Opinion
E077308
09-27-2022
EDWARD MIERAU, et al., Plaintiffs and Appellants, v. MICHAEL AMMERMON, Individually and as Auditor, etc., et al., Defendants and Respondents.
Pacheco & Neach, Rod Pacheco, Brian Neach, and Molly J. Magnuson for Plaintiffs and Appellants. Tyson & Mendes, Andrew L. Smith and Scott M. Nenni for Defendants and Respondents.
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County No. CVRI2000726. L. Jackson Lucky IV, Judge. Affirmed.
Pacheco & Neach, Rod Pacheco, Brian Neach, and Molly J. Magnuson for Plaintiffs and Appellants.
Tyson & Mendes, Andrew L. Smith and Scott M. Nenni for Defendants and Respondents.
OPINION
FIELDS J.
I. INTRODUCTION
In December 2020, plaintiffs and appellants, Edward Mierau and Neff Construction LLC (Neff), filed a complaint alleging a first cause of action for civil rights violations (42 U.S.C. § 1983) (section 1983) against defendants and respondents, Michael Ammermon and Michael Fine. In a second cause of action, plaintiffs allege a Monell claim against defendant and respondent, the "Fiscal Crisis and Management Assistance Team" (FCMAT), a governmental entity that provides auditing services to school districts. (See Ed. Code, § 1241.5, subd. (b).) Fine was the chief executive officer (CEO) of FCMAT, and Ammermon, a certified public accountant, was a FCMAT employee.
Monell v. Dep't of Soc. Servs. (1978) 436 U.S. 658 (Monell).
Concerning their section 1983 claims, plaintiffs allege defendants "conspired" and "colluded" with law enforcement agencies, including the Riverside County Sheriff's Office (RSO) and Riverside County District Attorney's Office (RIVCODA), to "intentionally" deprive plaintiffs of plaintiffs' First, Fourth, Fifth, Sixth, and Fourteenth Amendment rights. Concerning their Monell claim, plaintiffs allege FCMAT "tolerated and encouraged a clear custom of unethical behavior" by its employees, "particularly as it related to plaintiffs and the deprivation of their civil rights."
The trial court granted defendants' special motion to strike the entire complaint as a strategic lawsuit against public participation or SLAPP (Code Civ. Proc., § 425.16). In opposition to the motion, plaintiffs did not dispute that their entire complaint was based on and arose from defendants' protected activities: defendants' written and oral statements made in connection with (1) defendants' extraordinary audit of the Corona-Norco Unified School District (CNUSD) during 2017 to 2019 (see Ed. Code, § 1241.5, subd. (b)), and (2) RSO's and RIVCODA's parallel criminal investigation of CNUSD's facilities director Ted Rozzi, along with plaintiffs, for their suspected roles in embezzling school construction funds (§ 425.16, subd. (e)(2)). Instead, plaintiffs claimed that they had stated and substantiated legally sufficient civil rights claims against defendants. (Id. at subd. (b)(1).)
Undesignated statutory references are to the Code of Civil Procedure.
Plaintiffs appeal, claiming the anti-SLAPP motion was erroneously granted for three independent reasons: (1) section 1983 preempts the application of the anti-SLAPP statute to section 1983 claims brought in state court, (2) plaintiffs met their burden of making a prima facie evidentiary showing in support of their civil rights claims, and (3) the trial court prejudicially erred in denying plaintiffs' motion to conduct "limited" anti-SLAPP discovery (§ 425.16, subd. (g))-to take the depositions of Ammermon and an RSO detective-before plaintiffs were required to file an opposition to the anti- SLAPP motion. Plaintiffs claim they needed the deposition testimony to show that defendants were acting as law enforcement agents when defendants deprived plaintiffs of plaintiffs' constitutional rights in 2017 to 2019. We find no merit to any of plaintiffs' claims and affirm the judgment dismissing the entire complaint as a SLAPP.
II. FACTS AND PROCEDURE
A. The Allegations of the Complaint
We describe the complaint in detail and quote from it liberally, in the interest of fully considering plaintiffs' claims in this appeal.
1. The Parties
Neff is a construction firm located in San Bernardino County that provides "a variety of significant construction services on multi-million-dollar projects throughout California." For decades Neff has specialized in school construction. Mierau is Neff's chief executive officer and majority owner.
In 1991, the Legislature created FCMAT, a governmental entity, "to assist local school districts in their fiscal matters and issues." FCMAT provides auditing services to school districts pursuant to contracts with the districts and charges the districts for its services. FCMAT's board of directors includes district superintendents from throughout California including Riverside County. FCMAT is not a law enforcement agency and does not conduct criminal investigations.
Between 2012 and 2017, Ammermon, a certified public accountant, worked as an independent contractor and consultant for FCMAT. In 2017, Ammermon became an FCMAT employee and "Intervention Specialist." Ammermon is a "certified fraud examiner with forensic training and designation by the American Board of Forensic Accounting." Fine became the CEO of FCMAT on July 1, 2017, and served on its board of directors.
2. The Investigation of the Alleged Embezzlement Scheme
CNUSD provides K-12 education in the cities of Corona and Norco. In August 2017, "high ranking personnel with CNUSD . . . spoke to the [RSO] regarding their suspicions that the facilities director for CNUSD, Ted Rozzi, was possibly embezzling funds from the district." (Capitalizations omitted.) Shortly thereafter, RSO began investigating the allegations involving Rozzi. "The allegations included that Mr. Rozzi was utilizing the change order process in numerous school construction projects to secure checks to various banks under the premise that there were legitimate reasons for the checks. It is common for school district personnel across California to request checks from their contractors on school construction projects for various costs or expenses of the school districts. Those requests are then processed through the construction company as change orders and must meet with district review and approval, with final approval coming much later from the school district superintendent and ratification by the elected school board."
The complaint alleges that, because RSO lacked "intricate knowledge of the school construction process," RSO, based on e-mails from Rozzi to Mierau, "quickly" focused on checks that Rozzi requested and received from Neff, which were "then processed with change order forms in various school projects from which Rozzi directed they should come." The complaint stresses: "All funds requested by Rozzi in his e-mails were monies advanced by Neff and were not funds entrusted to Neff by the school district, thus the change orders eventually processed were essentially reimbursements to Neff. [¶] Neff change order forms directed by Rozzi were all prepared openly and transparently and went through an extensive approval process that required signed approval . . . from the . . . project manager from CNUSD, the architect who was independently hired by CNUSD, the district superintendent and the elected school board. . . . Every demand made by Rozzi of Neff was approved and paid by CNUSD." The complaint further stresses that, pursuant to their contracts with CNUSD, construction contractors like Neff were required to follow Rozzi's directives, and CNUSD could terminate their contracts if they refused to do so.
Around September 2017, and based on RSO's initial criminal investigation of the allegations involving Rozzi, the Riverside County superintendent of schools, who "controls and operates" the Riverside County Office of Education (RCOE), determined that CNUSD personnel "may have been involved in unlawful activity." RCOE then entered into a contract with FCMAT whereby FCMAT agreed to conduct an "AB 139 review" of CNUSD.
We note here that "AB 139" refers to Assembly Bill No. 139 (2001-2002 Reg. Sess.). Effective January 1, 2002, Assembly Bill No. 139 amended the Education Code to authorize county schools superintendents to "review or audit" a school district if the superintendent "has reason to believe that fraud, misappropriation of funds, or other illegal fiscal practices may have occurred that merit examination, as prescribed." (Legis. Counsel's Dig., Assem. Bill No. 139 (2001-2002 Reg. Sess.) Stats. 2001, ch, 620, p. 1; see Ed. Code, § 1241.5, subd. (b) ["At any time during a fiscal year, the county superintendent may review or audit the expenditures and internal controls of any school district in his or her county . . . [if there is] reason to believe that fraud, misappropriation of funds or other illegal fiscal practices have occurred that merit examination."].)
The AB 139 audit of CNUSD was to focus on two issues: "(1) determining whether adequate management controls were in place regarding CNUSD's procurement activities and contractual commitments relative to facilities maintenance and/or construction projects; and (2) reviewing project documentation and transactions for projects initiated and/or overlapping into fiscal years 2012-2013 through 2017-18." In November 2017, Barros, an RSO detective, informed FCMAT's CEO, Fine, that RSO's investigation of CNUSD had "hit a 'dead end.'" On information and belief, Barros's communication to Fine "was shared" with Ammermon, "who had been assigned the CNUSD audit on behalf of FCMAT."
On behalf of FCMAT, Fine signed the agreement with CNUSD, whereby FCMAT agreed to perform the AB 139 review of CNUSD, and CNUSD agreed to pay FCMAT $38,500 for the review. The complaint asserts that, "[d]ue to" their contractual relationship, FCMAT was "an agent of . . . RCOE"; the AB 139 audit was "for the sole purpose of auditing CNUSD's fiscal practices during a particular narrow six-year time frame"; and the FCMAT-CNUSD contract did not encompass any criminal or other investigation of Neff, Mr. Mierau, Neff personnel, or any "private parties."
In accordance with the "best practices" of the accounting profession and the "standard practice" of FCMAT, two FCMAT consultants, including Ammermon, were assigned to conduct the AB 139 review or audit for CNUSD. But in December 2017, shortly after the AB 139 audit began, the other consultant left the assignment and was not replaced. Thus, the complaint alleges, Ammermon "was free to act as he desired and file whatever final report he thought he could get away with, or that Defendant Fine would approve. Consequently, the field work [on the AB 139 review] was done exclusively by Defendant Ammermon." By early 2019, around 18 months after the AB 139 review began, FCMAT had still not completed the AB 139 audit, the audit had exceeded its $38,500 budget by more than $30,000, and FCMAT "demanded more public money from RCOE" for the audit.
In early 2019, Ammermon advised FCMAT that FCMAT's budget for the AB 139 audit should be increased by "two and [one] half times the original cost of $38,500." "Ammermon attributed the increased cost to his work for the RIVCODA investigating Neff and Mr. Mierau, though he [Ammermon] had no authority to charge a public entity [RCOE] for work that was not part of the contract" with RCOE. FCMAT "continued to bill on the contract with RCOE until April 2020"-almost one year after Ammermon and Fine concluded their work on the audit, according to FCMAT internal memos.
3. Defendants' Alleged "Entanglement" with Law Enforcement Agencies
Shortly after Fine signed the agreement with RCOE for FCMAT to conduct the AB 139 audit of CNUSD, Fine "began colluding with RSO from late September 2017 through December 2017. Ammermon "subsequently began colluding with RSO and . . . RIVCODA." On December 15, 2017, RSO served a search warrant on Neff, "securing copies and images of Neff computers." RSO and RIVCODA personnel were "in communication with Neff legal counsel" during the service of the RSO search warrant and thereafter. Thus, the complaint alleges, "all civil rights pertaining to the Fifth and Sixth Amendment[s] were established and communicated to RSO and RIVCODA in late 2017."
On information and belief, the complaint alleges that defendants, together with RSO and RIVCODA, "conspired to violate Mr. Mierau's Fourth, Fifth and Sixth Amendment rights." In January 2018, Ammeron contacted Mierau for the first time and requested an appointment with him, falsely telling him that Neff had been selected for a random audit along with other school district vendors. Ammermon told Mierau he wanted to interview Mierau and review Neff records. Mierau agreed to meet with Ammermon, even though Neff had no obligation to submit to a FCMAT audit. When Ammermon arrived at the meeting with Mierau, Ammermon "objected to the presence of legal counsel for Neff and stated unequivocally that he would not speak with anyone unless legal counsel left the room and was not present for his interview of Mr. Mierau and others." "Upon questioning, Ammermon could not explain his demand that counsel be removed from the room." Ammermon then tried to interview Neff personnel but "again was asked to explain his authority given that his charge was an examination of a school district's fiscal policies and practices[,] not [an investigation of] private citizens." Ammermon "grew visibly angry" when told that only CNUSD, not FCMAT, was authorized pursuant to Neff's contract with CNUSD "to secure confidential records from Neff upon request."
Thereafter, Ammermon "immersed himself in investigating Neff, and not so much CNUSD." At one "early point," RSO Detective Barros "identified" Ammermon as the "Neff investigator" and indicated that he, Barros, was investigating Rozzi. "This was done in writing and provided to other law enforcement partners announcing Ammermon's status in the investigation, amongst other things." "Ammermon almost immediately began interviewing witnesses." A senior investigator with RIVCODA, Doyle, would "typically accompany" Ammermon on the witness interviews, but Doyle "maintain[ed] a secondary position" and allowed Ammermon to "serve as lead 'investigator.' "
In interviewing several architects who had approved Rozzi's requests for checks "for purported school projects," Ammermon and Doyle falsely told architects that Doyle and Ammermon were colleagues at FCMAT. Doyle, however, was assigned to RIVCODA's "Public Integrity" unit which was tasked with investigating fraud and corruption. Ammermon instructed and directed Doyle "how to conduct Doyle's investigation," by, among other things, providing Doyle with questions to ask witnesses and directing what documents Doyle should seek.
The complaint asserts: "It is highly unusual, if not unheard of, for law enforcement agencies and personnel to provide unfettered access to confidential investigations, especially those that involve public corruption, to private citizens [Ammermon and Fine] who are not law enforcement. It is even more unusual for RSO to give a private citizen [Ammermon and Fine] documents from their service of a search warrant at any time let alone before charges are filed." It was also a "disturbing irregularit[y]" that Ammermon was allowed to participate in and to lead witness interviews.
In addition, without plaintiffs' permission, defendants received and reviewed confidential documents seized from Neff pursuant to the December 15, 2017 search warrant. The search warrant "necessitated the services of CATCH," a multi-agency task force that assists with investigations requiring "IT or high-tech computer assistance." "In one communication from [RSO Detective] Barros, in writing and addressed to [senior RIVCODA investigator] Doyle and personnel with [CATCH][,]" Barros arranged for Ammermon to receive "a multitude of confidential and privileged documents seized from Neff." "The purpose of Barros's e-mail to Doyle and CATCH was to inform the CATCH personnel that RSO, and RIVCODA, approved of a complete transfer of all computer records, seized from Neff during the search warrant, to . . . Ammermon and FCMAT."
Neff did not give FCMAT and its personnel permission to review Neff's trade secrets, privileged communications, and other confidential information seized pursuant to the December 15, 2017 search warrant. Neither RSO, RIVCODA, nor FCMAT sought Neff's permission for defendants to review this seized information nor advised Neff that defendants would be reviewing this information. The computer records seized from Neff contained "numerous confidential attorney-client privileged communications between Neff personnel, including Mr. Mierau, and their legal counsel, Rod Pacheco." On information and belief, Ammermon reviewed these privileged communications, "thus violating" Mierau's attorney-client privilege and Sixth Amendment right to counsel. Defendants never told plaintiffs or plaintiff's legal counsel that this privileged information was in defendants' possession.
By June 2019, defendants completed the AB 139 audit of CNUSD but "conspired" with RIVCODA to date the AB 139 report of the audit "months later." On November 5, 2019, RIVCODA filed felony charges against Mierau. At some point, felony charges were also filed against Rozzi. On November 6, FCMAT released its "final report" for the AB 139 audit, titled "Riverside County Office of Education AB 139 Extraordinary Audit of the Corona-Norco Unified School District" (the AB 139 Report or Report). Ammermon and a RIVCODA deputy district attorney "conspired" to file the Report and the charges against Mierau "at the same time" to "maximize negative publicity against" Neff and Mierau. RIVCODA then filed court documents containing "false and misleading information" in seeking a temporary restraining order "freezing two real properties owned by Mierau and his wife."
4. The AB 139 Report
The complaint alleges that the AB 139 Report was placed on the internet "for wide public exposure" and "reverberated throughout the school construction industry." The Report was misleading in several respects and spent "much more time accusing" Mierau and other Neff personnel of wrongdoing than it did examining CNUSD's practices, "severely damaging" Neff and Neff's existing and prospective school construction contracts. Ammermon "purposefully concealed information" from the Report and "made numerous false and misleading statements" in the Report "in an effort to slander" plaintiffs. For example, Ammermon "purposely excluded, or severely downplayed the fact that change orders for vendor payments requested by school districts are common and not unusual." "Defendants also knew that neither Neff [n]or Mr. Mierau had made any profits from Mr. Rozzi's actions and in fact all the change orders in question involved nothing more than reimbursement to Neff on monies advanced at the demand of the facilities director." (Capitalizations omitted.)
The AB 139 Report also falsely suggested that Mierau "purposely delayed asking for reimbursements from CNUSD in the change order process in an effort to conceal wrongdoing." But Neff's computer records showed that Neff processed Rozzi's change order requests within two weeks of when Neff received them-not months or years as the report suggested-and that the change orders were later approved by architects and CNUSD project managers. "The delay was in the processing of reimbursements [i.e. final payments] pursuant to those change orders, by CNUSD" and the superintendent. The Report falsely suggested that Mierau was guilty of embezzling over $2 million based on his "friendly" relationship with Rozzi and the fact they knew each other's wives' first names. The Report also falsely stated that Mierau and Rozzi had vacationed together-in an attempt to "savage Mr. Mierau's reputation and provide a basis for the filing of numerous charges against Mr. Mierau." "As astonishing" as it is, prosecutors later "rel[ied] on the 'wives' names' evidence as a basis for filing charges."
In the report, Ammermon "grossly distorted" the amount that Rozzi embezzled as totaling over $2.6 million. Several sources, including Fine, advised Ammermon that the $2.6 million figure was false, but Ammermon "convinced [Fine] otherwise," and Fine approved of including the figure in the Report, "knowing the figure was unreliable and untrustworthy, and would be included in a public report that would excoriate the reputation of Mr. Mierau and of Neff."
The Report also falsely claimed that Neff and Mierau failed to cooperate with CNUSD and law enforcement in their respective investigations. In fact, Neff and Mierau provided "numerous documents on Rozzi's e-mails [to CNUSD] in August 2017 when the allegations first came to light," and defendants knew this by early 2018. Plaintiffs also provided "significant information from August 2017 through and including 2019." Plaintiffs' counsel met numerous times with RSO Detective Barros and "RIVCODA personnel at some of its highest levels." In 2018, plaintiffs provided 60,000 pages of documents to RIVCODA.
5. Plaintiffs' Section 1983 Claims and Monell Claim
In its first cause of action, the complaint alleges that defendants, by "acting under color of law through their participation and service as agents of law enforcement or government agencies, without cause or justification, intentionally and maliciously deprived Plaintiffs . . . of rights secured to them by the First, Fourth, Fifth, Sixth, and Fourteenth Amendments . . . ." In this cause of action, the complaint relies on the foregoing allegations.
In its second cause of action, the Monell claim against FCMAT, the complaint alleges FCMAT "tolerated and encouraged a clear custom of unethical behavior by Defendants particularly as it related to Plaintiffs and the deprivation of their civil rights." FCMAT also "failed to provide any training to prevent the unethical behavior . . . ." In addition, Fine "was aware of and countenanced" Ammermon's "use of public funds" for an FCMAT audit that "Ammerman instead used to advance a criminal case" against Mierau for misappropriation of public funds. FCMAT's failure to train or supervise its employees shows a "deliberate indifference" to the due process and other constitutional rights violations that "naturally result[ed]" from its inaction.
The complaint further asserts that Fine failed to oversee Ammermon or to assign a replacement second auditor to the AB 139 audit, thus allowing "Ammeron to act on his own worst instincts. This lack of customary and routine oversight . . . was a significant contributing factor to the deprivation of Plaintiffs' civil rights." As FCMAT's CEO, Fine is a policy maker for FCMAT, and Fine sits on FCMAT's board, whose "sole responsibility" is policymaking for FCMAT. Fine also actively participated in preparing the AB 139 Report concerning CNUSD.
Regarding damages, the complaint alleges "false and misleading representations" in the AB 139 Report caused plaintiffs to lose over $100 million in school construction jobs and opportunities. Among other relief, plaintiffs seek $100 million in damages, attorney fees under 42 U.S.C. section 1988, and" a public written apology and critical refutation" of the AB 139 Report dated November 6, 2019.
B. Defendants' Anti-SLAPP Motion
On March 30, 2021, defendants filed their anti-SLAPP motion, asking the court to strike the entire complaint as a SLAPP. (§ 425.16.) Defendants argued that the complaint was completely based on protected activity, namely, defendants' communications in connection with the "official" FCMAT AB 139 audit and defendants' "parallel" communications with law enforcement. Defendants also argued that the complaint failed to state a "coherent" theory of liability under either section 1983 or Monell. Its "only ascertainable allegation" appeared to be defamation which, defendants argued, is not a civil rights violation.
In a supporting declaration, Fine averred he had assisted with the AB 139 audit by "providing general leadership within the FCMAT organization." He received periodic updates of the audit and contributed to the final editing of the AB 139 Report. FCMAT was "created by state law," and AB 139 audits are authorized by state law. FCMAT's funding comes from appropriations by the Legislature and "a modest fee schedule for charges to requesting agencies."
Under state law, school districts may ask FCMAT to provide "fiscal crisis or management assistance." FCMAT's "primary mission" is to assist California's K-14 educational agencies to "identify, prevent, and resolve financial, human resources, and data management challenges." "AB 139 Extraordinary Audits review possible fraud, misappropriation of funds, or other illegal fiscal practices occurring with connection to local educational agencies. Fraud audit fieldwork consists of gathering information and documentation pertaining to specific allegations, establishing an audit plan, interviewing potential witnesses, assembling evidence from internal and external sources, performing various audit procedures to determine whether fraud may have occurred, evaluating the loss associated with the alleged fraud, and determining who was involved and how it may have occurred."
The RCOE initiated the AB 139 audit of CNUSD, on behalf of the Riverside County superintendent of schools, after CNUSD staff members "noticed financial improprieties by Ted Rozzi, former Assistant Superintendent of Facilities with" CNUSD. CNUSD "employees became aware of checks [that] Rozzi had requested from Neff . . ., including checks to banks with which [CNUSD] did not have any business relationship. Subsequent developments are set forth more fully in the AB 139 Audit Report." Fine adduced a true and correct copy of the AB 139 Report with his declaration. According to Fine, the AB 139 audit was "conducted according to all applicable governing laws, rules, regulations and principles." Fine noted that, "[a]lthough the Complaint suggests various improprieties, it does not specify any actual laws, rules, regulations, and principles we may have violated in conducting this audit and preparing this report."
In another supporting declaration, Ammermon averred that he had assisted with the AB 139 audit of CNUSD and had a "leading role" in preparing the AB 139 Report. To the best of Ammermon's knowledge, neither he nor anyone else at FCMAT ever received, reviewed, or utilized any documents covered by plaintiffs' attorney-client privilege or the attorney work product doctrine. The complaint's allegation that the AB 139 audit "went over budget" was "spurious," and the allegation did not "implicate any procedural missteps or other wrongdoing whatsoever." The scope of FCMAT's fieldwork for the AB 139 audit grew larger because of Neff's "refusing to cooperate" with the audit. FCMAT's contract with RCOE was amended to authorize FCMAT to complete additional work.
C. Plaintiffs' Motion for Anti-SLAPP Discovery
On April 12, 2021, plaintiffs filed an ex parte motion to continue the hearing on the anti-SLAPP motion so that plaintiffs could first depose Ammermon and Detective Barros before they filed an opposition to the anti-SLAPP motion. (§ 425.16, subd. (g).) Alternatively, plaintiffs sought an ex parte order shortening time for a hearing on a plaintiffs' noticed motion for leave to conduct the discovery. (Ibid.) Along with their ex parte motion, plaintiffs filed a notice of motion and motion for leave to conduct the discovery.
In these motions, plaintiffs argued that the depositions were necessary so that plaintiffs could make a prima facie showing in support of their section 1983 claims in opposing the anti-SLAPP motion. Plaintiffs explained that "the gravamen" of their complaint was that defendants "intentionally and wrongfully colluded with law enforcement" in conducting the AB 139 audit, and in the course of that "collusion" defendants defamed plaintiffs' business reputation and violated plaintiffs' First, Fourth, Fifth, Sixth, and Fourteenth Amendment rights. Thus, plaintiffs argued, testimony showing "what Defendants knew, when they knew it, and what they internally discussed with law enforcement" at the time they violated plaintiffs' rights was "directly related to establishing" plaintiffs' "prima facie case" of civil rights violations and defamation. Plaintiffs sought "communications concerning the AB 139 investigation of Plaintiffs and the criminal investigation, communications among FCMAT, RSO and RIVCODA, and internal communications around the drafting and publishing of the AB 139 audit." Plaintiffs claimed, "Defendants and third party law enforcement officers hold [this information] exclusively in their possession," and "[o]nly deposition testimony will reveal the nature and extent of [defendants'] involvement in law enforcement actions."
In opposition, defendants pointed out that Mierau was then facing "approximately thirty felony charges related to embezzlement," and they argued that Mierau was seeking "to use the civil process to conduct discovery into the criminal case against him." Moreover, the complaint had no merit: "[D]efamation does not implicate federal civil rights or otherwise support Section 1983 claims. To the extent [plaintiffs'] attempt to list constitutional violations, they simply list amendments without making any attempt to allege prima facie violations thereof. Plaintiffs do not even include boiler-plate, black letter elements of any constitutional violation, much less make any factual showing." Rather, the complaint was a "wholesale attack on two government auditors and their audit report, which identified numerous financial irregularities amounting to millions of dollars in embezzled funds earmarked for school construction projects."
In sum, defendants argued plaintiffs had failed to demonstrate good cause to take the depositions (§ 425.16, subd. (g)) because plaintiffs did not identify (1) a specific civil rights violation, (2) specific facts they were seeking to discover, or (3) specific information entirely within defendants' possession. Plaintiffs were not saying "what element of what cause of action" they could state and substantiate if they could depose Ammermon and Barros. Lastly, defendants claimed the communications among defendants, RSO, and RIVCODA were protected by the litigation privilege (Civ. Code, § 47) as well as the anti-SLAPP statute (Code Civ. Proc, § 425.16).
On April 13, 2021, the court continued the hearing on the anti-SLAPP motion from April 29 to May 6, and set an April 29 hearing on the discovery motion. Still, the court set a briefing schedule for the anti-SLAPP motion and ordered plaintiffs to file their opposition to the anti-SLAPP motion before the April 29 hearing on plaintiffs' discovery motion.
The record does not contain reporter's transcripts of the April 13, April 29, or May 6, 2021 oral proceedings in this case. We discern the court's rulings on these dates from the court's minute orders and the register of actions.
On April 29, 2021, the court denied the noticed discovery motion, explaining that plaintiffs had not shown that "specified discovery tailored to oppose the anti-SLAPP motion" was necessary. The court also said it was "difficult . . . to determine what facts" supported plaintiffs' causes of action, and ruled that plaintiffs' "vague claims do not establish good cause for discovery." The court also noted that it was required to consider whether plaintiffs had an "informal means" of obtaining the information they were seeking, and that plaintiffs had one such means: the discovery process in Mierau's criminal case. (Pen. Code, § 1054.1.)
D. Plaintiffs' Opposition to the anti-SLAPP Motion
The court granted the anti-SLAPP motion on May 6, 2021. In their opposition, plaintiffs adduced various e-mails among Ammermon, other FCMAT personnel, law enforcement officers, and others that Mierau subpoenaed and obtained from Ammermon in late 2019 in Mierau's criminal case. Plaintiffs had had these e-mail communications in in their possession since December 2019, approximately one year before plaintiffs' filed their complaint in December 2020. Ostensibly, the complaint is based on the e-mails. The e-mails show, among other things, that between 2017 and 2019: (1) Ammermon corresponded with Detective Barros and other RSO personnel concerning the "fraud case" and the AB 139 audit of CNUSD, and (2) in the course of the AB 139 audit, RSO sent Ammermon documents that RSO seized from Neff pursuant to RSO's December 2017 search warrant of Neff.
In a declaration, Mierau averred he never gave RSO or RIVCODA permission to share the records that RSO had seized from Neff with Ammermon or FCMAT. But neither Mierau nor any other witness identified any trade secrets or attorney-client privileged documents in any of the documents that RSO seized from Neff in December 2017, or that Mierau had obtained from Ammermon in December 2019 pursuant to Mierau's subpeona in Mierau's criminal case.
Plaintiffs did not dispute that the complaint was based on defendants' protected activities. Instead, plaintiffs argued that federal preemption principles barred application of the anti-SLAPP statute because the statute "materially alter[ed]" plaintiffs' rights under 42 U.S.C. section 1983, in so far as those rights were based on activity protected under the anti-SLAPP statute.
Plaintiffs also argued that they had substantiated their section 1983 claims by showing that defendants acted as "third-party agents" of law enforcement to "to subvert" plaintiffs' constitutional rights. They argued defendants used the AB 139 audit of CNUSD as a "cover" for assisting law enforcement agencies in those agencies' criminal investigation of Neff and Mierau, and in the process defendants violated plaintiffs' constitutional rights. But plaintiffs did not explain how defendants violated plaintiffs' First, Fourth, Fifth, Sixth or Fourteenth Amendment rights, as the complaint alleged. Plaintiffs also argued that defendants defamed plaintiffs by publicizing "false statements" in the AB 139 Report. But plaintiffs did not identify any false statements of fact in the AB 139 Report.
In addition to Mierau's declaration, plaintiffs adduced the declaration of a certified fraud examiner who opined that the AB 139 Report was "filled with indications of bias, assumptions, unsubstantiated opinions and conclusions, and false narratives." Again, however, plaintiffs' fraud examiner did not identify any false statements of fact in the AB 139 Report. Lastly, plaintiffs pointed out they were not barred from pursuing their civil rights claims against defendants while the criminal case against Mierau was pending, given that defendants were neither peace officers nor employers of peace officers, unlike RSO and RIVCODA. (Gov. Code, § 945.3.)
E. The Trial Court's Ruling on the Anti-SLAPP Motion
In granting the anti-SLAPP motion, the court ruled that defendants met their initial burden of showing that the complaint was based on protected activity, but plaintiffs did not meet their burden of making a prima facie showing in support of their claims. The complaint, the court said, did not even allege sufficient facts to state a section 1983 claim or a Monell claim. Regarding the section 1983 claims, the court explained that plaintiffs failed to show that the records seized from Neff contained any attorney-client privileged documents or that defendants had violated any of plaintiffs' constitutional rights. The Monell claim was also factually insufficient: plaintiffs did not allege facts "showing a governmental policy or custom that caused their alleged constitutional injury." Thus, the court struck the entire complaint as a SLAPP and ordered it dismissed with prejudice. On June 24, 2021, plaintiffs filed a timely notice of appeal.
The trial court took judicial notice of the existence of the AB 139 Report but not the truth of the statements of fact or conclusions in the AB 139 Report. (Evid. Code, § 452, subd. (c); Mangini v. R.J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063-1065; Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 752-754.) We do the same. (Evid. Code, § 459, subd. (a).)
F. Plaintiffs' Request for Judicial Notice
Plaintiffs ask that we take judicial notice of a computer-generated court record dated after the filing of the notice of appeal: the criminal case report in Mierau's criminal case, Riverside County Superior Court case No. RIF1904591, as of January 19, 2022 (the case report). The case report is not certified. (Evid. Code, § 452.5.) But because plaintiffs' request is unopposed, and defendants do not dispute the authenticity of the case report, we grant the request. (Evid. Code, §§ 452, subds. (c), (d), 459, subd. (a).)
The case report shows that, as of January 19, 2022, no criminal charges were pending against Mierau in Riverside County and approximately 41 felony charges against Mierau had, at some point, been dismissed. The dismissed charges include conspiracy (Pen. Code, § 182, subd. (a)(1)), embezzlement (Pen. Code, § 504), misappropriation of funds (Pen. Code, § 424, subd. (a)(1)), and money laundering (Pen. Code, §186.10, subd. (a)).
The case report does not indicate when or for what reason the charges against Mierau were dismissed, but plaintiffs represent and defendants do not disagree that RIVCODA dismissed the charges against Mierau in July 2021. The case report also shows that, in February 2022, Rozzi was scheduled to be sentenced in the same criminal case, but the case report does not indicate Rozzi's convictions. Plaintiffs argue that RIVCODA's dismissal of the charges against Mierau, "demonstrates the lack of evidence defendants had to support the various statements made in the [AB 139] Report." We consider this argument in addressing plaintiffs' claim that they made a prima facie evidentiary showing in support of their civil rights claims. We judicially notice only the fact that the charges against Miearau had been dismissed and that Mierau had no criminal charges pending against him in Riverside County as of July 2021.
III. DISCUSSION
Plaintiffs claim defendants' anti-SLAPP motion was erroneously granted for three, independent reasons: (1) federal preemption principles bar application of the anti-SLAPP statute to section 1983 claims in state court; (2) plaintiffs made a prima facie evidentiary showing in support of their section 1983 claims; and (3) the trial court prejudicially erred in denying plaintiffs' motion to take "limited" anti-SLAPP discovery, namely, the Ammermon and Barros depositions, before plaintiffs were required to file an opposition to the anti-SLAPP motion. We find no merit to any of these claims.
Plaintiffs do not challenge the trial court's order dismissing their Monell claim as a SLAPP. Thus, plaintiffs have abandoned their Monell claim. (See Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1177.)
A. Federal Preemption Principles Do Not Bar the Application of the Anti-SLAPP Statute to Section 1983 Claims Brought in State Court
We first address plaintiff's claim that federal preemption principles bar application of the anti-SLAPP statute to section 1983 claims in state court. Plaintiffs maintain that the anti-SLAPP statute "materially alters [or restricts] the rights created by 42 U.S.C. Section 1983" for plaintiffs whose section 1983 claims arise from protected activity. For this reason, plaintiffs argue, federal preemption principles bar the application of the anti-SLAPP statute to section 1983 claims in state court.
Under the Supremacy Clause of the federal Constitution," state rules of evidence and procedure apply [to federal claims in state court] unless application of those rules would affect plaintiffs' substantive federal rights." (County of Los Angeles v. Superior Court (2006) 139 Cal.App.4th 8, 17, citing Felder v. Casey (1988) 487 U.S. 131, 138; see Higgason v. Stogsdill (2004) 818 N.E.2d 486, 488-489; see also Williams v. Horvath (1976) 16 Cal.3d 834, 837-842 [42 U.S.C. section 1983 preempted application of claims procedures of former Tort Claims Act to section 1983 claims brought in California courts].)
Plaintiffs argue the anti-SLAPP statute adversely affects their section 1983 rights because the statute "discriminates based upon the substance" of a section 1983 claim. That is, the statute treats plaintiffs with section 1983 claims based on protected activity differently than plaintiffs with section 1983 claims not based on protected activity by subjecting the former group of plaintiffs to the statute's discovery stay (§ 425.16, subd. (g)), its attorney fee provisions (§ 425.16, subd. (c)), and the rule prohibiting the plaintiff from amending its complaint after an anti-SLAPP statute is granted (Okorie v. Los Angeles Unified School Dist. (2017) 14 Cal.App.5th 574, 599, disapproved on another ground in Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1012, fn. 2).
Section 1983 claims that are not based on protected activity are not subject to this "differential treatment." Thus, plaintiffs argue, the anti-SLAPP statute undermines the purposes of section 1983 in that it "dissuades plaintiffs from vindicating" section 1983 claims in state court "that trigger" the anti-SLAPP statute. Plaintiffs further argue, "The effect of this differential treatment is that a subset of civil rights plaintiffs are subjected to the additional hurdle of surviving an anti-SLAPP motion. This interferes with a uniform federal approach to Section 1983 claims that does not tolerate imposing different procedural burdens on plaintiffs based solely on the type of Section 1983 claim asserted. Federal law therefore preempts application of the anti-SLAPP statue to Section 1983 claims. The Anti-SLAPP Motion should have been denied on this basis."
We disagree that federal preemption principles bar the application of the anti-SLAPP statute to section 1983 claims brought in state court. The Second District Court of Appeal recently addressed this question in Patel v. Chavez (2020) 48 Cal.App.5th 484 (Patel). In a thorough analysis, Patel concluded that federal preemption principles do not apply; thus, the anti-SLAPP statute applies to section 1983 claims brought in state court. (Id. at pp. 487-490.) Patel began with the applicable legal standard: "An analysis of whether to apply the anti-SLAPP statute to a federal claim in state court begins with the observations that the anti-SLAPP statute is a procedural law, rather than a substantive immunity . . . . As such, the anti-SLAPP statute will apply to adjudication of a federal claim in state court unless either (1) 'the federal statute provides otherwise'[citation], or (2) the anti-SLAPP statute 'affect[s] plaintiffs' substantive federal rights,' and is thus preempted." (Patel, at pp. 487-488.)
As Patel explained, neither exception applies to bar the application of the anti-SLAPP statute to section 1983 claims. Regarding the first exception, nothing in the language of section 1983 imposes any federal procedural law upon state courts trying civil rights actions. Thus, section 1983 itself does not preempt the application of the anti-SLAPP statute to section 1983 claims brought in state court. (Patel, supra, 48 Cal.App.5th at p. 488; accord, Bradbury v. Superior Court (1996) 49 Cal.App.4th 1108, 1117-1118; Vergos v. McNeal (2007) 146 Cal.App.4th 1387, 1392, fn. 4.)
The second exception also does not apply. The anti-SLAPP statute, including its discovery stay and attorney fee provisions, does not unduly burden a substantive federal right when applied to a section 1983 claim in state court. (Patel, supra, 48 Cal.App.5th at pp. 488-490.) In our view, a section 1983 claim may be fully adjudicated in a California state court but is properly examined early in the proceeding to ensure that it states a legally sufficient claim where it arises from protected activity. Thus, we agree with Patel: federal preemption principles do not bar the application of the anti-SLAPP statute to section 1983 claims in state court. We conclude the anti-SLAPP statute was properly applied to plaintiffs' section 1983 claims.
B. Plaintiffs Did Not Establish a Probability of Prevailing on Any Section 1983 Claim
1. Legal Principles and Standard of Review
"The anti-SLAPP statute does not insulate defendants from any liability for claims arising from the protected rights of petition or speech. It only 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.) Section 425.16 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 or California Constitutions, "in connection with a public issue." (§ 425.16, subd. (b)(1).) These protected acts, or protected activities, include, "(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." (§ 425.16, subd. (e).)
The resolution of an anti-SLAPP motion involves a two-step process: "First, the defendant must establish that the claim arises from activity protected by section 425.16. [Citation.] If the defendant makes the required showing, 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.) At the second step, the plaintiff must" '" 'state[] and substantiate [] a legally sufficient claim.'" '" (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056.)" 'Put another way, the plaintiff "must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited." '" (Ibid.)
Our Supreme Court has described the second step as a" 'summary-judgment-like procedure.'" (Baral v. Schnitt, supra, 1 Cal.5th at p. 384.) If the plaintiff's prima facie showing is insufficient to sustain a favorable judgment for the plaintiff, the plaintiff's challenged claim must be stricken. (Id. at p. 396) "Allegations of protected activity supporting the stricken claim are eliminated from the complaint, unless they also support a distinct claim on which the plaintiff has shown a probability of prevailing." (Ibid.) In determining whether the parties have met their respective burdens, 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).)
On appeal, we review a trial court's ruling on an anti-SLAPP motion de novo. (Tukes v. Richard (2022) 81 Cal.App.5th 1, 11.) We engage in the same two-step process as the trial court: we independently determine whether (1) the defendant made its threshold showing that the action (or part of it) is based on protected activity, and (2) whether the plaintiff established a probability of prevailing on its claims. (Marijanovic v. Gray, York & Duffy (2006) 137 Cal.App.4th 1262, 1270.) "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." (Navallier v. Sletten (2002) 29 Cal.4th 82, 89.)
2. The Entire Complaint Is Based on Defendants' Protected Activities
Regarding the first prong of the anti-SLAPP statute, plaintiffs have never disputed, and the trial court found, that the entire complaint arises from acts in furtherance of defendants' rights of petition or free speech. In independently reviewing this question, we agree with the trial court. The entire complaint is based on writings and oral statements defendants made in connection with two official proceedings authorized by law: the AB 139 audit of CNUSD, and the parallel criminal investigation of Rozzi and plaintiffs for embezzling school construction funds. (§ 425.16, subd. (e); Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115-1116 (Briggs); Hansen v. Department of Corrections & Rehabilitation (2008) 171 Cal.App.4th 1537, 1544.) In addition, all of defendants' complained-of writings and oral statements were made in connection with issues "under consideration or review" by executive agencies: FCMAT itself, ROCE, RSO, and RIVCODA. (§ 425.16, subd. (e).) Defendants' protected activities also extend to acts" 'preparatory to or in anticipation of'" the AB 139 audit and the parallel criminal investigation. (Briggs, supra, 19 Cal.4th at p. 1115.)
As the trial court noted in its May 6, 2021 minute order, the anti-SLAPP statute does not apply when the complained-of activities are indisputably unlawful. Indisputably unlawful conduct is not constitutionally protected and is therefore not protected under the anti-SLAPP statute. (Flatley v. Mauro (2006) 39 Cal.4th 299, 317.) An activity may be deemed unlawful as a matter of law when the defendant does not dispute that the activity was unlawful or when uncontroverted evidence conclusively shows that the activity was unlawful. (Ibid.; Dwight R. v. Christy B. (2013) 212 Cal.App.4th 697, 711-712.) But as the trial court found, the unlawful activities exception to the anti-SLAPP statute does not apply here. Defendants did not concede, nor does the evidence adduced on the anti-SLAPP motion conclusively show, that any of defendants' conduct was unlawful as a matter of law.
3. Plaintiffs Did Not State and Substantiate Any Section 1983 Claim
Plaintiffs claim they made a prima facie evidentiary showing sufficient to support a judgment on each of the section 1983 claims alleged in their complaint. We disagree. As the trial court found, the complaint does not allege sufficient facts to support any section 1983 claim, and plaintiffs did not make a prima facie evidentiary showing in support of any section 1983 claim.
Section 1983" 'is not itself a source of substantive rights' but merely provides 'a method for vindicating federal rights elsewhere conferred.'" (Graham v. Connor (1989) 490 U.S. 386, 393-394.) Section 1983 authorizes an injured plaintiff to assert a claim for relief against a person who, acting under color of state law, violated the plaintiff's federal constitutional or federal statutory rights. (Julian v. Mission Community Hospital (2017) 11 Cal.App.5th 360, 395-396.)
To state a claim for relief under section 1983, a plaintiff must allege two things: (1) a deprivation of a federal right; and (2) that the person who deprived the plaintiff of that right acted under color of state law. (Pueblo of Pojoaque v. New Mexico (D.N.M. 2016) 214 F.Supp.3d 1028, 1075.) Although section 1983 is "generally not applicable to private parties, a [section] 1983 action can lie against a private party when '[that private party] is a willful participant in joint action with the State or its agents.'" (Kirtley v. Rainey (9th Cir. 2003) 326 F.3d 1088, 1092.)
We assume without deciding that defendants were state actors. That is, defendants were "willful participants in joint action" with law enforcement agencies in pursuing the AB 139 audit of CNUSD and in assisting law enforcement agencies, the RSO and RIVCODA, with their parallel criminal investigation of Rozzi and plaintiffs for embezzling school construction funds. Nonetheless, and despite plaintiffs' allegations that defendants acted "in collusion" or "conspiracy" with the RSO and RIVCODA to "subvert" plaintiffs' constitutional rights, plaintiffs have not made a prima facie showing that defendants violated any federal constitutional right of plaintiffs in the course of either the AB 139 audit or the parallel criminal investigation.
(b) Plaintiffs' "Defamation-Plus" Claim Is Factually Insufficient
We begin with defamation, which plaintiffs have described as the "gravamen" of their complaint. The core allegation of the complaint is that defendants "intentionally and wrongfully colluded with law enforcement" in conducting the AB 139 review and criminal investigation, and in the course of this "collusion" defendants both (1) defamed plaintiffs' business reputation and (2) violated plaintiffs' First, Fourth, Fifth, Sixth, and Fourteenth Amendment rights.
Courts are required to examine each factual claim that comprises a cause of action, rather than attempt to evaluate the cause of action as a whole or its "gravamen," in determining whether it is wholly or partly based on protected activity. (Bonni v. St. Joseph Health System, supra, 11 Cal.5th at p. 1010-1012.) But courts may examine the "gravamen" of a cause of action in determining whether "particular acts alleged within the cause of action supply the elements of a claim." (Id. at p. 1012.) That is what we are doing here: examining whether plaintiffs' first cause of action for section 1983 violations includes any factual claims that amount to an actual section 1983 violation.
"Defamation is an invasion of the interest in reputation. The tort involves the intentional publication of a statement of fact that is false, unprivileged, and has a natural tendency to injure or which causes special damage." (Smith v. Maldonado (1999) 72 Cal.App.4th 637, 645; Civ. Code, §§ 44-46.) Thus, the elements of the tort of defamation are:"' "(a) a publication that is (b) false, (c) defamatory, and (d) unprivileged, and that (e) has a natural tendency to injure or that causes special damage." '" (Sanchez v. Bezos (2002) 80 Cal.App.5th 750, 763.)
Standing alone, however, the tort of defamation does not support a section 1983 claim. (Johnson v. Barker (1986) (9th Cir. 1986) 799 F.2d 1396, 1399 (Johnson) ["It is well settled that section 1983 'imposes liability for violations of rights protected by the Constitution, not for violations of duties of care arising out of tort law.' "].) In order to "rise to the level of a constitutional tort," defamation must be accompanied by the deprivation of a constitutional right, such as due process of law. (Ibid.)
As plaintiffs point out, procedural due process protections apply to reputational harm when the plaintiff suffers the stigma or reputational harm as a result of state action, and a right or status of the plaintiff, previously recognized by or held under state law, has been altered or extinguished. (Paul v. Davis (1976) 424 U.S. 693, 709-711.) This is known as the" 'stigma-plus'" test. (Hart v. Parks (9th Cir. 2006) 450 F.3d 1059, 1070.) Under the stigma-plus test, the plaintiff is required to show that the injury to the plaintiff's reputation "caused the denial of a federally protected right." (Ibid.)
The plaintiff in Paul v. Davis sued a police chief under section 1983 for circulating fliers that falsely listed the plaintiff as a shoplifter; in fact, the plaintiff had been arrested for shoplifting but the charges had been dismissed. (Paul v. Davis, supra, 424 U.S. at pp. 694-696.) The plaintiff argued that the fliers defamed him and deprived him of "some 'liberty'" interest protected by the Fourteenth Amendment's due process clause. (Id. at pp. 697-699; U.S. Const., 14th Amend. 14, § 1.) The high court explained that constitutionally protected liberty interests "attain this constitutional status by virtue of the fact that they have been initially recognized and protected by state law." (Paul v. Davis, at p. 710.) The plaintiff's section 1983 claim failed because the plaintiff could not point to any state-recognized or state-protected liberty, property, or privacy interest that the plaintiff was deprived of due to the publication of the flier. (Id. at pp. 712-713.)
Here, however, plaintiffs have not shown that the AB 139 Report contains any false statements of fact. Plaintiffs complain that the Report omits to mention or explain various things, but plaintiffs have not shown how these omissions render any statements of fact in the Report false. For example, plaintiffs complain that the Report "grossly exaggerates" the amount of money Rozzi embezzled, but plaintiffs have made no effort to show that the $2.6 million figure mentioned in the Report is inaccurate.
Moreover, even if the Report contains false and defamatory statements about plaintiffs, plaintiffs have not shown that any defamatory statements in the Report caused plaintiffs to suffer the denial of a federally protected right, such as a First, Fourth, Fifth, Sixth, or Fourteenth Amendment right as the complaint alleges. In fact, plaintiffs have proffered no evidence that defendants violated plaintiffs' due process rights or any other federal constitutional right in connection with preparing and publishing the Report. Thus, plaintiffs have not stated and substantiated a legally sufficient "defamation plus" or "stigma plus" claim as a basis for a section 1983 claim.
Plaintiffs' reliance on Humphries to support a "stigma-plus" section 1983 claim is misplaced. Humphries involved parents who were falsely accused of child abuse by their "rebellious child." (Humphries v. County of L.A. (9th Cir. 2009) 554 F.3d 1170, 1175.) After all criminal charges against the parents were dismissed and the parents were found factually innocent of the charges, the parents were falsely identified as" 'substantiated'" child abusers on California's Child Abuse Central Index (CACI). (Id. at pp. 1175-1176.)
Humphries held that California's maintenance of the CACI violated the plaintiffs' procedural due process rights under the Fourteenth Amendment. First, the "stigma" of being listed on the CACI as "substantiated" child abusers, "plus the various statutory consequences of being listed on the CACI[,] constitute[d] a liberty interest" of which the plaintiffs could not be deprived without due process of law. (Humphries, supra, 554 F.3d. at pp. 1185-1187, second italics added.) Second, because state statutes mandated that licensing agencies and others search the CACI before granting a person a number of rights and benefits, the parents' inclusion in the CACI "altered" the parents' "legal rights or status in a variety of ways," to which persons not listed on the CACI were not subjected. (Id. at p. 1188.) Humphries emphasized that its decision was "limited to those 'stigma-plus' situations where both the defamatory statement and the tangible burden on a legal right are statutorily created." (Id. at p. 1189, italics added.)
That is not the case here. Plaintiffs have not shown that any statement of fact in the AB 139 Report or the publication of the Report have "altered" plaintiffs' "legal rights or status" in any way mandated by state law. That is, plaintiffs have not shown that any statements in the AB 139 Report, if defamatory, caused plaintiffs to suffer a tangible burden on a statutorily created legal right. (Humphries, supra, 554 F.3d at p. 1188.)
To be sure, plaintiffs claim that the AB 139 Report has damaged their business reputation, causing them to lose over $100 million in school construction business. In opposing the anti-SLAPP motion, Mierau averred that "school-related construction is a highly regulated process," and that "FCMAT reports are commonly reviewed in the school construction industry." In addition, "California state law mandates an RFP [request for proposal] process for such projects and extensive questionnaires accompany such bids." Mierau argued, "The fact that Neff must disclose in response to these state mandated questions" that he, Mierau, has been "charged with embezzlement imposes a significant burden" on his and Neff's "ability to bid for and be awarded school contracts under state law."
Still, plaintiffs have not shown that the AB 139 Report, or the fact of the criminal charges, imposes a significant burden on any statutorily created legal right of plaintiffs. (Humphries, supra, 554 F.3d . at pp. 1188-1189.) The plaintiffs in Humphries had no available legal means of challenging the indisputably false statements about them in the CACI. (Id. at p. 1189 ["Once an agency consults the CACI and finds adverse information, CANRA requires the agency to conduct an investigation and come to its own conclusion." (Italics added.)].) Here, in contrast, plaintiffs have not shown that they do not have any means of disputing the contents of the AB 139 Report or the merits of the criminal charges against Mierau, in connection with submitting RFPs for school construction contracts. On this basis, Humphries is distinguishable.
In sum, plaintiffs have not shown that they have suffered the deprivation of any procedural due process rights or any other federal constitutional right in connection with the publication of the AB 139 Report or any factual statements in the Report. (Humphries, supra, 554 F.3d at pp. 1186-1189.) As noted, defamation or reputational injury, standing alone and unaccompanied by the deprivation of a federal constitutional right, is insufficient to support a section 1983 claim. (Johnson, supra, 799 F.2d at p. 1399.) Thus, plaintiffs' defamation claim does not "rise to the level of a constitutional tort" under section 1983. (Ibid.)
(c) Plaintiffs' Other Section 1983 Claims Are Also Factually Deficient
Apart from its factually-deficient defamation-plus or "stigma-plus" allegations, the complaint alleges defendants violated plaintiffs' First, Fourth, Fifth, and Sixth, and Fourteenth Amendment rights in connection with the AB 139 audit and the criminal investigation of Rozzi and plaintiffs. But the complaint offers no particularized facts tying any of defendants' conduct to a constitutional injury to plaintiffs. A complaint is insufficient to state a section 1983 claim when, as here, its allegations consist of mere conclusions without factual support. (Catsouras v. Department of California Highway Patrol (2010) 181 Cal.App.4th 856, 891 ["Some particularized facts demonstrating a constitutional deprivation are needed to sustain a cause of action under" section 1983.].) Plaintiffs' complaint does not allege facts sufficient to support any section 1983 claim.
Further, no particularized facts supporting a section 1983 are shown in any of the evidence plaintiffs adduced on the anti-SLAPP motion. Plaintiffs have made no effort to show that they suffered a violation of any of their First Amendment rights. They argue, as a basis for unspecified Fourth, Fifth, Sixth, and Fourteenth Amendment violations, that defendants "used their FCMAT investigation as an improper quasi-adjudication of criminal conduct, allowing them in the process to circumvent constitutional protections." Ammermon, "improperly worked together with and as an agent of law enforcement . . . in connection with FCMAT's purported audit of CNUSD, in an effort to conspire to violate Plaintiff's civil rights."
Again, however, no particularized facts showing any improprieties or constitutional violations are shown. Plaintiffs have adduced no evidence that defendants violated any laws, regulations, accounting standards, or FCMAT standards of operation, in conducting the AB 139 audit. Plaintiffs complain that the AB 139 audit exceeded its original $38,500 budget, but they do not articulate how that caused plaintiffs any constitutional injury. Plaintiffs also complain that Ammermon "referred to him[self] as the 'Neff investigator.'" But plaintiffs have not shown how defendants, either as agents of any law enforcement agency or acting on their own accord violated any of plaintiffs constitutional rights in the course of the AB 139 audit or the criminal investigation of Rizzo and plaintiffs.
All of the evidence shows that Ammermon assisted law enforcement personnel in understanding the AB 139 audit and in informing them how the embezzlement from CNUSD was perpetrated. No evidence shows that Ammermon unlawfully conducted any interviews or unlawfully seized or received any documents that were not related to or reasonably necessary to complete the AB 139 audit, as the complaint alleges. In sum, no evidence shows that any of defendants violated any of plaintiffs' constitutional rights in connection with the AB 139 audit or the criminal investigation.
In an effort to establish a Sixth Amendment violation, plaintiffs assert that, as" 'lead investigator for Neff,'" Ammermon was "given access to attorney-client privileged material, trade secret information and Neff's banking information." But in support of the anti-SLAPP motion, Ammermon averred that, to the best of his knowledge, neither he nor anyone else at FCMAT ever "obtained, received, reviewed, or utilized any documents to or from Plaintiffs or their attorneys, covered by the attorney-client privilege . . . ." Plaintiffs, in turn, adduced no evidence to contradict Ammermon's statement. Thus, plaintiffs made no evidentiary showing that Ammermon ever obtained, received, reviewed or utilized attorney-client privileged documents belonging to plaintiffs. Nor have plaintiffs shown that the documents that RSO seized from Neff in December 2017 contained any attorney-client privileged information.
Plaintiffs' similarly assert that Ammermon "colluded" with law enforcement to "subvert" the Fourth and Fifth Amendment rights of Neff" by "attempting to interview" Neff personnel, outside the presence of Neff's counsel, in January 2018 after RSO served the December 2017 search warrant on Neff and Neff was represented by counsel. Plaintiffs also claim Ammermon and RIVCODA Investigator Doyle "colluded to lie" to unspecified witnesses about Doyle's true identity. Ammermon also "attempted to secure reams of documents, in violation of the Fourth Amendment, that apparently law enforcement had been unable to gather." Again, however, plaintiffs have adduced no evidence that Ammermon improperly obtained or improperly utilized any attorney-client privileged communications belonging to plaintiffs at any time during the course of the AB 139 audit or the criminal investigation.
Relying on Jenkins v. McKeithen (1969) 395 U.S. 411 (Jenkins), plaintiffs argue that the AB 139 report amounted to "a quasi-adjudication of criminal conduct" in violation of plaintiffs' Fourteenth Amendment due process rights. Jenkins does not assist plaintiffs' argument. In Jenkins, a Louisiana statute created a "Labor-Management Commission of Inquiry" whose sole purpose was to investigate violations of criminal laws in the field of labor-management relations. (Id. at pp. 413-415.) The commission was tasked with determining in public findings whether there was probable cause to believe an individual had violated any criminal laws. (Id. at pp. 416-420.) The commission was empowered to recommend criminal prosecution of an individual or file criminal charges against the individual himself. (Id. at p. 417.) In making its findings, the commission was not required to afford individuals the right to call or cross-examine witnesses, and the individual's right to counsel was also limited. (Id. at pp. 417-418.)
The plaintiff, a labor union member, filed suit against the governor and six of the commission members for declaratory and injunctive relief, claiming the commission's public findings against him violated his Fourteenth Amendment due process rights. (Jenkins, supra, 395 U.S. at pp. 411, 418) He alleged that the commission was an "executive trial agency" whose "function was to publicly condemn." (Id. at pp. 414, 419.) The commission had" 'singled out'" the plaintiff for public condemnation, "procured false statements of criminal activities and used such statements to initiate baseless criminal proceedings" against the plaintiff, and "intimidated and coerced public officials into filing and prosecuting false criminal charges . . . ." (Id. at p. 419.)
Jenkins came before the high court after the lower court ruled that the complaint did not state a claim for relief under section 1983, among other grounds. (Jenkins, supra, 395 U.S. at p. 420.) A majority of the high court concluded that the plaintiff had sufficiently alleged a constitutional injury: the deprivation of his procedural due process rights in the commission's public findings against him. (Id. at pp. 428-429.)
The Jenkins court explained: "In the present context, where the Commission allegedly makes an actual finding that a specific individual is guilty of a crime, we think that due process requires the Commission to afford a person being investigated the right to confront and cross-examine the witnesses against him." (Jenkins, supra, 395 U.S. at p. 429.) The commission's procedures were also deficient in several other respects. (Id. at p. 430.) The Jenkins court stopped short of determining whether the Due Process Clause required the commission to provide all procedural protections afforded a defendant in a criminal prosecution, leaving that question for the district court to determine on remand. (Id. at pp. 430-431.) In a concurring opinion, Justice Black wrote that the state law establishing the commission was "nothing more nor less than a scheme for a nonjudicial tribunal to charge, try, convict, and punish people without courts, without juries, without lawyers, without witnesses-in short, without any of the procedural protections that the Bill of Rights provides." (Id. at p. 432.)
Similarly here, plaintiffs argue that the "FCMAT audit violated the minimal requirements of due process by acting as a quasi-adjudication of criminal conduct." We disagree. Defendants did not "adjudicate" or determine-either in the AB 139 Report or otherwise-that plaintiffs were guilty of any criminal conduct. (Cf. Jenkins, supra, 395 U.S. at p. 424, 427.) Rather, defendants were tasked with conducting an AB 139 audit of CNUSD's fiscal practices. Fine explained: "AB 139 Extraordinary audits review possible fraud, misappropriation of funds, or other illegal fiscal practices occurring with connection to local educational agencies." (See Ed. Code, § 1241.5, subd. (b).) This distinction renders Jenkins unhelpful to plaintiffs' section 1983 due process claim.
C. Plaintiffs' Motion for Anti-SLAPP Discovery Was Properly Denied
Plaintiffs claim the court abused its discretion in denying their motion for limited anti-SLAPP discovery. They claim they demonstrated good cause to take the depositions of Ammermon and Barros before they were required to file their opposition to the anti-SLAPP motion. We find no abuse of discretion.
1. Applicable Principles and Standard of Review
The filing of an anti-SLAPP motion stays discovery in the action. (§ 425.16, subd. (g).) But on noticed motion and "for good cause shown," the court "may order that specified discovery be conducted notwithstanding" the statutory discovery stay. (Ibid.)" '[G]ood cause'" in this context requires the plaintiff to show that," 'the specified discovery is necessary for the plaintiff to oppose the [anti-SLAPP] motion and is tailored to that end.'" (Balla v. Hall (2021) 59 Cal.App.5th 652, 692.)
The anti-SLAPP discovery stay has been uniformly interpreted as "a general stay on discovery in accordance with the [anti-SLAPP] statute's overall purposes." (Britts v. Superior Court (2006) 145 Cal.App.4th 1112, 1125.) The purpose of the anti-SLAPP statute is to "to nip SLAPP suits in the bud, with minimal costs to the target defendant" (id. at p. 1126), and the discovery stay serves this purpose (Slauson Partnership v. Ochoa (2003)112 Cal.App.4th 1005, 1021). "At the same time, the anti-SLAPP procedures were designed so that legitimate claims were not dismissed merely because they were tested at an early stage in the proceedings when the plaintiff had only a limited opportunity to conduct discovery." (The Garment Workers Center v. Superior Court (2004)117 Cal.App.4th 1156, 1161.) In enacting the anti-SLAPP discovery stay, "the Legislature sought to balance the need to protect defendants exercising their freedom of speech from having their personal and financial resources exhausted by SLAPPers' discovery demands with the need to permit legitimate plaintiffs to conduct necessary discovery before their suits were subjected to dismissal for failure to establish a prima facie case." (Ibid.)
Thus, "[i]f the plaintiff makes a timely and proper showing in response to the motion to strike, that a defendant or witness possesses evidence needed by plaintiff to establish a prima facie case, the plaintiff must be given the reasonable opportunity to obtain that evidence through discovery before the motion to strike is adjudicated." (Layfayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 37 Cal.App.4th 855, 868.) When good cause to obtain anti-SLAPP discovery is shown, the trial court must "liberally exercise" its discretion and allow the plaintiff the opportunity to obtain the discovery. (Ibid.) We review a trial court's ruling on a motion for anti-SLAPP discovery for an abuse of discretion. (Balla v. Hall, supra, 59 Cal.App.5th at p. 692.)
2. Analysis
Plaintiffs claim the court abused its discretion and prejudicially erred in denying plaintiffs' motion to take the depositions of Ammermon and Barros as anti-SLAPP discovery. (§ 425.16, subd. (g).) Plaintiffs argue this deposition testimony was necessary in order for plaintiffs to make a prima facie showing in support of their section 1983 claims. But plaintiffs did not explain in the trial court, and have not explained in this appeal, what deposition testimony Ammermon and Barros could have given that would have assisted plaintiffs in stating and substantiating any part of their section 1983 claims. Thus, plaintiffs did not establish good cause in the trial court, and the trial court did not abuse its discretion in denying plaintiffs' motion to take the Ammermon and Barros depositions. As the trial court pointed out, the allegations of the complaint were too vague to state a section 1983 claim or a Monell claim. For this reason, too, plaintiffs did not establish good cause to take the Ammermon and Barros depositions.
Plaintiffs argue they demonstrated good cause to take the Ammermon and Barros depositions. They point out that, in order to make a prima facie showing that defendants violated plaintiffs' First, Fourth, Fifth, Sixth, and Fourteenth Amendment rights (the 42 U.S.C. § 1983 claims), plaintiffs were required to establish, "among other things, that Defendants were working in connection with law enforcement, as agents or otherwise." Plaintiffs argue: "While documents in Plaintiffs' possession were helpful on this point, the documents painted a very incomplete picture as to whether Defendants improperly worked side by side with law enforcement in their investigation of Plaintiffs. The documentary evidence that Plaintiffs did have, however, made clear that everyone involved felt in their best interest not to leave a paper trail."
More specifically, plaintiffs argue the Ammermon and Barros deposition testimony "was needed to establish the nature of the relationship between Defendants and law enforcement, the specific details of Defendants' communications with law enforcement, and the information shared between Defendants and law enforcement, including the exchange of privileged information, among other things." In the trial court, plaintiffs similarly argued that the testimony would have revealed, "communications concerning the AB 139 investigation of Plaintiffs and the criminal investigation, communications among FCMAT, RSO, and RIVCODA, and internal communications around the drafting and publishing of the AB 139 audit." Thus, plaintiffs argued, the testimony would have shown "what defendants knew, when they knew it, and what they internally discussed with law enforcement at the time they violated Plaintiffs rights . . . ." (Italics added.)
As the trial court found, these arguments failed to demonstrate good cause to take the Ammermon and Barros depositions. The record shows that, by December 2019, one year before they filed their complaint in December 2020, plaintiffs were in possession of numerous e-mails that Ammermon produced in response to Mierau's subpoena to Ammermon in Mierau's criminal case. Plaintiffs ostensibly used the e-mails in drafting the complaint. These e-mails showed that, during the AB 139 audit of CNUSD between 2017 and 2019, defendants were working with and cooperating with law enforcement agencies in the agencies' criminal investigation of Rozzi and plaintiffs. Thus, the "nature" of defendant's relationship with law enforcement was demonstrated in the emails. But none of the e-mails showed that defendants violated any of plaintiffs' constitutional rights. Moreover, plaintiffs failed to show, in their motion to obtain the discovery, that Ammermon or Barros could have provided any testimony that would have assisted defendants in stating and substantiating any part of their civil rights claims. Thus, plaintiffs did not show good cause for taking the Ammermon and Barros depositions.
Plaintiffs argue "[i]t is believed . . . Barros and others colluded with Ammermon to thwart" plaintiffs' Fourth, Fifth and Sixth Amendment rights, "by having Ammermon directly contact plaintiffs to get documents, witness interviews, and other information for use in the criminal investigation and prosecution." Plaintiffs complain that, "Barros even identified Ammermon as the 'Neff investigator' and described himself as investigating Rozzi. This was done in writing and was provided to other law enforcement partners announcing Ammermon's status in the investigation." Again, however, plaintiffs never explained to the trial court what deposition testimony Ammermon and Barros could have given that would have assisted plaintiffs in stating and substantiating any part of their civil rights claims.
For example, plaintiffs did not identify any attorney-client privileged documents contained in the documents seized from Neff. The e-mails that Ammermon produced showed that at least some of the seized documents were forwarded to Ammermon. And, in support of the anti-SLAPP motion, Ammermon averred that, to the best of his knowledge, neither he nor anyone else at FCMAT had ever obtained, received, reviewed, or utilized any of attorney-client privileged documents belonging to plaintiffs. Plaintiffs made no contrary showing to the trial court in support of their discovery motion. Thus, the trial court did not abuse its discretion in denying plaintiffs' motion to obtain this anti-SLAPP discovery.
IV. DISPOSITION
The judgment dismissing plaintiffs' entire complaint as a strategic lawsuit against public participation (Code Civ. Proc., § 425.16) is affirmed. Defendants shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278.)
We concur: McKINSTER Acting P. J., SLOUGH J.