported termination of Plaintiff for Cause on or around October 20, 2023.  (FAC ¶24.)  Plaintiff alleges the arbitration is pending in Los Angeles, California.  (FAC ¶24.) 

Plaintiff alleges that following Moving Defendants’ awareness that Plaintiff would exercise her put option, the Company, at the behest of Moving Defendants, initiated a wasteful campaign to harass and intimidate Plaintiff and third parties. (FAC ¶25.)  Plaintiff alleges on information and belief that Moving Defendants also wanted to attack Plaintiff and her good name in an effort to reduce the value of the Company so that Plaintiff’s put option would be less valuable.  (FAC ¶25.)  Plaintiff alleges Moving Defendants’ actions have caused direct injury to the Company and its shareholders.  (FAC ¶25.) 

Plaintiff alleges that in the days following Moving Defendants’ October 6, 2023, ouster of Plaintiff from management of the Company, experienced and long-term employees—no doubt disappointed with the inexperienced and myopic direction of the Company under the Majority Director Defendants—began to exodus en masse.  (FAC ¶26.)  Plaintiff alleges that on October 9, 2023, seven employees ended their relationship with the Company, with three more employees following suit shortly thereafter.  (FAC ¶26.)  Plaintiff alleges on information and belief that many of these employees were approached about returning to the Company, but declined to do so when they learned they would be reporting to a new manager appointed by LG H&H.  (FAC ¶26.) 

Plaintiff alleges The Company, at the direction of Moving Defendants and over the objection of Plaintiff, has engaged a law firm, Littler Mendelson P.C. (“Law Firm”), not for purposes of engaging in litigation but rather to conduct a wasteful harassment campaign against Plaintiff, her family, and former employees outside of litigation.  (FAC ¶27.)  Plaintiff alleges on information and belief that this wasteful campaign was undertaken in an attempt to damage Plaintiff’s good name and reputation for the purpose of lowering the value of the Company so that Plaintiff’s put option would be less valuable.  (FAC ¶27.)  Plaintiff alleges on information and belief that the Law Firm and the Company engaged in a campaign of harassment by posting physical notices on the doors of the houses of former employees and family members of Plaintiff, making frequent and disruptive telephone calls to former employees, using private investigators to track former employees physically and digitally, and purposefully distributing letters intended for former employees to current employees to smear former employees’ reputations.  (FAC ¶28.)  

Plaintiff alleges Moving Defendants proffered justification for this Company expense is that certain employees downloaded Company data before leaving and to determine whether Plaintiff orchestrated their leave.  (FAC ¶29.)  Plaintiff alleges that explanation rings hollow, however, because Company employees frequently and routinely made similar downloads during the course of their employment, which Plaintiff explained to Moving Defendants, who have virtually no experience with the business practices of Company; none of the downloaded information has been determined to be trade secret or sensitive information; no evidence that Plaintiff directed the former employees has been found; and Company has access to Plaintiff’s emails and could therefore determine whether she orchestrated the employees’ departure without invasive tactics.  (FAC ¶29.)

Plaintiff alleges on information and belief that Moving Defendants’ conduct is not in the benefit of the company but rather retaliation for perceived slights against LG H&H and to lower the value of Plaintiff’s put option by lowering the Company’s overall valuation.  (FAC ¶30.)

Plaintiff alleges that after Moving Defendants obtained control of the Company board, but before succeeding in their attempts to oust her from management, Plaintiff discovered that Defendant Lee and/or Moving Defendants caused millions of dollars of Company funds to be transferred to LG H&H and/or its subsidiaries.  (FAC ¶31.)  Plaintiff alleges that she confronted Moving Defendants, who blithely explained that other LG H&H companies could use the money, but a similar amount would be available in the future if needed by Company.  (FAC ¶32.)

Plaintiff alleges that even if Moving Defendants’ explanation is accurate, the funds taken by Moving Defendants and/or Defendant Lee do not belong to LG H&H and the decision to transfer the funds away from Company is solely for the benefit of LG H&H and not Company.  (FAC ¶33.)

Plaintiff alleges that after Moving Defendants obtained control of the Company board, but before succeeding in their attempts to oust Plaintiff from management, the Company had tens of millions of dollars in liquid assets available, but Moving Defendants failed to issue dividends, pay Company debts (including money owed to Plaintiff pursuant to her Employment Agreement), or reinvest those assets in the Company.  (FAC ¶34.)

Plaintiff alleges on information and belief that Moving Defendants’ inaction with respect to the tens of millions of dollars in liquid capital is a subterfuge to create the appearance that Company is less valuable than it is, which action is solely for the benefit of LG H&H, and not it in the best interests of Company.  (FAC ¶35.)

Plaintiff alleges Moving Defendants approved conflicted and self-dealing transactions between the Company and Avon Products, Inc. (“Avon”), in which LG H&H owns a majority interest.  (FAC ¶36.)

Plaintiff alleges that before LG H&H acquired its majority interest, the Company previously declined to do business with Avon given its multi-level marketing structure.  (FAC ¶37.)

Plaintiff alleges that after LG H&H acquired its interest and appointed the Moving Defendants, the Company in 2022 sold approximately $1.5 million worth of products to Avon.  (FAC ¶38.)  Plaintiff alleges approximately six or seven months after that purchase, Avon returned products which had expired to the Company without having paid the balance owed to the Company.  (FAC ¶38.)  Plaintiff alleges these actions caused further damage to the Company.  (FAC ¶38.) 

Plaintiff alleges Moving Defendants abused their board positions to spread false statements about Plaintiff.  (FAC ¶39.)  Plaintiff alleges on information and belief that Moving Defendants’ false statements are intended to hide the detrimental economic impact that ouster of Plaintiff had on the value of the Company, and save face on the part of Moving Defendants before LG H&H, for the personal benefit of Moving Defendants and to the detriment of Company and its shareholders.  (FAC ¶40.)

Plaintiff alleges Defendant Moon has falsely represented in South Korean publications that she is responsible for valuable licensing agreements by the Company, including The Crème Shop x Sanrio Lunar New Year Collection, launched in December of 2022.  (FAC ¶41 & n.1.)

Plaintiff alleges that in actuality she brokered the deals between Company and Sanrio, as she had in the years predating LG H&H’s acquisition of shares of, or Defendant Moon’s involvement with the Company.  (FAC ¶42.)  Plaintiff alleges this was not an isolated incident—Defendant Moon repeatedly tried to claim credit for work that Plaintiff performed and results Plaintiff achieved.  (FAC ¶42.)

Plaintiff alleges on information and belief that Moving Defendants made false statements to management at LG H&H that Plaintiff ended her involvement with Company suddenly and without warning, to the detriment of Company.  (FAC ¶43.)  Plaintiff alleges that in actuality she offered on numerous occasions to work with Company and Moving Defendants to effectively transition management of the Company away from Plaintiff and her family.  (FAC ¶44.)  Plaintiff alleges Moving Defendants rebuffed and/or ignored those offers, to the detriment of the Company.  (FAC ¶44.)

Plaintiff alleges on information and belief that Moving Defendants’ false statements concerning the Company and Plaintiff were intended to, and did, obscure serious deficiencies in the management of the Company to LG H&H and the Company’s business partners.  (FAC ¶45.)

Plaintiff alleges on information and belief that Moving Defendants abused the resources and marketing channels of the Company, and their positions as directors (and, as to Defendant Lee, the position of officer) of the Company, to self-aggrandize with no concomitant benefit to the Company, and damaging the Company’s reputation, goodwill, and future business prospects within the tightly-knit cosmetics industry.  (FAC ¶46.)

On June 11, 2024, Moving Defendants filed the instant motion.  On August 7, 2024, Plaintiff filed her opposition.  On August 13, 2024, Moving Defendants filed their reply. 

Special Motion to Strike

          “Litigation of an anti-SLAPP motion involves a two-step process. First, ‘the moving defendant bears the burden of establishing that the challenged allegations or claims ‘aris[e] from’ protected activity in which the defendant has engaged.’ [Citation.] Second, for each claim that does arise from protected activity, the plaintiff must show the claim has “at least ‘minimal merit.’ [Citation.]”  (Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1009, citations omitted.)  As to the second step inquiry, a plaintiff seeking to demonstrate the merit of the claim “may not rely solely on its complaint, even if verified; instead, its proof must be made upon competent admissible evidence.”  (Sweetwater Union High School District v. Gilbane Building Co. (2019) 6 Cal.5th 931, 940, citations omitted.)

A defendant opposing a special motion to strike has the burden to “state [] and substantiate [] a legally sufficient claim.”  (Navellier v. Sletten (2002) 29 Cal.4th 82, 88 & 93.)  “‘Put another way, the defendant “must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the defendant is credited.”’ [Citations.]”  (Id. at pgs. 88-89.)  To that end, the defendant must present competent evidence, “that would be admissible at trial.”  (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212.)  “[D]eclarations may not be based upon ‘information and belief’ [citation]” and documents submitted without the proper foundation will not be considered.  (Id.)  The complaint, even if verified, is insufficient to carry the plaintiff’s shifted burden.  (Roberts v. Los Angeles County Bar Association (2003) 105 Cal.App.4th 604, 614; Karnazes v. Ares (2016) 244 Cal.App.4th 344, 354 [“pleadings do not constitute evidence”]; see also Burke, Anti-SLAPP Litigation (The Rutter Group, Civil Litigation Series 2018 §5:13) [“To satisfy prong two, the plaintiff must submit admissible evidence that if credited is sufficient to sustain a favorable judgment against the legal theories asserted by the defendant.”].)

Prong One: Arising from Protected Activity

“A cause of action is subject to a special motion to strike if the defendant shows that the cause of action arises from an act in furtherance of the defendant’s constitutional right of petition or free speech in connection with a public issue and the plaintiff fails to demonstrate a probability of prevailing on the claim. [Citations.]”  (Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873, 883.)

“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’ is defined by statute to include ‘(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 or the constitutional right of free speech in connection with a public issue or an issue of public interest.’  [Citation.] If the defendant shows that the cause of action arises from a statement described in clause (1) or (2) of section 425.16, subdivision (e), the defendant is not required to separately demonstrate that the statement was made in connection with a ‘public issue.’ [Citation.]”  (Id.)

“A cause of action is one ‘arising from’ protected activity within the meaning of section 425.16, subdivision (b)(1) only if the defendant’s act on which the cause of action is based was an act in furtherance of the defendant’s constitutional right of petition or free speech in connection with a public issue. [Citation.] In deciding whether the ‘arising from’ requirement is satisfied, ‘the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.’ [(C.C.P. §425.16(b)(2).)] Whether the ‘arising from’ requirement is satisfied depends on the ‘gravamen or principal thrust’ of the claim. [(Episcopal Church Cases (2009) 45 Cal.4th 467, 477, quoting Martinez v. Metabolife International, Inc. (2003) 113 Cal.App.4th 181, 193.)] A cause of action does not arise from protected activity for purposes of the anti-SLAPP statute if the protected activity is merely incidental to the cause of action. [(Martinez, 113 Cal.App.4th at pg. 188.)]”  (Digerati Holdings, LLC, 194 Cal.App.4th at pgs. 883-884.)  To show that a claim arises from protected activity under §425.16(b)(1), it is not sufficient to show that the claim “was filed after, or because of, protected activity, or when protected activity merely provides evidentiary support or context for the claim.”  (Rand Resources, LLC v. City of Carson (2019) 6 Cal.5th 610, 621.)  “Rather, the protected activity must ‘supply elements of the challenged claim.’ [Citation.]”  (Id., citations omitted.)

“At the first step, the moving defendant bears the burden of identifying all allegations of protected activity, and the claims for relief supported by them. When relief is sought based on allegations of both protected and unprotected activity, the unprotected activity is disregarded at this stage.”  (Baral v. Schnitt (2016) 1 Cal.5th 376, 396, emphasis added.)  

Moving Defendants argue Plaintiff’s allegation that Defendant Moon’s communication with an online news publication refers to 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’ include[ing]:… (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,” which, therefore, establishes that the challenged conduct arises from protected activity.  (Motion, pg. 9, citing C.C.P. §425.16(e)(3).)  Moving Defendants also argue that Plaintiff’s allegations pertaining to Moving Defendants’ hiring of an employment law firm to investigate the Company’s potential claims against Plaintiff, which resulted in the filing of multiple lawsuits against Plaintiff, arises out of Moving Defendants’ protected petitioning activity.  (Motion, pgs. 6-9, citing C.C.P. §425.16(e)(2).)

1.     Category 1: Statements Made by Defendant Moon in a South Korean News Publication

a.      The Challenged Allegations

The first category of challenged allegations concern statements made by Defendant Moon to South Korean publications.  The identified allegations are as follows.

Paragraphs 40-41, lines 15-22 & n.1:

Plaintiff is informed and believes and based thereon alleges, that Majority Director Defendants’ false statements are intended to hide the detrimental economic impact that ouster of Plaintiff had on the value of the Company, and save face on the part of Majority Director Defendants before LG H&H, for the personal benefit of Majority Director Defendants and to the detriment of Company and its shareholders.

For example, Defendant Moon has falsely represented in South Korean publications that she is responsible for valuable licensing agreements by the Company, including The Crème Shop x Sanrio Lunar New Year Collection, launched in December of 2022 [n.1].

[n.1] Korean-language publications containing the false statements of Defendant Moon are available at https://www.theguru.co.kr/news/article.html?no=49176 and https://www.theguru.co.kr/news/article.html?no=54481.

b.     Analysis

Moving Defendants failed to meet their burden to demonstrate the specific conduct at issue in this motion that is alleged in Plaintiff’s FAC arises from 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.”  (C.C.P. §§425.16(b), (e).)  

Here, the alleged conduct is merely incidental or collateral to Plaintiff’s causes of action and does not purport to support a claim for recovery.  (Sheley v. Harrop (2017) 9 Cal.App.5th 1147, 1170.)  As a preliminary matter, none of the parties in this case submitted a certified translation of the two South Korean articles referenced in FAC ¶41 n.1 and the notice to the instant motion, which are writings written exclusively in Korean.  (See Evid. Code §753(a) [“When the written characters in a writing offered in evidence are incapable of being deciphered or understood directly, a translator who can decipher the characters or understand the language shall be sworn to decipher or translate the writing.”], emphasis added; §753(b) [“The record shall identify the translator . . ..”], emphasis added.)

For the purposes of this motion, Moving Defendants fail to demonstrate the South Korean news articles at issue are in connection with a public issue.  Therefore, to the extent Moving Defendants’ motion is based on the purported statements in the South Korean news publications, it does not satisfy Defendants’ burden of demonstrating that the allegations in the FAC are protected activity within the meaning of C.C.P. §425.16(e)(3).

2.     Category 2: Statements Made by Moving Defendants in Physical Notices, Telephone Calls, and Distributing Letters in Advance of Litigation

a.      The Challenged Allegations

The second category of challenged allegations concern statements made by Moving Defendants in physical notices, telephone calls, and in letters.  The identified allegations are as follows.

Paragraph 2, lines 25-28: “Majority Director Defendants used the Company as an instrumentality to engage in a wasteful and tortious campaign of harassment against Plaintiff and others, in breach of the fiduciary duties of loyalty and care owed by the Majority Director Defendants to the Company.”

Paragraph 24, lines 21-23: “Following Majority Director Defendants’ awareness that Plaintiff would exercise her put option, the Company, at the behest of Majority Director Defendants, initiated a wasteful campaign to harass and intimidate Plaintiff and third parties.”

Paragraph 27, lines 9-15:

The Company, at the direction of Majority Director Defendants and over the objection of Plaintiff, has engaged a law firm, Littler Mendelson P.C. (“Law Firm”), not for purposes of engaging in litigation but rather to conduct a wasteful harassment campaign against Plaintiff, her family, and former employees outside of litigation. Plaintiff is informed and believes, and based thereon alleges, that this wasteful campaign was undertaken in an attempt to damage Plaintiff’s good name and reputation for the purpose of lowering the value of the Company so that Plaintiff’s put option would be less valuable.

Paragraph 28, lines 16-21:

Plaintiff is informed and believes and based thereon alleges that Law Firm and Company engaged in a campaign of harassment by posting physical notices on the doors of the houses of former employees and family members of Plaintiff, making frequent and disruptive telephone calls to former employees, using private investigators to track former employees physically and digitally, and purposefully distributing letters intended for former employees to current employees to smear former employees’ reputations.

Paragraph 28, lines 16-21:

Majority Director Defendants breached their fiduciary duties by knowingly acting on their personal behalf, and in the sole interests of LG H&H, and against the interests of the Company and its shareholders as a whole as detailed, supra, including, inter alia, by (i) engaging in a wasteful and vindicative harassment campaign against Plaintiff, her family, and former employees of the Company for the purpose of devaluing the Company; (ii) entering into conflicted and self-dealing transactions; and (iii) misusing Company marketing and business channels to spread falsities for the purpose of devaluing the Company.

c.      Analysis

Moving Defendants met their burden to demonstrate pre-litigation demand letters served on Plaintiff and her family members constitutes protected activity under C.C.P. §425.16(e)(2).

          Here, Moving Defendants’ alleged conduct of engaging the Law Firm to send demand letters to Plaintiff’s husband, Chris Yoon, Plaintiff, by way of her attorney, and eight other employees of the Company who resigned en masse, constitute statements or writings “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” under §425.16(e)(2) because such documents were prepared in advance of litigation in The Crème Shop, Inc. v. Sunna (“Olive”) Kim, et al., LASC Case No. 23STCV27922 (“Employment Action”).  (Decl. of Romeo ¶4, Exh. A; D-RJN, Exh. A; Tuszynska v. Cunningham (2011) 199 Cal. App.4th 257, 268; accord Shelley v. Harrop (2017) 9 Cal. App.5th 1147, 1165-1166 [“‘litigation funding decisions’ also constitute protected petitioning activity. . . . We agree with appellants that, insofar as a cause of action is based on the payment of funds to maintain a lawsuit, this constitutes protected activity that will be subject to a special motion to strike pursuant to section 425.16 unless the opposing party can demonstrate a probability of prevailing on the claim”].)

          The alleged conduct also constitutes an element of Plaintiff’s cause of action for breach of fiduciary duty.  A cause of action for breach of fiduciary duty requires the following elements: (1) a fiduciary duty; (2) breach of the duty; and

(3) damage caused by the breach.  (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 182.)  Here, Plaintiff alleges Moving Defendants “breached their fiduciary duties by knowingly acting on their personal behalf and in the sole interests of LG H&H and against the interests of the Company and its shareholders as a whole . . . by (i) engaging in in a wasteful and vindicative harassment campaign against Plaintiff, her family, and former employees of the Company for the purpose of devaluing the Company; (ii) entering into conflicted and self-dealing transactions; and (iii) misusing Company marketing and business channels to spread falsities for the purpose of devaluing the Company.”  (FAC ¶49.)  Plaintiff’s allegation pertaining to Moving Defendants’ retention of the Law Firm to send the demand letters at issue as a form of waste supplies an essential element of her cause of action for breach of fiduciary duty.  (Rand Resources, LLC, 6 Cal.5th at pg. 621 “[T]he protected activity must ‘supply elements of the challenged claim.’”].)

          Accordingly, Moving Defendants met their burden to demonstrate that the physical notices, telephone calls, and letters distributed by Moving Defendants’ counsel in advance of litigation constitutes protected activity under C.C.P. §425.16(e)(2).

          Plaintiff’s argument in opposition that Moving Defendants’ conduct cannot constitute protected activity because the cease-and-desist letters were extortionate is unavailing.  Plaintiff’s fails to demonstrate, as a matter of law, that the letters were illegal.  (Flatley v. Mauro (2006) 39 Cal.4th 299, 330-331; City of

Montebello v. Vasquez (2016) 1 Cal.5th 409, 424 [“The defendant must concede the point, or the evidence conclusively demonstrate it, for a claim of illegality to defeat an anti-SLAPP motion at the first step.”].)  Here, Plaintiff does not conclusively demonstrate the letters were illegal, and Moving Defendants do not concede that the letters were extortionate.  Plaintiff merely argues in a conclusory fashion, “[u]nder the totality of the circumstances, Mr. Romeo’s letters constituted extortionate threats. Specific statues were cited. Specific crimes were identified. Quite obviously, recipients of these letters would have ‘feared’ being reported. The letters were in furtherance of extortion.”  (Opposition, pg. 8.)

The burden shifts to Plaintiff to demonstrate a probability of prevailing on her cause of action for breach of fiduciary duty against Moving Defendants.  Plaintiff has not met her burden.

Prong Two: Probability of Prevailing

A.   Breach of Fiduciary Duty

A cause of action for breach of fiduciary duty requires the following elements: (1) a fiduciary duty; (2) breach of the duty; and (3) damage caused by the breach.  (Charnay, 145 Cal.App.4th at pg. 182.)

Plaintiff failed to establish a probability of prevailing on her cause of action for breach of fiduciary duty.  Plaintiff’s opposition does not address the probability of prevailing on this cause of action.  (See Opposition.)

Accordingly, Plaintiff failed to establish a probability of prevailing on her cause of action for breach of fiduciary duty.

Conclusion

          Moving Defendants’ special motion to strike FAC ¶¶40-41, lines 15-22 including n.1 is denied.  Moving Defendants’ special motion to strike FAC ¶2, lines 25-27; ¶25, lines 21-23; ¶¶27-28, lines 9-21; and ¶49, lines 1-5 is granted.

          Moving Defendants may separately move for attorneys’ fees and costs incurred on the instant motion.

          Moving Party to give notice.

Dated:  December _____, 2024