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San Diegans For Open Government v. San Diego State University Research Foundation

California Court of Appeals, Fourth District, First Division

May 3, 2017

SAN DIEGANS FOR OPEN GOVERNMENT, Plaintiff and Appellant,
v.
SAN DIEGO STATE UNIVERSITY RESEARCH FOUNDATION et al., Defendants and Respondents INVESTIGATIVE NEWSOURCE et al., Real Parties in Interest and Respondents.

         APPEAL from an order of the Superior Court of San Diego County Super. Ct. No. 37-2015-00011951- CU-MC-CTL, Eddie C. Sturgeon, Judge. Affirmed.

          Leibold McClendon & Mann and John G. McClendon for Plaintiff and Appellant.

          Butz Dunn & DeSantis, Higgs Fletcher & Mack, Douglas M. Butz and Joy L. Homze for Defendants and Respondents.

          Sheppard, Mullin, Richter & Hampton, Guylyn R. Cummins and Valerie E. Alter for Real Parties in Interest and Respondents.

          NARES, J.

         A free press is a foundation of citizen participation in government because the press informs people about issues of public concern and provides a place for debate about public issues. A lawsuit filed primarily to chill the valid exercise of free speech is called a SLAPP suit and, if without merit, such an action may be dismissed early under Code of Civil Procedure[1] section 425.16 in what is commonly known as an anti-SLAPP motion.[2]

         In this anti-SLAPP case, investigative newsource (inewsource), an independent, nonprofit journalism organization, entered into contracts with KPBS, San Diego's public radio and television station, to gather and produce news stories with and for KPBS, in exchange for the right to use KPBS offices, media equipment, and related news facilities. KPBS is a department of San Diego State University (SDSU), and inewsource and KPBS have jointly created hundreds of news stories.

         In February 2015 inewsource began publishing articles critical of attorney Cory Briggs. For example, one was entitled "Cory Briggs' Land Deals Raise Ethical Legal Questions" and another was called "San Diego Attorney's Environmental Lawsuits Could Be Tainted by Conflict of Interest."

         After inewsource published about a dozen more critical stories about Briggs, San Diegans for Open Government (SDOG)-an entity inewsource reported is controlled by Briggs-sued inewsource, along with its founder, Loretta Hearn, and also SDSU, California State University (CSU), and San Diego State University Research Foundation (SDSURF).

         The gist of SDOG's complaint is the contracts between KPBS and inewsource violate statutory prohibitions on self-dealing involving public funds because Hearn was allegedly influencing both sides of the transaction-for SDSU as a faculty member, and for inewsource as its executive director. SDOG also alleges inewsource and Hearn misappropriated the names KPBS and SDSU.

         Asserting SDOG's lawsuit is based on the exercise of their constitutionally protected speech rights and lacked merit, Defendants[3] brought anti-SLAPP motions. The court granted the motions.

         SDOG appeals, contending the anti-SLAPP statute does not apply because (1) its lawsuit is a public interest lawsuit, exempt from the anti-SLAPP law under section 425.17, subdivision (b); and (2) the exception to that exemption for media defendants under section 425.17, subdivision (d) is inapplicable because its lawsuit has "nothing to do with stopping news reporting" but is instead directed to stopping "self-dealing by a public employee."

         Alternatively, SDOG asserts that if the anti-SLAPP statute applies, the order should be reversed because (1) its lawsuit is not directed at protected activity; and (2) even if it is, SDOG established a probability of prevailing.

         We affirm. Reporting news is protected speech. (Hunter v. CBS Broadcasting, Inc. (2013) 221 Cal.App.4th 1510, 1521 (Hunter).) News stories addressing issues of public interest do not arise out of thin air. They often require newsgathering using offices, internet access, studios, and production services. Providing office space and related newsgathering facilities in exchange for investigative news stories furthers protected speech. SDOG's lawsuit is therefore squarely within the anti-SLAPP statute, which protects not only speech, but also "conduct in furtherance of the exercise of the constitutional right of... free speech in connection with a public issue or an issue of public interest." (§ 425.16, subd. (e), italics added.)

         We reject SDOG's assertion that the anti-SLAPP statute does not apply because its lawsuit targets unlawful self-dealing, not protected speech. SDOG's argument improperly conflates distinct issues of conduct and motive. In determining whether the anti-SLAPP statute applies, the appropriate focus is on the alleged injury-producing conduct (here, the KPBS-inewsource contracts), and not the defendant's alleged wrongful motive for engaging in that conduct (here, alleged self-dealing). (Hunter, supra, 221 Cal.App.4th at pp. 1521-1523.)

         Moreover, SDOG's reliance on the public interest exemption to the anti-SLAPP statute in section 425.17, subdivision (b) is unavailing. That exemption does not apply to actions such as this one against news media engaged in newsgathering conduct. (§ 425.17, subd. (d)(1); Major v. Silna (2005) 134 Cal.App.4th 1485, 1496-1497 (Major).)

         Last, SDOG's claims fail on the merits because SDOG offered no admissible evidence to support its claims. SDOG's attempt to fill the evidentiary void by relying on allegations in its verified complaint is insufficient as a matter of law. (Brodeur v. Atlas Entertainment, Inc. (2016) 248 Cal.App.4th 665, 679 (Brodeur).)

         FACTUAL AND PROCEDURAL BACKGROUND

         A. The News Media Parties

         Hearn has been a professional journalist since 1974. In 2009 she founded inewsource, which creates investigative news stories on public issues.

         KPBS is a media entity operating as a public service of SDSU. KPBS, with broadcast facilities on the SDSU campus, delivers news and entertainment programming through television, radio, and digital media.

         SDSURF is a nonprofit corporation and a separate legal entity from SDSU. For over 34 years, SDSURF has provided KPBS with financial accounting, tax reporting, and administrative support.

         In 2010 KPBS began publishing inewsource news stories. Reporters for these two organizations also began working together on stories of public interest.

         B. The 2012 Agreement for Collaboration Between Inewsource and KPBS

         In the fall of 2011, KPBS remodeled its newsroom and began a nightly news television show. Hearn asked KPBS's station manager, Deanna Mackey, about moving inewsource into the remodeled KPBS newsroom because inewsource was looking for a reliable audience for its investigative news. Hearn's proposal interested KPBS, which was looking for more investigative news content.

         In 2012 KPBS and inewsource entered into a contract under which KPBS agreed to provide inewsource newsroom space to allow inewsource reporters to work closely with KPBS editors, reporters, and producers on collaborative work (the 2012 Agreement).[4] In exchange, inewsource agreed to give KPBS all of its news content for distribution on radio, television, and the Internet. KPBS characterizes this relationship with inewsource as a "partnership" that contemplates "joint story telling."

         Under the 2012 Agreement, KPBS agreed to provide inewsource with offices, furniture, studios and production areas, telephone and internet connections, and news gathering equipment. KPBS also agreed to invite inewsource employees to daily news meetings.

         In exchange, inewsource agreed to provide KPBS with 10 "substantial data driven stories" during the term and one "Watchdog feature per month, " plus a "[w]eekly data brief on a topic of interest to KPBS' audience." Inewsource also agreed to provide reporters to KPBS and to provide KPBS access to its databases.

         KPBS did not competitively bid the 2012 Agreement. Mackey, KPBS's station manager who participated in drafting the 2012 Agreement, stated such a contract would "never be subject to open bidding" because "content is qualitative" and "[p]artnerships between news organizations require trust...." Mackey stated KPBS "only partners with news organizations whose accuracy and content have proven to be trustworthy, such as inewsource." Vince Petronzio, associate general manager for business and financial affairs at KPBS, similarly stated that "KPBS does not solicit open bids for content-based contracts." He explained, "In fact, because content is unique and qualitative, it would never be subject to open bidding.... KPBS receives significant value from its partnership with inewsource because inewsource stories enhance the coverage that KPBS can provide to its audience." He added, "The partnership between KPBS and inewsource is definitely a value-for-value partnership."

         In a declaration, Hearn asserted she negotiated the 2012 Agreement only on behalf of inewsource. Mackey and Suzanne Marmion, director of news and editorial strategy for KPBS, negotiated the 2012 Agreement for KPBS. Neither Mackey nor Marmion has any financial interest in inewsource. In 2012, although Hearn occasionally volunteered as a guest lecturer for SDSU's school of journalism, she was not employed by SDSU and held no executive or managerial role at SDSU.

         Hearn's declaration states she has never been a KPBS board member or KPBS employee and has "never been in a position to influence [the KPBS] decision-making process or outcome in any way." She has never been a tenured or tenured-track SDSU professor, nor a department head, advisory board member, committee member, director, officer, or department chairperson. Hearn has never been employed by SDSURF.

         C. The 2015 Extension and Lease

         In 2015 inewsource and KPBS extended the 2012 Agreement (the 2015 extension).[5] They also entered into a new lease (2015 lease) under which KPBS leased office space, conference rooms, studios, and production areas to inewsource for its reporters to use "for the benefit of securing investigative news content for KPBS." Rent under the 2015 lease was only one dollar; however, KPBS's station manager stated KPBS received "significant value" from this agreement because "inewsource stories enhance the coverage that KPBS can provide to its audience."

         Hearn states she negotiated the 2015 extension and 2015 lease only on behalf of inewsource. Mackey and Marmion negotiated on behalf of KPBS. In 2015 Hearn was an adjunct professor of journalism at SDSU, teaching a three-unit class. SDSU paid Hearn for her teaching time at its standard rate, and she received no other benefits from SDSU. Hearn's declaration states she did not occupy any position of control or decision-making authority with SDSU, SDSURF, or KPBS.

         D. Nature of KPBS and Inewsource Collaboration

         Inewsource and KPBS have jointly created and distributed more than 285 stories. In most, inewsource reports the news, with input from KPBS editors and using KPBS videographers. In other cases, KPBS reporters do the reporting and inewsource reporters edit. Occasionally, KPBS and inewsource collaborate to jointly report stories. In all these situations, inewsource reporters work closely with KPBS editors and producers on content for KPBS.

         E. Inewsource Articles About Briggs

         In February 2015 inewsource began publishing uncomplimentary stories about Briggs. For example, one was entitled, "San Diego Attorney's Environmental Lawsuits Could Be Tainted by Conflict of Interest." There, inewsource reported that Briggs's wife, Sarichia Cacciatore, was listed as a project manager on a contract her employer had with a government entity at the same time Briggs was suing that entity over environmental matters. Briggs responded by stating on his website, "My wife has a job, and I have a job. We don't talk about or share client confidences, and we take measures to avoid creating any conflicts. There isn't anything illegal, unethical, or even unusual about this either."

         The next day, in an article entitled, "Document Links Briggs' Wife to His Law Business, " inewsource reported that Cacciatore was listed as vice president of Briggs's law firm at the same time she worked on projects for government agencies Briggs was suing.

         On February 25, 2015, inewsource reprinted a letter Briggs posted on his website, defending his conduct and stating, "My clients aren't wealthy corporations. There are people who have to fight and need a lawyer to represent them but often can't pay right away. I still fight for them."

         On March 3, 2015, inewsource published three more articles about Briggs. These were entitled "Behind the Briggs Investigation, " "Helix: Briggs' Wife Did Not Disclose VP Role in His Law Firm, " and "Contested Transcript of San Diego Attorney Cory Briggs' Wife Released."

         In these articles, inewsource reported that Cacciatore was employed by an environmental company that has done work for the City of San Diego (the City)-and that Briggs sued the City regarding one of these projects. Inewsource reported, "Records released Monday confirm Cory Briggs' wife was vice president of the Briggs Law Corp[oration] for the past 'twenty years, ' which means she was an officer of the law firm he used to sue the [City] at the same time she worked for a company on contract with the city." Briggs responded, stating Cacciatore was vice president of his law corporation "for reasons having nothing to do with running the firm and everything to do with things like estate planning...."

         On March 10, 2015, inewsource reported that Briggs had sued the City about at least one project Cacciatore worked on "directly."

         On March 30, 2015, Cacciatore and Briggs wrote to KPBS "to give you notice of our demand, and to make that demand, for correction and retraction of false, inaccurate, and/or misleading reporting that may have been disseminated by KPBS...." Inewsource and KPBS responded, stating it was "unaware of any false fact" in its story.

         On April 7, 2015, inewsource reported that the environmental firm employing Cacciatore had agreed to pay the City $143, 000 to resolve the potential conflict of interest claim. Earlier, Briggs wrote, "'There isn't anything illegal, unethical or even unusual'" about Cacciatore's employment and relationship to Briggs.

         One day later, inewsource published another article about Briggs, reporting Cacciatore played a "key role" in an environmental review of a project near the Mexican border. The article states Briggs filed a lawsuit alleging inadequacies in that project's analysis of biological impacts, and Cacciatore-vice president of Briggs's law firm-was the project's biologist. Inewsource also reported that Briggs had sued "at least 15 government agencies" that had contracted with the environmental firm employing Cacciatore. The article states Briggs operates through nonprofit corporations, including SDOG, which are actually run by Briggs's associates, including his cousin. The article states, "Experts in legal ethics have told inewsource the connection between Briggs and [his wife] is a 'horrible' and 'problematic' conflict of interest." The article explains:

         "Briggs' lawsuits against the [City] have cost taxpayers a significant amount of money over the years. But there was an undisclosed conflict of interest behind at least two of them, posing ethical and legal issues that recently resulted in a taxpayer settlement."

         On April 9, 2015, inewsource published Cacciatore's demand for correction and retraction, along with inewsource's lawyer's point-by-point response, refuting Briggs's assertions. The same day, SDOG filed the instant action. However, SDOG did not serve Hearn with the lawsuit until June 2015.

         F. Inewsource Publishes Another ...


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