Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
San Francisco County Super. Ct. No. CGC05445411
RIVERA, J.
Plaintiffs George Bauto, Virginia Dinsay, and Carmelita Bollier seek to overturn the trial court’s determination that their special motion to strike was unmeritorious and the award of sanctions in favor of defendant Best Collateral, Inc. We reject plaintiffs’ contentions and affirm the trial court’s ruling.
I. Procedural History
Defendant is in the pawn shop business. Plaintiffs filed an action against defendant, their former employer, alleging failure to pay wages and overtime pay, failure to provide mandatory breaks or meal periods, and failure to pay wages due within 72 hours of termination of employment. Plaintiffs also sought, pursuant to Business and Professions Code section 17200, an injunction prohibiting defendant from engaging in such unlawful conduct in the future.
Defendant cross-complained alleging that plaintiffs, who had held positions of trust in defendant’s business, made false and fraudulent loans for personal gain, made loans in excess of the value of the collateral given, and concealed these wrongful acts from defendant, resulting in damages in excess of $220,000.
Plaintiffs filed a so-called anti-SLAPP motion, pursuant to Code of Civil Procedure section 425.16, asking the court to strike the cross-complaint. Plaintiffs argued that the cross-complaint was brought in retaliation for plaintiffs’ protected petitioning activity—the filing of their complaint seeking redress of the alleged wage and hour violations. Plaintiffs also denied any wrongdoing, and contended they were singled out for defendant’s accusations due to the initiation of their action against defendant. Plaintiffs asserted that other employees were involved in fraudulent loan transactions who were not sued by defendant; that defendant’s owner instructed others to make fraudulent loans; and that during their employment, they were never accused of, or disciplined for, any improper activity.
All undesignated statutory references are to the Code of Civil Procedure.
In opposition, defendant submitted the declaration of Robert Verhoeff, its president and owner. Verhoeff denied ever directing or permitting anyone to make fraudulent loans. Verhoeff averred in detail, and with supporting exhibits, that he had conducted a number of investigations, which were triggered by employee tips or customer complaints; that the investigations revealed all three plaintiffs had engaged in making false or fraudulent loans for their own or each others’ benefit; and that each plaintiff had affirmatively and successfully avoided being disciplined for or accused of improper activity during their employment.
Apparently, defendant also filed points and authorities in opposition to the motion to strike contending plaintiffs had not made the threshold showing that the cross-complaint arose out of plaintiffs’ protected activity and therefore it was not subject to an anti-SLAPP motion. It further appears defendant requested sanctions for plaintiffs’ filing of a frivolous motion to strike. Defendant’s opposition brief, however, was not made a part of the record on appeal.
Plaintiffs’ reply brief disputed the competence of defendant’s evidence. Plaintiffs also argued that the cross-complaint did arise out of plaintiffs’ protected petitioning activity in that the causes of action in both the complaint and the cross-complaint arose out of the employment relationship, and the cross-complaint was a “calculated attempt to tarnish [plaintiffs] with the allegations concerning the loan practices to undermine their credibility and to . . . portray them as common crooks . . . so that they never recover their unpaid wages.” Plaintiffs’ opposition to the sanctions request offered similar arguments: Because the cross-complaint was filed “in direct response” to the complaint it was subject to a motion to strike; and because defendant offered no admissible evidence in support of its allegations, the motion to strike had merit.
After a hearing, the trial court denied the motion to strike, and granted defendant’s request for sanctions. Plaintiffs filed a notice of appeal only from the order granting sanctions. The trial court thereafter ordered plaintiffs and their counsel to pay $13,000 in attorney fees and costs.
II. Discussion
A. Appealability
Defendant makes the threshold contention that the order granting sanctions is not appealable separately from the order denying the motion to strike. While there is authority for the proposition that the sanctions order is not separately appealable pursuant to section 425.16, subdivision (i) and section 904.1, subdivision (a)(13) (Doe v. Luster (2006) 145 Cal.App.4th 139, 145-150), defendant ignores that section 904.1, subdivision (a)(12) permits an appeal from “an order directing payment of monetary sanctions by a party or an attorney for a party if the amount exceeds . . . ($5,000).” Here, plaintiffs and their counsel were ordered to pay monetary sanctions in the amount of $13,000. Although the appeal was premature insofar as the notice of appeal was filed before the trial court issued its order on the amount of sanctions, the order was unquestionably appealable, and we will treat the premature appeal as a timely one. (Cal. Rules of Court, rule 8.104(e) & (f); 9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 512, p. 558; id. (2007 supp.) § 512, pp. 157-158.)
B. Elements of a SLAPP Action
Plaintiffs contend defendant’s cross-complaint is arguably a SLAPP (strategic lawsuit against public participation), and therefore plaintiffs’ special motion to strike was not frivolous. Although plaintiffs have not appealed the denial of their motion, we must examine the merits of the motion to determine whether it was “ ‘totally devoid of merit’ [citation]” (Decker v. U.D. Registry, Inc. (2003) 105 Cal.App.4th 1382, 1392, superseded by statute on other grounds, as stated in Hall v. Time Warner, Inc. (2007) 153 Cal.App.4th 1337, 1349), and therefore sanctionable.
Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1109, footnote 1.
The anti-SLAPP statute provides, in relevant part: “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (§ 425.16, subd. (b)(1).) “As used in this section, ‘act in furtherance of a person’s right of petition or free speech under the [constitutions] in connection with a public issue’ includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law . . . .” (§ 425.16, subd. (e).)
Ruling on a special motion to strike is “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. . . . If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) Thus, the party moving to strike has the initial burden to show that the cause of action arises from an act in furtherance of the moving party’s right of petition or free speech. (Zamos v. Stroud (2004) 32 Cal.4th 958, 965.) “ ‘Only if such showing is made should the court proceed on to the second step, which is to determine whether the [cross-complainant] has demonstrated a probability of prevailing on the claim. [Citations.]’ [Citation.]” (Greka Integrated, Inc. v. Lowrey (2005) 133 Cal.App.4th 1572, 1577.) In order to determine whether the claim is subject to a special motion to strike, the court considers “the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” (§ 425.16, subd. (b)(2).)
In the court below, no one disputed that plaintiffs’ act of filing their complaint against defendant constituted an act in furtherance of plaintiffs’ constitutional right to petition for redress of grievances. (See Mattel, Inc. v. Luce, Forward, Hamilton & Scripps (2002) 99 Cal.App.4th 1179, 1188.) The disputed issue was whether the causes of action alleged in defendant’s cross-complaint arose out of the petitioning act. The trial court determined that defendant’s cross-complaint did not arise out of the filing of plaintiffs’ lawsuit. As the court explained, “[m]oving party [sic] has not carried the burden to show that the Cross-Complaint addresses acts taken in furtherance of rights [to] . . . petition.” As we have noted, this decision was not appealed. The sole issue presented for review is the trial court’s additional ruling that plaintiffs’ motion was so lacking in merit as to be considered frivolous, thus requiring an award of sanctions. That determination is reviewed for abuse of discretion. (Foundation for Taxpayer & Consumer Rights v. Garamendi (2005) 132 Cal.App.4th 1375, 1388.) “ ‘[T]he appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason.’ [Citation.]” (Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (1996) 47 Cal.App.4th 777, 785.)
Under the anti-SLAPP statute, if a trial court determines that a special motion to strike was frivolous or was solely intended to cause unnecessary delay, it shall award costs and reasonable attorney fees to the prevailing party. (§ 425.16, subd. (c).)
C. No Abuse of Discretion
The trial court stated that the core issue—whether defendant’s cross-complaint arose out of plaintiffs’ petitioning activity—was “directly controlled” by prior case law. That law, the court explained, proscribes the filing of a cross-complaint “that says you violated [my] rights by suing [me]. That would . . . potentially, at least be subject to the anti-SLAPP procedures. But [defendant] didn’t do that, and I read [its] cross-complaint very carefully to see if there was anything in it that referred in any way to [its] complaining about the filing of the complaint, and I didn’t find it.” The court therefore concluded the motion was frivolous and “could have no other purpose than to unfairly delay the action and put the opposing party to needless expense.”
We agree with the trial court’s analysis. It cannot reasonably be contended that defendant’s cross-complaint against plaintiffs “arose from” plaintiff’s wage and hour lawsuit against defendant. The cross-complaint alleges that plaintiffs engaged in fraudulent and/or grossly negligent conduct while they were employees of defendant and caused defendant to suffer losses as a result. Nowhere does the cross-complaint seek to expose plaintiffs to liability for having filed the lawsuit against defendant, which is the essence of a SLAPP action. (Navellier v. Sletten (2002) 29 Cal.4th 82, 92-93 (Navellier).)
Conceding that defendant’s cross-complaint “does not allege acts regarding the filing of [plaintiffs’] lawsuit,” plaintiffs nevertheless contend that there is an “intersection of . . . claims” and an “interconnectedness” of the facts alleged in the complaint and the cross-complaint. Plaintiffs point out that the allegations of the complaint and the cross-complaint both relate to the employment relationship between plaintiffs and defendant. Additionally, plaintiffs argue that the cross-complaint was an “obvious effort to thwart [plaintiffs’] exercise of their rights to receive overtime compensation and meal and rest period compensation [by portraying plaintiffs] as nothing more than malingerers, who spent the[] entirety of their work days fabricating fraudulent loans, self-dealing, [and] acting with gross negligence.” According to plaintiffs, defendant’s cross-complaint was entirely pretextual and was brought “solely to prevent [plaintiffs] from exercising their right to petition the courts,” by discrediting them in the eyes of the jury.
Plaintiffs have requested that we take judicial notice of the trial court’s tentative decision concluding that defendant did not prove its malfeasance claims against two of the plaintiffs. Plaintiffs argue that the tentative decision is relevant to the issue of whether the cross-complaint was pretextual in nature and filed solely to discourage plaintiffs from pursuing their wage and hour claims. As we explain below, the question is not whether the cross-complaint was pretextual. The question is whether the cross-complaint arose out of plaintiffs’ litigation activity. The tentative decision, therefore, is not relevant to our analysis, and the request for judicial notice is denied.
Even assuming all of these contentions are true, they do not come close to demonstrating that defendant’s cross-complaint arose out of, or was based upon plaintiffs’ filing of the wage and hour lawsuit, as is made clear by the controlling precedent of Kajima Engineering & Construction, Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921 (Kajima).
In Kajima, a construction company (Kajima) sued the City of Los Angeles (City) for breach of contract and related claims arising out of a construction project. (Kajima, supra, 95 Cal.App.4th at p. 924-925.) The City cross-complained, alleging 21 causes of action, including breach of contract, fraud, embezzlement, and false claims pertaining to the company’s bidding practices and its work on the project. (Ibid.) Kajima filed a special motion to strike, contending that the cross-complaint “ ‘arises from, and is in patent retaliation for, Kajima’s exercise of its constitutional right to petition this court for redress by filing the complaint in this action.’ ” (Ibid.) The trial court concluded, however, that only one of City’s causes of action—a claim that the filing of the complaint was a violation of the False Claims Act—arose out of Kajima’s exercise of its constitutional rights. Kajima appealed, arguing the cross-complaint had been filed “ ‘in retaliation for Kajima’s exercise of its constitutional right to petition,’ ” and therefore the trial court erred in denying the motion as to the other causes of action. (Kajima, at p. 926.)
Affirming the trial court, the Court of Appeal explained that a SLAPP suit is an action that purports to make a person liable for the exercise of their rights. “ ‘The phrase “arising from” in section 425.16, subdivision (b)(1) has been interpreted to mean that “the act underlying the plaintiff’s cause” or “the act which forms the basis for the plaintiff’s cause of action” must have been an act in furtherance of the right of petition or free speech.’ [Citations.]” (Kajima, supra, 95 Cal.App.4th at pp. 928-929.) Because the City did not allege any causes of action based upon Kajima’s filing of its lawsuit against the City—except for the False Claims Act violation—the fact that its cross-complaint may have been filed in retaliation for Kajima’s complaint was irrelevant to the special motion to strike. “Kajima wrongly focuses on the City’s filing of the amended cross-complaint as a supposed act of retaliation without demonstrating, as it must under the anti-SLAPP statute, that the amended cross-complaint ‘alleges acts in furtherance of [Kajima’s] right of petition or free speech . . . .” (Kajima, at p. 929.) The court explained it is not sufficient to show that the challenged cross-complaint implicates or involves the same transaction or subject matter as the complaint. Rather, the challenged complaint must have arisen out of the litigation process itself. (Id. at p. 933.)
Plaintiffs cannot rationally contend they did not understand the import of the opinion in Kajima. Indeed,the court took great pains to distinguish between an action filed because of or in retaliation for a protected act, and one brought based upon a protected act. “We publish this opinion . . . to emphasize that a cross-complaint or independent lawsuit filed in response to, or in retaliation for, threatened or actual litigation is not subject to the anti-SLAPP statute simply because it may be viewed as an oppressive litigation tactic. No lawsuit is properly subject to a special motion to strike under section 425.16 unless its allegations arise from acts in furtherance of the right of petition or free speech.” (Kajima, supra, 95 Cal.App.4th at p. 924, italics added.)
Our courts have consistently hewed to this interpretation of the statute. (See, e.g., Navellier, supra, 29 Cal.4th at p. 92; City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 (Cotati); Department of Fair Employment & Housing v. 1105 Alta Loma Road Apartments, LLC (2007) 154 Cal.App.4th 1273, 1283-1284; Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532, 1537-1538; Visher v. City of Malibu (2005) 126 Cal.App.4th 364, 370; Gallimore v. State Farm Fire & Casualty Ins. Co. (2002) 102 Cal.App.4th 1388, 1397-1398.) Plaintiffs, however, ignore this large body of precedent and argue that, because they are seeking vindication of basic employment rights, the statute should be read more expansively than its reading in Kajima, which addressed the anti-SLAPP statute in the context of a contractual relationship. But plaintiffs advance no policy reason for treating employment cases differently than contract cases for purposes of the fundamental requirement that the action must “arise from” the constitutionally protected act in order to bring into play the special motion to strike. (Cotati, supra, 29 Cal.4th at p. 78 [“[i]n the anti-SLAPP context, the critical point is whether the . . . cause of action itself was based on an act in furtherance of the [moving party’s] right of petition or free speech”]; see also DuPont Merck Pharmaceutical Co. v. Superior Court (2000) 78 Cal.App.4th 562, 565.)
Finally, plaintiffs argue that the purpose of the anti-SLAPP statute is to address lawsuits brought primarily to chill the valid exercise of constitutional rights, and the strict application of Kajima will result in unscrupulous defendants being able to avoid that purpose by “plead[ing] around” the arising-out-of requirements, or by “fabricating a lawsuit and the basis for the lawsuit, thereby seeking to deprive complainant of his or her constitutional rights to petition the courts.” Thus, plaintiffs contend, they are merely “attempt[ing] to advance an interpretation of the anti-SLAPP statute, which while consistent with recent California Supreme Court cases, is more protective of plaintiff-employees than the rule found in Kajima.” This argument is utterly groundless.
First, plaintiffs’ interpretation of the anti-SLAPP statute is not consistent with any Supreme Court cases, nor with any other cases of which we are aware, and plaintiffs have cited none. Second, it is true that a party may not avoid the reach of the anti-SLAPP statute by creative pleading. (Navellier, supra, 29 Cal.4th at pp. 90-91 [plaintiff sought to characterize claim as a “ ‘garden variety breach of contract . . . claim,’ ” but the only act of breach alleged was the filing of litigation].) Here, however, even the most expansive reading of defendant’s cross-complaint fails to reveal a single claim that can be said to arise from plaintiffs’ protected litigation activities as opposed to their employment activities.
Third, it has never been the purpose of the anti-SLAPP statute to prevent or punish all manner of pretextual, retaliatory cross-complaints, even if they are intended to chill the exercise of petitioning rights by means of oppressive litigation tactics. The statute was adopted to discourage unfounded legal challenges to constitutionally protected activity. It does not bring within its ambit a cross-complaint that, as here, arises out of or relates to the subject matter of the complaint but does not seek to hold plaintiff liable for the filing of it. (Kajima, supra, 95 Cal.App.4th at pp. 933-934; Computer Xpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1002.)
A plaintiff who is wronged by a retaliatory, unfounded cross-complaint that does not arise out of plaintiff’s protected activity is free to seek sanctions pursuant to section 128.7, subdivisions (b)-(d); a special motion to strike is “not the appropriate remedy.” (Kajima, supra, 95 Cal.App.4th at p. 934.)
The trial court was well within the bounds of reason in determining that plaintiffs’ motion was completely without merit.
III. Disposition
The trial court’s order is affirmed.
We concur: REARDON, Acting P. J., SEPULVEDA, J.