Filed 9/4/19 Maxwell v. Save Mart Supermarkets CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIFTH APPELLATE DISTRICT

GERALD MAXWELL,

Plaintiff and Respondent,

v.

SAVE MART SUPERMARKETS, et al.,

Defendants and Appellants.

F076326

(Super. Ct. No. 2021374)

OPINION

APPEAL from an order of the Superior Court of Stanislaus County. John D. Freeland, Judge.

Sheppard, Mullin, Richter & Hampton, Karin Dougan Vogel and Paul S. Cowie for Defendant and Appellant Save Mart Supermarkets.

The Velez Law Firm, Mark P. Velez and Samantha J. Tanner for Plaintiff and Respondent.

-ooOoo-

Plaintiff Gerald Maxwell (Maxwell) sued Defendant Save Mart Supermarkets for various claims related to his employment at Save Mart’s Vacaville distribution center. Less than two weeks later, Maxwell, along with hundreds of other Save Mart employees at the distribution center who were being laid off as a result of the distribution center’s closure, were presented with a general release and waiver, which they signed as a condition of receiving a severance payment. Upon learning the document he signed released his claims in this lawsuit, Maxwell amended his complaint to include causes of action for economic duress and rescission. Save Mart filed a Code of Civil Procedure section 425.16 special motion to strike both causes of action. The trial court granted the motion as to the economic duress claim, but denied it as to the rescission claim.

On appeal from the trial court’s order, Save Mart contends the trial court erred in denying the motion as to the rescission claim because it met its burden of showing the allegations upon which this claim are based constitute protected activity under the statute and Maxwell failed to establish a probability of prevailing on the merits. We agree with Maxwell that the rescission claim is not subject to an anti-SLAPP motion because the underlying statements were not made in connection with an issue under consideration or review in an official proceeding authorized by law. Accordingly, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Beginning in October 2012, Save Mart employed Maxwell as an order selector at its Vacaville distribution center. On August 17, 2016, Maxwell filed a complaint in superior court against Save Mart and five of its managers which alleged seven causes of action under the Fair Employment and Housing Act (FEHA) (Govt. Code, § 12900, et. seq) arising out of his employment. The claims included physical disability discrimination and harassment, sexual harassment, retaliation, and failure to prevent harassment and discrimination, engage in the interactive process, and make reasonable accommodations. Two days later, Maxwell’s counsel served the summons, complaint, a civil case cover sheet, and notice of case management conference, on Save Mart by mail via a Notice and Acknowledgement of Receipt.

Prior to Maxwell filing his complaint, Save Mart decided to close the Vacaville distribution center, which resulted in a facility-wide reduction in force. All of the employees at the distribution center were laid off, with the exception of a select few who were able to find comparable employment at other Save Mart facilities. Hundreds of employees were laid off, including Maxwell. As part of the planned closure, Save Mart offered severance agreements to the laid off employees.

On the morning of August 30, 2016, Maxwell went to the computer room at the distribution center to get his final paycheck. In his declaration, Maxwell explained that when he arrived, he saw about 10 manila envelopes sitting on a table with employee names on them, including his. About 15 minutes later, other Save Mart employees joined him. After another 15 minutes, the employees were instructed to open their manila envelopes; inside his he found a check, a W-2 form and a “packet.” Maxwell spent the next five to 10 minutes speaking with his co-workers about their final paychecks and what they were going to do because they had just been laid off.

A Save Mart representative then told all those assembled to sign page nine of the packet in order to a receive a second check, which was described as “a gift” Save Mart “was paying their employees” because the facility was closing. Maxwell was never made aware he was signing a severance agreement and signing away his legal rights, and he was not given time to review the 27-page packet. He only knew if he signed page nine of the packet he would receive the “gift.” Maxwell signed the severance agreement that day without reading it. Maxwell would not have signed the agreement had he known he was signing away his legal rights. Instead, Save Mart led him to believe the second check was a “gift.” Maxwell stated he was in the room for a total of about 30 minutes.

Maxwell testified at his deposition that he did not read the severance agreement before signing it because “[w]e were talking about our stuff and w[ere]n’t really paying attention to anybody.” He decided to sign the severance agreement right then because he had bills to pay – he was losing his job, he just bought a car and had a car payment, and he “[j]ust had all this stuff I had to pay.” He did not understand what a severance agreement was. In addition, he wanted to get out of the room. He had medicine he needed to take – he had just had surgery, and his foot was swelling up and “killing” him. He could not take the medicine before he came to the distribution center because he would not have been able to drive himself to the meeting. While no one told him he had to sign the severance agreement that day, he knew he would not get his check that day unless he signed it. He understood the check was not for vacation pay or wages.

When asked if there was any reason why he did not consult with his attorney before signing the severance agreement, Maxwell responded, “No.” He would characterize that as a mistake, but he was not mistaken about anything else when he signed the agreement. Maxwell did not ask anyone at Save Mart questions about the severance agreement before signing it. Maxwell had not told anyone at Save Mart that he had filed a lawsuit against Save Mart and had no reason to believe anyone at Save Mart knew on August 30, 2016 that he filed this lawsuit. In exchange for signing the severance agreement, Maxwell received a $3,482.71 severance payment. Maxwell considered that a lot of money, as it was “a whole month’s pay.”

Save Mart’s human resources manager, Sharon Levitt, who presented the severance agreements to laid-off employees, gave a different account of what occurred during the meeting. Levitt met with the employees subject to the reduction in force in groups of about 10 employees. In her meetings, she presented the employees with a severance agreement, which included a release of all claims they might have against Save Mart. In exchange for signing the severance agreement, the employees would receive a certain amount of severance pay, depending on their length of employment. Levitt claims that during the meeting Maxwell attended she presented the employees with their severance agreements, explained the terms, and instructed the employees to review the agreements before signing and let her know if they had any questions. Levitt also told the employees they could speak with their attorneys before signing and they should do so if they had any legal questions. Levitt told the employees they did not need to sign the severance agreement during the meeting or even that day; rather, they could take the agreement home and bring it back signed, or not sign the agreement at all. Several employees, including one from the groups of employees presented severance agreements on August 30, 2016, opted to take their agreements home before returning them signed at a later date.

The severance agreement states in a heading, which is in all capital letters, that it is a “General Waiver and Release.” The agreement provides, in pertinent part: “I, Gerald Maxwell, for and in consideration of receipt of $3,482.71, which I understand constitutes my Severance Payment . . . hereby waive, release and discharge Save Mart Supermarkets . . . from any and all actions, causes of action, demands, claims or liabilities (whether known or unknown) of any kind whatsoever, including but not limited to those arising out of my employment or the termination of my employment by the Company such as: (1) claims under any federal, state, or local law concerning employment rights or employment discrimination of any type, including, but not limited to . . . the Fair Employment and Housing Act (‘FEHA’) and laws involving claims of discrimination based on race, sex, age (including the Age Discrimination in Employment Act (‘ADEA’), religion, national origin, disability, veteran’s status, union activity, marital status, retaliation, or other protected categories . . . .” The agreement expressly stated: “I acknowledge that I have been, and by this document I am, advised in writing to consult an attorney before executing this General Release and that the foregoing shall operate as a general release and as a promise not to sue, and that I have read, understand, and agree to this General Release.” The agreement does not specifically mention Maxwell’s pending FEHA lawsuit.

On January 30, 2017, Save Mart’s counsel forwarded the severance agreement to Maxwell’s counsel and advised that by signing it, Maxwell released the FEHA claims alleged in this lawsuit. Save Mart’s counsel asked Maxwell to immediately dismiss the lawsuit with prejudice and threatened to move for sanctions if the lawsuit was not dismissed.

Maxwell moved to amend the complaint. After the trial court granted the motion, Maxwell filed a first amended complaint (FAC) on April 17, 2017, which added two causes of action – an eighth for economic duress and a ninth for rescission. The heading to the rescission claim stated it was based on duress, illegality, unconscionability, undue influence, mistake of law, and “contrary to public policy.”

Maxwell’s new claims were based on allegations that (1) Save Mart “acted in such a manner as to place Plaintiff in a position of having no reasonable alternative to the involuntary execution of the General Waiver and Release”; (2) Save Mart “perpetrated certain acts . . . in order to confine Plaintiff to the premises of Defendant Save Mart’s facilities until such a time as Plaintiff signed” the severance agreement; (3) “Plaintiff misunderstood the law at the time of contracting[;] Defendants knew the correct law, but did not rectify Plaintiff’s misunderstanding”; (4) Save Mart and its attorneys “were well aware of Plaintiff’s complaint from a court docket service provider,” Save Mart’s attorney, the law firm of Sheppard Mullin, discussed the complaint with Save Mart, and Levitt “met with Plaintiff for the specific purpose of defrauding Plaintiff of his rights set forth in his original complaint”; and (5) Save Mart and Sheppard Mullin “intentionally misled Plaintiff to accept [the] amount of $3,482.71 as a full and complete settlement of his lawsuit,” which communication by Save Mart at Sheppard Mullin’s behest “amounted to an unlawful ex parte communication with a represented party,” as well as to unconscionability, illegality and undue influence. Maxwell further alleged he rescinded the general release and returned the severance payment to Save Mart’s counsel.

Save Mart filed a special motion to strike the eighth and ninth causes of action under the anti-SLAPP statute. Save Mart argued Maxwell’s claims arose from protected activity under section 425.16, subdivision (e)(1) and (2), as the alleged statements were settlement communications made before or in connection with a judicial proceeding. Save Mart asserted Maxwell could not satisfy his burden to show a substantial probability of prevailing on his claims for the following reasons: (1) the litigation privilege of Civil Code section 47 barred the claims; (2) the economic duress claim was legally and factually unsupportable; (3) the rescission claim failed because Maxwell could not prove the severance agreement was illegal, contrary to public policy or unconscionable, he had not pled the requisite elements of undue influence and had no evidence to support the claim, and he failed to allege a material mistake of law and admitted his only mistake was not consulting his attorney.

In his opposition to the motion, Maxwell argued Save Mart failed to meet its burden of showing his claims arose from protected activity because his allegations that Save Mart was aware of the complaint before misleading and coercing him to sign the severance agreement, which was the “principal thrust or the predomina[nt] nature of the complaint,” do not relate to protected activity. Maxwell further argued the litigation privilege did not bar his claims, as they did not fall within its scope, and the economic duress claim was legally and factually supported. With respect to the rescission claim, Maxwell argued he made a prima facie case as the severance agreement (1) was illegal and violated public policy, since Save Mart knew about this lawsuit and “acted in an unconscionable and deceptive manner in order to coerce [Maxwell] into signing a severance agreement”; (2) was unconscionable because there was unequal bargaining power and the results were overly harsh; (3) resulted from undue influence; and (4) was based on a mistake of law, since Maxwell was mistaken as to the rights he purportedly waived and released since he did not believe he waived any rights in order to receive the “gift” from Save Mart.

After oral argument on the motion, the trial court issued an order granting the motion as to the eighth cause of action for economic duress, but denying it as to the ninth cause of action for rescission because that cause of action “does not arise from Defendant’s exercise of their [sic] 1st Amendment or Code of Civil Procedure § 47 privileges. Plaintiff’s opposing declaration, and his deposition excerpt introduced by Defendant, also shows a prima facie case on this cause of action on grounds not arising from either privilege.”

Save Mart moved for reconsideration of the trial court’s denial of the motion to strike the ninth cause of action in light of new evidence. Save Mart asserted the new evidence consisted of Maxwell’s counsel’s post-hearing conduct, in which he demanded to depose Save Mart’s in-house counsel and Levitt, and demanded Save Mart’s outside counsel withdraw as attorney of record due to a conflict of interest. Save Mart argued this evidence showed Maxwell intended to invade the attorney-client privilege. The trial court denied the motion.

DISCUSSION

The anti–SLAPP statute is intended to address a problem with meritless lawsuits filed to “chill” the exercise of the constitutional right of free speech. (§ 425.16, subd. (a).) As relevant here, section 425.16, subdivision (b)(1) states: “A cause of action against a person arising from any act of that person in furtherance of the 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.”

A court ruling on a motion under the SLAPP statute must go through a two-step process. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon Enterprises).) First, the court must determine whether the moving defendant has made a threshold showing that the challenged causes of action arise from protected activity, that is, activity by defendants in furtherance of their constitutional right of petition or free speech. (Ibid.) The protected acts include: (1) written or oral statements made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) written or oral statements 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) written or oral statements made in a place open to the public or in a public forum in connection with an issue of public interest; or (4) any other conduct in furtherance of the exercise of the constitutional rights of petition or free speech in connection with a public issue or an issue of public interest. (§ 425.16, subd. (e).)

Second, if the court finds that the defendant has met its initial burden, it then determines whether the plaintiff has demonstrated a probability of prevailing on its claim. (Equilon Enterprises, supra, 29 Cal.4th at p. 67.) To satisfy this prong, “the 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 if the evidence submitted by the plaintiff is credited.’ [Citations.] In deciding the question of potential merit, the trial court considers the pleadings and evidentiary submissions of both the plaintiff and the defendant (§ 425.16, subd. (b)(2)); though the court does not weigh the credibility or comparative probative strength of competing evidence, it should grant the motion if, as a matter of law, the defendant’s evidence supporting the motion defeats the plaintiff’s attempt to establish evidentiary support for the claim.” (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.)

On appeal, we review the anti-SLAPP motion de novo to determine whether the parties have met their respective burdens. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3; Christian Research Institute v. Alnor (2007) 148 Cal.App.4th 71, 79.)

Protected Activity

With this background, we turn to the first step of the SLAPP analysis: whether Save Mart met its burden of showing the cause of action alleged arose from protected activity.

We reiterate that Save Mart’s burden is to make a prima facie or initial showing the claims arose from protected activity (Baral v. Schnitt (2016) 1 Cal.5th 376, 384), which entails Save Mart identifying all allegations of protected activity and claims for relief that support them. (Id. at p. 396.) “ ‘ “As courts applying the anti-SLAPP statute have recognized, the ‘arising from’ requirement is not always easily met. [Citations.]” [Citation.] A claim does not arise from constitutionally protected activity simply because it is triggered by such activity or is filed after it occurs. [Citation.] Rather, the focus is on the substance of the lawsuit. “[T]he 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. [Citations.]” [Citation.] In other words, “ ‘ “the act underlying the plaintiff’s cause” or “the act which forms the basis for the plaintiff’s cause of action” must itself have been an act in furtherance of the right of petition or free speech.’ ” ’ ” (Aguilar v. Goldstein (2012) 207 Cal.App.4th 1152, 1160 (Aguilar); see Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1062-1063.) “ ‘If the mention of protected activity is “only incidental to a cause of action based essentially on nonprotected activity,” then the anti-SLAPP statute does not apply.’ ” (Aguilar, supra, at p. 1160; Scott v. Metabolife International, Inc. (2004) 115 Cal.App.4th 404, 414.)

As pertinent here, an analysis of whether a cause of action arises from statements or writings “made in connection with an issue under consideration or review by a . . . judicial body” (§ 425.16, subd. (e)(2) may “be broken down into three components: (a) was there an ‘issue under consideration or review by a . . . judicial body’; (b) were [Save Mart’s] statements [or writings] made ‘in connection with’ this issue; and (c) did the cause of action pleaded by [Maxwell] ‘aris[e] from’ [Save Mart’s] statements [or writings]?” (City of Costa Mesa v. D’Alessio Investments, LLC (2013) 214 Cal.App.4th 358, 372-373, fn. omitted.) “The statute does not accord anti-SLAPP protection to suits arising from any act having any connection, however remote, with an official proceeding.” (Paul v. Friedman (2002) 95 Cal.App.4th 853, 866.) A statement is in connection with litigation under section 425.16, subdivision (e)(2) if it relates to the substantive issues in the litigation and is directed to persons having some interest in the litigation. (Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 962 (Seltzer); Neville v. Chudacoff (2008) 160 Cal.App.4th 1255, 1266.)

In the FAC’s newly pleaded rescission cause of action, Maxwell alleges: (1) Save Mart “perpetrated certain acts . . . in order to confine [him] to the premises of Defendant Save Mart’s facilities” until he signed the severance agreement; (2) he misunderstood the law when he signed the severance agreement, while Save Mart knew the correct law, yet Save Mart failed to rectify his misunderstanding; (3) Save Mart, knowing of his lawsuit, met with him “for the specific purpose of defrauding [him] of his rights set forth in his original complaint”; and (4) Save Mart and its attorney “in essence intentionally misled” him to accept the severance payment as a full and complete settlement of this lawsuit.

Save Mart contends these claims fall within the anti-SLAPP statute because they “arose out of statements made ‘before or in connection with judicial proceedings.’ ” Specifically, Save Mart argues these allegations show the rescission claim “is based on Save Mart’s settlement communications with Maxwell and obtaining a release agreement from him.” We disagree.

We cannot say the acts upon which Maxwell’s rescission claim is based amount to protected settlement efforts or negotiations. Maxwell’s rescission claim is not based on or does not arise from settlement talks between counsel, like the cause of action held protected in GeneThera, Inc. v. Troy & Gould Professional Corp. (2009) 171 Cal.App.4th 901. There, the plaintiffs alleged an attorney’s communication of a settlement offer to their counsel regarding a codefendant in the underlying litigation constituted intentional interference with contractual relations and negligence because the offer was designed to raise a conflict of interest so the plaintiffs’ counsel could not represent any party in that litigation. (Id. at pp. 904-906.) The appellate court held both claims were based on the communication of the settlement offer, which was a matter connected with issues under consideration or review by a judicial body, as “[a]n attorney’s communication with opposing counsel on behalf of a client regarding pending litigation directly implicates the right to petition and thus is subject to a special motion to strike.” (Id. at p. 908.)

Likewise, in Seltzer, the appellate court concluded the plaintiff’s tort claims, which were based on allegations the attorney defendant secretly negotiated a settlement agreement with defense counsel in the underlying litigation, stemmed from protected activity. (Seltzer, supra, 182 Cal.App.4th at pp. 962, 968.) The court explained the attorney’s “negotiations with the [Homeowners] Association did constitute petitioning activity on behalf of [the insurer], which had ultimate authority over settlement of the covered claims” and the attorney’s “role and the basis for his asserted liability was his negotiation of the agreement, which is conduct within the scope of section 425.16.” (Seltzer, supra, at pp. 968, 969, fn. 11; see Suarez v. Trigg Laboratories, Inc. (2016) 3 Cal.App.5th 118, 122-123 [opposing party’s communications made “in the course of settlement negotiations” are protected activity in lawsuit seeking to rescind the prior settlement agreement based on asserted fraudulent nondisclosure of information that induced the plaintiff to settle his claims for a fraction of their value]; Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834, 842 [fraudulent statements within the context of negotiating a stipulated judgment are protected activity]; Dowling v. Zimmerman (2001) 85 Cal.App.4th 1400, 1420 [claim for fraud and other torts that arose from defendant attorney’s act of negotiating a stipulated settlement of a pending unlawful detainer action are protected activity].)

Finally, in Navellier, supra, 29 Cal.4th 82, the plaintiffs and defendant were engaged in federal litigation when they entered into an agreement which required the defendant to execute a general release in the plaintiffs’ favor which partially settled the lawsuit. After executing the release, the defendant filed counterclaims against the plaintiffs in the federal action. The plaintiffs used the release as a defense against the counterclaims in the federal action and filed a state court action against the defendant for fraudulent inducement, alleging the defendant mispresented his intention to be bound by the release by failing to disclose he was secretly not in agreement with its terms, and breach of the release agreement. (Id. at pp. 85-87, 89.)

Our Supreme Court concluded the basis of the fraud claim, namely defendant’s acts of negotiating, executing and repudiating the release, which the plaintiffs relied on in moving to dismiss the defendant’s counterclaims, fell within the ambit of the anti-SLAPP statute because they “involved ‘statement[s] or writing[s] made in connection with an issue under consideration or review by a . . . judicial body’ (§ 425.16, subd. (e)(2)), i.e., the federal district court . . . .” (Navellier, supra, 29 Cal.4th at p. 90) The act of filing counterclaims in the federal action, the basis of the breach of contract cause of action, also fell within the ambit of the anti-SLAPP statute inasmuch as “arguments respecting the Release’s validity were ‘statement[s] or writing[s] made before a . . . judicial proceeding’ ([§ 425.16], subd. (e)(1)), i.e., the federal action.” (Navellier, supra, at p. 90.)

Here, Maxwell seeks to rescind the general release presented to him in conjunction with his severance from Save Mart, which does not specifically reference his lawsuit and therefore did not occur in connection with it. While Maxwell alleged Save Mart knew of the lawsuit and intended to settle it through the release, the parties did not engage in settlement negotiations, as in the cases we have discussed. Instead, Save Mart allegedly presented the severance agreement to him without explanation as to its effect, thereby misleading him into signing it. Contrary to Save Mart’s assertion, these were not protected communications, as they were not connected with the ongoing litigation. Save Mart contends the release is itself a protected settlement communication, as it was created by the protected activities of an offer, acceptance and execution. But this communication was not made in the context of settlement of this lawsuit, and therefore did not involve an issue in consideration before a judicial body. Accordingly, the rescission claim does not fall within the ambit of the anti-SLAPP statute’s “arising from” prong and the trial court properly denied Save Mart’s request to strike this cause of action. (§ 425.16, sud. (b)(1).) Because Save Mart failed to demonstrate the rescission claim arose from protected activity, we have no occasion to address the merits of those claims. (Loanvest I, LLC v. Utrecht (2015) 235 Cal.App.4th 496, 505.)

DISPOSITION

The order is affirmed. Maxwell shall recover his costs on appeal.

SNAUFFER, J.

WE CONCUR:

LEVY, Acting P.J.

FRANSON, J.