2014-00159556-CU-BC

Kirk J Wolden vs. Clayeo C Arnold

Nature of Proceeding: Motion to Strike (SLAPP)

Filed By: Bitzer, Brett E.

Defendants Clayeo C. Arnold (“Arnold”), Clayeo C. Arnold A Professional Law
Corporation dba Arnold Law Firm’s (“Law Firm”) (collectively “Defendants”) Special
Motion to Strike pursuant to CCP §425.16 is ruled upon as follows.

Defendants’ request for judicial notice is GRANTED. In taking judicial notice of these
documents, the court accepts the fact of their existence, not the truth of their contents.
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(See Professional Engineers v. Dep’t of Transp. (1997) 15 Cal.4 543, 590 [judicial
notice of findings of fact does not mean that those findings of fact are true]; Steed v.
Department of Consumer Affairs (2012) 204 Cal.App.4th 112, 120-121.)

This is an action arising from Plaintiffs Kirk J. Wolden, Clifford L. Carter and Lance J.
Curtis’ (collectively “Plaintiffs”) prior employment at the Law Firm. Plaintiffs were
former attorneys with Defendants. Around February 2013, the parties began
negotiating Plaintiffs’ “buy-out” of Arnold’s interest in the Law Firm. On February 28,
2013, Plaintiffs were terminated from their employment. According to Defendants,
Plaintiffs were terminated because Defendants learned that Plaintiffs were conspiring
to leave the Law Firm to form a new firm and were soliciting the Firms’ clients.
Plaintiffs allege that on February 28, 2013, Arnold called a firm wide meeting informing
firm, staff, and remaining attorneys, that Plaintiffs had been fired for “stealing money”
from the Law Firm. (Complaint, ¶ 29.) Plaintiffs allege that Arnold specified that
Plaintiffs had “stolen over $600,000 from Defendants.” (Id.) Plaintiffs filed the instant
action for failure to pay wages, breach of contract, breach of implied covenant of good
faith and fair dealing, wrongful termination in violation of public policy, and defamation.
Defendants move to strike Plaintiff’s fifth cause of action for defamation.

Legal Standard
The California legislature enacted Code of Civil Procedure section 425.16, known as
the anti-SLAPP statute, to provide a procedural remedy to dispose of lawsuits and
causes of action that are brought to chill the valid exercise of the constitutional rights to
free speech and to petition the government for
redress of grievances. (See Rusheen v Cohen (2006) 37 Cal.4th 1048, 1055-1056.)
“The analysis of an anti-SLAPP motion thus involves two steps. First, the court decides
whether the defendant moving to strike has made a threshold showing that the
challenged cause of action is one “arising from” protected activity. If the court finds
such a showing has been made, it then must consider whether the plaintiff has
demonstrated a probability of prevailing on the claim. “When the trial court examines
plaintiff’s affidavits, it must consider whether he has presented sufficient evidence to
establish a prima facie case, i.e., a showing by competent and admissible evidence, of
facts which, if proven at trial, would support a judgment in his favor; when it considers
defendant’s affidavits, the court cannot weigh them against plaintiff’s, but must decide
only whether they defeat plaintiff’s supporting evidence as a matter of law.” (Du
Charme v. International Brotherhood of Electrical Workers (2003) 110 Cal. App. 4th
107, 112.) Only a cause of action that satisfies both prongs of the anti-SLAPP statute
– i.e., that arises from protected speech or petitioning and lacks even minimal merit-is a
SLAPP, subject to being stricken under the statute.” (Oasis West Realty, LLC v.
Goldman (2011) 51 Cal.4th 811, 819-820; citations omitted.)

The defendant has the burden on the first prong that the claim arises from protected
activity, and the plaintiff has the burden on the second prong of affirmatively
demonstrating a probability of prevailing on the claim. (See Governor Gray Davis Com
v American Taxpayers Alliance (2002) 102 Cal App.4th 449, 456; City of Cotati v.
Cashman (2002) 29 Cal. 4th 69, 76.)

Protected Activity

Defendants argue that Plaintiffs’ defamation cause of action arises out of protected
activity because Defendants’ statements were made in connection with an issue under
consideration or review, in an official proceeding authorized by law (CCP §425.16(e)
(2).) 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.” (Neville v. Chudacoff (2008) 160 Cal.App.4th
1255, 1266.) Moreover, “although litigation may not have commenced, if a statement
‘concern[s] the subject of the dispute’ and is made ‘in anticipation of litigation
contemplated in good faith and under serious consideration’ then the statement may
be petitioning activity protected by section 425.16.” (Id. at 1269.)

The Court finds that Defendants have met their threshold burden to demonstrate that
the defamation cause of action arises from a protected activity. Here, Arnold’s
declaration provides that at the February 28, 2013 meeting, he informed the attorneys
and staff that Plaintiffs’ were terminated and that multiple lawsuits would result.
(Declaration of Clayeo C. Arnold (“Arnold Decl.”) ¶ 27.) He explained that each client
of the Law Firm that Plaintiffs subsequently retain would require litigation, fee
arbitration, and or mediation. (Id.) He further explained that Plaintiffs’ actions would
cause substantial financial hardship to the Law Firm which would have a significant
impact on the livelihoods of the Law Firm’s employees. (Id.) He advised the attorneys
and staff that due to the likelihood of anticipated litigation it would be best if no one
employed by the Law Firm communicate with Plaintiffs and to be prepared to
appropriately answer questions from the Law Firm’s current clients relating to Plaintiffs’
termination. (Id.) Additionally, subsequent litigation arose, including Defendants suing
Plaintiffs in Placer County for conversion, breach of contract, and quantum meruit.

Probability of Prevailing

Having determined that the defamation cause of action arise out of a protected activity,
the Court now considers the second prong of the anti-SLAPP analysis, whether
Plaintiffs have demonstrated a probability of prevailing on the claim. In order to satisfy
the second prong, a 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.” ( Oasis West
Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820 citations omitted.) In considering
the second prong, the court “accept[s] as true the evidence favorable to the plaintiff
and evaluate[s] the defendant’s evidence only to determine if it has defeated that
submitted by the plaintiff as a matter of law.” (Id. citations omitted.)

Defendants argue that Plaintiffs have no probability of prevailing because their
defamation cause of action is barred by the litigation privilege. “The litigation privilege
in section 47 applies to ‘any communication (1) made in judicial or quasi-judicial
proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the
objects of the litigation; and (4) that have some connection or logical relation to the
action. ’ Prelitigation statements are protected under section 47 when they are made in
connection with a proposed litigation that is ‘contemplated in good faith and under
serious consideration.’” (Rohde v. Wolf (2007) 154 Cal. App. 4th 28, 37.) Defendant
further argues that the defamatory statements that Plaintiffs stole approximately
$600,000 were not made at the meeting.

In opposition to the motion, Plaintiffs argue that the litigation privilege does not apply
because “the mere potential or ‘bare possibility’ that judicial proceedings ‘might be
instituted’ in the future is insufficient to invoke the litigation privilege.”
(Edwards v. Centex Real Estate Corp. (1997) 53 Cal. App. 4th 15, 36.) “In every case,
the privileged communication must have some relation to an imminent lawsuit or
judicial proceeding which is actually contemplated seriously and in good faith to
resolve a dispute.” (Id.) Moreover, a lawsuit must “actually be suggested or proposed,
orally or in writing.” (Id. at 33.) “Without some actual verbalization of the danger that a
given controversy may turn into a lawsuit, there is no unmistakably objective way to
detect at what point on the continuum between the onset of a dispute and the filing of a
lawsuit the threat of litigation has advanced from mere possibility or subjective
anticipation to contemplated reality. (Id.)

Plaintiffs proffer the declaration of Teresa Lovato (“Lovato”). Lavoto was an employee
of the Law Firm on February 28, 2013, and attended the meeting. (Declaration of
Teresa Lovato (“Lovato Decl.”) ¶¶ 3-4.) Lovota states that at the meeting, Arnold
stated that he believed Plaintiffs had stolen approximately $500,000 to $600,000 from
him and the Law Firm. (Id. ¶5.) Lovato states that she “recall[s] Mr. Arnold saying that
he believed that his termination of Plaintiffs may result in a lawsuit.” (Id. ¶ 6 [emphasis
added].) Lovato disputes that Arnold stated that he anticipated that litigation was
inevitable to result from him anticipating that Plaintiffs would subsequently retain some
of the Law Firm’s clients. (Id. ¶ 7.) Lovato further disputes that Arnold stated that the
termination would spawn multiple lawsuits. (Id. ¶ 8.) She explains that while Arnold
expressed concern for the future stability of the Law Firm, he did not say that the
concern was based on his anticipation of litigation. (Id. ¶ 9.) She lastly explains that while Arnold expressed his belief that it would be best if no one employed by the Law
Firm communicate with Plaintiffs, he did not say that his concern was based on an
anticipation of litigation. (Id. ¶ 10.)

Accepting Plaintiffs’ evidence as true, as the Court must, the Court finds that Plaintiffs
have demonstrated a probability of prevailing on the defamation cause of action. In
particular, Lovato’s declaration indicates that the statements were made at the meeting
and that litigation was a “mere potential” rather than “contemplated in good faith and
under serious consideration.” Although Defendants proffer declarations from other
attendees at the meeting to dispute Lovato’s declaration, the declarations do not
defeat the evidence submitted by Plaintiffs as a matter of law.

Moreover, the Court disagrees with Defendants that the statement that Plaintiffs “stole”
over $600,000 is a “non-actionable opinion.” Generally, “the First Amendment does not
permit the imposition of liability for statements not conveying a false factual
imputation.” (Kahn v. Bower (1991) 232 Cal.App.3d 1599, 1607.) “Statements do not
imply a provably false factual assertion and thus cannot form the basis of a defamation
action if they cannot reasonably [be] interpreted as stating actual facts about an
individual. Thus, ‘rhetorical hyperbole,’ ‘vigorous epithet[s],’ ‘lusty and imaginative
expression[s] of … contempt,’ and language used ‘in a loose, figurative sense’ have all
been accorded constitutional protection. The dispositive question after [Milkovich v.
Lorain Journal Co., supra, 497 U.S. 1,] is whether a reasonable trier of fact could
conclude that the published statements imply a provably false factual assertion. (
Nygard, Inc . v. Uusi-Kerttula (2008) 159 Cal. App. 4th 1027, 1048 [emphasis added].)
Here, the statement can be proven false.

The Court did not consider Defendants’ argument that the statements are privileged
pursuant to the “common interest privilege” (Civ. Code §47(c)) as the argument was
raised for the first time on reply.

Having found that Plaintiffs have demonstrated a probability of prevailing on the
defamation cause of action, Defendants motion to strike pursuant to CCP §425.16 is
DENIED.

The minute order is effective immediately. No formal order pursuant to CRC Rule
3.1312 or further notice is required.