2014-00159556-CU-BC

Kirk J Wolden vs. Clayeo C Arnold

Nature of Proceeding: Motion to Strike (SLAPP)

Filed By: Bitzer, Brett E.

If oral argument is requested, the matter will be heard by Judge Loncke on or
around 10:00 a.m.

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 GRANTED.

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. One
such client was Mr. Nixon, who had obtained a $7 million jury verdict, which entitled
the Firm to 40% of Mr. Nixon’s gross recovery, plus reimbursement of all advanced
costs. 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. 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.)

Litigation Privilege

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 statement 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.)

Even accepting Plaintiffs’ evidence as true, the Court finds that Plaintiffs have not
demonstrated a probability of prevailing on the defamation cause of action. Indeed,
Lovato’s declaration indicates that Arnold verbalized that the controversy with Plaintiffs
“may” turn into a lawsuit. (See Edwards v. Centex Real Estate Corp. (1997) 53 Cal.
App. 4th 15, 36.) The Court is not convinced that simply because Lovato’s declaration
fails to state that Arnold verbalized that he “anticipated litigation”, that the statements
were not made in anticipation of litigation, especially given the circumstances
surrounding Plaintiffs’ termination from the Firm and the subsequent litigations.

Common Interest Privilege

Defendants next argue that the defamation cause of action is barred by the common
interest privilege.

Civil Code §47(c) provides a privilege to communications made without malice “to a
person interested therein, (1) by one who is also interested, or (2) by one who stands
in such a relation to the person interested as to afford a reasonable ground for
supposing the motive for the communication to be innocent, or (3) who is requested by
the person interested to give the information.” (Civ. Code §47(c).) This privilege
attaches to workplace communications, including statements to employees regarding
the reasons for termination of another employee. (King v. United Parcel Service, Inc.
(2007) 152 Cal. App.4th 426, 440-441.) An employer has a legitimate interest in
communicating the reasons why an employee was terminated, to make other
employees aware of the penalties for similar conduct. (Id. at 441.)

Plaintiffs first argue that the common interest privilege does not apply because
Defendants deny that the statements were made. Given this denial, Plaintiffs argue
that Defendants cannot now rely on the privilege. Plaintiffs, however, fail to proffer
legal authority to support this position and the Court is not persuaded by this
argument. Indeed, there is conflicting evidence whether the statements were actually
made.

Plaintiffs next argue that Defendants have not demonstrated that they shared a
common interest with their employees. (Plaintiffs’ Sur-Reply 7:6-8.) Plaintiffs contend
that the employees’ only interest was a “mere general or idle curiosity.” They further
argue that the communications were not reasonably calculated to protect any common
interest. ‘“Interested persons” within the meaning of section 47, subdivision 3, have
been defined as a communicator and a recipient with a common interest, although to
be protected the communication must be one ‘reasonably calculated to further that
interest.’” (Cuenca v. Safeway San Francisco Employees Fed. Credit Union (1986)
180 Cal. App. 3d 985, 995.) They argue that Defendants have failed to satisfy their
initial burden to demonstrate that the communications were made on a privileged
occasion.

The Court disagrees. Indeed, Ms. Lovato states that Arnold “express[ed] concern for
the future stability of ALF and its employees during The Meeting.” (Lovato Decl. ¶ 9.)
The stability of the Firm and its employees’ ability to earn a living were a common interest. The communications were also reasonably calculated to further that interest
because it put the Firm’s employees on notice that their salaries and jobs may be
threatened. Moreover, Plaintiffs’ argument that Defendants have not satisfied their
initial burden is incorrect. As noted above, after Defendants meet their threshold
burden that the defamation cause of action arises from the protected activity, the
burden shifts to Plaintiffs to demonstrate a probability of prevailing on the merits.

Plaintiffs lastly argue that the common interest privilege does not apply because the
statements were communicated with malice. “The malice necessary to
defeat a qualified privilege is ‘actual malice’ which is established by a showing that the
publication was motivated by hatred or ill will towards the plaintiff or by a showing that
the defendant lacked reasonable grounds for belief in the truth of the publication and
therefore acted in reckless disregard of the plaintiff’s
rights.” (Noel v. River Hills Wilsons, Inc. (2003) 113 Cal.App.4th 1363, 1370.)
Plaintiffs contend that it can be inferred that the statements were made with actual
malice because the statements were false and slanderous per se, and that Defendants
published them without having probable cause for believing them to be true.
Moreover, Plaintiffs argue that Arnold’s failure to articulate to the employees that he
conducted any inquiry or investigation into whether Plaintiffs had in fact stolen money,
supplies a sufficient inference of malice.

The Court disagrees and declines to infer malice from the circumstances presented
here. Moreover, the Court is not convinced that Arnold was required to articulate to his
employees that he conducted an inquiry or investigation. Plaintiffs fail to proffer any
evidence that Arnold did not conduct any inquiry or investigation into whether Plaintiffs
stole money or that he did not have a good faith basis for believing them to be true.
Accordingly, Plaintiffs have failed to satisfy their burden to demonstrate that the
statements were made with malice.

Given all of the above, Defendants’ motion to strike the defamation cause of action is
GRANTED.

Defendants may seek attorneys’ fees and cost through a properly noticed motion.
The minute order is effective immediately. No formal order pursuant to CRC Rule
3.1312 or further notice is required.