Optional Capital v. Akin Gump Strauss, Hauer & Feld LLP ( 2017 )

Filed 11/16/17; Certified for Publication 12/7/17 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF
CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
OPTIONAL CAPITAL, INC., B275274
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC474472)
v.
AKIN GUMP STRAUSS, HAUER
& FELD LLP et al.,
Defendants and Respondents.
APPEAL from orders of the Superior Court of Los
Angeles County, Teresa Sanchez-Gordon, Judge. Affirmed.
Rogari Law Corporation, Ralph Rogari; Law Offices of
Mary Lee and Mary Lee for Plaintiff and Appellant.
McDermott, Will & Emery, Gordon A. Greenberg and
Charles Edward Weir for Defendant and Respondent Akin
Gump, Strauss, Hauer & Feld LLP.
Lewis Brisbois Bisgaard & Smith, Raul L. Martinez,
Kenneth C. Feldman and Larissa G. Nefulda for Defendants
and Respondents Parker Shumaker Mills LLP, David Parker
and William Mills.
——————————
Optional Capital, Inc. (Optional or Plaintiff) sued
various entities and individuals, including DAS Corporation
(DAS) and its counsel—Akin Gump Straus Hauer & Feld
LLP (Akin) and Parker Shumaker Mills LLP, David Parker
and William Mills (collectively, Parker) (collectively with
Akin, Defendants)—for conversion and fraudulent transfer.
Plaintiff sought to recover from Defendants on theories of
vicarious liability (conspiracy and aiding and abetting).
In response, Defendants, pursuant to section 425.16 of
the Code of Civil Procedure,1 filed special motions to strike
all claims asserted against them—so-called anti-SLAPP
motions.2 In their motions, Defendants argued that their
respective representations of DAS were protected petitioning
activity under the anti-SLAPP statute and that Plaintiff
1 All further statutory references are to the Code of
Civil Procedure unless otherwise indicated.
2
SLAPP is an acronym for “strategic lawsuit against
public participation.” (Equilon Enterprises v. Consumer
Cause, Inc. (2002) 29 Cal. 4th 53, 57.)
2
could not show a probability of prevailing on any of its
claims due, among other things, to the litigation privilege.
The trial court eventually granted Defendants’ motions.
On appeal, Plaintiff argues that Defendants’ alleged
misconduct is not protected activity under the anti-SLAPP
statute and, even if it were, Plaintiff presented the trial
court with sufficient evidence to establish a probability of
prevailing on the merits of its claims. In addition, Plaintiff
argues that our decision in a prior appeal involving DAS’s
anti-SLAPP motion (Optional v. DAS Corp. (2014) 222
Cal. App. 4th 1388 (Optional I)) is “the law of the case” and,
as a result, Defendants’ reliance on the litigation privilege is
unavailing. We disagree with Plaintiff on each point and,
accordingly, affirm.
BACKGROUND3
Plaintiff is a Korean venture capital firm, whose
investors included DAS. (Optional I, supra, 222 Cal.App.4th
at pp. 1392–1393.) In 2001, according to Plaintiff, DAS and
certain individuals (the Kim parties) conspired to and did
3
As we noted in our earlier opinion, “[t]his case
involves an extremely tangled thicket of legal proceedings in
both state and federal court, as well as Switzerland.”
(Optional I, supra, 222 Cal.App.4th at p. 1392.) Since we
have discussed that tangled thicket in some detail
previously, (see id. at pp. 1392–1395), and since the parties
are familiar with the various proceedings, we will set forth
only as much background as is relevant to the disposition of
this appeal.
3
take control of Optional, converting more than $35 million of
Optional’s funds. (Ibid.) The Kim parties created a
California corporation, Alexandria Investments, Inc.
(Alexandria), and then transferred the money
misappropriated from Plaintiff into bank accounts in the
name of Alexandria at United Commercial Bank in Rowland
Heights, California. (Ibid.)
I. The underlying lawsuits
A. THE STATE COURT ACTION
In May 2003, DAS sued the Kim parties and others in
California state court (the state court action), alleging,
among other things, fraud, breach of contract, and breach of
fiduciary duty. (Optional I, supra, 222 Cal.App.4th at
pp. 1392–1393.) As part of the state court action, DAS
alleged that the Kim parties had transferred the funds
looted from Plaintiff into the United States. Later in 2003,
after DAS had inaugurated the state court action,
Alexandria transferred more than $15 million of Plaintiff’s
converted money to a bank account at Credit Suisse in
Geneva, Switzerland. (Ibid.)
B. THE FEDERAL FORFEITURE ACTION
Beginning in 2004, the United States Government,
based on the conduct of the Kim parties in running Optional,
commenced a series of forfeiture proceedings in California
federal district court that were later consolidated into one
proceeding (the federal forfeiture action). (Optional I, supra,
222 Cal.App.4th at pp. 1393–1394 & fn. 3.) “At the request
of the United States government, the Swiss government
4
froze the Credit Suisse account . . . . Both Optional and DAS
were claimants in the forfeiture action arising out of the Kim
parties’ looting of Optional, and both Optional and DAS filed
claims to the various assets, including the monies in the
Credit Suisse account.” (Id. at p. 1394.) Beginning in 2005,
Parker represented DAS in the federal forfeiture action.
In March 2007, the United States District Court
granted the Kim parties’ summary judgment motion against
the United States government in the federal forfeiture
action, a decision the Ninth Circuit affirmed in 2008, thereby
extinguishing the United States government’s forfeiture
claim and the government freeze on the Credit Suisse
account. (Optional I, supra, 222 Cal.App.4th at p. 1394.)
In October 2009, the federal district court granted
summary judgment in favor of the Kim parties on all
remaining properties, resulting in the dismissal of DAS’s
and Plaintiff’s claims. Both DAS and Plaintiff appealed.
C. PLAINTIFF’S FEDERAL COURT ACTION
In 2004, Plaintiff filed a lawsuit in federal district
court in California against the Kim parties and Alexandria
seeking damages for fraud and conversion based on the
looting of Optional (Plaintiff’s federal court action).
(Optional I, supra, 222 Cal.App.4th at p. 1394.)
In 2008, the jury returned a verdict in Plaintiff’s
federal court action, finding that the Kim parties and
Alexandria converted approximately $15.5 million from
Optional. (Optional I, supra, 222 Cal.App.4th at p. 1394.)
5
The federal district court, however, subsequently vacated the
jury award, extinguishing Plaintiff’s judgment lien. (Ibid.)
D. DAS’S CRIMINAL ACTION IN SWITZERLAND
In April 2007, after the Kim parties won their
summary judgment motion against the United States
government in the federal forfeiture action, DAS instituted
criminal proceedings in Switzerland against Alexandria,
thereby obtaining a second freeze on the Credit Suisse funds
(DAS Freeze). (Optional I, supra, 222 Cal.App.4th at
p. 1394.) “Although it was aware of the DAS Freeze on the
funds, Optional did not take any action on its own in
Switzerland to freeze the funds.” (Ibid.)
E. A CONFLUENCE OF EVENTS IN 2010-2011
During the period 2010-2011, a number of events
occurred in rapid succession in the underlying proceedings
that would give rise to Plaintiff’s claims below.
In November 2010, the parties to the state court action,
through private mediation, reached a confidential
settlement. (Optional I, supra, 222 Cal.App.4th at p. 1395.)
At the time of the settlement, Akin represented DAS.
In December 2010, funds became available to fund the
settlement in the state court action. Shortly after the
parties to the state court action had settled their dispute, the
Swiss investigating magistrate was informed of the
settlement. (Optional I, supra, 222 Cal.App.4th at p. 1395.)
At a hearing in February 2011, “with DAS and Alexandria
present, the Swiss government lifted the DAS Freeze and
6
the funds on deposit at Credit Suisse were released to DAS.
Optional did not participate in these proceedings.” (Ibid.)
Also, in December 2010, the Ninth Circuit reversed
and reinstated both DAS’s and Plaintiff’s claims in the
federal forfeiture action. One month later, in January 2011,
the Ninth Circuit reinstated Plaintiff’s recovery on its
conversion claim. (Optional I, supra, 222 Cal.App.4th at
p. 1395.)
In May 2011, with its restored judgment against the
Kim parties, Plaintiff sought a contempt order against DAS
and its counsel (attorneys from both Parker and Akin),
arguing, among other things, that the settlement in the state
court action was “designed to thwart [the federal district
court’s] jurisdiction and deprive Optional of its opportunity
to pursue its claims” on the funds in the Credit Suisse
account. Plaintiff asked the federal district court to order
the return of the funds from Credit Suisse account.
In June 2011, the federal district court denied
Plaintiff’s requests. While the district court recognized that
DAS’s conduct had, in effect, “bypassed [its] in rem
jurisdiction over the Credit Suisse accounts,” neither DAS
nor its counsel violated any court order. In fact, “DAS
obtained the relief it sought from a legitimate authority that
had both jurisdiction and actual control over the [Credit
Suisse] accounts.”
In November 2011, the district court, over Plaintiff’s
objection, dismissed DAS from the federal forfeiture action.
7
II. Plaintiffs’ claims against Defendants
On December 1, 2011, Plaintiff filed its initial
complaint in the action below. Plaintiff alleged that DAS,
Defendants, and various other individuals and entities,
including the United States government, “agreed on a
common plan . . . to fraudulently transfer 13 million dollars
from the Credit Suisse Bank account to DAS and thereby
hinder, delay or defraud OPTIONAL in recovering that
property.” Although Plaintiff did not provide any details
about the formation and operation of the alleged conspiracy,
it alleged that the DAS Freeze was a result of the conspiracy
and that Parker had made misleading representations to the
federal district court and to the Ninth Circuit.
Plaintiff’s initial complaint spurred a number of anti-
SLAPP motions from various defendants. DAS filed the first
of these motions on March 27, 2012. On April 4, 2012, the
same day that Akin filed its anti-SLAPP motion, Plaintiff
voluntarily dismissed Akin from the case. On April 12, 2012,
Plaintiff and Parker stipulated that Parker could defer filing
its anti-SLAPP motion until after an appeal was decided on
the then-pending anti-SLAPP motions.
The trial court granted DAS’s anti-SLAPP motion and
Plaintiff appealed. (Optional I, supra, 222 Cal.App.4th
at pp. 1396–1397.) In an opinion dated January 15, 2014,
we reversed, holding that “DAS’s conduct in obtaining money
from Alexandria’s Credit Suisse account did not constitute
protected activity under section 425.16, Optional has
established a reasonable probability of prevailing on the
8
merits because it can trace the funds the Kim parties
wrongfully took from Optional to the funds in Alexandria’s
account, and the litigation privilege does not bar Optional’s
claims.” (Id. at p. 1397.)
In March 2014, following our decision in Optional I,
supra, 222 Cal. App. 4th 1388, Plaintiff filed its first amended
complaint (FAC), the operative complaint for purposes of
this appeal. The FAC, besides adding a third cause of action
for violation of Penal Code section 496, added little in the
way of detail with respect to the alleged conspiracy. The
only significant additional factual averment with regard to
the conspiracy was that the “agreement originated with
United States attorneys in the Justice Department” and
“had the approval of the president of the United States,”
with the goal being a “new trade agreement between the
United States and South Korea.”
III. Defendants’ anti-SLAPP motions
On May 28, 2014, Parker filed its anti-SLAPP motion.
In its motion, Parker stressed that it was counsel of record
for DAS in the federal forfeiture action and, as a result, it
had nothing to do with the settlement in the state court
action or with the Swiss proceedings connected with the DAS
Freeze or with the transfer of funds from the Credit Suisse
account to DAS. Moreover, as DAS’s counsel in the federal
forfeiture action, Parker argued that its actions were
protected activity under the anti-SLAPP statute and that
Plaintiff could not show a probability of prevailing on any of
its claims due to, among other things, the litigation
9
privilege. Parker’s motion was supported by, inter alia, a
declaration from one of the Parker attorneys who
represented DAS in the federal forfeiture action.
On August 5, 2014, Akin, which Plaintiffs had brought
back into the lawsuit, filed a second anti-SLAPP motion.
Akin argued that Plaintiff’s claims against it in the FAC
were premised on Akin’s provision of legal services to DAS in
the state court action including the negotiated settlement of
that action, actions which were protected by the anti-SLAPP
statute and the litigation privilege, among other things.
Although Akin’s motion was not supported by a declaration
from any of its attorneys who represented DAS in the state
court action, Akin submitted court records from that case
establishing that it was counsel of record for DAS in the
state court action at or around the time of the settlement.
Parker and Akin joined in each other’s motions.
IV. Plaintiffs’ oppositions
Plaintiff opposed both motions. In opposition to
Defendants’ motions, Plaintiff argued that, based on our
holding in Optional I, supra, 222 Cal. App. 4th 1388,
Defendants’ respective representations of DAS were not
protected petitioning activity under the anti-SLAPP statute.
Plaintiff, in other words, argued that Defendants were
vicariously liable for DAS’s misconduct.
Consistent with its law of the case argument, Plaintiff
relied on evidence that concerned its claims against DAS.
For example, in the lone declaration filed in support of
Plaintiff’s oppositions, the evidentiary focus is on
10
establishing Plaintiff’s right to the funds in the Credit Suisse
account, not on identifying Defendants’ conduct in support of
the alleged conspiracy. To the extent that Plaintiff identified
any specific acts of alleged misconduct by the Defendants, it
was limited to certain purported omissions and
misrepresentations by Defendants in the federal forfeiture
action. More specifically, Plaintiff submitted an order from
the district court in the federal forfeiture action denying
Plaintiff’s contempt motion against DAS and its attorneys.
Although the district court denied Plaintiff’s motion, it
expressed some dismay with respect to the conduct of
Defendants, especially in regard to their arguably belated
disclosure of the state court settlement and the transfer of
funds from the Credit Suisse account to DAS: “While a
finding of contempt cannot be supported . . . , the events
described above and counsel’s explanations . . . give the
Court some pause as to counsel’s judgment and credibility.
Specifically, the Court views with some skepticism [Parker’s]
disclaiming any meaningful knowledge of the settlement
[citations] and [Akin’s] suggestion that the removal of 14
billion won from the Credit Suisse accounts is of no
consequence to this Court’s in rem
jurisdiction . . . . [¶] . . . [T]hat the DAS-Kim settlement
contains a confidentiality clause is not an adequate
explanation for any counsel’s failure to disclose the existence
of the settlement. . . . The Court should not have to ferret
out information so crucial to case
management . . . . [¶] . . . Most attorneys practicing before
11
this Court are forthright and assist the Court in the
objective we all strive for—the speedy and efficient provision
of justice [Citation.] The conduct of counsel for DAS and the
Kims, described herein, was, regrettably, lacking such
cooperation.”
On January 27, 2015, the trial court granted both of
Defendants’ motions. However, based on certain comments
made during the hearing on the motions, the judge was
subsequently disqualified. As a result, the ruling in favor of
the Defendants was vacated without prejudice to the parties
re-litigating the motions.
In February 2016, after the case had been reassigned
to a different judge, the Defendants rescheduled their
motions. The Defendants also sought leave to file
supplemental briefs addressing new case law. The new
judge granted Defendants’ request and granted Plaintiff the
opportunity to fully brief its opposition to the motions to
address the new authorities relied upon by Defendants.
In its supplemental oppositions, Plaintiff continued to
argue, based on our prior holding, that because DAS’s
conduct was not protected under the anti-SLAPP statute
neither was Defendants’ conduct. And, as before, Plaintiff’s
evidence was devoted primarily to reproving its successful
conversion claim in the federal court action and thereby its
right to the funds in the Credit Suisse account. However,
Plaintiff also augmented its prior evidentiary submissions
about Defendants’ purported failure to timely disclose to the
district court overseeing the federal forfeiture action the
12
state court settlement and resulting transfer of funds to
DAS. For example, in addition to the district court’s order
denying the contempt motions, Plaintiff included excerpts
from a transcript of a hearing before the district court at
which attorneys for both Defendants appeared, various
orders by the district court taking issue with “DAS’s silence”
with respect to the status of the Credit Suisse account, and
responsive filings by DAS.
In April 2016, the trial court granted Defendants’
motion, observing to Plaintiff, “You might allege all these
things [conspiracy, etc.], but where is the evidence?”
Plaintiff timely appealed from both orders.
DISCUSSION
I. Optional I, supra, 222 Cal. App. 4th 1388 is not the
“law of the case” for purposes of this appeal
Plaintiff contends on appeal, as it did below, that
Optional I, supra, 222 Cal. App. 4th 1388 is the “law of the
case.” Consequently, as a preliminary matter, we need to
address what effect, if any, our prior decision in Optional I
has on the outcome of this appeal.
“ ‘The law of the case doctrine states that when, in
deciding an appeal, an appellate court “states in its opinion a
principle or rule of law necessary to the decision, that
principle or rule becomes the law of the case and must be
adhered to throughout its subsequent progress, both in the
lower court and upon subsequent appeal.” ’ ” (Quackenbush
v. Superior Court (2000) 79 Cal. App. 4th 867, 874.) The
doctrine applies to a rule of law necessarily decided in an
13
appellate decision and determines “ ‘the rights of the same
parties in any subsequent retrial or appeal in the same
case.’ ” (Nally v. Grace Community Church (1988) 47 Cal. 3d
278, 301, italics added; Morohoshi v. Pacific Home (2004) 34
Cal. 4th 482, 491 [doctrine applies to “same parties”].) “The
‘law of the case’ doctrine . . . precludes a party from
obtaining appellate review of the same issue more than once
in a single action.” (Katz v. Los Gatos–Saratoga Joint Union
High School Dist. (2004) 117 Cal. App. 4th 47, 62, italics
added; People v. Boyer (2006) 38 Cal. 4th 412, 441 [doctrine
applies to “ ‘an already decided issue in the same case’ ”].)
The law of the case doctrine does not apply here
because our prior decision involved different parties and
different issues. The core issue in Optional I, supra, 222
Cal. App. 4th 1388 was whether “DAS’s conduct in obtaining
money from Alexandria’s Credit Suisse
account . . . constitute[d] protected activity under section
425.16.” (Optional I, at p. 1397, italics added.) We were not
concerned with Defendants’ conduct, because they were not
parties to the appeal. In fact, at the time Plaintiff filed its
appeal in Optional I, Plaintiff had dismissed Akin from the
case and had stipulated with Parker that its anti-SLAPP
motion could be deferred until after Plaintiff’s appeal had
been resolved.
In short, Plaintiff is incorrect. The law of the case
doctrine is not applicable to this appeal, as the parties and
the issues are not the same as those in Optional I, supra,
222 Cal. App. 4th 1388.
14
II. The anti-SLAPP statute and applicable legal
principles
A. SECTION 425.16
“A SLAPP is a civil lawsuit that is aimed at preventing
citizens from exercising their political rights or punishing
those who have done so. ‘ “While SLAPP suits masquerade
as ordinary lawsuits such as defamation and interference
with prospective economic advantage, they are generally
meritless suits brought primarily to chill the exercise of free
speech or petition rights by the threat of severe economic
sanctions against the defendant, and not to vindicate a
legally cognizable right.” ’ ” (Simpson Strong-Tie Co., Inc. v.
Gore (2010) 49 Cal. 4th 12, 21 (Simpson).)
“In 1992, out of concern over ‘a disturbing increase’ in
these types of lawsuits, the Legislature enacted
section 425.16, the anti-SLAPP statute. (§ 425.16, subd. (a).)
The statute authorized the filing of a special motion to strike
to expedite the early dismissal of these unmeritorious
claims. (§ 425.16, subds. (b)(1), (f).) To encourage ‘continued
participation in matters of public significance’ and to ensure
‘that this participation should not be chilled through abuse
of the judicial process,’ the Legislature expressly provided
that the anti-SLAPP statute ‘shall be construed broadly.’
(§ 425.16, subd. (a).)” (Simpson, supra, 49 Cal.4th at p. 21.)
The anti-SLAPP statute “provides a procedure for
weeding out, at an early stage, meritless claims arising from
protected activity.” (Baral v. Schnitt (2016) 1 Cal.5th 376,
384 (Baral).) The statute applies to “cause[s] of action
15
against a person arising from any act of that person in
furtherance of the person’s right of petition or free speech
under the United States Constitution or the California
Constitution in connection with a public issue.” (§ 425.16,
subd. (b)(1), italics added.) As used in the statutory scheme,
an “ ‘act in furtherance of a person’s right of petition or free
speech under the United States or California Constitution in
connection with a public issue’ includes: (1) any written or
oral statement or writing made before a legislative,
executive, or judicial proceeding, or any other official
proceeding authorized by law, (2) any written or oral
statement or writing made in connection with an issue under
consideration or review by a legislative, executive, or judicial
body, or any other official proceeding authorized by law,
(3) any written or oral statement or writing made in a place
open to the public or a public forum in connection with an
issue of public interest, or (4) any other conduct in
furtherance of the exercise of the constitutional right of
petition or the constitutional right of free speech in
connection with a public issue or an issue of public interest.”
(§ 425.16, subd. (e).)
B. EVALUATING ANTI-SLAPP MOTIONS
In ruling on a motion under section 425.16, the trial
court engages in what is now a familiar two-step process.
“First, the defendant must establish that the challenged
claim arises from activity protected by section 425.16.
[Citation.] If the defendant makes the required showing, the
burden shifts to the plaintiff to demonstrate the merit of the
16
claim by establishing a probability of success.” (Baral,
supra, 1 Cal.5th at p. 384.)
1. Step one: “arising from” protected activity
The moving party’s burden at step one is to show “the
challenged cause of action arises from protected activity.”
(Rusheen v. Cohen (2006) 37 Cal. 4th 1048, 1056.) “[T]he
statutory phrase ‘cause of action . . . arising from’ means
simply that the defendant’s act underlying the plaintiff’s
cause of action must itself have been an act in furtherance of
the right of petition or free speech. [Citation.] In the anti-
SLAPP context, the critical point is whether the plaintiff’s
cause of action itself was based on an act in furtherance of
the defendant’s right of petition or free speech. [Citations.]
‘A defendant meets this burden by demonstrating that the
act underlying the plaintiff’s cause [of action] fits one of the
categories spelled out in section 425.16, subdivision (e).’ ”
(City of Cotati v. Cashman (2002) 29 Cal. 4th 69, 78.)
In other words, “it is not enough to establish that the
action was filed in response to or in retaliation for a party’s
exercise of the right to petition. [Citations.] Rather, the
claim must be based on the protected petitioning activity.”
(Bergstein v. Stroock & Stroock & Lavan LLP (2015) 236
Cal. App. 4th 793, 804 (Bergstein).) “[I]f the defendant does
not meet its burden on the first step, the court should deny
the motion and need not address the second step.”
(Tuszynska v. Cunningham (2011) 199 Cal. App. 4th 257,
266.)
17
a. The principal thrust/ gravamen analysis
In determining whether a cause of action is based on
protected activity, we “examine the principal thrust or
gravamen of a plaintiff’s cause of action to determine
whether the anti-SLAPP statute applies.” (Ramona Unified
School Dist. v. Tsiknas (2005) 135 Cal. App. 4th 510, 519–
520.)4 “We assess the principal thrust by identifying ‘[t]he
allegedly wrongful and injury-producing conduct . . . that
provides the foundation for the claim.’ ” (Hylton v. Frank E.
Rogozienski, Inc. (2009) 177 Cal. App. 4th 1264, 1272, italics
added.)
In determining “whether the challenged claims arise
from acts in furtherance of the defendants’ right of free
speech or right of petition under one of the categories set
forth in section 425.16, subdivision (e). . . . ‘[w]e examine the
principal thrust or gravamen of a plaintiff’s cause of action
to determine whether the anti-SLAPP statute applies.’ ”
(Finton Construction, Inc. v. Bidna & Keys, APLC (2015) 238
Cal. App. 4th 200, 209 (Finton Construction).) The “gravamen
is defined by the acts on which liability is based, not some
philosophical thrust or legal essence of the cause of action.”
(Wallace v. McCubbin (2011) 196 Cal. App. 4th 1169, 1190.)
In other words, “for anti-SLAPP purposes [the] gravamen [of
4 Gravamen is generally understood to mean “the
substantial point or essence of a claim, grievance or
complaint.” (Black’s Law Dict. (10th ed. 2014) p. 817, col. 1;
Garner, Dict. of Modern Legal Usage (2d ed. 1995) p. 391
[“the point of a complaint or grievance”].)
18
plaintiff’s cause of action] is defined by the acts on which
liability is based.” (Ibid., italics added.)
Consequently, “[i]n deciding whether the ‘arising from’
requirement is met, a court considers ‘the pleadings, and
supporting and opposing affidavits stating the facts upon
which the liability or defense is based.’ (§ 425.16, subd. (b).)”
(City of Cotati v. Cashman, supra, 29 Cal.4th at p. 79.)
Thus, we are “not limited to examining the allegations of the
complaint alone but rather consider the pleadings and the
factual material submitted in connection with the special
motion to strike.” (Contreras v. Dowling (2016) 5
Cal.App.5th 394, 408 (Contreras); see Karnazes v. Ares
(2016) 244 Cal. App. 4th 344, 353 [considering pleadings plus
declaration and emails for step one]; Navellier v. Sletten
(2002) 29 Cal. 4th 82, 90 (Navellier) [examining “relevant
documents” to find acts complained of fall within anti-
SLAPP statute].)5
5 In the wake of Baral, supra, 1 Cal.5th 376, one court
has rejected the principal thrust or gravamen analysis.
(Sheley v. Harrop (2017) 9 Cal.App.5th 1147, 1170 (Sheley).)
We are not convinced, however, that Sheley’s rejection is
well-taken for at least two reasons.
First, Sheley’s wholesale rejection of the principal
thrust or gravamen analysis is based largely on an
extrapolation from Baral, supra, 1 Cal.5th 376. (Sheley,
supra, 9 Cal.App.5th 1147.) In Baral, our highest court
disapproved a number of cases that used the “primary right
theory” to determine whether a cause of action is based on
protected activity. (Baral, at pp. 394–395.) Baral explained
19
that the primary rights theory has a “ ‘fairly narrow field of
application. It is invoked most often when a plaintiff
attempts to divide a primary right and enforce it in two
suits.’ ” (Id. at p. 395.) In addition, “the primary right
theory is notoriously uncertain in [its] application.” (Ibid.)
Based on Baral’s rejection of the primary rights theory,
Sheley rejected the principal thrust/gravamen analysis.
(Sheley, at p. 1170.) Baral, however, (as Sheley concedes) did
not address, let alone disapprove, the principal thrust or
gravamen analysis. (See id. at p. 1170.)
Second, Sheley’s rejection appears to be based, in part,
on an overbroad reading of Baral, supra, 1 Cal.5th 376.
(Sheley, supra, 9 Cal.App.5th 1147.) In Baral, our Supreme
Court simply held that a special motion to strike can reach
distinct claims within pleaded counts, thereby disapproving
the so-called Mann rule that only entire causes of action can
be stricken (Mann v. Quality Old Time Service, Inc. (2004)
120 Cal. App. 4th 90). (See Baral, at p. 396 & fn. 11.) But
Baral did not say that a special motion to strike must always
be limited to challenges within a pleaded count. Rather,
Baral adopted a permissive approach: “the Legislature’s
choice of the term ‘motion to strike’ reflects the
understanding that an anti-SLAPP motion, like a
conventional motion to strike, may be used to attack parts of
a count as pleaded.” (Id. at p. 393, italics added.) In other
words, a special motion to strike, like a conventional motion
to strike may be used to attack an entire pleading, such as a
complaint, and various subparts of a pleading, such as a
cause of action or pleaded count, as well as component
paragraphs, words or phrases. Critically, in this case,
Defendants did not move to strike certain subparts of
Plaintiffs’ complaint. Instead, they expressly moved to
20
b. The defendant’s burden
A defendant’s burden on the first prong is not an
onerous one. A defendant need only make a prima facie
showing that plaintiff’s claims arise from defendant’s
constitutionally protected free speech or petition rights. (See
(Governor Gray Davis Com. v. American Taxpayers Alliance
(2002) 102 Cal. App. 4th 449, 456.) “ ‘The Legislature did not
intend that in order to invoke the special motion to strike
the defendant must first establish [his or] her actions are
constitutionally protected under the First Amendment as a
matter of law.’ [Citation.] ‘Instead, under the statutory
scheme, a court must generally presume the validity of the
claimed constitutional right in the first step of the anti-
SLAPP analysis, and then permit the parties to address the
issue in the second step of the analysis, if necessary.
[Citation.] Otherwise, the second step would become
superfluous in almost every case, resulting in an improper
shifting of the burdens.’ ” (Id. at p. 458, italics added.)
2. Step two: probability of prevailing
“If the defendant makes the required showing, the
burden shifts to the plaintiff to demonstrate the merit of the
claim by establishing a probability of success.” (Baral,
supra, 1 Cal.5th at p. 384.) The plaintiff must do so with
admissible evidence. (Kreeger v. Wanland (2006) 141
Cal. App. 4th 826, 831.) “We decide this step of the analysis
strike Plaintiffs’ entire complaint and all claims asserted
against them.
21
‘on consideration of “the pleadings and supporting and
opposing affidavits stating the facts upon which the liability
or defense is based.” (§ 425.16, subd. (b).) Looking at those
affidavits, “[w]e do not weigh credibility, nor do we evaluate
the weight of the evidence. Instead, we accept as true all
evidence favorable to the plaintiff.” ’ ” (Burrill v. Nair (2013)
217 Cal. App. 4th 357, 378–379, disapproved in part in Baral,
at p. 396, fn. 11.)
This second step has been described as a “ ‘summary-
judgment-like procedure.’ ” (Baral, supra, 1 Cal.5th at
p. 384.) A court’s second step “inquiry is limited to whether
the [opposing party] has stated a legally sufficient claim and
made a prima facie factual showing sufficient to sustain a
favorable judgment. [The court] . . . evaluates the
defendant’s showing only to determine if it defeats the
plaintiff’s claim as a matter of law.” (Id. at pp. 384–385.)
“Only a [claim] that satisfies both prongs of the anti-SLAPP
statute—i.e., that arises from protected speech or petitioning
and lacks even minimal merit—is a SLAPP, subject to being
stricken under the statute.” (Navellier, supra, 29 Cal.4th at
p. 89.)
C. STANDARD OF REVIEW
“On appeal, we review the trial court’s decision de
novo, engaging in the same two-step process to determine, as
a matter of law, whether the defendant met its initial
burden of showing the action is a SLAPP, and if so, whether
the plaintiff met its evidentiary burden on the second step.”
22
(Tuszynska v. Cunningham, supra, 199 Cal.App.4th at
pp. 266–267.)
III. The gravamen of Plaintiffs’ claims6 is protected
activity
It is well established that the protection of the anti-
SLAPP statute extends to lawyers and law firms engaged in
litigation-related activity. As our Supreme Court explained,
“ ‘Any act’ ” under section 425.16, subdivision (b)(1) “includes
communicative conduct such as the filing, funding, and
prosecution of a civil action. [Citation.] This includes
qualifying acts committed by attorneys in representing
clients in litigation.” (Rusheen v. Cohen, supra, 37 Cal.4th at
p. 1056.)
In fact, courts have adopted “a fairly expansive view of
what constitutes litigation-related activities within the scope
of section 425.16.” (Kashian v. Harriman (2002) 98
Cal. App. 4th 892, 908.) “ ‘Under the plain language of
section 425.16, subdivisions (e)(1) and (2), as well as the case
law interpreting those provisions, all communicative acts
performed by attorneys as part of their representation of a
client in a judicial proceeding or other petitioning context
are per se protected as petitioning activity by the anti-
SLAPP statute.’ ” (Finton Construction, supra, 238
Cal.App.4th at p. 210, italics added.) Cases construing the
6 To avoid confusion, our high court in Baral, supra, 1
Cal.5th 376 referred to “the proper subject of a special
motion to strike as a ‘claim’ ” instead of a “ ‘cause of action.’ ”
(Id. at p. 382.) Accordingly, we do the same here.
23
anti-SLAPP statute hold that “a statement is ‘in connection
with’ litigation under section 425.16, subdivision (e)(2), if it
relates to the substantive issues in the litigation and is
directed to persons having some interest in the litigation.”
(Neville v. Chudacoff (2008) 160 Cal. App. 4th 1255, 1266.)
Consequently, because settlement negotiations are regarded
as an exercise of the right to petition, communications
during such negotiations are regarded as having been made
in connection with the underlying lawsuit for purposes of
section 425.16, subdivision (e)(2). (See Seltzer v. Barnes
(2010) 182 Cal. App. 4th 953, 963–964.) The protection of the
anti-SLAPP statute applies “even against allegations of
fraudulent promises made during the settlement process.”
(Suarez v. Trigg Laboratories, Inc. (2016) 3 Cal.App.5th 118,
123.)
As we observed previously, “conduct is not
automatically protected merely because it is related to
pending litigation; the conduct must arise from the
litigation.” (Optional I, supra, 222 Cal.App.4th at p. 1400.)
Paul v. Friedman (2002) 95 Cal. App. 4th 853 (Paul) is
illustrative. In that case, a securities broker alleged that an
attorney, in litigating a prior arbitration proceeding,
conducted an intrusive investigation into the broker’s
personal life and disclosed details of the broker’s life that
were not relevant to issues in the arbitration proceedings.
(Id. at pp. 857–858.) The Paul court found that the
attorney’s conduct was not protected activity within
section 425.16 because the communication must occur in
24
connection with an issue under consideration or review in
the proceeding. Thus, while the attorney’s investigative
conduct may have been “ ‘in connection with’
a[] . . . proceeding,” it was not “[in] connection with an issue
under review in that proceeding,” and therefore was not
protected activity. (Id. at p. 867.)
Here, in contrast to Paul, supra, 95 Cal. App. 4th 853,
Defendants’ conduct at issue—as established by Plaintiff’s
pleading and the factual material submitted by the parties
in connection with the anti-SLAPP motions—arose directly
out of the litigation in which they were respectively
representing DAS. Under Plaintiff’s theory of the case, there
would not have been any transfer of funds from the Credit
Suisse account to DAS but for Akin’s work in negotiating a
settlement of the state court action and but for Parker’s
alleged failure to timely disclose the settlement to the
federal district court. In fact, Plaintiff even relies on in-court
statements by Akin lawyers as evidence of a conspiracy with
the Kim parties.
In short, the gravamen of Plaintiff’s claims against
Defendants is based on protected activity, namely
Defendants’ representation of DAS in litigation (the state
court action and the federal forfeiture action).7 Accordingly,
7 Plaintiff, relying on Flatley v. Mauro (2006) 39
Cal. 4th 299 (Flatley), argues that while Defendants’ motions
may apply to its conversion and fraudulent transfer claims,
the anti-SLAPP statute does not protect conduct that is
illegal; as a result, its third cause of action for violation of
25
we hold that Defendants made a prima facie showing that
Plaintiff’s claims arise from Defendants’ constitutionally
protected petition rights.
Penal Code section 496 is immune to Defendants’ special
motions to strike. Plaintiff’s reliance on Flatley is misplaced.
In Flatley, the defendant lawyer admitted writing letters
and making calls to the plaintiff and his attorneys that,
when taken together, threatened to accuse the plaintiff of a
variety of crimes and disgrace him in the public media
unless he paid a large sum of money. (Id. at pp. 306–307,
fn. 4, 328–329.) Our Supreme Court held that where “the
defendant concedes, or the evidence conclusively establishes,
that the assertedly protected speech or petition activity was
illegal as a matter of law,” such activity will not support an
anti-SLAPP motion. (Id. at p. 320.) However, if “a factual
dispute exists about the legitimacy of the defendant’s
conduct, it cannot be resolved within the first step [of the
anti-SLAPP analysis] but must be raised by the plaintiff in
connection with the plaintiff’s burden to show a probability
of prevailing on the merits.” (Id. at p. 316.) A long line of
cases have concluded in the wake of Flatley that its
exception for illegal conduct is a “very narrow” one, one that
applies “only ‘where either the defendant concedes the
illegality of its conduct or the illegality is conclusively shown
by the evidence.’ [Citation.]” (Finton Construction, supra,
238 Cal.App.4th at 210.) Here, in contrast to Flatley, neither
Defendant has conceded that its actions were illegal.
Moreover, the evidence presented in connection with the
motions does not conclusively establish that Defendants’
conduct was illegal as a matter of law. Accordingly, Flatley
does not put Plaintiff’s third cause of action beyond the reach
of Defendants’ anti-SLAPP motions.
26
IV. Plaintiff did not show a probability of prevailing
on its claims
Defendants contend that Plaintiff cannot show a
probability of success because its claims are barred by the
litigation privilege of Civil Code section 47, which provides:
“A privileged publication or broadcast is one made:
[¶] . . . [¶] (b) In any . . . (2) judicial proceeding.” The
litigation privilege is “relevant to the second step in the anti-
SLAPP analysis in that it may present a substantive defense
a plaintiff must overcome to demonstrate a probability of
prevailing.” (Flatley, supra, 39 Cal.4th at p. 323.) “A
plaintiff cannot establish a probability of prevailing if the
litigation privilege precludes a defendant’s liability on the
claims.” (Bergstein, supra, 236 Cal.App.4th at p. 814.)
A. THE LITIGATION PRIVILEGE
“The principal purpose of the Civil Code section 47
litigation privilege ‘ “is to afford litigants and witnesses
[citation] the utmost freedom of access to the courts without
fear of being harassed subsequently by derivative tort
actions. [Citations.]” [Citation.] The privilege promotes
effective judicial proceedings by encouraging “ ‘open
channels of communication and the presentation of
evidence’ ” without the external threat of liability.
[Citation.] The litigation privilege “further promotes the
effectiveness of judicial proceedings by encouraging
attorneys to zealously protect their clients’ interests.”
[Citation.] “Finally, in immunizing participants from
liability for torts arising from communications made during
27
judicial proceedings, the law places upon litigants the
burden of exposing during trial the bias of witnesses and the
falsity of evidence, thereby enhancing the finality of
judgments and avoiding an unending roundelay of litigation,
an evil far worse than an occasional unfair result.” ’ ”
(Seltzer v. Barnes, supra, 182 Cal.App.4th at pp. 969–970.)
“ ‘ “Although originally enacted with reference to defamation
actions alone [citation], the privilege has been extended to
any communication, whether or not it is a publication, and to
all torts other than malicious prosecution. [Citations.] Thus,
the privilege has been applied to suits for fraud [citations],
negligence and negligent misrepresentation [citation], and
interference with contract.” ’ ” (Id. at p. 970, italics added.)
The litigation privilege applies “to any communication
(1) made in judicial or quasi-judicial proceedings; (2) by
litigants or other participants authorized by law; (3) to
achieve the objects of the litigation; and (4) that have some
connection or logical relation to the action.” (Silberg v.
Anderson (1990) 50 Cal. 3d 205, 212.) The privilege is
“absolute in nature, applying ‘to all publications, irrespective
of their maliciousness.’ ” (Action Apartment Assn., Inc. v.
City of Santa Monica (2007) 41 Cal. 4th 1232, 1241).) “ ‘Any
doubt about whether the privilege applies is resolved in
favor of applying it.’ ” (Finton Construction, supra, 238
Cal.App.4th at p. 212.) “ ‘Many cases have explained that
[Civil Code] section 47[, subdivision] (b) encompasses not
only testimony in court and statements made in pleadings,
but also statements made prior to the filing of a lawsuit,
28
whether in preparation for anticipated litigation or to
investigate the feasibility of filing a lawsuit.’ ” (Bergstein,
supra, 236 Cal.App.4th at p. 814.)
The scope of the litigation privilege is illustrated by a
trio of relatively recent cases: Bergstein, supra, 236
Cal. App. 4th 793; Finton Construction, supra, 238
Cal. App. 4th 200; and Contreras, supra, 5 Cal.App.5th 394.
In Bergstein, supra, 236 Cal. App. 4th 793, the plaintiffs
sued lawyers who represented their adversaries in litigation
over various financial transactions. Plaintiffs asserted that
the lawyers engaged in tortious conduct when they
“ ‘solicited and received . . . confidential, privileged, and/or
proprietary information’ ” from one of plaintiffs’ former
attorneys and “used that information ‘in devising the legal
strategy to be employed’ in the litigation against plaintiffs.”
(Id. at p. 797.) The attorneys filed a special motion to strike
under the anti-SLAPP statute, and the trial court granted
the motion, concluding that the complaint arose from
protected activity. (Id. at p. 797.) Plaintiffs appealed,
contending that the attorneys were not being sued for
written or oral statements made in a judicial proceeding, but
rather for the unprotected conduct of aiding and abetting the
former attorney’s breach of fiduciary duties. (Id. at p. 811.)
The Court of Appeal disagreed and affirmed. It explained
that the anti-SLAPP statute’s definitional focus “ ‘is not the
form of the plaintiff's cause of action but, rather, the
defendant’s activity that gives rise to his or her asserted
liability—and whether that activity constitutes protected
29
speech or petitioning.’ ” (Id. at p. 811.) Thus, the court
examines “ ‘the specific acts of wrongdoing’ alleged, ‘without
particular heed to the form of action within which it has
been framed.’ ” (Ibid.) In Bergstein, “[a]lmost all of the
‘specific acts of alleged wrongdoing’ in the complaint [were]
litigation activities.” (Ibid.) In fact, the Court of Appeal
noted that the plaintiffs did “not identify any of defendants’
conduct that was not a communication made in a judicial
proceeding . . . to achieve the objects of the litigation. Simply
claiming that ‘aiding and abetting Tregub’s breach of
fiduciary duty and facilitating Tregub’s breach of contract’ is
‘non-communicative conduct’ does not make it so.” (Id. at
p. 815.)
In Finton Construction, supra, 238 Cal. App. 4th 200, a
home builder sued a law firm for conversion, alleging that
the lawyers had received a stolen hard drive during the
course of a lawsuit in which the builder was a defendant.
The trial court granted the lawyers’ anti-SLAPP motion and
the builder appealed. (Id. at p. 204.) The Court of Appeal
affirmed, holding that the litigation privilege applied to
defendants’ actions in receiving and retaining the hard drive
until it was turned over pursuant to the court’s order in the
underlying case. (Id. at pp. 212–213.) In reaching its
decision, the Court of Appeal noted that “[w]ithout the
litigation privilege, attorneys would simply be unable to do
their jobs properly. No attorney can litigate a trade secret
case without examining the disputed materials to determine
30
if they constitute trade secrets or even contain any relevant
data at all.” (Id. at p. 212.)
In Contreras, supra, 5 Cal.App.5th 394, the plaintiff, a
tenant, accused an attorney, Dowling, of repeatedly aiding
and abetting his landlord-clients entering her apartment
illegally. In addressing the litigation privilege, the court
rejected the tenant’s argument that the litigation privilege
did not apply because she was suing Dowling for conspiracy
and aiding and abetting his clients’ illegal entries into the
apartment. Citing Bergstein, supra, 236 Cal. App. 4th 793,
the court explained that the sole focus was on Dowling’s
conduct, not that of his clients. “Simply claiming that
Dowling’s alleged conspiring or aiding and abetting ‘is “non-
communicative conduct” does not make it so.’ ” (Id. at
p. 416.) The Court of Appeal went on to state that it would
not “infer Dowling’s concurrence in his clients’ acts from the
mere existence of their attorney-client relationship,” because
such an inference would have a “chilling effect on attorneys
if their communicative acts can be placed outside the
protection of section 425.16 by the unadorned allegation that
they conspired in their clients’ torts.” (Id. at p. 418.)
B. THE LITIGATION PRIVILEGE DEFEATS PLAINTIFF’S
CLAIMS
Here, Defendants met their burden of showing that the
litigation privilege applies because the communicative
conduct at issue—as established by the pleadings and
documents submitted in connection with motions—was made
in judicial or quasi-judicial proceedings (i.e., the state court
31
action, the federal forfeiture action, and the private
mediation in the state court action) by attorneys for DAS to
achieve the object of the proceedings and had some
connection or logical relation to the action. As with the
plaintiffs in Bergstein, supra, 236 Cal. App. 4th 793, Plaintiff
failed to identify any nonlitigation-related conduct by either
Akin or Parker. Consequently, the litigation privilege
applies to bar Plaintiff’s claims against Defendants.
Plaintiff argues that, while all of the specific conduct at
issue may have occurred in connection with judicial or quasi-
judicial proceedings, a jury could infer Defendants’
participation in an illegal conspiracy to convert Plaintiff’s
funds in the Credit Suisse account. For example, Plaintiff
places considerable weight on the fact that while Parker
learned of the state court settlement in November 2010 it
did not disclose the settlement and the resulting transfer to
DAS to the federal district court until several month later.
According to Plaintiff, “an unbiased fact-finder could
reasonably infer from Parker’s conduct, relationship, interest
and activities that once it learned of the plan [to transfer the
funds from the Credit Suisse account to DAS], it not only
tacitly consented and acquiesced in it but aided DAS and the
Kims in the concealment of the transfer of the funds from
Optional.”
Plaintiff’s argument is unpersuasive. As noted above,
the court’s analysis under the second step is a “ ‘summary-
judgment-like procedure.’ ” (Baral, supra, 1 Cal.5th at
p. 384.) Summary judgment may be based on an inference
32
where it is the only plausible inference that may be drawn
from undisputed facts; but “evidence which is equivocal or
from which conflicting inferences may be drawn is
insufficient.” (Anderson v. Metalclad Insulation Corp. (1999)
72 Cal. App. 4th 284, 297.) Here, any number of inferences
may be drawn from the fact that DAS did not immediately
advise the federal district court of the transfer, including the
fact that it was, as the district court subsequently concluded,
under no legal obligation to do so. We join with the court in
Contreras, supra, 5 Cal.App.5th at page 418, in expressing
grave concern about inferring an attorney-client conspiracy
from the mere existence of an attorney-client relationship.
In short, “ ‘[a]n anti-SLAPP motion is an evidentiary
motion.’ ” (Contreras, supra, 5 Cal.App.5th at p. 405.) To
successfully defend against a special motion under section
425.16, Plaintiff was required to state and substantiate its
claims with a prima facie showing of facts. (Navellier, supra,
29 Cal.4th at pp. 88–89 & 93.) “The prima facie showing of
merit must be made with evidence that is admissible at trial.
[Citation.] Unverified allegations in the pleadings or
averments made on information and belief cannot make the
showing.” (Salma v. Capon (2008) 161 Cal. App. 4th 1275,
1289.) Plaintiff failed to meet its evidentiary burden. It
relied on unverified allegations, averments made on
information and belief, and, most critically, on evidence
concerning only Defendants’ litigation-related
33
communicative conduct—evidence that was, at best,
equivocal—in proving up Plaintiff’s claims.8
Since the litigation privilege defeats Plaintiff’s claims
as a matter of law, we affirm the judgment below.9
8 The litigation privilege applies not only to Plaintiff’s
claims for conversion and fraudulent transfer, but also to
Plaintiff’s third cause of action, violation of Penal Code
section 496, because the gravamen of Plaintiff’s claim
against Defendants is based solely on their communicative
conduct in ongoing litigation. (See Ribas v. Clark (1985) 38
Cal. 3d 355, 364–365; Kimmel v. Goland (1990) 51 Cal. 3d
202, 210–211; Rubin v. Green (1993) 4 Cal. 4th 1187, 1193–
1194, 1196.) “[C]ommunications made in connection with
litigation do not necessarily fall outside the privilege simply
because they are, or are alleged to be, fraudulent, perjurious,
unethical, or even illegal.” (Kashian v. Harriman, supra, 98
Cal.App.4th at p. 920.) As our Supreme Court has
recognized, where a privileged communication by an
attorney rises to the level of criminal conduct, “other
remedies aside from a derivative suit for compensation will
exist,” including “criminal prosecution under Business and
Professions Code, section 6128[,] and State Bar disciplinary
proceedings for violation of Business and Professions Code,
section 6068, subdivision (d).” (Silberg v. Anderson, supra,
50 Cal.3d at pp. 218–219, fn. omitted.)
9 In light of our holding with respect to the
applicability and effect of the litigation privilege, we decline
to address Defendants’ other arguments for why Plaintiff
could not show a probability of prevailing.
34
DISPOSITION
The orders are affirmed. The parties are to bear their
own costs on appeal.
JOHNSON, J.
We concur:
CHANEY, Acting P. J.
LUI, J.
35
Filed 12/7/17
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
OPTIONAL CAPITAL, INC., B275274
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. BC474472)
v. CERTIFICATION AND
ORDER FOR PUBLICATION
AKIN GUMP STRAUSS, HAUER &
FELD LLP et al.,
Defendants and Respondents.
The opinion in the above-entitled matter filed
November 16, 2017, was not certified for publication in the
Official Reports. For good cause it now appears that the opinion
should be published in the Official Reports and it is so ordered.
CHANEY, Acting P. J. JOHNSON, J. LUI, J.