Case Name: Benjamin Greenberg, et al. v. Sofia University, FPC, et al.
Case No.: 2015-1-CV-287059

Factual and Procedural Background

This is an action for fraud and unfair business practices. Plaintiffs Benjamin Greenberg, Nathan Wright, Betsy Peterson, James Norwood, Joy Riach, Ruchi Patel, Beau Scott, and Korie Leigh (collectively, “Plaintiffs”) were students in the Psychology Doctoral Program (the “Program”) at defendant Sofia University AKA Institute of Transpersonal Psychology (“Sofia”). Sofia, as predecessor in interest to Sofia University, FPC (the “University”), represented that it had the financial and academic resources to ensure that Plaintiffs could timely complete the Program and qualify to be licensed psychologists in California. However, Plaintiffs were misled regarding the financial condition of Sofia. After securing Plaintiffs’ tuition payments, Sofia admitted that the Program would not be continued, that no “teach out” would be offered and strongly encouraged Plaintiffs to apply to other programs to complete their education. Thus, Plaintiffs have sustained damages including tuition and fees paid to Sofia, moving expenses, lost income, and tuition and fees paid to other educational institutions as a result of being unable to complete their education at the University.

Plaintiffs also allege that defendant WASC Senior College and University Commission (erroneously sued as Western Association of Schools and Colleges) (“WASC”) entered into a written contract with Sofia whereby Sofia would pay certain fees and meet certain standards and WASC would provide accreditation. The University also entered into a written contract with WASC in May 2014. The contract provided that the University would retain the WASC accreditation acquired by Sofia and that the University would comply with all WASC requirements for accreditation. Plaintiffs were third party beneficiaries of the contracts between WASC and the University and WASC and Sofia.

Plaintiffs allege that WASC breached the University/WASC contract and the Sofia/WASC contract by accrediting, and continuing to accredit without enforcing its own accreditation standards, i.e., requiring a “teach out.” As a result of the breach, Plaintiffs seeks damages in excess of $1,000,000.

On October 20, 2015, Plaintiffs filed a complaint against defendants setting forth causes of action for: (1) violation of the Consumer Legal Remedies Act; (2) unfair business practices; (3) unfair business practices; (4) fraud; (5) breach of contract; (6) breach of contract (third party beneficiary); (7) negligence; (8) breach of covenant of good faith and fair dealing; and (9) imposition of constructive trust.

On February 4, 2016, Plaintiffs dismissed the third cause of action against defendant WASC.
Currently before the Court is the special motion to strike the complaint by defendant WASC. (See Code Civ. Proc., § 425.16 et seq.) WASC filed a request for judicial notice and evidentiary objections in conjunction with the motion. Plaintiffs filed written opposition and evidentiary objections. WASC filed reply papers. Both sides request an award for attorney’s fees.

Special Motion to Strike the Complaint

Following dismissal of the third cause of action, the only claims alleged against defendant WASC are the sixth, seventh, and eighth causes of action in the complaint. WASC argues that such claims should be stricken as they arise from protected activity and Plaintiffs cannot demonstrate a probability of success on the merits.

Request for Judicial Notice

WASC requests judicial notice of the following court records: (1) the complaint in this action; and (2) the request for dismissal of the third cause of action. (See Exhibits A and B.) The Court may take judicial notice of these documents as records of the superior court under Evidence Code section 452, subdivision (d). (See Stepan v. Garcia (1974) 43 Cal.App.3d 497, 500 [the court may take judicial notice of its own file].)

Therefore, the request for judicial notice is GRANTED.

Legal Standard

When a special motion to strike is filed, the initial burden rests with defendant to demonstrate that the challenged pleading arises from protected activity. (Code Civ. Proc., § 425.16, subd. (e); Zamos v. Stroud (2004) 32 Cal.4th 958, 965.) Defendant need only make a prima facie showing that the complaint “arises from” their constitutionally-protected free speech or petition activity. (See Governor Gray Davis Committee v. American Taxpayers Alliance (2002) 102 Cal.App.4th 449, 458-459.) In determining whether defendant sustained his initial burden of proof, the court relies on the pleadings and declarations or affidavits. (Code Civ. Proc., § 425.16, subd. (b).)

Once defendant makes such a prima facie showing, the burden shifts to the plaintiff to establish a “probability” that they will prevail on whatever claims are asserted against Defendant. (See Code Civ. Proc. § 425.16, subd. (b).) Plaintiff must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment. (Premier Med. Mgmt. Systems, Inc. v. California Ins. Guar. Ass’n (2006) 136 Cal.App.4th 464, 476.) The burden is on plaintiff to produce evidence that would be admissible at trial—i.e., to proffer a prima facie showing of facts supporting a judgment in their favor. (Chavez v. Mendoza (2001) 94 Cal.App.4th 1083, 1087.)

First Prong: Protected Activity

“A defendant meets his or her burden on the first step of the anti-SLAPP analysis by demonstrating the acts underlying the plaintiff’s cause of action fall within one of the four categories spelled out in [Code of Civil Procedure] section 425.16, subdivision (e).” (Collier v. Harris (2015) 240 Cal.App.4th 41, 50-51.) That section provides that 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 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.” (Code Civ. Proc., § 425.16, subd. (e).) “These categories define the scope of the anti-SLAPP statute by listing acts which constitute 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.’” (Collier, supra, at p. 51, citing Code Civ. Proc., § 425.16, subd. (e).)

The anti-SLAPP statute should be broadly construed and a plaintiff cannot avoid operation of the anti-SLAPP statute by attempting, through artifices of pleading, to characterize an action as a garden variety tort or contract claim when in fact the claim is predicated on protected speech or petitioning activity. (Hylton v. Frank E. Rogozienski, Inc. (2009) 177 Cal.App.4th 1264, 1271-1272 [internal citations omitted].) “Accordingly, we disregard the labeling of the claim and instead ‘examine the principal thrust or gravamen of a plaintiff’s cause of action to determine whether the anti-SLAPP statute applies.’” (Id. at p. 1272 [internal citation omitted].) “We assess the principal thrust by identifying ‘[t]he allegedly wrongful and injury-producing conduct…that provides the foundation for the claim.’” (Ibid. [citation omitted].) “If the core injury-producing conduct upon which the plaintiff’s claim is premised does not rest on protected speech or petitioning activity, collateral or incidental allusions to protected activity will not trigger application of the anti-SLAPP statute.” (Ibid.)

As the California Supreme Court has stressed, “the critical point is whether the plaintiff’s cause of action itself was based on an act in furtherance of the defendant’s right of petition or free speech.” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78.) “In other words, the defendant’s act underlying the plaintiff’s cause of action must itself have been in furtherance of the right of petition or free speech.” (Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 670.)

“In deciding whether the ‘arising from’ requirement is met, a court considers ‘the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.’” (Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP, supra, 133 Cal.App.4th at p. 670.)
“[I]f the defendant does not demonstrate this initial prong, the court should deny the anti-SLAPP motion and need not address the second step.” (Baharian-Mehr v. Smith (2010) 189 Cal.App.4th 265, 271.)

Free Speech/Petitioning Activity

WASC argues that Plaintiffs’ claims constitute free speech and petitioning activity protected under the First Amendment. As an initial matter, WASC’s legal authorities do not address accreditation as free speech protected under the First Amendment in the context of an anti-SLAPP motion. Furthermore, WASC supports this argument by referencing a May 15, 2014 letter to Sofia regarding the ownership change. However, this letter does not constitute the alleged communicative conduct which is at issue in the sixth, seventh, and eighth causes of action. Rather, those claims are based on alleged contracts between WASC and Sofia and the University. (See Complaint at ¶¶ 85, 87-88.) WASC fails to demonstrate that these contracts constitute free speech or petitioning activity. To the extent that WASC claims that no such contracts exist, that is an argument for a motion for summary judgment with supporting evidence or for the trier of fact at trial, not on a special motion to strike. Thus, this argument does not satisfy the first prong.

Matter of Public Interest

WASC also contends that its actions are protected as statements made in a place open to the public or a public forum in connection with an issue of public interest.

“The statute does not provide a definition for ‘an issue of public interest, and it is doubtful an all-encompassing definition could be provided. However, the statute requires that there be some attributes of the issue which make it one of public, rather than merely private, interest. A few guiding principles may be derived from decisional authorities. First, ‘public interest’ does not equate with mere curiosity. [Citations.] Second, a matter of public interest should be something of concern to a substantial number of people. [Citation.] Thus, a matter of concern to the speaker and a relatively small, specific audience is not a matter of public interest. [Citations.] Third, there should be some degree of closeness between the challenged statements and the asserted public interest [citation]; the assertion of a broad and amorphous public interest is not sufficient [citation]. Fourth, the focus of the speaker’s conduct should be the public interest rather than a mere effort ‘to gather ammunition for another round of [private] controversy…’ [Citation.]” (Weinberg v. Feisel (2003) 110 Cal.App.4th 1122, 1132-1133.)

California courts have found statements made in connection with matters of public interest. For example, Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628 (disapproved on another ground in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68) involved statements concerning a lawsuit against a large and wealthy church that had been the subject of extensive media coverage. Also, Averill v. Superior Court (1996) 42 Cal.App.4th 1170 considered statements about the placement of a shelter for battered women that had been the subject of considerable public controversy, including local land use hearings. (Id. at p. 1175.) Finally, Sipple v. Foundation for Nat. Progress (1999) 71 Cal.App.4th 226 addressed allegations of domestic violence against a nationally known political consultant who successfully had used the domestic violence issue in a number of political campaigns.

WASC fails to specifically address any of the public interest factors delineated in Weinberg in support of its special motion to strike. The only argument is simply that the subject speech in this case involves education, a matter of public interest. (See Memo of P’s & A’s at p. 7:5-9.) There is certainly no question that education is a legitimate public interest concern. However, WASC fails to demonstrate that this particular case involving a contract dispute between private parties is of concern to a substantial number of people. If anything, the dispute concerns only the Plaintiffs and the contracting parties who represent a relatively small and specific audience. For that reason, the case is not a matter of public interest. Furthermore, WASC also supports this argument with reference to the May 2014 letter and asserts that the controversy is a matter of public interest because the letter was posted online in a public forum. (Id. at p. 7:9-12.) However, as stated above, the alleged contracts constitute the communicative conduct which is the subject of these claims, not the May 2014 letter. There is no evidence before the Court showing that the subject contracts were posted online or in any other public forum. Therefore, the public interest argument does not satisfy the first prong.

Official Proceeding

Finally, WASC argues that Plaintiffs’ claims arose in connection with an issue under consideration or review by an official proceeding authorized by law. In support of this argument, WASC again refers to the May 2014 letter. It might be that the letter itself arose in connection with an issue under consideration as suggested by defendant. However, as stated above, the May 2014 letter is not the subject of Plaintiffs’ claims. Instead, these claims arise from contracts between WASC and Sofia and the University. There is no evidence before the Court to suggest that these contracts were under consideration or review by an official proceeding authorized by law. Therefore, this argument also fails to satisfy the first prong.

Having failed to satisfy the first prong, the Court does not need to address whether Plaintiffs can prevail on the merits of their claims. (Baharian-Mehr v. Smith, supra, 189 Cal.App.4th at p. 271.) Accordingly, the special motion to strike the sixth, seventh, and eighth causes of action is DENIED.

Evidentiary Objections

The Court declines to render formal rulings on WASC’s evidentiary objections as they did not satisfy the first prong of the special motion to strike.

Requests for Attorney’s Fees

WASC’s request for attorney’s fees is DENIED as it did not prevail on the merits of the motion.

Plaintiffs’ request for attorney’s fees and costs is DENIED WITHOUT PREJUDICE subject to a noticed motion and attorney declaration to support an award of fees and costs. (Code Civ. Proc., § 425.16, subd. (c); Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131 [prevailing plaintiff may recover attorney’s fees and costs where special motion to strike is frivolous or solely intended to cause unnecessary delay].)