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People v. McGraw-Hill Companies, Inc.

California Court of Appeals, First District, Second Division

August 18, 2014

THE PEOPLE, Plaintiff and Respondent,
v.
THE MCGRAW-HILL COMPANIES, INC. et al., Defendants and Appellants.

San Francisco City & County Super. Ct. No. CGC-13-528491 Honorable Curtis E.A. Karnow Trial Judge.

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COUNSEL

Morrison & Foerster, Melvin R. Goldman, Ryan G. Hassanein, Nicholas Napolitan; Cahill Gordon & Reindel, Floyd Abrams, Adam Zurofsky, Jason M. Hall and Peter J. Linken for Defendants and Appellants.

Kamala D. Harris, Attorney General, Martin Goyette, Senior Assistant Attorney General, and Fredrick W. Acker, Deputy Attorney General, for Plaintiff and Respondent.

OPINION

RICHMAN, J.

The People, by and through the Attorney General, brought this action against McGraw-Hill Companies, Inc. and Standard & Poor’s Financial Services LLC (defendants) for statutory violations arising out of defendants’ alleged business practice of inflating their credit ratings of various structured finance securities. The complaint alleged four causes of action, including two for violations of California's False Claims Act (Gov. Code, § 12650 et seq.; CFCA). Defendants filed a special motion to strike the CFCA causes of action pursuant to section 425.16, subdivision (b) of the Code

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of Civil Procedure, the anti SLAPP statute.[1] The superior court denied the motion on the ground tat the People’s enforcement action was exempt from the special motion to strike procedure pursuant to section 425.16, subdivision (d), which provides that “This section shall not apply to any enforcement action brought in the name of the people of the State of California by the Attorney General, district attorney, or city attorney, acting as a public prosecutor.” Defendants filed a notice of appeal.

The People filed a motion to dismiss the appeal, challenging this court’s jurisdiction to review the trial court’s order, relying on the express language of subdivision (d). Defendants opposed the motion, contending that this appeal is authorized by the express language of subdivision (i), which provides that “[a]n order granting or denying a special motion to strike shall be appealable under Section 904.1.” The motion was thoroughly briefed, and we held oral argument, which was vigorous indeed. We now rule, concluding that the order is not appealable, and we therefore grant the motion to dismiss the appeal.[2]

BACKGROUND

Section 425.16

“In 1992, the Legislature enacted section 425.16, the anti-SLAPP statute, to provide for the early dismissal of unmeritorious claims filed to interfere with the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. [Citation.]” (Club Members for an Honest Election v. Sierra Club (2008) 45 Cal.4th 309, 315 [86 Cal.Rptr.3d 288, 196 P.3d 1094]; see also Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 192 [25 Cal.Rptr.3d 298, 106 P.3d 958] (Varian) [section 425.16 enacted in order “to prevent and deter” SLAPP suits “ ...


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