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Efrain Garcia, et al. v. Allstate Insurance

September 17, 2012

EFRAIN GARCIA, ET AL.
PLAINTIFFS,
v.
ALLSTATE INSURANCE,
DEFENDANT.



The opinion of the court was delivered by: Sheila K. Oberto United States Magistrate Judge

FINDINGS AND RECOMMENDATIONS THAT DEFENDANT'S ANTI-SLAPP MOTION AND REQUEST FOR ATTORNEY'S FEES BE GRANTED IN PART AND DENIED IN PART (Docket No. 13) OBJECTIONS DUE: 21 days

I. INTRODUCTION

On June 21, 2012, Defendant Allstate Insurance ("Allstate" or "Defendant") filed a special motion to strike Plaintiffs Efrain Garcia and Ofelia Garcia's (the "Garcias" or, collectively, "Plaintiffs") entire complaint pursuant to California's anti-Strategic Lawsuits Against Public Participation ("anti-SLAPP") statute, California Code of Civil Procedure Section 425.16. Plaintiffs did not file an opposition to Defendant's motion. The Court reviewed the motion and supporting documents and determined that this matter was suitable for decision without oral argument pursuant to the Local Rules of the United States District Court, Eastern District of California, Rule 230(g); as such, the hearing on the motion was vacated.

For the reasons set forth below, the Court RECOMMENDS that Defendant's motion be GRANTED IN PART and DENIED IN PART, that Plaintiffs' complaint be DISMISSED without prejudice and with leave to amend, and that Defendant's request for attorney's fees be DENIED.

II. BACKGROUND

On March 12, 2012, Plaintiffs filed a complaint in the Tulare County Superior Court for malicious prosecution against Defendant. (Doc. 1, pp. 5-7.) Plaintiffs alleged that on or about October 19, 2004, Defendant had instituted a prior civil action against Plaintiffs, claiming subrogation of damages in the amount of $10,233.20. (Doc. 1, p. 6, ¶ 5.) Plaintiffs' complaint states in relevant part:

Defendant[] acted without probable cause in bringing the [prior action in] that they did not honestly and reasonabl[y] believe that there were grounds for the action because DMV [Department of Motor Vehicle] records clearly showed that Plaintiffs were not the owners of the vehicle that Defendant was seeking subrogation for. Defendant[,] furthermore, continued to prosecute the action even after Plaintiffs asserted this fact. (Doc. 1, p. 6, ¶ 7.) Plaintiffs state that Defendant voluntarily dismissed the prior action on November 11, 2011. (Doc. 1, ¶ 6.)

Plaintiffs allege that Defendant "acted maliciously" in bringing the prior suit due to Defendant's refusal to "dismiss the [prior] lawsuit against Plaintiffs even after Plaintiffs on numerous attempts communicated that they did not own the subject vehicle, and showed sufficient proof of this." (Doc. 1, p. 6, ¶ 8.) Plaintiffs' complaint seeks damages in the sum of $300,000 and costs in the amount of $4,300. (Doc. 1, p. 6, ¶¶ 9-10.)

On April 17, 2012, Defendant filed a Notice of Removal in this Court based on diversity grounds pursuant to 28 U.S.C. § 1441(b), asserting that Plaintiffs are citizens of the State of California, Defendant is a corporation incorporated under the laws of the State of Illinois with its principal place of business in that state, and the damages sought by Plaintiff exceed $75,000. (Doc. 1, pp. 1-2.)

On May 17, 2012, the parties filed a stipulation and proposed order for an extension of time for Defendant to file an anti-SLAPP motion, which was granted by the Court on May 22, 2012. (Docs. 6, 8.) A stipulation and proposed order for a second extension of time for Defendant to file an anti-SLAPP motion was filed on June 1, 2012, and granted by the Court on June 5, 2012. (Docs. 9, 10.) Defendant's anti-SLAPP motion was filed on June 21, 2012, and Plaintiffs did not file an opposition. (Doc. 13.)

III. DISCUSSION

A. Legal Standard

The California legislature enacted California Code of Civil Procedure section 425.16(a) as a remedy for the "disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances." Cal. Code Civ. Proc. § 425.16(a); see also Equilon Enters., LLC v. Consumer Cause, Inc., 29 Cal. 4th 53, 59-60 (2002). Such lawsuits are known as "SLAPP" suits, an acronym for "strategic lawsuit against public participation." Equilon Enters, 29 Cal. 4th at 57, n.1. SLAPP suits are "civil lawsuits. . . aimed at preventing citizens from exercising their political rights or punishing those who have done so." Rezec v. Sony Pictures Entm't, Inc., 116 Cal. App. 4th 135, 139 (2004) (citations omitted). Section 425.16(a) provides that the statute shall be broadly construed. Rohde v. Wolf, 154 Cal. App. 4th 28, 35 (2007).

A defendant opposing a SLAPP claim may bring a special motion to strike any cause of action "arising from any act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue." Cal. Civ. Proc § 425.16(b)(1). The so-called "anti-SLAPP" statute provides a means of quickly identifying and eliminating SLAPP actions through early dismissal. Because SLAPP suits seek to deplete "the defendant's energy" and drain "his or her resources," the legislature sought "to prevent SLAPPs by ending them early and without great cost to the SLAPP target." Kibler v. N. Inyo Cnty. Local Hosp. Dist., 39 Cal. 4th 192, 197 (2006) (citations omitted). "Thus, in promulgating section 425.16, the California legislature provided that a 'special motion to strike may be brought early in the lawsuit and that discovery ordinarily may not proceed unless and until the court finds that the [plaintiff's] suit has a probability of success.'" Aeroplate Corp. v. Arch Ins. Co., No. CV F 06-1099 AWI SMS, 2006 WL 3257487, at *3 (E.D. Cal. Nov. 9, 2006) (citing Rogers v. Home Shopping Network, Inc. 57 F. Supp. 2d 973, 976 (C.D. Cal.1999)).

The Ninth Circuit has determined that Section 425.16 applies in federal courts in the absence of "direct collusion" between the state enactment and the Federal Rules of Civil Procedure 8, 12, and 56. U.S. ex rel. Newsham v. Lockheed Missiles & Space Co., Inc., 190 F.3d 963, 973 (9th Cir. 1999); see also Hopscotch Adoptions, Inc. v. Kachadurian, No. CV F 09-2101 LJO MJS, 2011 WL 587357, at *3 (E.D. Cal. Feb. 9, 2011); Aeroplate Corp, 2006 WL 3257487, at *4. California's "[a]nti-SLAPP statute and the Federal Rules do, in some respects, serve similar purposes, namely the expeditious weeding out of meritless claims before trial . . . . [T]here is no indication that Rules 8, 12, and 56 were intended to 'occupy the field' with respect to pretrial procedures aimed at weeding out meritless claims." Lockheed Missiles, 190 F. 3d at 972. The Ninth Circuit found that:

Although Rules 12 and 56 allow a litigant to test the opponent's claims before trial, California's "special motion to strike" adds an additional, unique weapon to the pretrial arsenal, a weapon whose sting is enhanced by a entitlement to fees and costs. Plainly, if the anti-SLAPP provisions are held not to apply in federal court, a litigant interested in bringing meritless SLAPP claims would have a significant incentive to shop for a federal forum. Conversely, a litigant otherwise entitled to the protections of the Anti-SLAPP statute would find considerable disadvantage in a federal proceeding.

Id. at 973.

"Special procedural rules apply where an anti-SLAPP motion is brought in federal court." Bulletin Displays, LLC v. Regency Outdoor Adver., Inc., 448 F. Supp. 2d 1172, 1180 (C.D. Cal. 2006); see also Hopscotch Adoptions, Inc., 2011 WL 587357, at *3. Federal courts must apply federal standards when considering Section 425.16 motions. Rogers, 57 F. Supp. 2d at 982. "If a defendant makes a special motion to strike based on alleged deficiencies in the plaintiff's complaint, the motion must be treated in the same manner as a motion under Rule 12(b)(6) except that the attorney's fee provision of § 425.16(c) applies." Id.at 983. However, "[i]f a defendant makes a special motion to strike based on the plaintiff's alleged failure of proof, the motion must be treated in the same manner as a motion under Rule 56 except that again the attorney's fees provision of § 425.16(c) applies." Id.*fn1

While a Section 425.16 special motion to strike does not apply to federal claims in federal court, see, e.g., Bulletin Displays, LLC, 448 F. Supp. 2d at 1182; Hopscotch Adoptions, Inc., 2011 WL 587357, at *4, the anti-SLAPP statute does apply to "state law claims that federal courts hear pursuant to their diversity jurisdiction." Hilton v. Hallmark Cards, 599 F.3d 894, 900 (9th Cir. 2010).

A court considering a motion to strike under California's anti-SLAPP statute must engage in a two-part inquiry. First, a defendant must make an initial prima facie showing that the plaintiff's suit arises from activity protected by the anti-SLAPP statute. Cal. Code Civ. Pro. § 425.16(b)(1); Brill Media Co. v. TCW Group, Inc., 132 Cal. App. 4th 324, 329, (2005), disapproved on other grounds in Simpson Strong-Tie Co., Inc. v. Gore, 49 Cal. 4th 12, 230 P.3d 1117 (2010). In determining whether the defendant has made this showing, the California Supreme Court has stressed that "the critical point is whether the plaintiff's cause of action itself was based on an act in furtherance of the defendant's right of petition or free speech." City of Cotati v. Cashman, 29 Cal. 4th 69, 78 (2002). Second, if the defendant is able to make this threshold showing, the burden shifts to the plaintiff to demonstrate a probability of prevailing on the challenged claims. Accordingly, a plaintiff must show that the claim 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." Jarrow Formulas, Inc. v. LaMarche, 31 Cal. 4th 728, 744 (2003). Claims for which a plaintiff is able to satisfy this burden are "not subject to being stricken as a SLAPP." Id.; see also Roderick v. Weissman, No. 1:11-CV-02093 LJO, 2012 WL 639463, at *2 (E.D. Cal. Feb. 24, 2012).

B. Analysis

Defendant moves to strike Plaintiffs' single cause of action for malicious prosecution. As Plaintiffs' complaint alleges a state law claim, and this action was removed by Defendant to this Court based on diversity, the Court properly considers Defendant's anti-SLAPP motion.*fn2 (Doc. 1.)

1. Defendant Meets Its Burden to Show that Plaintiffs' Suit Arises From Protected Activity

Defendant bears the initial burden of making a prima facie showing that Plaintiffs' suit arises from activity that is protected under California's anti-SLAPP statute. Cal. Code Civ. Pro. § 425.16(b)(1); Brill Media Co., 132 Cal. App. 4th at 329. "[T]he critical consideration is whether the cause of action is based on the defendant's protected free speech or petitioning activity." Navellier v. Sletten, 29 Cal. 4th 82, 89 (2002). "[A] defendant that satisfies its initial burden of demonstrating the targeted action is one arising from protected activity faces no additional requirement of proving the plaintiff's subjective intent . . . Nor need a moving defendant demonstrate that the action actually has had a chilling effect on the exercise of such rights." Id. at 88 (citation omitted). "A defendant meets this [protected activity] burden by demonstrating that the act underlying the plaintiff's cause fits one of the categories spelled out in section 425.16, subdivision (e)." Braun v. Chronicle Publishing Co., 52 Cal. App. 4th 1036, 1043 (1997). California Code of Civil Procedure 425.16 (e) provides: As used in this section, "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 ...


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