Opinion
D040118.
7-30-2003
DAVID E. KOHNE, Plaintiff and Respondent, v. AMOCO CORPORATION et al., Defendants and Appellants.
In this malicious prosecution action, Amoco Corporation and Amoco Technology Company (collectively, Amoco) appeal an order denying their special motion to strike David E. Kohnes malicious prosecution complaint against them. Amoco contends that the trial court erred in denying the motion because, in accordance with the California Supreme Courts recent decision in Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811 (Wilson), the denial of Kohnes motion for summary judgment in the underlying action establishes as a matter of law that Amoco had probable cause to facilitate the bringing of the underlying action. We agree and reverse.
FACTUAL AND PROCEDURAL BACKGROUND
Kohne is the inventor of two methods of using certain nucleic acid probes to detect bacteria microorganisms in fluids that allow for the rapid diagnosis of many infectious diseases. In January 1983, Kohne filed a patent application relating to the first of these methods and in July 1989 was issued United States Patent No. 4,851,330 (patent 330). Kohne filed a patent application for the second method in September 1984 and was issued United States Patent No. 5,288,611 (patent 611) in February 1994. Kohnes interest in these patents was ultimately assigned to Gen-Probe, Incorporated (Gen-Probe), a corporation formed by Kohne and others to develop and commercialize the nucleic acid probe technology at issue.
In July 1992, Amoco and the Regents (the Regents) of the University of California (UC) entered into an exclusive licensing agreement that granted Amoco a license to any rights the Regents had in patent 330. The agreement provided that if the Regents determined to pursue litigation to secure title to that patent, Amoco would pay the costs of such litigation.
In October 1993, the Regents brought an action against Kohne and Gen-Probe in federal court (the patent action). According to the allegations of the Regents complaint, Kohne and UC Professor Eric Stanbridge jointly conceived of the methods covered by patent 330 prior to May 1975, and from May 1975 through 1976 they collaborated together in reducing this idea to practice. As Stanbridges employer and as the assignee of his rights in the invention, the Regents asserted claims for declaratory relief, conversion, unjust enrichment and unfair competition under the Lanham Act (15 U.S.C. § 1051 et seq.) against Kohne and Gen-Probe. After Kohne obtained patent 611, the Regents amended its complaint to allege rights in that patent as well.
In late 1993, Kohne and Gen-Probe brought a motion to dismiss or, alternatively, for summary judgment of the Regents claims for declaratory judgment, conversion and unfair competition on laches, statute of limitations and other grounds. The court granted the motion to dismiss the unfair competition cause of action for failure to state a claim, but otherwise denied the defense motions.
In September 1994, Kohne and Gen-Probe sought summary judgment of the Regents remaining claims, arguing that the declaratory judgment claim was barred for lack of diligence or laches, that the conversion claim was barred by the applicable statute of limitations and that in any event the doctrine of equitable estoppel precluded the Regents from asserting those claims. They filed a second motion for summary judgment, asserting that, as a matter of law, the Regents evidence was insufficient to meet its burden of showing, by clear and convincing evidence, that Stanbridge was a co-inventor of the methods protected by the 330 and 611 patents. The district court denied both of these motions in their entirety. In September 1995, however, the district court granted a motion by Kohne and Gen-Probe to dismiss the Regents conversion claim, finding that "a California court would not recognize a property interest in the ideas at issue here, so would not apply the tort of conversion to it."
At trial on the declaratory judgment claim, Kohne and Gen-Probe sought a directed verdict on their affirmative defenses of lack of diligence, laches, estoppel, waiver and/or unclean hands, which the court denied. After the jury returned a special verdict in favor of Kohne and Gen-Probe, they then sought to recover their attorney fees on the ground the Regents knew or should have known that its co-inventorship claim was baseless. The district court denied the request.
Kohne filed this malicious prosecution action against Amoco, alleging that after it failed to develop its own noninfringing gene probe technology, Amoco wrongfully instigated the Regents suit against him. The trial court granted Amocos motion for summary judgment on the ground that the Regents had probable cause to file the underlying action because a reasonable attorney would have found its claims objectively tenable. Kohne appealed and, in an unpublished opinion, this court reversed the judgment dismissing the claims arising out of the Regents action, concluding that the evidence was sufficient to create a triable issue of fact as to whether Amoco knew the Regents factual allegations were false at the time it caused the Regents to file the patent action (Kohne v. Amoco Corporation (Apr. 10, 2001, D034756)).
On remand, Kohne filed a third amended complaint asserting malicious prosecution causes of action against Amoco arising out of the Regents action generally and the Regents assertion of claims for declaratory relief, conversion, unfair competition and unjust enrichment claims in that action specifically. Amoco brought a special motion to strike the third amended complaint as a SLAPP suit (a "strategic lawsuit against public participation") within the purview of Code of Civil Procedure section 425.16 (hereafter section 425.16, also known as the anti-SLAPP statute). (All statutory references are to the Code Civ. Proc. except as otherwise specified.) Amoco argued that Kohnes malicious prosecution action arose out of its First Amendment activities, and that Kohne could not establish a probability of prevailing on his claims because the denial of his various motions in the patent action established as a matter of law that Amoco had probable cause to encourage the Regents to file the underlying action.
The trial court denied the motion. It found that although Kohnes claims were within the purview of the anti- SLAPP statute, Kohne had established a probability of prevailing on his claims based on the existence of the triable issue of fact relating to whether Amoco had probable cause to encourage or fund the litigation. Thereafter, the California Supreme Court rendered its decision in Wilson, on which Amoco primarily relies as the basis for its appeal.
DISCUSSION
Section 425.16, subdivision (b) provides in relevant part that "[a] cause of action against a person arising from any act of that person in furtherance of the persons 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." (Id., subd. (b)(1).) Its purpose is to encourage participation in matters of public significance by allowing a court to promptly dismiss unmeritorious actions or claims that are brought to chill anothers valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. (Id., subd. (a).) In furtherance of this purpose, the anti-SLAPP statute is to be construed broadly. (Ibid.; Ketchum v. Moses (2001) 24 Cal.4th 1122, 1130.)
A defendant bringing an anti-SLAPP motion to strike must make a prima facie showing that the plaintiffs suit is subject to section 425.16, i.e., that the defendants challenged acts were taken in furtherance of his constitutional rights of petition or free speech in connection with a public issue. (Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 820, disapproved on other grounds by Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68, fn. 5.) If the defendant makes such a showing, the burden shifts to the plaintiff to demonstrate, by admissible and competent evidence, a reasonable probability that it will prevail on the merits at trial. ( § 425.16, subd. (b)(1); DuPont Merck Pharmaceutical Co. v. Superior Court (2000) 78 Cal.App.4th 562, 567- 568.)
In reviewing an anti-SLAPP motion, a court must consider the pleadings and the evidence submitted by the parties ( § 425.16, subd. (b)(2)); however, it cannot weigh the evidence, but instead must simply determine whether the respective partys evidence is sufficient to meet its burden of proof. (Mattel, Inc. v. Luce, Forward, Hamilton & Scripps (2002) 99 Cal.App.4th 1179, 1188.) On appeal, we independently review the trial courts ruling on the motion to strike. (Foothills Townhome Assn. v. Christiansen (1998) 65 Cal.App.4th 688, 695, disapproved on other grounds by Equilon Enterprises v. Consumer Cause, Inc.,supra, 29 Cal.4th at p. 68, fn. 5.)
The issue of whether a cause of action for malicious prosecution is subject to a special motion to strike under the anti-SLAPP statute is currently pending review in the California Supreme Court. (See Jarrow Formulas, Inc. v. La Marche (2002) 97 Cal.App.4th 1, rev. granted Jun. 12, 2002 (S106503); Stroock & Stroock & Lavan v. Tendler (2002) 102 Cal.App.4th 318, rev. granted Jan. 15, 2003 (S111188).) However, although Kohne argues that this case is not within the purview of what the Legislature originally adopted section 425.16 to address, he does not cite any authority or make any specific argument as to why the anti-SLAPP statute is inapplicable here. In fact, he essentially concedes that Amoco has met "the minimal required showing" and that the action "apparently falls within the letter of the statute, even if it offends the spirit," and instead focuses his appellate challenge on the issue of whether he has established a probability of success on the merits, as necessary to support a denial of the motion to strike. We limit our discussion accordingly.
To establish a claim for malicious prosecution, the plaintiff must demonstrate in part that the prior action was commenced by or at the direction of the defendant, without probable cause. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871, 254 Cal. Rptr. 336, 765 P.2d 498.) A plaintiff has probable cause to bring a civil action if his claim is legally tenable, as determined on an objective basis. (Roberts v. Sentry Life Insurance (1999) 76 Cal.App.4th 375, 382 (Roberts).) The probable cause issue presents a question of law and requires a determination of whether any reasonable attorney would have considered the action legally tenable in light of the facts known at the time the suit was filed. (Wilson, supra, 28 Cal.4th at p. 822, fn. 6; Swat-Fame, Inc. v. Goldstein (2002) 101 Cal.App.4th 613, 624.) Where the evidence is conflicting on what the defendant knew (or whether the defendant knew that the factual allegations underlying its claims were untrue), the traditional rule has been that the jury must resolve this conflict before the trial court can determine whether probable cause existed. (Sheldon Appel Co. v. Albert & Oliker ,supra, 47 Cal.3d at p. 881.)
Amoco argues that the denial of Kohnes motions for summary judgment, for judgment as a matter of law and for directed verdict in the patent action establishes the existence of probable cause as a matter of law, citing the analysis of the Supreme Court in Wilson and of the appellate court in Roberts. Roberts holds that the denial of a defense motion for summary judgment based on the existence of a triable issue of fact generally establishes probable cause so as to defeat a later malicious prosecution action, absent a showing that the ruling on the motion was obtained by false evidence. (Roberts, supra, 76 Cal.App.4th at pp. 384-385.) The California Supreme Courts decision in Wilson similarly holds that a trial courts denial of an anti-SLAPP motion to strike in the underlying action, on the ground that the plaintiff showed a probability of prevailing on his claims, establishes that there was probable cause to bring the underlying action unless the prior ruling was obtained by fraud or perjury. (Wilson, supra, 28 Cal.4th at p. 820; see also Sierra Club Foundation v. Graham (1999) 72 Cal.App.4th 1135, 1154.)
Kohne contends that the bright-line rule set forth in Wilson and Roberts cannot be applied in a case such as this, where there is a specific contention that the underlying plaintiff (or, in this case, Amoco) knew, at the time the underlying action was filed, that the facts on which the action was based were false. Kohnes argument has facial appeal because it is difficult to strictly reconcile the analysis of Wilson and Roberts with the requirement that probable cause is to be determined based on the facts known to the litigant or attorney at the time the action was brought (Sheldon Appel Co. v. Albert & Oliker,supra , 47 Cal.3d at pp. 878-881). The difficulty arises because, except possibly in the case of anti-SLAPP motions, the pretrial motions relied on as establishing probable cause generally do not reflect the state of the evidence (and thus the facts) known to the plaintiff or its attorneys at the time the action was filed. (See Wilson,supra, 28 Cal.4th at p. 822, fn. 6.)
This divergence is particularly pronounced in this case because in our prior opinion we concluded that the evidence in the record creates a triable issue of fact as to whether Amoco knew, at filing, that the factual allegations on which the underlying action was based were untrue. However, we read Wilson to establish a bright-line rule that probable cause is deemed to exist, even in the absence of evidence of the facts the malicious prosecution defendant and/or its counsel knew at the time the underlying action was filed, when the trial court denies on the merits a defense motion for summary judgment (or other potentially dispositive motion) in the underlying action. (See Downey Venture v. LMI Ins. Co. (1998) 66 Cal. App. 4th 478, 498 [evaluation of the legal tenability of an action for purposes of determining probable cause is based either on the facts known at the time the underlying action was filed or on subsequent events in the underlying action demonstrating that the action was objectively tenable].)
In Wilson the high court acknowledged decisions in California and elsewhere holding that a judgment or verdict in an underlying action establishes probable cause even though the judgment or verdict is later overturned. Although the Wilson opinion did not specifically acknowledge that such cases essentially altered the traditional rule requiring probable cause to be determined based on the facts known to the underlying plaintiff at the time the action was filed, it did conclude that such a result is appropriate because "claims that have succeeded at a hearing on the merits, even if that result is subsequently reversed by the trial or appellate court, are not so lacking in potential merit that a reasonable attorney or litigant would necessarily have recognized their frivolousness." (Wilson, supra, 28 Cal.4th at p. 818.)
Wilson also states "[a] trial courts conclusion that issues of material fact remain for trial `necessarily implies that the judge finds at least some merit in the claim. The claimant may win, if certain material facts are decided favorably. This finding (unless disregarded) compels [the] conclusion that there is probable cause, because probable cause is lacking only in the total absence of merit. [Citation.] Giving effect to this conclusion `serves the policy . . . to discourage dubious malicious prosecution suits." (Wilson, supra, 28 Cal.App.4th at p. 819.) Wilson agreed with the conclusion in Roberts that "just as a trial victory by the underlying plaintiff `shows that the suit was not among the least meritorious of meritless suits, those which are totally meritless and thus lack probable cause, so too `denial of a defendants summary judgment motion provides similarly persuasive evidence that a suit does not totally lack merit." (Wilson, at p. 819, quoting Roberts, supra, 76 Cal.App.4th at p. 383.)
For the same reasons, the high court concluded that the denial of a special motion to strike in the underlying action establishes probable cause for the action unless the ruling was obtained by fraud or perjury. It reasoned that "the rights of litigants and attorneys to bring nonfrivolous civil actions, `"even [those that] it is extremely unlikely . . . they will win" [citation], would be unduly burdened were they exposed to tort liability for malicious prosecution for actions that had been found potentially meritorious under section 425.16." (Wilson, supra, 28 Cal.4th at p. 820.)
Applying the analysis of Wilson here, we conclude that the denial of Kohnes various substantive motions in the patent action establishes that there was probable cause for the Regents to file, and for Amoco to encourage, the underlying action unless Kohne can show that the rulings on those motions were obtained by fraud or perjury. He attempts to invoke this exception to the Wilson rule by arguing that Amoco "knowingly [sponsored] false evidence" in the patent action. In making this argument, however, Kohne again focuses on evidence of what Amoco may have known at the time the Regents filed the patent action. This focus is misplaced, however, because the relevant consideration underlying the Wilson exception is whether any of the Regents evidence submitted in opposition to his motions for summary judgment was fraudulent or perjurious, a showing that Kohne has not made.
Kohne makes no attempt to challenge the validity of the documentary evidence on which the district court relied in denying his motion for summary judgment, but rather argues that the documents were insufficient as a matter of law to create a triable issue of fact that Stanbridge was a co-inventor of the patented methods. Further, although he does challenge Stanbridges declaration, he does not cite evidence that proves the declaration false.
For example, Kohne cites Stanbridges declaration that the two men conceived of the invention that resulted in the 330 and 611 patents while working together from November 1974 to May 1975, and suggests that this establishes lack of probable cause in light of Stanbridges "admission" that he did not start working for the Regents until August 1975. However, this contention is belied by Stanbridges additional statement that he continued to work on the development of the invention after he began working for the Regents.
Kohne also suggests that Stanbridges conduct was inconsistent with having a claim to the patented inventions, specifically that Stanbridge (1) did not tell anyone that he thought he had rights under the patents and did not even believe he had any such rights until Amoco convinced him otherwise; (2) did not comply with the Regents disclosure obligations relating to the invention until 1993, more than 18 years after he began working with Kohne; and (3) purported to orally modify his notes relating to his work with Kohne, also in 1993. However, these facts do not establish that Stanbridges statements made in opposition to the underlying motion for summary judgment were fraudulent or perjured.
Kohne also attempts to avoid the impact of Wilson by arguing that this courts prior decision is law of the case and thus cannot or should not be revisited. Under the law of the case doctrine, "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." (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 301, 253 Cal. Rptr. 97, 763 P.2d 948; People v. Shuey (1975) 13 Cal.3d 835, 841, 120 Cal. Rptr. 83, 533 P.2d 211.) The doctrine promotes finality by preventing relitigation of issues previously decided. (George Arakelian Farms, Inc. v. Agricultural Labor Relations Bd. (1989) 49 Cal.3d 1279, 1291.) It does not apply to points of law that might have been, but were not, decided in the prior appeal (Nally v. Grace Community Church,supra , at p. 302), but does extend to questions that were implicitly determined as essential to the prior decision (Estate of Horman (1971) 5 Cal.3d 62, 73, 95 Cal. Rptr. 433, 485 P.2d 785).
The law of the case doctrine is one of procedure rather than jurisdiction and can be disregarded (Searle v. Allstate Life Ins. Co. (1985) 38 Cal.3d 425, 435, 212 Cal. Rptr. 466, 696 P.2d 1308), most notably where there is an intervening or contemporaneous change in the law (Clemente v. State of California (1985) 40 Cal.3d 202, 212, 219 Cal. Rptr. 445, 707 P.2d 818). Such is the case here. In Wilson, the Supreme Court clarified that, notwithstanding its earlier opinions holding that probable cause is to be determined based on the facts known at the time the underlying action was filed, subsequent events in that action may nonetheless demonstrate that the prior action was objectively tenable. This intervening clarification of the law renders the law of the case doctrine inapplicable here.
Kohne also contends that, even if the denial of the prior motions establishes probable cause as to the Regents declaratory relief cause of action against him, it does not establish probable cause as to the Regents other claims as to which his motions were successful. It is true that in cases where the underlying litigation involves multiple causes of action, the plaintiff may maintain a malicious prosecution action if any one of the claims asserted against it lacks probable cause. (Crowley v. Katleman (1994) 8 Cal.4th 666, 679, 881 P.2d 1083; Videotape Plus, Inc. v. Lyons (2001) 89 Cal.App.4th 156, 161.) However, the mere fact that the district court found three of the Regents four causes of action unmeritorious is not sufficient to meet Kohnes burden; to prevail, Kohne must make a prima facie showing that the underlying claims were frivolous rather than merely lacking in merit. (See Wilson,supra , 28 Cal.4th at p. 817 [standard of probable cause to bring a civil suit is equivalent to that for determining the frivolousness of an appeal, so as to avoid chilling the assertion of "novel or debatable legal claims"].) He did not meet this burden.
Kohne correctly points out that, absent agreement to the contrary, each co-owner of a United States patent is free to make, use, offer to sell, and sell the patented invention without regard to the wishes of any other co-owner. (35 U.S.C. § 262.) However, he has not established that the Regents claims for conversion, unjust enrichment and unfair competition were contrary to well- established law or otherwise frivolous. "Attorneys and litigants . . . "have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win . . . ."" (Wilson, supra, 28 Cal.4th at p. 817.) Only those claims that any reasonable attorney would agree are totally and completely without merit may form the basis for a malicious prosecution suit. (Ibid.) Although the Regents assertion of damage claims against Kohne may have been inventive or based on aggressive applications of existing authorities, this is not sufficient to establish a prima facie case that Amoco lacked probable cause in encouraging and facilitating the Regents filing of the patent action.
Because Kohne has not shown that the underlying rulings denying his motions seeking dismissal of the Regents declaratory judgment claim were fraudulently obtained, nor made a prima facie showing that the Regents remaining claims (as to which his motions were successful) were totally and completely without merit, he has not met his burden to establish a probability of success on the merits of his claim. Accordingly, the trial court erred in denying Amocos anti-SLAPP motion.
DISPOSITION
The order denying Amocos special motion to strike Kohnes third amended complaint is reversed and the matter is remanded with directions for the trial court to enter a new order granting that motion and to conduct further proceedings, if necessary. Amoco is entitled to its costs of appeal.
WE CONCUR: NARES, Acting P. J., MCDONALD, J.