General Liability Alert: A Mixed Cause of Action with Protected and Non-Protected Activity Not Subject to Anti-SLAPP Motion

In Baral v. Schnitt (filed 2/5/2015, No. B253620), the California Court of Appeal, Second Appellate District, held that California’s anti-SLAPP statute does not authorize the striking of allegations of protected activity in a cause of action that also contains meritorious allegations of non-protected activity not within the purview of the statute. In so holding, the court attempted to resolve, or at least add its voice to, the growing conflict among appellate districts on the issue.

A SLAPP lawsuit (Strategic Lawsuit Against Public Participation) seeks to chill or punish the exercise of constitutional rights to free speech and to petition the government for redress of grievances. California’s Legislature enacted the anti-SLAPP statute to permit a defendant to file a special motion to strike as to any cause of action that arises out of an act in furtherance of such rights. In Baral, the plaintiff alleged that his business partner had violated fiduciary duties in usurping the plaintiff’s ownership and management interests in their jointly owned company, so that the defendant could benefit from a secret sale of the company. The complaint alleged that the defendant hired a public accounting firm and prevented the plaintiff from participating in its investigation in order to force the plaintiff’s cooperation of the sale of the company. The defendant filed an anti-SLAPP motion, seeking to strike all references to the accounting firm’s audit. The trial court denied the motion, on the ground that the anti-SLAPP statute applies to causes of action, not allegations.

On appeal, the defendant argued that the audit allegations should be stricken, despite that such a ruling would not eliminate any cause of action. The Court of Appeal disagreed, stating: “We come out on the side of those cases holding that, if the nonmoving party demonstrates a prima facie case of prevailing on any part of a mixed cause of action, the anti-SLAPP motion fails.” The court acknowledged a conflict among the appellate courts, even within the same districts, but disagreed with the line of cases holding that a mixed claim should be stricken because a plaintiff cannot frustrate the purposes of the SLAPP statute through a pleading tactic of combining allegations of protected and non-protected activity. The court stated the following reasons for its holding: (1) the anti-SLAPP statute applies to “causes of action” not allegations; (2) the purpose of the statute is to dispose of lawsuits arising from speech and petitioning activity, but there would be no appreciable timesaving if only certain portions of the claims were struck; and (3) to hold otherwise would have the perverse effect of encouraging defendants to file anti-SLAPP motions merely to take advantage of the statute’s effect (e.g., staying discovery, forcing a plaintiff to present evidence early on, etc.)

Baral is significant for its acknowledgment that the appellate courts are divided on the issue of mixed conduct cases and for announcing its adherence to the “all or nothing” approach. Baral comes on the heels of other recent anti-SLAPP appellate decisions acknowledging this split, and undoubtedly, it’s only a matter of time before the state high court reviews this issue.

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February 9, 2015