When a friend persuaded Tarla Makaeff
to sign up for a $1,500 Trump University real estate investment course in 2008, the former fashion designer from Corona del Mar had visions of learning the trade secrets of Donald J. Trump, the school's namesake and chairman. Trump University promised its students the "insider success secrets" of the real estate magnate, TV personality, and erstwhile presidential candidate.
Instead, Makaeff found that the proffered "one-year apprenticeship program" with Trump's "handpicked" mentors was actually a three-day infomercial that pressured students to spend at least $35,000 more on a "Trump Gold Elite" program, where they were promised key information for making millions in real estate transactions. Makaeff ultimately spent nearly $60,000 on Trump University seminars or related classes endorsed by the program. The initial seminars consisted of excursions to visit Home Depot and tour properties, led by mentors who recommended deals in which they stood to personally benefit.
In a recent court declaration, Makaeff said of the university's sales pressure, "I can only liken it to a brainwashing scheme that is so powerfully convincing that you do not realize you are being severely taken advantage of until you have completed the mentorships."
After seven months in the program, Makaeff began complaining to Trump University officials that she was not getting her money's worth. In April 2009 she asked for a tuition refund and was refused. So she began writing letters to the Better Business Bureau and placing postings on Internet message boards accusing Trump University of "bait and switch" tactics and deceptive business practices. Then she filed a class action, asserting claims of false advertising, negligent misrepresentation, and unfair business practices. (Makaeff v. Trump Univ., LLC
, No. 10-CV-00940 (S.D. Cal. filed Apr. 30, 2010).)
What Makaeff got in return was a Trump University counter-claim of defamation. Makaeff's lawyers responded with a special motion to strike the complaint under a frequently invoked remedy, California's anti-SLAPP statute, enacted by the Legislature in 1992 to protect free speech rights. (The acronym stands for Strategic Lawsuits Against Public Participation; see Cal. Code of Civ. Proc., § 425.16.)
An anti-SLAPP motion is a potent weapon, giving a defendant the chance to have a complaint dismissed early on. The motion may be filed 60 days after service of the plaintiff's lawsuit. Filing an anti-SLAPP motion stays all discovery. Once the defendant makes a prima facie showing that its conduct arose from protected speech or petition activity, the burden shifts to the plaintiff to produce evidence supporting each element of the claims, with no ability to amend the complaint. Defendants have a right to automatic appeal, and if they prevail are entitled to mandatory award of attorneys fees. (See § 425.16(b)-(g).)
The district court rejected Makaeff's motion to strike the defamation suit, holding that Trump University isn't a public figure and therefore could establish the probable validity of its claim. But last year the Ninth Circuit reversed, finding that Trump University's aggressive advertising program rendered it a limited-purpose public figure under the statute - thereby heightening the burden of proof and making the anti-SLAPP motion less tenable. (Makaeff v. Trump Univ., LLC
, 715 F.3d 254 (9th Cir. 2013).)
For Makaeff, the anti-SLAPP law worked. "It is designed to cut down on baloney lawsuits," says Thomas R. Burke, a partner at Davis Wright Tremaine in San Francisco and author of Anti-SLAPP Litigation
(The Rutter Group, 2013). He contends the anti-SLAPP statute is being used "exactly as it was intended to be used."
But the motion has proved far too useful to far too many lawyers. Currently, according to Burke, anti-SLAPP motions are permitted in at least 45 different causes of action. The Judicial Council reports that since 2000 nearly 6,500 such motions have been filed in California courts. And that number may be quite low, since the reporting requirement isn't enforced.
Inevitably, the litigation tactic is subject to abuse. Take the case of Kendall Kleveland, a trustee caught in a bitter family probate dispute in San Diego County. Attorneys representing a disgruntled beneficiary - the trustee's nephew - accused Kleveland of misconduct and attempted to have him removed. (See Leach v. Kleveland
, 2010 WL 1076221.) But in 2011 a superior court judge sanctioned two Vista lawyers, Boris Siegel and Lewis M. Wolensky, for filing a case in bad faith and for an improper purpose: to force an unequal distribution of trust assets. The court of appeal affirmed both the sanctions order and the trial court's decision regarding the distribution of property. (See Leach v. Kleveland
, 2012 WL 5857340.)
Fed up and seeking to recover attorneys fees and costs, trustee Kleveland sued the nephew beneficiary and his lawyers for malicious prosecution. The beneficiary's attorneys fired back with an anti-SLAPP motion, accusing Kleveland of attempting to thwart their right to petition and free speech. Again the lawyers lost, and again they appealed. On the third round, the appellate court sanctioned the law firm nearly $53,000, adding $8,500 in costs for wasting the court's time on a frivolous case. (See Kleveland v. Siegel & Wolensky LLP
, 215 Cal. App. 4th 534, 560 (2013).) Together, the sanctions nearly equaled the inheritance at issue.
"The number of people who called us within a week of reading Kleveland
was astounding," says Andrew A. Kurz, a sole practitioner in Cardiff by the Sea who filed the trustee's lawsuit, along with lead counsel Gregory S. Day. "There is real abuse of the system going on," Kurz says. "A defendant can file an anti-SLAPP, [then] appeal, and get a one-and-a-half-year delay with no consequences. That is grossly out of whack."
Burke acknowledges, "I wish there were more cases [like Kleveland
] where the Court of Appeal or the trial court spoke out and said, 'This isn't right and it is not what was intended [by the law], and the madness should stop.' "
In recent years, anti-SLAPP motions have been filed in response to alleged violations of a rent control law (Santa Monica Rent Control Bd. v. Pearl Street, LLC
, 109 Cal. App. 4th 1308 (2003)); in product liability claims (Martinez v. Metabolife Int'l, Inc.
, 113 Cal. App. 4th 181 (2003)); to fend off liability for civil rights violations (Dep't of Fair Emp't and Hous. v. 1105 Alta Loma Rd. Apts.
, 154 Cal. App. 4th 1273 (2007); and by an attorney in an effort to insulate himself from accusations of criminal extortion (Mendoza v. Hamzeh
, 215 Cal. App. 4th 799 (2013)).
Such filings force plaintiffs to scramble to produce evidence justifying each element of their claims prior to discovery, compel trial judges to consider complex First Amendment questions, and entangle appellate courts in disputes the Legislature never envisioned. Unresolved legal splits over anti-SLAPP fester in the courts of appeal, and Ninth Circuit judges have questioned whether California's statute should even apply in federal courts.
It took Bill Lockyer, then a state senator,
three tries to win approval for a bill that would counter the type of litigation that had come to be known as a "SLAPP suit." Governors George Deukmejian and Pete Wilson vetoed two earlier versions, but Wilson signed the bill in 1992 after the Legislature reworked it once again.
Lockyer says the anti-SLAPP measure was inspired in 1987 by a man who challenged a proposal to build a waste incinerator in his East Bay community. He rallied opponents who sued, alleging improper use of public funds for the project. The man was then hit personally with a cross-complaint alleging he interfered with the defendant's prospective economic advantage. Lockyer - now California's treasurer - says his bill "was intended to protect free speech in a more robust way."
The statute immediately proved to be a godsend for media organizations, citizens' rights groups, and public interest organizations commonly beset by causes of action such as defamation, public nuisance, intentional infliction of emotional distress, and a variety of business torts.
"Everyone knew it would be used by the media to get rid of libel cases," says Karl Olson, a media and First Amendment lawyer with Ram, Olson, Cereghino & Kopczynski in San Francisco. "It has done a lot of good, not just by enabling media to get rid of meritless defamation suits, but also because a lot of lawsuits were not
filed because of it."
Five years later the Legislature expanded anti-SLAPP protections by adding language that the law "shall be construed broadly." Benjamin G. Shatz, a certified specialist in appellate law at Manatt, Phelps & Phillips in Los Angeles, says, "The statute was not used that much initially, and then blossomed into a really powerful tool. If a litigator in California is not familiar with anti-SLAPP, you're not representing your client properly." He adds that anti-SLAPP defense motions have "become quite the norm."
The expansion drew something of a backlash from conservatives on the bench. In a dissent to a state Supreme Court ruling in 1999, Justice Marvin Baxter warned, "The majority's holding in this case belies that carefully delineated legislative purpose and will authorize use of the extraordinary anti-SLAPP remedy in a great number of cases to which it was never intended to apply." (Briggs v. Eden Council for Hope & Opportunity
, 19 Cal. 4th 1106, 1124 (1999).) And in 2002 Justice Janice Rodgers Brown weighed in to call anti-SLAPP motions "the latest form of abusive litigation." (Navellier v. Sletten
, 29 Cal. 4th 82, 96 (2002).)
The next year lawmakers, declaring that "there has been a disturbing abuse" of the anti-SLAPP law, amended the statute to clarify that anti-SLAPP motions cannot be filed against a person who is primarily engaged in commercial speech. The amendment also bars motions challenging some public interest lawsuits. (See Cal. Code Civ. Proc. § 425.17.) "It was made clear that [false advertising or securities claims] were not topics where an anti-SLAPP suit could be supported," Lockyer says.
"Every law that gets written gets tested," he adds. "Maybe 15 people think about the practical applications while it is in the Legislature - and maybe 50,000 lawyers think creatively about it when it's on the books."
In 2011 a three-judge panel of the First District Court
of Appeal decided it had seen enough creativity. The court had before it an anti-SLAPP motion filed in 2009 by the Punjab Times
in response to a defamation suit over articles written about a member of the Fremont Sikh Temple. The 2005 articles alleged that Hardev Singh Grewal had engaged in theft, embezzlement, and tax fraud. Justice James A. Richman, joined by Justices J. Anthony Kline and Paul R. Haerle, noted that it had been almost five years since the plaintiff filed his defamation suit, and "trial is not yet in sight." (Grewal v. Jammu
, 191 Cal. App. 4th 977, 1003 (2011).)
In affirming denial of the newspaper's anti-SLAPP motion, Richman devoted much of the opinion to documenting the explosion of similar filings in recent years. Relying on references to section 425.16 in West's Annotated California Code
, he stated, "the annotations for the 12-year period
between 1992 and 2004 are 82 pages, an average of six-plus pages per year; the annotations for the five-year period
between 2005 and 2009 are 107 pages, an average of 20-plus pages per year." He added that there was no sign of a letup, "as one cannot pick up a volume of the official reports without finding an anti-SLAPP case. Or four." (Grewal
, 191 Cal. App. 4th at 998 (emphasis by the court).)
, Justice Richman detailed some of the subtleties of abuse. A defendant could claim in good faith that the plaintiff's action arose from protected activity, meeting part one of the two-pronged anti-SLAPP analysis. But simply by filing the special motion, the defendant gains a tactical advantage, curtailing discovery and forcing the plaintiff to spend thousands of dollars to oppose it. If denied, the motion can then be appealed - often delaying litigation of the underlying matter for years. He cited Varian Medical Systems, Inc. v. Delfino
(35 Cal. 4th 180, 195 (2005)), in which the state Supreme Court affirmed that a pending appeal from the denial of an anti-SLAPP motion stays the trial court proceedings on related matters.
Richman acknowledged that the right of appeal can be important. "But it should not trump all else," he wrote. "And a losing defendant's 'loss' of the right to appeal a lost anti-SLAPP motion, we submit, is a much smaller price to pay than a winning plaintiff having to expend thousands of dollars in attorney fees on appeal, while plaintiff's case is stayed for anywhere from 19 to 26 months, all in a setting where the original motion was without merit, if not downright frivolous."
The justice concluded, "[S]omething is wrong with this picture, and we hope the Legislature will see fit to change it." Richman even suggested a remedy for the rare circumstance when a trial court denies a meritorious anti-SLAPP motion: Allow the defendant to obtain relief by filing a writ. (Grewal
, 191 Cal. App. 4th at 1002-03.)
The day after Grewal
came down, University of San Diego law professor Shaun Martin commented on his California Appellate Report
blog. "Justice Richman thinks that the possibility of filing a summary judgment motion or a writ solves this problem for cases in which an appeal might be meritorious," wrote Martin, who specializes in anti-SLAPP litigation. "I'm not entirely persuaded." Instead, he proposed expedited appeals, with an opening brief due in 30 days, a response brief due 30 days later, and a reply brief (if any) due 15 days thereafter. "Total time from start to finish: Four to six months," Martin predicted.
But neither proposal attracted much support. "Why should appeals that potentially implicate protected constitutional rights receive such second-class treatment?" asks Burke at Davis Wright. "It would be like asking a law professor to forgo the use of footnotes in a law review article!"
Still, attorney Kurz in San Diego contends anti-SLAPP motions are used much too widely. "The courts of appeal are beyond angry," he says. "Anti-SLAPP is now a standard operating procedure in all types of cases. It's almost like a demurrer. Clearly, I think, it is being abused."
Three years after Grewal, however,
neither the Legislature nor the Judicial Council has shown much interest in amending the statute or in changing court rules. "It's really off our radar," says Justice Harry E. Hull Jr., chair of the Judicial Council's Rules and Projects Committee, confirming that no rule amendments dealing with anti-SLAPP are currently before the administrative body.
Some anti-SLAPP experts also doubt assertions that the special motion is clogging the appellate courts. "There is no statistical data to back that up," says Jeremy B. Rosen, an anti-SLAPP specialist and partner at Horvitz & Levy in Encino. He points to roughly 500 anti-SLAPP motions filed annually in California, compared with millions of other filings. Regardless of the volume, Rosen adds, "In a case of real abuse, courts have remedies."
San Diego sole practitioner James J. Moneer agrees. An anti-SLAPP specialist who handles appeals on both sides of this issue, he contends there are "adequate protections" against abuse and consequences for it, pointing to the sanctions in Kleveland
Justice Richman, however, is still troubled by the implications of meritless anti-SLAPP appeals. "It's the stay part of [the state Supreme Court's Varian
decision] that bothers me the most," he said in an interview.
In January he affirmed denial of an anti-SLAPP motion a San Francisco landlord filed against a tenant who had sued him, alleging failure to fix health-and-safety problems. "Another appeal in an anti-SLAPP case," Richman's opinion began. "Another appeal by a defendant whose anti-SLAPP motion failed below. Another appeal that, assuming it has no merit, will result in an inordinate delay of the plaintiff's case and cause him to incur more unnecessary attorneys fees. And no merit it has." (Moriarty v. Laramar Mgmt. Corp.
, 2014 WL 808084.) The court published Moriarty
after receiving several requests to do so, according to Richman.
Sometimes tossing a questionable anti-SLAPP motion
is a straightforward matter. After attorneys Gary Rand and Suzanne Rand-Lewis were sued for overdue transcription fees by a court-reporting firm, they filed a special motion, contending the lawsuit was retaliation for their complaints that the court reporters had overcharged them. But in 2012 an appellate court ruled that the Rands were trying to transform a "meritless" challenge to a routine collections case into a constitutional claim - and noted that the two attorneys had previously filed an anti-SLAPP motion in a similar case. The court determined that "defendants pursued this appeal for the purpose of delaying this matter and preventing plaintiff from presenting its case on the merits," sanctioning the Rands $22,000 to pay the plaintiffs' legal fees. (Personal Court Reporters, Inc. v. Rand
, 205 Cal. App. 4th 182 (2012).)
But when anti-SLAPP motions are filed in cases with so-called mixed causes of action - where some actions by a defendant are protected public conduct under the anti-SLAPP statute and some are not - the courts of appeal are conflicted about how to handle them.
The split centers on whether judges' power under the statute is limited to simply striking entire causes of action, or whether they can weed out allegations against protected conduct and leave standing the remainder of a cause of action otherwise based on unprotected conduct. The threshold issue in these cases is whether the anti-SLAPP statute applies at all.
For example, most appellate courts in California hold that the entire cause of action must stand or fall. This is the general rule in the First Appellate District (Haight-Ashbury Free Clinics, Inc. v. Happening House Ventures
, 184 Cal. App. 4th 1539 (2010) and Wallace v. McCubbin
, 196 Cal. App. 4th 1169 (2011)); the Second District (Coretronic Corp. v. Cozen O'Connor
, 192 Cal. App. 4th 1381 (2011)); the Third District (Burrill v. Nair
, 217 Cal. App. 4th 357 (2013)); and the Fourth District (M.G. v. Time Warner, Inc.
, 89 Cal. App. 4th 623 (2001) and A.F. Brown Elec. Contractor, Inc. v. Rhino Elec. Supply, Inc.
, 137 Cal. App. 4th 1118 (2006).)
However, at least two courts have concluded otherwise, ruling that trial judges have the authority in certain circumstances to slice out protected conduct without dismissing the entire claim. (See City of Colton v. Singletary
, 206 Cal. App. 4th 751 (2012); Cho v. Chang
, 219 Cal. App. 4th 521 (2013).)
case reveals a split in the Fourth District, and Cho
appears to do the same in the Second - perhaps the best evidence of the complexity of the problem. As Justice Norman Epstein noted in Cho
, "Appellate courts have wrestled with the application of the anti-SLAPP law where, as in this case, a single cause of action includes multiple claims, some protected by that law and some not."
Epstein also observed, "It would make little sense if the anti-SLAPP law could be defeated by a pleading, such as the one in this case, in which several claims are combined into a single cause of action, some alleging protected activity and some not. Striking the entire cause of action would plainly be inconsistent with the purposes of the statute."(Cho
, 219 Cal. App. 4th at 526-27.)
So far, the California Supreme Court has declined to resolve the differences. As recently as November, it denied a petition for review of an anti-SLAPP appeal with a mixed cause of action. But two justices - Joyce Kennard and Kathryn Werdegar - voted to grant review, signaling that the issue is on the high court's radar.
In the underlying case (San Diego Hosp. Based Physicians v. El Centro Reg'l Med. Ctr.
, 2013 WL 3975762), a physicians group sued an El Centro hospital for alleged retaliation following the doctors' complaints about patient care practices. The hospital sought to dismiss the suit by filing an anti-SLAPP motion. But the Fourth District court of appeal ruled that plaintiffs had shown a probability of prevailing on each of the causes of action, including both protected and unprotected claims.
"This issue is definitely ripe," says Davis Wright's Burke. "Eventually, the Supreme Court is going to have to resolve this because the statute can now be gamed a little bit in the hands of a clever attorney."
State court judges aren't the only ones concerned
about the potential abuses of the anti-SLAPP statute. Fifteen years ago the Ninth Circuit held that California's special motion applies to state law claims in federal court, finding no conflict with federal court mechanisms for dealing with meritless claims under the Federal Rules of Civil Procedure. (U.S. ex rel. Newsham v. Lockheed Missiles & Space Co., Inc.
, 190 F.3d 963 (9th Cir. 1999).)
But last year in Tarla Makaeff's appeal against Trump University, Ninth Circuit Chief Judge Alex Kozinski and Judge Richard Paez fired a warning shot. In a concurrence, Kozinski argued that federal courts should no longer apply the anti-SLAPP motion in diversity cases, reasoning that it is a procedural mechanism for vindicating rights and as such creates no substantive rights.
Invoking Erie Railroad Co. v. Tompkins
(304 U.S. 64 (1938)), Kozinski argued that the anti-SLAPP statute conflicted with both rule 12 and rule 56 of the Federal Rules of Civil Procedure. He concluded that Newsham v. Lockheed
was "a big mistake" and that "[i]t's time we led the way back out of the wilderness." (Makaeff
, 715 F.3d at 275.)
Trump University's petition for en banc review lingered for months, setting off speculation that anti-SLAPP motions might utterly change forum selection considerations between state and federal courts. A plaintiff, typically preferring state court, might opt for federal court to avoid anti-SLAPP consequences. By contrast, a defendant, typically preferring to remove suits to federal court, would want to remain in state court to preserve anti-SLAPP rights.
But the majority of judges apparently had no appetite for Kozinski's argument. While anti-SLAPP practitioners waited for a ruling, the Ninth Circuit continued to issue opinions in accordance with Newsham
. (See Doe v. Gangland Productions, Inc.
, 730 F.3d 946 (9th Cir. 2013).)
Then in late November the full court voted to deny en banc review. Kozinski joined three others in the dissent, written by Circuit Judge Paul J. Watford. "Even if anti-SLAPP motions may be brought in federal court, we should stop entertaining interlocutory appeals from rulings in such motions," the minority groused, calling for the court to reexamine its "anti-SLAPP jurisprudence" and overrule Newsham
, 736 F.3d 1180, 1190.)
"Many of us who practice in this area want to know what the final word is, or if this debate is going to continue in another case," says Andrew M. White, an entertainment and media litigator with Kelley Drye & Warren in Los Angeles. "Every [defense] client would be dreaming of how to make a diversity case, to move matters out of state court."
Martin at USD hopes a solution will come from Sacramento. "The courts of appeal have repeatedly questioned meritless anti-SLAPPs," he says. "If anyone in the Legislature is listening, the courts have told them that there's a problem. Every ten years or so, the Legislature tinkers with it. Once a decade, however, is nowhere near enough."
Pamela A. MacLean is a
California Lawyer contributing writer.