Judge William A. Crowfoot, Case 23AHCV00149 2023-05-23 Tentative Ruling

Judge: William A. Crowfoot, Case: 23AHCV00149, Date: 2023-05-23 Tentative Ruling

Plaintiff Employee Retention Benefits (“ERB”) provides “employee benefits solutions” to members of the Los Angeles County Professional Peace Officers Association (“PPOA”). (Compl., ¶¶ 8-10.) ERB alleges that defendant Atlas Voluntary Benefits Financial & Insurance Solutions, Inc. (“Atlas”), an insurance agency founded by co-defendant Marisol Flores (“Flores”), is engaging in unlawful competitive actions by making defamatory statements to ERB clients, propagating a misinformation campaign against ERB, and coaching current ERB clients to terminate policies based on misinformation. (Compl., ¶¶ 11-15.) ERB asserts causes of action against Atlas and Flores (collectively, “Defendants”) for: (1) tortious interference with an existing contract, (2) tortious interference with prospective contractual relations, (3) defamation – trade libel, and (4) violation of California Business & Professions Code section 17200 et seq.

On April 13, 2023, Defendants filed this special motion to strike ERB’s claims and for attorneys’ fees against ERB and its attorneys of records (the “Motion”). In support of their Motion, Defendants submit the declarations of their employees, defense counsel, and six members of PPOA. Defendants contend that Plaintiff’s claims are based on protected activity and that the Plaintiff cannot show a probability of prevailing because of the litigation privilege.

Courts resolving an anti-SLAPP motion under Cal. Civ. Code §425.16 must follow a two-step process. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 733.) In the first step (“prong one”), the court determines whether the conduct underlying the plaintiff’s cause of action arises from the defendant’s constitutional rights of free speech or petition. (Baral v. Schnitt (2016) 1 Cal. 5th 376, 395.) This is a threshold issue—if the moving party fails to show that the conduct is constitutionally protected, then the court need not address prong two. (Jarrow, supra, 31 Cal.4th at p. 733.)

Under the second prong, the burden shifts to plaintiff to prove that he or she has a legally sufficient claim and to prove with admissible evidence a probability that the plaintiff will prevail. (E.g. Navellier v. Sletten (2002) 29 Cal.4th 82, 88.) To fulfill prong two, a plaintiff cannot rely on the allegations of the complaint, but must produce evidence that is admissible at trial. (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212.)

The anti-SLAPP statute protects “any written or oral statement or writing made in connection with” an “official proceeding authorized by law.” (Code Civ. Proc., § 425.16, subd. (e).) Litigation-related activities and statements fall under the first amendment’s right to petition the government and are broadly protected by section 425.16 of the anti-SLAPP statute. (E.g. Navellier, supra, 29 Cal. 4th 204 at pp. 90-91.) “Statements made ‘in anticipation of a court action’ may be entitled to protection under the anti-SLAPP statute.” (Trinity Risk Management, LLC v. Simplified Labor Staffing Solutions, Inc. (2021) 59 Cal.App.5th 995, 1005.) “‘‘[J]ust as communications preparatory to or in anticipation of the bringing of an action or other official proceeding are within the protection of the litigation privilege . . . [,] such statements are equally entitled to the benefits of section 425.16.’’” (Ibid. [quoting Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115].) “A prelitigation communication is privileged only if it ‘relates to litigation that is contemplated in good faith and under serious consideration.’” (Ibid. [quoting Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1251].)

Defendants argue that ERB’s claims are based on Atlas’s communications “made through a letter, provided by another insurance company, to be used by ERB’s policyholders to seek redress from ERB’s double billing.” (Motion, p. 7.) These communications include a purported change by ERB in PPOA union members’ policies without the members’ consent and allegedly criminal action in failing to report the theft of information concerning PPOA union members and employees to the California Department of Insurance in or about April 2020. (Motion, pp. 5-6; Compl., ¶ 15.) Defendants argue that ERB’s Claims arise out of their protected activity because Atlas was “assisting [] policyholders in seeking redress for ERB’s improper business practices” and “essentially providing assistance to these individuals in prelawsuit demands for the overcharging and loss of benefits created by ERB’s improper business practices.” (Motion, p. 8.)

As evidence, Defendants submit declarations from Atlas’s employees and PPOA members. However, Defendants’ evidence merely alludes to litigation and does not show that litigation was under serious consideration. In fact, Defendants even state that “it is common practice in the insurance industry to assist the policyholder seeking to change its policy to a different carrier” by “assist[ing] the customer in cancelling the previous policy and pro-rating the premiums back to the insured that have not yet been accrued [sic].” (Motion, p. 8.) Defendants also characterize their actions as “consistent with Atlas’ customer centric approach to take care of its customers first as its overarching business philosophy.” (Ibid.)

Moreover, Mr. Robles, a manager for Atlas, states that “a number of individuals expressed to [him] that they were considering pursuing a legal action against ERB.” Yet, Mr. Robles does not state that his communications with PPOA members were intended to persuade them to file a lawsuit or pursue other legal remedies. Instead, his declaration only shows that Atlas agents were assisting PPOA members in obtaining a refund. Additionally, as ERB aptly details in its opposition, none of the five PPOA members who submitted a declaration mention a lawsuit or describe the draft letter Atlas provided them as a “prelawsuit demand.” They only describe Atlas’s efforts to help them obtain a refund and/or cancel their policies after ERB allegedly overcharged them. (Bhutto Decl., ¶¶ 6-7; Schriever Decl., ¶¶ 4-5; White Decl., ¶¶ 4-6; Hicks Decl., ¶¶ 3-4; Acevedo Decl., ¶¶ 4-5; Opp., pp. 4-5.)

On reply, Defendants add declarations from two additional individuals: (1) PPOA member Lieutenant Jose Salgado and (2) Rick Hayden, the father of PPOA member Deputy Sheriff Dakota Palanca. The late addition of these declarations are unavailing because “[w]hether or not a person intends to exercise his or her constitutional right to petition the government by persuading another to file a lawsuit depends upon the state of mind of the person offering the persuasion, not the state of mind of the person whom he or she attempts to persuade.” (Bel Air Internet, LLC v. Morales (2018) 20 Cal.App.5th 924, 944.) Also, the declarants still only state that they “intend to file a lawsuit” or are “currently seeking legal assistance to file a legal complaint.” (Reply, Salgado Decl., ¶ 6; Hayden Decl., ¶ 6.)

There is no evidence that Defendants were encouraging PPOA members to sue, rather than advising them on how to obtain a refund. Accordingly, Defendants have failed to show how ERB’s claims arise from their protected activity.

Because Defendants fail to meet their moving burden, ERB does not need to establish that there is a probability of succeeding on the merits of its claims.

ERB requests its attorneys’ fees and argues that the Court should draw the inference of subjective bad faith based on the objective lack of merit in Defendants’ Motion. ERB argues that Defendants failed to submit any evidence showing that litigation was contemplated in good faith and under serious consideration by any of the PPOA members. (Opp., p. 11.)

“If the court finds that a special motion to strike is frivolous or is solely intended to cause unnecessary delay, the court shall award costs and reasonable attorney’s fees to a plaintiff prevailing on the motion, pursuant to Section 128.5.” (Code Civ. Proc., § 425.16, subd. (c).) “Frivolous” is defined as “totally and completely without merit or for the sole purpose of harassing an opposing party.” (Code Civ. Proc., § 128.5, subd. (b)(2).) A request for sanctions pursuant to section 128.5 “shall be made separately from other motions or requests.” Therefore, the matter of fees will not be decided in connection with Defendants’ motion to strike. (Chitsazzadeh v. Kramer & Kaslow (2011) 199 Cal.App.4th 676, 683 [substantive and procedural requirements of CCP 128.5 adopted in determining anti-SLAPP fee requests by opposing party].) ERB should reserve a hearing date and file a noticed motion to recover its attorneys’ fees.

William A. Crowfoot

Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.