Opinion
C084499
07-25-2018
DUANE LAW, Plaintiff and Respondent, v. DEPARTMENT OF DEVELOPMENTAL SERVICES, Defendant and Appellant.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 34201600194451CUBTGDS)
Plaintiff Duane Law filed a complaint against defendant California Department of Developmental Services (Department) for intentional interference with Law's written employment contract with the Kern Regional Center (Center), where he served as the Center's chief executive officer. Law's claim arises from an e-mail sent by the Department's chief counsel, Hiran Patel, to the Center's counsel demanding the Center immediately terminate Law's employment contract or the Department would move to terminate its contract with the Center, remove the entire board of directors, and install interim leadership for the Center (Patel e-mail). Consequently, the Center terminated Law's contract and this litigation followed.
The Department filed a special motion to strike the complaint under Code of Civil Procedure section 425.16, commonly known as an anti-SLAPP (strategic lawsuit against public participation) motion. The trial court denied the motion, finding the Department failed to meet the first prong of the two-step analysis, i.e., to trigger anti-SLAPP protection, the moving party has the initial burden to show the plaintiff alleges constitutionally protected activity and the claim arises from that activity. (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1062-1063.)
All further section references are to the Code of Civil Procedure unless otherwise stated.
The parties agree the pertinent question is whether the Department met its burden of showing its demand that the Center terminate Law's employment, as stated in the Patel e-mail, constitutes protected speech for purposes of the anti-SLAPP motion. (Park v. Board of Trustees of California State University, supra, 2 Cal.5th at p. 1063 [" 'The only means specified in section 425.16 by which a moving defendant can satisfy the ["arising from"] requirement is to demonstrate that the defendant's conduct by which plaintiff claims to have been injured falls within one of the four categories described in [the statute]' "].) Our de novo review of the record reveals the Department did not meet its burden. Accordingly, we affirm.
Because we conclude the trial court correctly determined the Department did not satisfy its burden under the first prong of the anti-SLAPP statute, we do not address the potential merits under the second prong.
GENERAL BACKGROUND
To assist in a better understanding of the factual and procedural background of the case and the discussion that follows, we begin with the general background of the anti- SLAPP statutory framework and the Lanterman Developmental Disabilities Services Act (Act), which underscores the relationship between the Department and the Center.
I
Anti-SLAPP Statutory Framework
The anti-SLAPP statute "provides a procedure for weeding out, at an early stage, meritless claims arising from protected activity." (Baral v. Schnitt (2016) 1 Cal.5th 376, 384.) The statute applies to "cause[s] 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 Constitution or the California Constitution in connection with a public issue." (§ 425.16, subd. (b)(1), italics added.) It applies to public officials and entities, and causes of action alleging intentional interference with contract relations. (Vargas v. City of Salinas (2009) 46 Cal.4th 1, 17-19; GeneThera, Inc. v. Troy & Gould Professional Corp. (2009) 171 Cal.App.4th 901, 907-908.)
As used in the statutory scheme, " 'act in furtherance of a person's right of petition or free speech under the United States or California Constitution 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, (2) 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, (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest." (§ 425.16, subd. (e).)
A special motion to strike involves a two-step process. "First, the defendant must establish that the challenged claim arises from activity protected by section 425.16." (Baral v. Schnitt, supra, 1 Cal.5th at p. 384.) "[T]he moving defendant bears the burden of identifying all allegations of protected activity." (Id. at p. 396.) To be subject to the anti-SLAPP statute, "the prior protected activity [must] supply elements of the challenged claim." (Park v. Board of Trustees of California State University, supra, 2 Cal.5th at p. 1064.) "[A] claim may be struck only if the speech or petitioning activity itself is the wrong complained of, and not just evidence of liability or a step leading to some different act for which liability is asserted." (Id. at p. 1060.) When the court takes the first step to determine whether the plaintiff's claim arises from the defendant's protected activity, it does not consider the merits of the plaintiff's claim. (City of Costa Mesa v. D'Alessio Investments, LLC (2013) 214 Cal.App.4th 358, 371.) If the defendant does not meet its burden on the first step, the court should deny the motion and need not address the second step. (City of Riverside v. Stansbury (2007) 155 Cal.App.4th 1582, 1594.)
"If the defendant makes the required showing [under the first step], the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success." (Baral v. Schnitt, supra, 1 Cal.5th at p. 384.) The plaintiff must do so with admissible evidence. (Kreeger v. Wanland (2006) 141 Cal.App.4th 826, 831.) This second step has been described as a "summary-judgment-like procedure." (Taus v. Loftus (2007) 40 Cal.4th 683, 714.) The "inquiry is limited to whether the plaintiff has stated a legally sufficient claim and made a prima facie factual showing sufficient to sustain a favorable judgment." (Baral, at pp. 384-385.) "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." (Navellier v. Sletten (2002) 29 Cal.4th 82, 89.)
II
The Lanterman Developmental Disabilities Services Act
The Legislature enacted the Act in 1977, stating "California accepts a responsibility for persons with developmental disabilities and an obligation to them which it must discharge." (Welf. & Inst. Code, §§ 4500, 4501.) To implement the Act, the Legislature fashioned a system in which both state agencies and private entities have functions.
Broadly, the Department "has jurisdiction over the execution of the laws relating to the care, custody, and treatment of developmentally disabled persons" (Welf. & Inst. Code, § 4416), while "regional centers," operated by private nonprofit corporations under contract with the Department, are charged with providing developmentally disabled persons with "access to the services and supports best suited to them throughout their lifetime" (id. at §§ 4620, 4621). Thus, the regional centers provide services that enable each developmentally disabled person to live a more independent and productive life in the community (see id. at §§ 4620, 4646-4648); whereas, the Department's role is limited to promoting uniformity among and cost-effectiveness of the operations of the regional centers. For example, the Department is responsible for developing uniform systems of accounting, budgeting, and reporting (id. at § 4631, subd. (a)), negotiating contract obligations to be performed by the regional centers (id. at §§ 4631, 4633), setting rates for out-of-home care (id. at §§ 4681.1-4684), and processing, auditing, and paying funds to the regional centers (id. at § 4780.5).
The Department does not have authority to control how the regional centers provide services or generally operate their programs. (Association for Retarded Citizens v. Department of Developmental Services (1985) 38 Cal.3d 384, 389-390; 64 Ops.Cal.Atty.Gen. 910, 916 (1981); 62 Ops.Cal.Atty.Gen. 229, 230-231 (1979).) In other words, "the Department has no general authority to control the operations of the regional centers through contract provisions negotiated under [the Act], although specific statutory exceptions authorize Department contractual control in limited areas." (62 Ops.Cal.Atty.Gen., at p. 233.) For example, "[i]n the area of the staffing of the regional centers, the Department may not generally control the centers' hiring practices." (Id. at p. 232.) Two areas in which the Department may exercise contractual control as part of its statutory duties are conflicts of interest (Welf. & Inst. Code, §§ 4626-4627) and compliance with state and federal nondiscrimination and equal opportunity laws (Gov. Code, §§ 11135-11139.5). (62 Ops.Cal.Atty.Gen., at p. 232.)
However, see Welfare and Institutions Code section 4640.6, effective January 1, 2015, providing the Department with some limited contractual responsibilities relating to regional center staffing. (Stats. 2004, ch. 409, § 43.)
"If the [D]epartment finds that any regional center is not fulfilling its contractual obligations, the [D]epartment shall make reasonable efforts to resolve the problem within a reasonable period of time with the cooperation of the regional center . . . ." (Welf. & Inst. Code, § 4635, subd. (b)(1).) If those efforts are unsuccessful, the Department shall issue a letter of noncompliance stating the noncompliant activities and establishing a specific timeline for the development and implementation of a corrective action plan. (Id. at subd. (b)(2).) The Department shall approve the plan and monitor its implementation. (Ibid.)
If, however, the Department finds a regional center "continues to fail in fulfilling its contractual obligations after reasonable efforts have been made, and finds that other regional centers are able to fulfill similar obligations under similar contracts, and finds that it will be in the best interest of the persons being served by the regional center, the [D]epartment shall take steps to terminate the contract and to negotiate with another governing board to provide regional center services in the area." (Welf. & Inst. Code, § 4635, subd. (c).) A decision to cancel or not renew a regional center's contract is subject to various steps, including a 90-day written notice of decision. (Id., subd. (d).) Welfare and Institutions Code sections 4635 and 4636 further provide procedures and impose requirements to avoid or minimize disruption of services, if a contract is canceled.
FACTUAL AND PROCEDURAL BACKGROUND
I
The Allegations
The Center is one of the 21 California nonprofit regional centers under contract with the Department to provide and coordinate services for individuals with developmental disabilities under the Act. Law entered into a written employment contract with the Center in March 2012 to serve as its chief executive officer. The contract was extended in 2014 through June 30, 2019.
Shortly after Law joined the Center, he learned of various improprieties that occurred under his predecessor's management. Law and other members of the Center's management team met with the Department in June 2013 to discuss Law's concerns and a special investigation followed. The results of the investigation were submitted to the Department's management around July 2014, which the Department did not release. Law pushed the Department to release the audit findings and recommendations, and enlisted the help of Senator Jean Fuller in that regard. On April 15, 2015, after Law met with Fuller's staff, the Department released its findings and recommendations in a letter addressed to Law and the Center's board president (management letter).
While the management letter contained a detailed discussion of the issues and questionable activities that occurred during the tenure of the Center's prior executive management, it also raised a few ongoing concerns under Law's leadership. Specifically, the Department expressed concern "that the [Center's] Board remain[ed] the sole corporate member of [another] Board in direct conflict with the April 2013 written direction provided by [the Department] to the current [Center] Board President and the Chief Executive Officer to take immediate action to remedy this issue" and that the Center "has failed to remedy this very serious issue despite [the Department's] clear written directive that was provided over a year and a half ago." The second ongoing concern was the Center's use of certain funds deposited into "an off-the-books account," referred to as the "Special Project Fund," to pay portions of the Center's operational expenses. Such funds should have reverted back to the state as required by the Budget Act.
Under a section entitled "Recommendations," the Department outlined 12 specific items the Center, its board, and chief executive officer were required to implement. The board needed to increase oversight of the chief executive officer, management, and staff, and understand documents before signing them; the board and chief executive officer needed to participate in Department-approved training on ethics and conflicts of interest; and the Center needed to establish an adequate system of internal controls, renegotiate a lease agreement, terminate its sole corporate membership on another board as outlined in the Department's prior directive, cease use of a specific vendor's service, remit all funds in the "Special Project Fund" to the Department with a full accounting of the funds received and expended, assign different employees to approve vendors, review turnaround invoices, and authorize payments, implement a strong whistleblower policy, review and amend vendor contracts as needed, and have an independent, qualified pension professional review the current pension plan.
The Center had to "submit a corrective action plan to [the Department] within 60 days of the date of th[e] Management Letter to address each of the above recommendations, including the specific corrective actions already taken and describing the plans with timeframes, [the Center] w[ould] undertake to address those items not fully corrected." Thus, the corrective action plan had to be submitted by June 15, 2015.
On May 14, 2015, Patel sent an e-mail to the Center's counsel, Gary Ray, asking whether the Center would be terminating Law's employment the next day. Ray responded that the board would be considering the issue of termination and asked Patel to confirm his understanding that: "1. [The Department] has lost all confidence in Mr. Law's continued ability to lead [the Center]. [¶] 2. In order to retain the contract for services between [the Center] and [the Department], [the Center] is required to terminate Mr. Law's employment agreement. [¶] 3. If Mr. Law's employment agreement with [the Center] is not terminated at the Special Meeting of the Board of Directors of [the Center] held on May 15, 2015, [the Department] will take immediate steps to terminate its contract with [the Center]." Ray requested this confirmation to "completely understand the position of [the Department] regarding [Law's] employment agreement, and so [Ray] [could] accurately communicate that position to the [Center's] Board members." Ray further noted the employment agreement required a 60-day written notice prior to the termination date.
Patel responded, "[t]he answer is 'yes,' to each of your three questions below." He continued: "If Mr. Law is not terminated tonight, [the Department] will move to terminate the contract, remove the entire current board of directors, and promptly install interim leadership for [the Center]. If Mr. Law is terminated tonight, we would urge the [the Center's] board to take steps to immediately remove him from his position. Waiting for 60 days before Mr. Law relinquishes his duties is completely unacceptable. If the board were to permit Mr. Law to linger for 60 days, [the Department] would still immediately move to terminate the contract and remove the entire current board. Once Mr. Law is removed, [the Department] intends to recommend interim leadership for [the Center] to ensure continuity of services for its consumers, and bring stability to the organization."
On May 21, 2015, the Center delivered a letter to Law notifying him that the board voted to terminate his employment contract without cause. Law alleges "his efforts to expose and remediate the misconduct of his predecessor antagonized [the Department] officials . . . so that they began pressuring the [Center] Board of Directors to terminate [his] contract." The board did not want to terminate Law's employment. Law believes his termination was "a consequence of the threats and ultimatums delivered by Mr. Patel, at the direction of his superiors" in his May 15, 2015 e-mail. Law claims these superiors sought to eject him from the Center due to the Department director's close personal friendship with Law's predecessor.
Law sued for one cause of action -- intentional interference with contractual relations. Law claimed the Department committed intentional acts to induce the Center to breach or disrupt the contractual relationship.
II
The Motion
The Department filed an anti-SLAPP motion arguing the conduct alleged in the complaint occurred in connection with an official proceeding under section 425.16, subdivision (e)(2), and concerned an issue of public interest under section 425.16, subdivision (e)(4). The Department relied exclusively on the allegations in the complaint and the attached exhibits; it introduced no additional evidence in support of its motion.
The Department's argument regarding the application of section 425.16, subdivision (e)(2), consisted of one page. The Department argued the Patel e-mail "was made in connection with [Department] proceedings specifically authorized under the [Act] relative to cancellation of the [Center] contract with [the Department] due to [the Center's] failure to comply with statutory requirements and take corrective action as indicated in the audit and Management Letter." Specifically, the Department relied on various Welfare and Institutions Code sections "giv[ing] [the Department] broad discretionary authority to take necessary action to ensure that regional centers meet their statutory, regulatory and contractual obligations." The Department argued it is "authorized to initiate action to cancel a regional center contract" under Welfare and Institutions Code section 4635.
Similarly, the Department's argument regarding the application of section 425.16, subdivision (e)(4), consisted of less than one page. The Department argued Welfare and Institutions Code section 4501, which states "California accepts a responsibility for persons with developmental disabilities and an obligation to them which it must discharge," supported a finding that the Patel e-mail concerned an issue of public interest because it "was made in furtherance of enforcing the [Act]" by "indicating that [the Department] had lost all confidence in Mr. Law's continued ability to lead [the Center] due to the failure to correct the issues raised in the audit."
The remainder of the Department's motion focused on its argument that Law could not meet his burden of showing a probability of success on the merits because: 1) the complaint "fail[ed] to state a cause of action for interference with contractual relations because the conduct by [the Department] was justified pursuant to broad discretionary statutory authority under the [Act]"; and 2) "[Department] officials are also immune" under sections of the Civil Code and Government Code.
Law opposed the motion, responding "there was no evidence that any 'proceeding' was either contemplated or underway to seek plaintiff's removal as Chief Executive Officer of [the Center]," there was no evidence that Law's continued employment "was 'an issue under review' by [the Department]," the Department has no authority to dictate who serves as the chief executive officer, and the Department's interference in the Center's internal governance was a violation of the Act. Law further emphasized that his complaint was based on the Patel e-mail and not the audit. Law introduced three declarations in support of his opposition: his own (attaching a letter of recommendation from Steve Esselman, the vice president of the Center's board at the time of Law's termination), a declaration by Susan Lara (the president of the Center's board from 2008 through May 5, 2015), and a declaration by Frank Meyer (a member of the Center's board when Law's employment was terminated).
Both Lara and Meyer declared the Center's board did not want to terminate Law's employment contract. Lara said that "[w]ithin days of the Management Letter, the Board was informed . . . [the Department] threatened to cut off [the Center's] contract/funding . . . unless [it] terminated Mr. Law's contract. No one from [the Department] ever gave a specific, concrete reason for its threat. In particular, no one from [the Department] ever communicated that its threats were due to [the Center's] failure to comply with statutory requirements, or take corrective action as indicated in the audit and Management Letter. . . . It was only after [the Department] was forced to release the audit results which it had suppressed for well over a year that it demanded Mr. Law be fired." Lara further declared she believes "that [the Department] demanded Mr. Laws's [sic] termination in retaliation for embarrassing its top officials and forcing the public release of the audit results."
Meyer declared, "[a]t no time from the completion of the investigation in December, 2013 until after release of the Management Letter in April, 2015 did anyone from [the Department] ever request or demand that Mr. Law be terminated from his position" and "[i]t was only after the Management Letter was released that [the Department] began to insist that Mr. Law be fired." He further declared the Department never told the Center it was out of compliance with its statutory obligations, or that Law's termination was necessary for compliance with the Act. He acknowledged that the Center was "informed that [the Department] had 'lost all confidence' in Mr. Law," however, "[the Department] never said that it was due to his failure to correct the issues raised in the audit or the Management Letter."
In its reply, the Department relied on the audit report attached to its request for judicial notice filed in support of its reply. The Department argued the audit report demonstrated the audit findings were discussed with the Center in 2014, and that the "chronology of the audit process" as shown by the audit report refuted Law's position. The Department further argued the Patel e-mail was used "as a means to avoid formal contract termination proceedings [and] is covered by [section] 425.16" and the "chronology is consistent with the procedure outlined in [Welfare and Institutions Code section] 4635[, subdivision] (b) with the next step being proceeding to contract termination proceedings under [section] 4635[, subdivisions] (c) and (d)." It advanced that the "undisputed chronology makes clear that the conduct at issue was action taken in furtherance of efforts by [the Department] to get [the Center] to correct ongoing violations of the [Act]." The Department did not introduce any declarations or other evidence in support of its reply.
III
The Decision
The court denied the Department's request for judicial notice as untimely because it contained purported evidence supporting its motion, which had to be included with the moving papers. The court also denied the Department's anti-SLAPP motion.
The Department does not challenge this ruling.
The court identified "[t]he conduct that [gave] rise to the Complaint [as] the email sent to [the Center] stating that if they did not terminate plaintiff their funding would be pulled." The court found the Patel e-mail did not fall within the parameters of section 425.16, subdivision (e)(2). The Department failed to present "any evidence that the email sent to [the Center] was part of an official proceeding to terminate the plaintiff" under Welfare and Institutions Code section 4635 because "that section concerns the procedure to follow in cancelling a regional center contract" and not "the procedure used in terminating a [chief executive officer] of a regional center." The Department further did not present "admissible evidence in the form of declarations that establishes that the email sent by [the Department's] counsel to [the Center] was made in connection with official [Department] proceedings specifically authorized under the [Act]."
The court also found the Patel e-mail did not fall within the parameters of section 425.16, subdivision (e)(4). The Department "failed to submit any evidence to support its contention that the email from [the Department's] counsel was made in connection with a public issue or an issue of public importance." Specifically, the Department "presented no evidence that the subject email sent by [the Department's] counsel to [the Center] was because [the Department] had lost all confidence in Mr. Law's continued ability to lead [the Center] due to the failure to correct the issues raised in the audit." "No declaration of any [Department] employees [wa]s submitted to support this contention, nor that the email concerned an issue of public interest or that it was sent in furtherance of enforcing the [Act]."
The court did not address the second step in the anti-SLAPP analysis because it found the Department failed to meet its burden under the first step.
DISCUSSION
The Department maintains the court erred in denying its motion because the court improperly regarded the exhibits to the complaint as hearsay rather than accepting the facts appearing therein as true, and the court "incorrectly held that the subject communication must have been part of an official proceeding contrary to clear case law holding that communications preparatory to or in anticipation of a potential proceeding are also covered by the anti-SLAPP statute." The Department further argues the facts and allegations in the complaint and accompanying exhibits "clearly show" the Patel e-mail was made in connection with potential contract termination proceedings, was preparatory to and in anticipation of an official proceeding, and concerned an issue of public interest.
"On appeal, we review the trial court's decision de novo, engaging in the same two-step process to determine, as a matter of law, whether the defendant met its initial burden of showing the action is a SLAPP, and if so, whether the plaintiff met its evidentiary burden on the second step." (Tuszynska v. Cunningham (2011) 199 Cal.App.4th 257, 266-267, overruled on other grounds in Park v. Board of Trustees of California State University, supra, 2 Cal.5th at p. 1071.) We " 'conduct[] an independent review of the entire record.' " (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 672.) "[O]ur analysis proceeds independently of the trial court's reasoning"; we review the "validity of the trial court's action rather than its reasons." (Sanowicz v. Bacal (2015) 234 Cal.App.4th 1027, 1034, fn. 5.)
"In deciding whether the initial 'arising from' requirement is met, a court considers 'the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based' " (Navellier v. Sletten, supra, 29 Cal.4th at p. 89, quoting § 425.16, subd. (b)), but "we neither 'weigh credibility [nor] compare the weight of the evidence' " (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3). The court accepts the plaintiff's evidence as true for purposes of analyzing whether the plaintiff's claim arose from protected activity. (Freeman v. Schack (2007) 154 Cal.App.4th 719, 733.)
Given the applicable standard of review is de novo, we do not address the Department's claims of error with regard to the trial court's reasoning. Our independent review of the record reveals the trial court correctly denied the Department's motion for failure to meet its burden under the first prong of the anti-SLAPP analysis.
I
The Patel E-mail Is Not A Protected Communication
Under Section 425.16, Subdivision (e)(2)
Conduct has protected status under section 425.16, subdivision (e)(2), if it is connected either to an issue under consideration or review by one of the three branches of government or to an official proceeding authorized by law. (Maranatha Corrections, LLC v. Department of Corrections & Rehabilitation (2008) 158 Cal.App.4th 1075, 1085.) As used in section 425.16, subdivision (e)(2), a matter is "under consideration" if it "is one kept 'before the mind', given 'attentive thought, reflection, meditation.' [Citation.] A matter under review is one subject to 'an inspection, examination.' " (Braun v. Chronicle Publishing Co. (1997) 52 Cal.App.4th 1036, 1049.) A writing in the form of an e-mail falls within the purview of section 425.16, subdivision (e)(2). (Contemporary Services Corp. v. Staff Pro Inc. (2007) 152 Cal.App.4th 1043, 1055.) The Department argues: (1) the Patel e-mail occurred in connection with an issue under consideration and review by the Department; and (2) the Patel e-mail occurred in connection with an official proceeding. Neither argument passes muster.
A
The Department Failed To Demonstrate The Communication Occurred In
Connection With An Issue Under Consideration Or Review By The Department
The Department argues the allegations in the complaint and attached exhibits identify Patel "as the Chief Counsel of [the Department] which is part of the executive branch of state government" and "clearly show that [the Center's] lack of compliance with the [Act] and plaintiff's failure to correct problems identified by [the Department] while he was [the Center's chief executive officer] was undoubtedly an issue under consideration and review by [the Department]." It further claims "[t]he chronology of [the Center's] ongoing lack of compliance going back to 2013, the issuance of the draft audit report in December, 2014, and the Management Letter in April, 2015, followed by the e-mail exchange between counsel a month later clearly shows a connection between the communication by [the Department's] Chief Counsel of the potential for contract termination proceedings and issues under consideration and review by [the Department]."
There is, however, no evidence to support the proposition that the issue of Law's employment was connected to the audit and the management letter, which were the issues under consideration and review by the Department. "It is axiomatic that argument is not evidence." (People v. Breaux (1991) 1 Cal.4th 281, 313.) When we consider " 'the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based' " (Navellier v. Sletten, supra, 29 Cal.4th at p. 89), it appears the 2013 compliance discussions and the 2014 audit findings culminated in the management letter. Indeed, the management letter outlined, addressed, and discussed the various audit findings. The management letter further identified 12 specific categories of corrective action items to be completed by the Center and gave the Center 60 days to prepare and submit a corrective action plan.
Two of the recommendations in the management letter dealt with the ongoing concerns under Law's leadership, upon which the Department relies in its attempt to bootstrap the Patel e-mail to the audit and audit findings -- the conflict of interest and special fund issues purportedly discussed with the Center and Law back in 2013. Specifically, in the management letter the Department mandated: (1) the board had to terminate its sole corporate membership on another board to resolve the conflict of interest issue outlined in the Department's 2013 directive; and (2) the board had to remit all funds in the "Special Project Fund" to the Department within 60 days of the management letter with a full accounting of the funds received and expended. Neither of these categories (nor the remaining ten categories) involved, discussed, or raised Law's employment at the Center.
Additionally, we note that nothing in the management letter indicates the Department intended to impose additional requirements on the Center beyond the 12 categories to avoid contract termination. And, nothing in the Patel e-mail indicates that it supplements the requirements in the management letter, or that the demand for Law's termination is connected to issues identified in the management letter. Further, the Patel e-mail demands immediate compliance with the termination demand whereas the Center still had approximately 30 days to respond to the management letter, indicating that the e-mail was wholly separate and independent from the audit and management letter.
It was the Department's burden to show the connection between the Patel e-mail and an issue under consideration by the Department. It failed to do so.
B
The Department Failed To Demonstrate The Communication
Occurred In Connection With An Official Proceeding
The Department argues the Patel e-mail "also involves a statement made in connection with an official proceeding authorized by law" because: 1) it amounted to a "settlement offer" and/or a "demand letter" sent preparatory to and in anticipation of a contract termination proceeding; and 2) it formed part of a contract termination proceeding under Welfare and Institutions Code section 4635. These arguments are unpersuasive.
First, the Department did not raise this argument -- that the Patel e-mail constituted a settlement offer or demand letter -- in the trial court. It is the general rule that " 'issues not raised in the trial court cannot be raised for the first time on appeal.' " (Sea & Sage Audubon Society, Inc. v. Planning Com. (1983) 34 Cal.3d 412, 417; see also Johnson v. Greenelsh (2009) 47 Cal.4th 598, 603.) As a related principle, " '[a] party is not permitted to change his [or her] position and adopt a new and different theory on appeal.' " (In re Marriage of Broderick (1989) 209 Cal.App.3d 489, 501.) Permitting consideration of new theories at the appellate level " 'would not only be unfair to the trial court, but manifestly unjust to the opposing litigant.' " (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1350, fn. 12; In re Marriage of Walker (2006) 138 Cal.App.4th 1408, 1418.) The principles that foreclose a party from raising issues for the first time on appeal are equally applicable in the context of reviewing special motions to strike under the anti-SLAPP statute. (See, e.g., Roger Cleveland Golf Co., Inc. v. Krane & Smith, APC (2014) 225 Cal.App.4th 660, 684 & fn. 11; Hunter v. CBS Broadcasting, Inc. (2013) 221 Cal.App.4th 1510, 1526; Bently Reserve L.P. v. Papaliolios (2013) 218 Cal.App.4th 418, 436.)
Second, while the Department spends half of a page arguing a regional center contract termination proceeding meets the definition of an "official proceeding," it fails to connect the dots as to how the Patel e-mail was a part of a contract termination proceeding. The Department merely concludes "[f]or these reasons, the communication of the potential for contract termination proceedings constitutes a communication made in connection with an official proceeding within the meaning of the anti-SLAPP statute." It does not, however, provide the purported "reasons" supporting its position. In the trial court, the Department argued the Patel e-mail was made in connection with the Center's "failure to comply with statutory requirements and take corrective action as indicated in the audit and Management Letter." As we explained above, however, the Department failed to support this position with evidence in the record.
The Patel e-mail itself also does not indicate that it forms part of a contract termination proceeding. Under Welfare and Institutions Code section 4635, subdivision (b)(1), the Department must make a "find[ing] that [the] regional center is not fulfilling its contract obligations" before it takes "reasonable efforts to resolve the problem within a reasonable period of time with the cooperation of the regional center." The Patel e-mail contains no mention or indication that the Center was not fulfilling its contract obligations and the Department introduced no evidence suggesting the e-mail arose out of such a finding. Additionally, Welfare and Institutions Code section 4635, subdivision (b)(2), requires the Department to issue a letter of noncompliance if efforts to resolve the problem are not successful. The Patel e-mail does not contain the necessary elements of a letter of noncompliance, i.e., "stat[ing] the noncompliant activities and establish[ing] a specific timeline for the development and implementation of a corrective action plan." The Patel e-mail further does not meet the notice of violation requirements of California Code of Regulations section 54535, subdivision (a), because the e-mail does not "inform the party or parties in writing of [a] violation, including the supporting facts or information upon which determination of violation was made" or "[r]equire that the party or parties take appropriate action, within 30 calendar days of the notice of violation." (Cal. Code Regs., tit. 17, § 54535, subd. (a)(1)-(2).)
This provision allows the Department to "take immediate action to commence procedures for termination or nonrenewal of the regional center contract pursuant to Welfare and Institutions Code section 4635" if the violation is not resolved or eliminated within 30 calendar days after the notice of violation is issued. (Cal. Code Regs., tit. 17, § 54535, subd. (b).)
Moreover, while it is true, as the Department contends, that conduct related to the investigation and gathering of evidence preparatory to, or in anticipation of, an official proceeding is subject to the statute (Dwight R. v. Christy B. (2013) 212 Cal.App.4th 697, 711), such communications are only protected if it is shown that litigation was seriously contemplated (Bel Air Internet, LLC v. Morales (2018) 20 Cal.App.5th 924, 941; People ex rel. Fire Ins. Exchange v. Anapol (2012) 211 Cal.App.4th 809, 824 [the good faith and serious consideration requirement "guarantees that hollow threats of litigation are not protected"]). "Thus, for example, when a cause of action arises from conduct that is a 'necessary prerequisite' to litigation, but will lead to litigation only if negotiations fail or contractual commitments are not honored, future litigation is merely theoretical rather than anticipated and the conduct is therefore not protected prelitigation activity." (Bel Air Internet, LLC, at p. 941.) Here, the Department did not introduce any evidence showing litigation was seriously contemplated.
Again, the Department failed to carry its burden of connecting the Patel e-mail to an official proceeding.
II
The Patel E-mail Is Not A Protected Communication
Under Section 425.16, Subdivision(e)(4)
Section 425.16, subdivision (e)(4), provides anti-SLAPP protection for "other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest." This protection "extends to government entities and employees that issue reports and take positions on issues of public interest relating to their official duties." (Santa Barbara County Coalition Against Automobile Subsidies v. Santa Barbara County Assn. of Governments (2008) 167 Cal.App.4th 1229, 1237-1238 & fn. 5.) The anti-SLAPP statute does not define "public issue" or "issue of public interest."
Although case law has not precisely defined the boundaries of these terms, courts have identified "three nonexclusive and sometimes overlapping categories of statements that have been given anti-SLAPP protection." (Cross v. Cooper (2011) 197 Cal.App.4th 357, 371, 373.) These statements "either concerned a person or entity in the public eye [citations], conduct that could directly affect a large number of people beyond the direct participants [citations] or a topic of widespread, public interest." (Rivero v. American Federation of State, County and Municipal Employees, AFL-CIO (2003) 105 Cal.App.4th 913, 924.) The Department did not and does not argue that the Patel e-mail involved any of the foregoing categories.
The Department instead argues that "[e]nsuring [the Center's] continued ability to provide services to persons with developmental [dis]abilities clearly concerns a public issue and constitutes an issue of public interest." It further maintains the Patel e-mail "was made in connection with a public issue or an issue of public interest" because it was "made in connection with the ongoing effort by [the Department] to get [the Center] to comply with its statutory, regulatory, and contractual obligations." The Department attempts to ground this argument in its "discretionary authority to enforce [its statutory, regulatory, and contractual obligations] by proceeding to terminate its contract with a regional center." The Department cites to only three cases in support of its argument -- one for the proposition that the definition of "public interest" should be broadly construed and two explaining private communications can fall under the anti-SLAPP statute if they concern a public issue. The Department again fails to carry its burden.
As stated above, our review of the complaint, the attached exhibits, and the declarations filed by Law do not show that Law's termination was an issue under consideration in a contract termination proceeding, or that it arose from the Center's failure to comply with its statutory, regulatory, and contractual obligations. The Department introduced no evidence connecting those dots. The Department's remaining argument -- its reliance on the broad public interest of ensuring services for persons with developmental disabilities -- does not carry the day. "The fact that 'a broad and amorphous public interest' can be connected to a specific dispute is not sufficient to meet the statutory requirements" of the anti-SLAPP statute. (Dyer v. Childress (2007) 147 Cal.App.4th 1273, 1280.) "In evaluating the first prong of the anti-SLAPP statute, we must focus on 'the specific nature of the speech rather than the generalities that might be abstracted from it.' " (World Financial Group, Inc. v. HBW Ins. & Financial Services, Inc. (2009) 172 Cal.App.4th 1561, 1570.)
Here, the specific nature of the speech was a demand that the Center terminate Law's employment agreement, it did not involve services to persons with developmental disabilities or the Center's statutory, regulatory, or contractual obligations. The Department does not argue that Law's continued employment as the chief executive officer was a public issue. Thus, the Department has not met its burden of showing the Patel e-mail was made in connection with a public issue or an issue of public interest.
DISPOSITION
The trial court's order denying the Department's anti-SLAPP motion is affirmed. Law shall recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
/s/_________
Robie, J. We concur: /s/_________
Hull, Acting P. J. /s/_________
Hoch, J.