Case Name:   Shi v. Zhang, et al.

Case No.:       1-14-CV-267855

 

After full consideration of the evidence, the arguments and the authorities submitted by each party, the court makes the following rulings:

 

This is an action for wrongful termination.  On July 11, 2014, plaintiff Nan Shi (“Plaintiff” or “Shi”) filed a complaint against defendants Maria Zhang (“Zhang”) and Yahoo! Inc. (“Yahoo!”) asserting causes of action for sexual harassment in violation of FEHA, intentional infliction of emotional distress, and wrongful termination.  The complaint alleges that Zhang is the Director of Engineering at Yahoo!  (See complaint, ¶ IT-1, first through third causes of action.)  The complaint alleges that Zhang instructed Plaintiff to allow Zhang stay in Plaintiff’s temporary housing unit, and coerced Plaintiff into having sex despite Plaintiff’s protests.  (Id.)

 

On July 16, 2014, Zhang filed a cross-complaint for defamation and intentional infliction of emotional distress, alleging that Shi’s false accusations against Zhang to Yahoo! and numerous third persons has caused Zhang to suffer injury to her professional reputation and caused emotional distress.

 

Shi specially moves to strike the cross-complaint pursuant to Code of Civil Procedure section 425.16.

 

Shi’s special motion to strike the third cause of action

 

In Equilon Enterprises, LLC v. Consumer Cause, Inc. (2002) 29 Cal.4^th 53, the California Supreme Court established the trial court’s duty in ruling on an anti-SLAPP motion to strike:

 

Section 425.16, subdivision (b)(1) requires the court to engage in a two-step process.  First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity.  The moving defendant’s burden is to demonstrate that the act or acts of which the plaintiff complains were taken ‘in furtherance of the [defendant]’s right of petition or free speech under the United States or California Constitution in connection with a public issue,’ as defined in the statute.  [Citation.]  If the court finds [that defendant has made its threshold showing], it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.  Under section 425.16, subdivision (b)(2), the trial court in making these determinations considers ‘the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.’

 

(Id. at 67.)

 

“[I]n order to establish the requisite probability of prevailing [citation], the plaintiff need only have ‘stated and substantiated a legally sufficient claim.’”  (Navellier v. Sletten (2002) 29 Cal. 4^th 82, 88, quoting Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal. 4^th 1106, 1123.)  “Put another way, 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.’”  (Id. at 88-89, quoting Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4^th 811, 821.)  “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.”  (Id. at 89.)

 

Shi demonstrates that the cross-complaint arises from protected activity

 

The cross-complaint alleges that Shi falsely accused Zhang of forcing Shi to have sex with Zhang to Yahoo! and numerous third parties.  Shi concedes that any statements to third parties would not constitute protected activity, but asserts that, as mixed causes of action, the causes of action would nevertheless be subject to the protection of the anti-SLAPP statute.  (See Shi’s memorandum of points and authorities in support of special motion to strike the cross-complaint (“Shi’s memo”), pp.6:2-24, 7:1-4.)  Shi is correct.  (See Salma v. Capon (2008) 161 Cal.App.4^th 1275, 1287 (stating that “[a] mixed cause of action is subject to section 425.16 if at least one of the underlying acts is protected conduct, unless the allegations of protected conduct are merely incidental to the unprotected activity”).)  Thus, the Court shall determine whether Shi’s allegedly defamatory statements to Yahoo! employees constitute protected activity.

 

Subdivision (e)(1) does not apply.

 

Subdivision (e)(1) protects “any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law.  Shi contends that “Comstock v. Aber (2012) 212 Cal.App.4^th 931… held that an employee’s report of sexual harassment to an HR manager is protected under subdivision (e)(1) and/or (e)(2) of section 425.16.”  (Shi’s memo, p.8:10-12.)  However, as to subdivision (e)(1), the Comstock court specifically distinguished it from the argument made in Olaes v. Nationwide Mutual Ins. Co. (2006) 135 Cal.App.4^th 1501, in which the employer argued “that the investigation of harassment claimwas an official proceeding authorized by law… [t]hat is not Aber’s argument here, which is that her statements to Bush were protected because they were statements prior litigation….”  (Comstock, supra, 212 Cal.App.4^th at p.601.)  In Olaes, the court rejected the employer’s argument that “[b]ecause an employer’s proceedings for resolving sexual harassment complaints are legally required—as well as being the first step in the process of instituting a civil action—they are ‘other official proceedings authorized by law,’” stating:

Despite Nationwide’s attempt to cast its sexual harassment procedure as a quasi-governmental proceeding, the procedure involved was designed and instituted by a private company.  Although, as Nationwide suggests, employers must take all reasonable steps necessary to prevent harassment from occurring under Government Code section 12940, subdivision (k), such a duty does not automatically transform a private employer into an entity conducting “official” proceedings.

 

As Olaes notes, a private employer possesses neither the powers nor the responsibilities of a government agency.  Instead, each private employer develops its own idiosyncratic methods of handling employee harassment complaints.  The corporate individuals implementing those procedures do not act in the capacity of governmental officials performing an official duty.  Nor are the resulting proceedings reviewable by writ of mandate.

Despite Nationwide’s claims to the contrary, we cannot view a corporation’s sexual harassment procedure as a “quasi-judicial proceeding.”

 

(Olaes, supra, 135 Cal.App.4^th at pp.1508-1509 (also stating that “the fact that the private company’s personnel department is charged with implementing a harassment policy and establishes procedures that mimic those of a governmental agency does not transform it into an ‘administrative body’”; also stating that “Nationwide’s human resource specialist may indeed be vested with discretion, apply California law regarding harassment, and make decisions affecting the personal and property rights of the accused harasser… [s]till, the human resource specialist is not an administrative body possessing quasi-judicial powers”).)

 

Shi is incorrect that Comstock held an employee’s report of sexual harassment to an HR manager is protected under subdivision (e)(1), and it is clear that there is case authority contrary to Shi’s assertion.  Shi’s assertion is without merit.

 

Subdivision (e)(4) does not apply.

 

Subdivision (e)(4) protects “any other conduct in furtherance of the exercise of the constitutional right of free speech in connect with a public issue or an issue of public interest.”  (See Code Civ. Proc. § 425.16, subd. (e)(4).)  Shi contends that the cross-complaint is “subject to subdivision (e)(4) of the anti-SLAPP law… [because s]exual harassment and sexual harassment in the workplace are clearly issues of interest and importance to employers, employees and the general public at large.”  (Shi’s memo, pp.10:3-27, 11:1-27, 12:1-11.)  However, “unlawful workplace activity below some threshold level of significance is not an issue of public interest, even though it implicates a public policy.”  (Carpenter v. Jack in the Box Corp. (2007) 151 Cal.App.4^th 454, 472 (stating that it is “well established ‘that unlawful workplace activity below some threshold level of significance is not an issue of public interest, even though it implicates a public policy’”), quoting Rivero v. American Federation of State, County and Municipal Employees, AFL-CIO (2003) 105 Cal.App.4^th 913, 924.)  In fact, “although… the elimination of sexual harassment implicates a public interest, an investigation by a private employer concerning a small group of people does not rise to a public interest under section 425.16.”  (Olaes v. Nationwide Mutual Ins. Co. (2006) 135 Cal.App.4^th 1501, 1511 (also stating that “a dispute among a small number of people in a workplace does not implicate a broader public interest subject to a motion to strike under section 425.16, subdivision (e)”).)  Here, Shi concedes that the cross-complaint arises from her allegedly defamatory statements made to Yahoo!, her employer.  It is clear that subdivision (e)(4) does not protect Shi’s allegedly defamatory statements.

 

However, subdivision (e)(2) applies.

 

Subdivision (e)(2) protects “any written or oral statement or writing 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.”  In Comstock, supra, the court did find that statements made to a HR manager were protected pursuant to subdivision (e)(2) because Aber’s “statements were necessary to address a commonly used affirmative defense by an employer in a sexual harassment case—a defense, not incidentally, that [the employer] has in fact asserted against Aber here… [and thus] were statements prior to litigation….”  (Comstock, supra, 212 Cal.App.4^th at pp.944-945.)

 

Here, Yahoo! has not filed an answer.  However, according to the Comstock court, statements to a HR manager are “protected because they were statements prior to litigation, necessary to defeat an affirmative defense that [the employer] could… assert in [a] lawsuit.”  (Id. at p.945 (emphasis added).)  Thus, absent an exception to such protection, Shi has made a threshold showing that the challenged cause of action is one arising from protected activity pursuant to subdivision (e)(2).

 

The cross-complaint does not allege that it is based on the extortionate demand letter.

 

In opposition, Zhang contends that Shi’s statements are not protected because they constitute extortion.  In Flatley v. Mauro (2006) 39 Cal.4^th 299, the defendant threatened “to publicly accuse Flatley of rape and to report and publicly accuse him of other unspecified violations of various laws unless he ‘settled’ by paying a sum of money to [accuser] Robertson of which [attorney] Mauro would receive 40 percent.”  (Id. at p.329.)  The Flatley court noted that the definition for extortion pursuant to Penal Code section 518 “is the obtaining of property from another, with his consent… induced by a wrongful use of force or fear.”  (Id. at p.326.)  “Fear, for purposes of extortion ‘may be induced by a threat, either: [¶] … [¶] 2. To accuse the individual threatened … of any crime; or, [¶] 3. To expose, or impute to him … any deformity, disgrace or crime[.]”  (Id.)  The Flatley court concluded that “because the activity forming the basis of Mauro’s motion to strike Flatley’s action was extortion as a matter of law and, therefore, not constitutionally protected activity for purposes of section 425.16, we further conclude that the trial court did not err when it denied Mauro’s motion to strike.”  (Id. at p.333.)

 

Here, Zhang provides evidence that demonstrates that Shi’s counsel, Matthew Fisher, indeed sent a letter to Yahoo! demanding $1 million to settle the case, or he would file a lawsuit on behalf of Shi.  (See Frank decl., exh.D.)  However, in Flatley, the action was based on the demand letter and subsequent demands.  (See Flatley, supra, 39 Cal.4^th

at p.305 (stating that “Flatley’s action was based on a demand letter Mauro sent to Flatley on behalf of Tyna Marie Robertson, a woman who claimed that Flatley had raped her, and on subsequent telephone calls Mauro made to Flatley’s attorneys, demanding a seven-figure payment to settle Robertson’s claims”).)  Here, the cross-complaint does not allege extortion or claims based on the demand letter; rather, the cross-complaint alleges that Shi made false sexual harassment claims to Yahoo! and received hundreds of thousands of dollars that she would not have received since Yahoo! refrained from terminating her earlier due to the seriousness of the allegations.  Although the demand letter and subsequent communications appear extortionate, it does not appear that the alleged statements upon which the cross-complaint is based are extortionate as a matter of law pursuant to Flatley.

 

Thus, Shi’s statements made to Yahoo! are protected pursuant to subdivision (e)(2), and the court must now determine whether Zhang has demonstrated a probability of prevailing on the claim.

 

Zhang demonstrates a probability of prevailing on her claims in the cross-complaint.

 

As previously stated, “the plaintiff need only have ‘stated and substantiated a legally sufficient claim.’”  (Navellier v. Sletten (2002) 29 Cal. 4^th 82, 88, quoting Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal. 4^th 1106, 1123.)  Zhang asserts two causes of action against Shi: defamation and intentional infliction of emotional distress.

 

The first cause of action for defamation

 

“Libel is a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation.”  (Civ. Code § 45.)

 

To demonstrate a probability of prevailing on her claims, Zhang presents emails from Shi to various persons at Yahoo! regarding Shi.  (See Frank decl., exhs. A and B.)  In the emails, Shi accuses Zhang of “forc[ing Shi] to have sexual relationships with [Zhang] during the time [Shi was] working at Yahoo.”  Zhang also presents three declarations submitted by Shi’s lawyers from three individuals in China who state that Shi told them that Zhang had forced Shi to have sex with Shi.  (See Frank decl., exh. C.)  Zhang also presents the demand letter and subsequent communications regarding the demand.  (See Frank decl., exhs. D-G.)  Additionally, Zhang presents her own declaration in which she states that the accusations by Shi are false, have caused injury to her business reputation as well as emotional distress.  (See Zhang decl., ¶¶ 2-5.)

 

Zhang presents evidence that demonstrates that her defamation claim is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by Zhang is credited.  Accordingly, the special motion to strike the first cause of action for defamation is DENIED.

 

The second cause of action for intentional infliction of emotional distress

 

The elements for intentional infliction of emotional distress are: “(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.”  (Davidson v. City of Westminister (1982) 32 Cal.3d 197, 209.)

 

The provided evidence demonstrates extreme and outrageous conduct by Shi made with the intention of causing, reckless disregard of the probability of causing emotional distress.  Zhang’s declaration demonstrates her emotional distress caused by Shi.  Zhang presents evidence that demonstrates that her intentional infliction of emotional distress claim is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by Zhang is credited.  Accordingly, the special motion to strike the second cause of action for intentional infliction of emotional distress is likewise DENIED.

 

Accordingly, Shi’s special motion to strike is DENIED in its entirety.  Shi’s demand for attorney fees and costs is also DENIED.

 

Shi’s objections are OVERRULED in their entirety.  Although the Court OVERRULES the objections to the declarations made by Xiaobing Chen, Yunping Gu and Pei Shi and the demand letter and subsequent communications, the Court notes that the emails—to which were not objected—is sufficient evidence to demonstrate that Shi published the allegedly defamatory statements, and coupled with Zhang’s declaration, the emails and Zhang’s declaration sufficiently demonstrate that the cross-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 Zhang is credited.