Monday, March 2, 2015

A Conundrum for Mann-Hunter(s)

Baral v. Schnitt, No. B253620 (D2d1 Feb. 5, 2015)

Yet another court weighs in on the Mann rule, which says that an anti-SLAPP motion lies only to an entire cause of action. The upshot of the rule is that when a cause of action arises from both non-incidental activity protected under Code of Civil Procedure § 425.16(b)(1), as well as activity that is not subject to anti-SLAPP protection, the motion should be denied so long as the plaintiff can make a prima facie showing of success on any part of the claim. Over the last few years, a substantial split in appellate authority has arisen on this issue, with cogent arguments being raised on both sides.

Here, claims sounding in breach of fiduciary duties alleged that the defendant took efforts to oust plaintiff as an owner and co-manager of a company. Among other things, plaintiff alleged that defendant refused to permit plaintiff to participate in a forensic audit of plaintiff’s alleged misappropriation of corporate assets.

Relying on Hunter v. CBS Broadcasting, 221 Cal. App. 4th 1510 (2014), the court reads § 425.16(b)(1) rather broadly to include matters that “help to advance or assist” first amendment protected activity.  Based on this rule, it finds that the defendant’s decisions about the conduct of a forensic audit conducted in anticipation or contemplation of potential litigation would satisfy that standard.*

But plaintiff came forward with evidence substantiating a breach of fiduciary duty, although the evidence did not address the audit-related actions.  This implicates the Mann rule.  Reviewing the various cases on both sides of the split, the court—disagreeing with another second district case from two years ago—takes the Mann side of the split. Thus, the the trial court correctly denied the motion, instead of striking only the audit-related allegations.


*Interestingly, this case actually implicates two splits of authority over the anti-SLAPP statute, although it doesn’t point out the second one: the Mann split, as well as a long-simmering but not fully recognized split over the scope of § 425.16(e)(4)’s “other conduct in furtherance” language. As I noted when the case came out, Hunter is a particularly broad take (e)(4)’s language that is in tension with some other rulings. (If a nexus to anticipated litigation is sufficient to bring conduct into (e)(4), logically speaking, wiretapping witnesses might count as protected activity.) 

Moreover, although the court doesn’t delve into issue, §425.16(e)(4) applies only when the “conduct in furtherance” is “in connection with a public issue or an issue of public interest[.]” It’s unclear how an audit seeking to uncover defalcation of funds by an officer and member of a closely-held LLC meets that test. 

Review Granted on May 13, 2015.

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