Saturday, April 2, 2016

Sworn Hearsay Permitted in SLAPP Step Two

Sweetwater Union Sch. Dist. v. Gilbane Bldg. Co., No. D067383 (D4d1 Feb. 24, 2016)

A School District sued a contractor to void some contracts it alleged were corruptly procured by the contractor’s wining and dining of various district officials. The contractor moved to strike the case under the anti-SLAPP statute. The trial court denied the motion under Flatley v. Mauro, i.e., it held that the conduct alleged was illegal as a matter of law, and thus that the anti-SLAPP motion can’t apply.

The court of appeal affirms, but for different reasons. First off, for some strange reason, the district basically concedes that bribery of public officials “arises from protected activity.” The court cursorily notes that since lobbying local government entities is generally protected by the First Amendment, unless the district can show that the Flatley exception applies, the conduct counts as protected under Code of Civil Procedure § 425.16(b)(1). 

Notably, there’s essentially no analysis in the opinion as to which of the four categories of “protected activity” listed in § 425.16(e)(1)-(4) is implicated here. Political bribery isn’t a “statement” as the term is used in the definitions in categories (1) to (3). (FWIW, that readily distinguishes the only case cited on the point, DuPont Merck Pharmaceutical Co. v. Superior Court, 78 Cal. App. 4th 562, 566 (2000), which dealt with a drug company’s statements in advertising, marketing, and public relations campaigns.) The only potential applicable category that reaches conduct that does not require a written or oral utterance is the “other conduct in furtherance” catchall in § 425.16(e)(4). And as I’ve noted elsewhere, the (e)(4) catchall has led to anomalous results and an unresolved split in authority, with no case articulating a satisfying theory of how (e)(4) should be applied to activity that pretty clearly isn’t First-Amendment protected—stuff like bribery in furtherance of litigation, racial, gender, and age discrimination in media employment and tenure decisions, and litigation-related wiretapping—but can arguably be crammed into the linguistic formulation of “other conduct in furtherance” of some speech or petitioning interest.

In any event, the court goes on to decide that the Flatley exception doesn’t apply. The exception is very narrow, applying only when (1) the defendant admits the illegality of its conduct; or (2) the evidence is sufficient to establish the illegality of the conduct as a matter of law. While the District here alleges that the contract was engaged in illegal bribery, the contractor didn’t admit it, and the District’s evidence wasn’t so strong as to prove bribery as a matter of law, even though several employees of the District and the Contractor had pleaded guilty. So to avoid having its claim stricken as a SLAPP, the district needs to show a probability of prevailing. And to do that, it needs to come forward with prima facie evidence for each element on its claim.

The District, however, did meet its burden. The relevant statute—Government Code § 1090—permits a public entity to sue to cancel a contract when the people who awarded it were financially interested. And “interested” has been interpreted to include receiving bribes in exchange for approving a deal. On this issue, the District put forth a bunch of evidence, especially materials from prior criminal cases. The Contractor’s appeal argues that the trial court erroneously considered this evidence.

The Court of Appeal notes the generally applicable rule that evidence submitted in opposition to an anti-SLAPP motion needs to be admissible under the Evidence Code. But like on summary judgment, this rule recognizes a narrow exception: although technically hearsay, affidavits and declarations can be used in lieu of live testimony. The gist of the point is generally that a declaration simply puts potential trial testimony in a form that can be considered as part of a law and motion matter without holding an evidentiary hearing.

The problem is that the evidence doesn’t consist of affidavits or declarations prepared for this case. It consists instead of sworn change of plea documents from the convicted individuals and grand jury transcripts. The court nonetheless finds that these documents fall within the exception because—notwithstanding whether the declarants would or could ever attend a trial in the case—the statements and testimony were sworn under penalty of perjury. It getting to its result it confronts a split of authority addressing the admissibility of prior case testimony in the summary judgment context. 

One case—Gatton v. A.P. Green Services, Inc., 64 Cal. App. 4th 688, 694 (1998)—holds that because prior-case testimony is not the functional equivalent of an affidavit or declaration, it is admissible on a summary judgment only only if the foundational elements of the prior testimony exception to the evidence code are present. I.e., that the witness is unavailable and a party to the prior case had a similar motive an opportunity to cross. See Cal. Evid. Cod § 1292(a). Notably Gatton specifically declined to follow the other case—Williams v. Saga Enterprises, Inc., 225 Cal. App. 3d 142, 149 (1990)—which permitted use of prior case depo testimony on SJ without satisfying § 1292(a), because it was under oath and its “effect” was functionally “the same as would be a declaration supplied by [the witness] in this case.”

The court here decides Williams has the better argument. So since the evidence at issue—change of plea documents and grand jury testimony—were signed or verbally sworn under penalty of perjury, the trial court could consider it as the functional equivalent of a declaration. And that was the case even if the District couldn’t satisfy the requirements of some other hearsay exception or otherwise show that the witnesses could or would testify to those facts at some later trial. (Indeed, given the witnesses’ potential incarceration, presumably they would not.) The court notes that a technical relaxation of the hearsay rule is particularly sensible on an anti-SLAPP motion, where the plaintiff is constrained in being required to gather evidence to substantiate a prima facie case without the benefit of any discovery.

So, considering the objectionable evidence, the District set out a prima facie case, satisfying its burden under the second step of the anti-SLAPP analysis. The motion was thus properly denied.


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