Case Name: Lee v. Li
Case No.: 2010-1-CV-171476

Defendant Yanchun Li (“Defendant”) moves for summary judgment, or in the alternative, summary adjudication, in his favor and against plaintiff Lan Lee (“Plaintiff”).

After full consideration of the evidence, separate statements and authorities submitted by the parties, the Court makes the following rulings:

Defendant’s request for judicial notice is GRANTED. (Evid. Code, § 452, subd. (d).)

Plaintiff’s request for judicial notice is GRANTED. (Evid. Code, § 452, subd. (d).)

As an initial procedural matter, Defendant’s notice of motion fails to comply with California Rules of Court, rule 3.1350(b), which provides that where summary adjudication is sought, as it is here, the notice of motion must specify the “specific cause of action, affirmative defense, claims for damages, or issues of duty” sought to be adjudicated. Here, Defendant requests summary judgment or, alternatively, summary adjudication, but does not identify the claims she seeks to summarily adjudicate. The court has no authority to adjudicate claims that have not been specifically identified in the notice. (See, e.g., Maryland Cas. Co. v. Reeder (1990) 221 Cal.App.3d 961, 974.) Consequently, the motion must be treated as one for summary judgment only and not for summary adjudication in the alternative.

Defendant’s motion for summary judgment is DENIED. In moving for summary judgment/adjudication of claims for defamation against her in the FAC, Defendant makes the following arguments: (1) Plaintiff already settled all of the claims in this action pursuant to a release signed in 2010; (2) Defendant’s emails to NetLogic are not actionable; and (3) Defendant’s emails to NetLogic are protected by the common-interest privilege.

With regard to Defendant’s first argument, on October 28, 2010, Plaintiff Lee and NetLogic entered into a “Confidentiality Agreement and Release” (the “Release”) pursuant to which Plaintiff admitted various facts (though not any form of criminality on his part) and waived all claims against the company. (Defendant’s Separate Statement of Undisputed Materials Facts in Support of Motion for Summary Judgment/Adjudication (“UMF”) No. 18.) Defendant maintains that by its terms, the Release includes Plaintiff’s claims against her in the FAC. The relevant language of the Release provides as follows:

In consideration of the promises, obligations and releases provided by the Company [NetLogic] as set forth in this Agreement, and expressly conditioned upon the performance by the Company of the obligations set forth in this Agreement, Lee, on behalf of himself, his spouse, heirs, agents, and assigns, hereby irrevocably and unconditionally releases, acquits, holds harmless and forever discharges the Company, the Company’s parent, subsidiaries, affiliates, divisions, successors, predecessors, or related corporate entities, the Company’s current or former employees, officers, directors, stockholders, agents, representatives, attorneys, and all persons acting by, through, under or in concert with any of them (collectively “Releases”), from any and all claims, liabilities, demands, causes of action, charges, suits, costs, expenses, attorney’s fees, damages, indemnities, obligations and all other legal responsibilities of every kind and nature, in law, equity or otherwise, whether known or unknown, suspected or unsuspected, disclosed or undisclosed, fixed or contingent, which he has or had or may claim to have by reason of or based in whole or in part upon any and all acts, omissions, events, proceedings or matters occurring up to the date of this Release (hereinafter “Released Actions”). The Released Actions and claims include but are not limited to claims or demands related to …; claims alleging fraud, defamation, infliction of emotional distress or wrongful discharge; and claims based upon acts, omissions, facts, conduct or allegations related to or arising from proceedings in U.S. v. Lee.

(UMF No. 18 [emphasis added].)

Defendant maintains that she falls within the scope of those against whom Plaintiff agreed to release all of his potential claims, particularly those who qualify as “agents, representatives, attorneys, and all persons acting by, through, under or in concert with any of them.” Before addressing the substantive merits of this argument, however, the Court must first determine whether it is even available for Defendant in the first place. In his opposition, Plaintiff maintains that Defendant cannot assert any defense based on the Release, an affirmative defense, because she did not plead it in her answer, thereby waiving it.

As a general rule, affirmative defenses must be affirmatively set forth in the defendant’s answer. (California Academy of Sciences v. County of Fresno (1987) 192 Cal.App.3d 1436, 1442.) A release is an affirmative defense which conclusively estops the parties from reviving and re-litigating the released claim. (Ladd v. Warner Bros. Entertainment, Inc. (2010) 184 Cal.App.4th 1298.) With few exceptions, the failure to present and preserve the particular defenses appropriate to a given case results in their waiver or forfeiture. (In re Cellular 101, Inc. (9th Cir. 2008) 539 F.3d 1150, 1155, fn. 2.) This is because a plaintiff is entitled to be protected from prejudice arising from tardy assertion of defenses that are not included in the answer. (Jetty v. Craco (1954) 123 Cal.App.2d 876, 880.) While courts may permit a party to cure the waiver by granting it leave to amend its answer, the longer the delay in doing so, the greater the likelihood of prejudice to the plaintiff. (Schwing, 1 Cal. Affirmative Def, (2d ed. 2017) § 1.11.) Here, trial is set for April 30, 2018. Defendant’s answer to the FAC was filed in April 2011, mere months after the Release was signed, but contains no reference to it. Defendant has undoubtedly had numerous opportunities to amend her answer to assert this defense, even excluding the time during which the anti-SLAPP motion was appealed, but has failed to do so. Further, while she has included her answer in her request for judicial notice filed in support of her motion for summary judgment/adjudication, she makes no mention of the fact that the affirmative defense of release is not pleaded anywhere in that document, and thus makes no request that the defense be considered despite it not having been pleaded as required. Given Defendant’s failure to plead the release as an affirmative defense in her answer, she has waived it and thus it cannot serve as a basis for summary judgment in her favor. However, even if the defense had not been waived, or if the Court were inclined to allow her the opportunity to cure the waiver, this Court is not persuaded that the Release even applies to Plaintiff’s claims against Defendant.

As a general matter, contract principles apply when interpreting a release, and “normally the meaning of contract language, including a release, is a legal question.” (Benedek v. PLC Santa Monica, LLC (2002) 104 Cal.App.4th 1351, 1356.) The scope of the release depends on its terms. (Huverserian v. Catalina Scuba Luv, Inc. (2010) 184 Cal.App.4th 1462.) As set forth above, it is Defendant’s contention that the Release applies to Plaintiff’s claims against her because she falls within the following descriptor: “agents, representatives, attorneys, and all persons acting by, through, under or in concert with any of them.” Specifically, Defendant maintains that the Release covers her because she acted as a representative of or “in concert” with NetLogic by making her anonymous accusations against Plaintiff via the four emails she sent to NetLogic’s CEO, Ronald Jankov (“Jankov”), in September 2002, December 2002, March 2003 and May 2003. Defendant asserts that Jankov encouraged her to provide him with information regarding Plaintiff’s efforts to start a company which would compete with NetLogic. (Declaration of Ronald Jankov in Support of Motion for Summary Judgment/Adjudication (“Jankov Decl.”), ¶ 14.)

Defendant’s argument lacks merit. Defendant admitted (in her testimony at Plaintiff’s criminal trial) that she anonymously reached out to Jankov of her own volition and for her own purposes- to try to manipulate Jankov into stopping Sico from developing because she did not want her husband, Ge, to participate in it. (Declaration of Lan Lee in Support of Opposition to Motion for Summary Judgment/Adjudication, Exhibit 12 (500:3-19, 501:9-16, 501:25-502L16); Exhibit 13 (504:19-505:1, 534:8-535:6).) The phrase acting “in concert” with another is defined by Webster’s Third International Dictionary (1971) as “together,” while various criminal statutes containing the phrase have interpreted it to mean those who aid and abet one another in accomplishing a particular act. (See, e.g., People v. Calimee (1975) 49 Cal.App.3d 337, 341.) Defendant and Jankov did not act “in concert” in this sense. Once Defendant, who had absolutely no connection to NetLogic, suggested to him that Plaintiff was seeking to start a competing business, Jankov requested further information from her. However, there is no evidence that they worked together to actually prevent Sico from developing so as to protect NetLogic’s business interests. Jankov merely obtained (false) information from Defendant, but did not work “in concert” with her to accomplish a particular goal or task.

Additionally, as Plaintiff notes, “[i]t is essential to the validity of a contract, not only that the parties should exist, but that it should be possible to identify them.” (Civ. Code, § 1558.) Here, Defendant Li is not “identified” in the Release, which was executed after Plaintiff had filed this action against her. How could Plaintiff agree to release a claim that he had already filed? If the intention of the Release was to also dispose of any pending claims, including those against Defendant, it stands to reason that such an intention would have been made clear in the Release itself. However, no such intention appears to exist. In sum, the Release, by its terms, does not apply to Plaintiff’s claims against Defendant Li in the instant action. Thus, even if the affirmative defense of Release was available to Defendant, it would not offer her any respite from Plaintiff’s claims.

Defendant next argues that she is entitled to summary adjudication of Plaintiff’s first and second causes of action for defamation and libel per se, respectively, because the emails to NetLogic(Jankov) upon which they are predicated are not actionable. She maintains that this is the case because these communications are either protected by the so-called “common-interest” privilege, are non-actionable opinions, or are true statements of fact.

The following emails from Defendant to Jankov are the subject of Plaintiff’s defamation claims:

 September 27, 2002: “One of your employees is actively looking for ways to start his own company in the same field. He might recruit people from your company too. Name is Lan Lee. Be careful.”
 December 2, 2002: “He was in China talking to VCs this past weekend.”
 March 26, 2003: “They are running out of hope. It’s not likely for him [Lan] to get funding.”
 May 15, 2003: “Looks like Lan found one company in Beijing to pay Sico (Lan’s company) to co-develop[ ] a network processor in China. I just don’t want to see Net[L]ogic’s IP [to] become Sico’s IP one day.”

Plaintiff asserts that the arguments advanced by Defendant that the foregoing are not actionable as mere opinions or are protected by the common interest privilege were already considered and rejected by the Court of Appeal. The appellate court’s rejection of these arguments, Plaintiff explains, constitutes the “law of the case,” thereby preventing this Court from ruling to the contrary.

“The doctrine of the ‘law of the case’ deals with the effect of the first appellate decision on the subsequent retrial or appeal: The decision of an appellate court, stating a rule of law necessary to the decision of the case, conclusively establishes that rule and makes it determinative of the rights of the same parties in any subsequent retrial or appeal in the same case.” (Morohoshi v. Pacific Home (2004) 34 Cal.4th 482, 491.) The doctrine does not prevent retrial of an issue, “although it does require that the same conclusion be reached if that matter is retried on the same evidence.” (People v. Burbine (2003) 106 Cal.App.4th 1250, 1261.) Thus, the doctrine governs “only the principles of law laid down by an appellate court, as applicable to a retrial of fact,” but does not “embrace the facts themselves.” (People v. Cooper (2007) 149 Cal.App.4th 500, 526 [internal citations omitted].) In order for the doctrine to apply, the point of law involved must have been necessary to the prior decision, the matter must have been actually presented and determined by the court, and application of the doctrine will not result in an unjust decision. (Id.)

In the appeal of the Court’s denial of Defendant’s anti-SLAPP motion, the Court of Appeal first determined that Defendant Li had met her burden to demonstrate that Plaintiff’s claims against her (that were the subject of the motion) arose from protected activity. Then, moving on to the second prong of the two-step anti-SLAPP analysis, the court held that Plaintiff had met his burden by demonstrating that he had a probability of prevailing on the merits of his defamation causes of action. Defendant Li argued that her statements to the FBI and Jankov were either the truth or her own opinions and therefore not actionable. The court explained that statements which are opinions do not necessarily enjoy blanket protection from defamation actions where they imply “a false assertion of fact” and then, applying the so-called “totality of the circumstances” test to the subject statements, concluded that some of the statements, particularly those alluding to Plaintiff’s use of NetLogic’s intellectual property, implied “provably false factual assertions” and thus could constitute the basis of a defamation cause of action. (Lan Lee v. Yanchun Li (2014) 2014 WL 2535484, *11.)

Next, after agreeing with Defendant that her statements to the FBI were absolutely privileged under Section 47, subdivision (b), the Court then reasoned, after noting Plaintiff’s submission of portions of Defendant’s testimony in U.S. v. Lee wherein she admitted that she contacted Jankov without any basis for her allegations and did so in hopes that he would stop Plaintiff and her husband from continuing to work on Sico, that the statements to Jankov were not necessarily protected by the common interest privilege, i.e., subdivision (c) of Section 47. The common interest privilege “extends a conditional privilege against defamation to statements made without malice on subjects of mutual interest” and is “recognized where the communicator and the recipient have a common interest and the communication is of a kind reasonably calculated to protect or further that interest.” (Hawran v. Hixson (2012) 209 Cal.App.4th 256, 287.) Once a defendant has satisfied his burden to show that the statement is protected by the common interest privilege, the plaintiff can defeat that privilege by showing that the statement was made with malice. (Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 108.) Whether the statements are privileged is a question of law. (Id.) The appellate court concluded that the testimony submitted by Plaintiff, “if credited, … could allow a rational trier of fact to make a finding of malice, rendering the qualified common interest privilege inapplicable to the statements [Defendant] made to Jankov.” (Lan Lee v. Yanchun Li, supra, 2014 WL 2535484 at *12.) The court then reasoned that Plaintiff had submitted the evidence necessary to satisfy the second prong of the anti-SLAPP statute based solely on the emails Defendant to Jankov implying that Plaintiff was stealing intellectual property.

Plaintiff’s contention that the Court of Appeal rejected Defendant’s argument that her statements to NetLogic are protected by the common interest privilege and such a result is the “law of the case” is not well taken. The appellate court merely concluded that Plaintiff had produced sufficient evidence that, if credited, would demonstrate the malice necessary to defeat the common interest privilege. The court did not conclude, unequivocally, that Plaintiff had absolutely defeated the privilege, as evidenced by the court’s own statement in its decision that “[Defendant] may have submitted evidence to the contrary, asserting that [Plaintiff] may have taken information that was considered trade secret by NetLogic, but we do not weigh the credibility of evidence. In this state of the anti-SLAPP analysis we accept [Plaintiff’s] evidence as true.” (Lan Lee v. Yanchun Li, supra, 2014 WL 2535484 at *13.) In leaving the application of law to facts to the finder of fact on remand, the court’s disposal of the common interest privilege cannot be deemed the “law of the case” because, as set forth above, the doctrine does not “embrace the facts themselves.” (People v. Cooper (2007) 149 Cal.App.4th 500, 526 [internal citations omitted].) Thus, Plaintiff’s assertion that the arguments asserted by Defendant in the appeal cannot be entertained by this Court in this motion are without merit.

However, it must be noted that, per the case of Bergman v. Drum (2005) 129 Cal.App.4th 11 and based on the “law of the case” doctrine, when a prior appeal has determined that the evidence presented in connection with an anti-SLAPP motion is sufficient to establish a prima facie case, that determination is sufficient to “defeat a subsequent motion for summary judgment unless the defendant submits to the trial court, in support of such motion, additional or different evidence that would, as a matter of law, conclusively negate plaintiff’s prima facie case.” (Bergman v. Drum, 129 Cal.App.4th at 18.) The Court of Appeal expressly held that Plaintiff had produced sufficient evidence to establish a prima facie case of defamation and libel per se, thereby defeating (in part) Defendant’s anti-SLAPP motion. Thus, unless Defendant produces additional or different evidence in support of the instant motion that, as a matter of law, conclusively negates Plaintiff’s prima facie case, she is not entitled to summary adjudication of the claims for defamation.

In this vein, Defendant attempts to establish that her statements to Jankov were true, particularly those portions which asserted that Plaintiff was: (1) forming his own company in NetLogic’s field; (2) recruiting at least one employee of NetLogic to join his new company; (3) seeking venture capital funding in China; (4) negotiating a contract with Chinese entities; and (5) making projections regarding costs and manufacturing and development schedules. However, even assuming Defendant’s contention is true, none of these facts are alleged by Plaintiff to be defamatory; instead, Plaintiff’s claims for defamation against Defendant are predicated on statements by her which insinuated that he was stealing NetLogic’s intellectual property.

With respect to the portion of her statements which asserted that Plaintiff was using NetLogic’s intellectual property, Defendant maintains that these portions are still nonactionable because the fact that Plaintiff was using NetLogic’s intellectual property is indisputable, and she never asserted that his use of the property was illegal. She cites to portions of evidence submitted at the criminal trial, including parts of the Release and Plaintiff’s responses to various requests for admission. However, in none of these materials does Plaintiff admit to stealing NetLogic’s trade secrets, which is what some of Defendant’s statements to Jankov, particularly her statement that she did not “want to see Net[L]ogic’s IP become Sico’s IP one day,” implied. This implication constitutes libel per se, and defeats Defendant’s contention that she never asserted that Plaintiff’s use of NetLogic’s intellectual property was illegal. (See Barnes-Hind, Inc. v. Superior Court (1986) 181 Cal.App.3d 377, 385 [finding that “perhaps the clearest example of libel per se is an accusation of crime”].) Plaintiff merely acknowledged using some of NetLogic’s intellectual property that did not constitute trade secrets, but never admitted to using property that did. (Plaintiff’s Separate Statement of Undisputed Material Fact in Opposition to Defendant’s Motion for Summary Judgment/Adjudication (“PUMF”) No. 24.) Defendant offers no additional evidence in connection with the foregoing argument.

Thus, Defendant has not produced “additional or different evidence that would, as a matter of law, conclusively negate plaintiff’s prima facie case” of defamation. (Bergman v. Drum, 129 Cal.App.4th at 18.) A trier of fact could still conclude that Defendant made provably false assertions of fact against Plaintiff with malice. Accordingly, Defendant’s motion for summary judgment is denied.