Mission Beverage Co. v. Pabst Brewing Co. ( 2017 )


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  • Filed 9/25/17
    CERTIFIED FOR PUBLICATION
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SECOND APPELLATE DISTRICT
    DIVISION TWO
    MISSION BEVERAGE COMPANY,                   B271781
    Plaintiff and Respondent,            (Los Angeles County
    Super. Ct. No. BC578821)
    v.
    PABST BREWING COMPANY, LLC,
    Defendant and Appellant.
    APPEAL from an order of the Superior Court of Los
    Angeles County. Maureen Duffy-Lewis, Judge. Affirmed.
    McDermott Will & Emery, Richard K. Welsh, Gregory
    R. Jones, and Jeffrey A. Zuidema for Defendant and Appellant.
    Morgan Lewis & Bockius, Thomas M. Peterson, Brian
    C. Rocca, Phillip J. Wiese, and Seth M. Gerber for Plaintiff and
    Respondent.
    ******
    A brewer of beer decided to replace one of its distributors,
    and sent that distributor a letter terminating their distribution
    contract and invoking the statutory procedure requiring an
    existing distributor to negotiate and, if necessary, arbitrate with
    its successor to settle the “fair market value” of its
    distributorship rights (Bus. & Prof. Code, § 25000.2). 1 The
    ousted distributor sued the brewer for breaching the contract’s
    termination-for-cause requirement and for declaratory relief.
    The brewer responded with a motion to strike the entire
    complaint under the anti-SLAPP 2 statute (Code Civ. Proc.,
    § 425.16). This appeal presents two questions: (1) Does a
    brewer’s cancellation of a contract, when that cancellation will be
    followed by negotiation and possibly arbitration under section
    25000.2, qualify as “protected activity” within the meaning of the
    anti-SLAPP statute?; and (2) Does the ousted distributor’s
    lawsuit for breach of contract and declaratory relief lack minimal
    merit on the ground that section 25000.2 immunizes successor
    brewers from liability for breach of contract because it
    affirmatively grants those brewers a right to terminate
    distribution contracts and provides full compensation for the
    ousted distributor? We conclude that the answer to both
    questions is “no,” and accordingly affirm the trial court’s denial of
    the brewer’s anti-SLAPP motion in this case.
    1     All further statutory citations are to the Business and
    Professions Code unless otherwise indicated.
    2     “SLAPP” is short for “strategic lawsuit against public
    participation.”
    2
    FACTS AN PROCEDURAL BACKGROUND
    I.       Facts
    Defendant and appellant Pabst Brewing Company, LLC
    (Pabst) is a brewer of beers; among others, Pabst brews such
    American classics as Pabst Blue Ribbon, Colt 45 Malt Liquor, Old
    Milwaukee, Schlitz, and Stroh’s.
    In January 2009, Pabst entered into a written Distributor
    Agreement (Agreement) with plaintiff and respondent Mission
    Beverage Company (Mission). Pabst granted Mission the
    exclusive right to distribute many of its beers within specifically
    delineated boundaries within Los Angeles County. In turn,
    Mission promised to “aggressively promote, encourage, and
    increase” the sales of, and “customer satisfaction” with, those
    beers. The parties’ powers to terminate the contract were not the
    same: Mission could terminate the contract with 60 days’ notice
    and irrespective of cause, while Pabst could terminate the
    contract only for one of ten enumerated reasons and then only if
    it gave Mission an opportunity to cure. One of those ten reasons,
    memorialized in section 8.2.10 of the Agreement, permits Pabst
    to terminate the Agreement if Pabst has a “right to terminate”
    under “applicable state or federal law, statute or regulation.”
    The Agreement also provides that any and all litigation should
    occur in court, and contemplates that Mission recover attorney’s
    fees if it prevails in litigation against Pabst.
    In November 2014, Pabst came under new ownership.
    Three months later, in February 2015, Pabst sent Mission a
    letter “commencing termination” of the Agreement “pursuant
    to . . . [section] 25000.2 and Section 8.2.10 of
    [the] . . . Agreement.” Pabst stated that Classic Distributing &
    Beverage Group, Inc. (Classic) and Beauchamp Distributing
    3
    Company (Beauchamp) would be replacing Mission as Pabst’s
    distributor. 3 Pabst did not cite any other basis for terminating
    the Agreement.
    As discussed more fully below, section 25000.2 provides
    that when a brewer who acquires the right to manufacture beer
    “cancels any of [an] existing beer wholesaler’s rights to distribute
    [a] product,” that successor brewer’s designated replacement
    distributors must negotiate in good faith—and, failing that,
    arbitrate—with the existing distributor “to determine the fair
    market value of the affected distribution rights.” (§ 25000.2,
    subds. (b), (d), (e) & (f).) Adhering to these procedures, Pabst’s
    designated distributors tried to negotiate with Mission and, when
    that failed, in March 2015, sent Mission a letter initiating
    arbitration.
    II.    Procedural Background
    In April 2015, Mission sued Pabst for (1) breach of contract,
    and (2) declaratory relief. Specifically, Mission alleged that Pabst
    breached the Agreement by “attempting to terminate” the
    Agreement on the basis of section 25000.2, which did not “provide
    an independent right to terminate . . . .” Mission also sought a
    declaration that there was no valid “termination” of the
    Agreement.
    Mission made several attempts to halt the ongoing
    arbitration between itself and Pabst’s newly designated
    distributors, all to no avail. Mission made an ex parte motion to
    stay the arbitration, but that motion was denied “without
    prejudice” to filing a noticed motion. Mission thereafter filed a
    3      Pabst named a third distributor, Harbor Distributing, LLC,
    in its letter, but that distributor at some point dropped out of the
    running to replace Mission.
    4
    noticed motion, but that motion was also denied. Not deterred,
    Mission also asked the arbitrator to dismiss the arbitration, but
    the arbitrator refused.
    The arbitrator issued a final award in October 2015. In the
    award, the arbitrator made clear that his order “contain[ed] no
    findings, declarations or damages determinations regarding
    Mission’s [pending civil] cause of action . . . that Pabst breached
    the . . . Agreement.” However, the arbitrator fixed the fair
    market value of the distributorship rights conferred by the
    Agreement. 4 Mission did not appeal the award, and Classic and
    Beauchamp thereafter paid Mission the amount fixed by the
    arbitrator.
    Pabst then filed a motion to strike Mission’s lawsuit under
    the anti-SLAPP statute. 5 Pabst argued that the “linchpin” of
    Mission’s lawsuit was Pabst’s “invo[cation of] the statutorily-
    mandated arbitration process under [s]ection 25000.2,” which
    Pabst asserted was “protected activity” under the anti-SLAPP
    statute. Pabst further contended that Mission’s lawsuit lacked
    minimal merit because no “legally viable or non-duplicative
    remedy” remained once Mission had accepted the payment
    reflecting the fair market value of its distributorship rights from
    Classic and Beauchamp.
    4     Pabst has moved to augment the record with an unredacted
    version of the arbitrator’s award revealing proprietary financial
    data and the actual amount awarded. Because the proprietary
    data and the award amount are not relevant to our resolution of
    the issues in this appeal, we deny the motion to augment.
    5     Pabst also filed a demurrer, which was subsequently
    overruled and is not challenged on appeal.
    5
    The trial court denied the motion. The court acknowledged
    that “protected activity” under the anti-SLAPP statute included
    activities related to “official proceeding[s]” such as “statutorily
    required . . . arbitration[s],” but concluded that Mission’s lawsuit
    was separate and distinct from the arbitration: The lawsuit was
    “for breach of the contract between [Mission and Pabst],” while
    the arbitration was “between the distributors,” and the primary
    issue in the lawsuit—“whether the [Agreement] was validly
    terminated”—is “an issue separate [from] (and prerequisite to)
    the arbitration, . . . not part of [it].”
    After the trial court entered its order, Pabst filed this
    timely appeal.
    DISCUSSION
    Pabst argues that the trial court erred in denying its anti-
    SLAPP motion. We independently review the trial court’s ruling.
    (Park v. Board of Trustees of California State University (2017)
    2 Cal.5th 1057, 1067 (Park).) Because this case lies at the
    intersection of the anti-SLAPP statute and the Alcoholic
    Beverage Control Act (§ 23000 et seq.), we will discuss the
    pertinent portions of each before turning to the merits of this
    appeal.
    I.     The Anti-SLAPP Statute
    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).)
    Specifically, the anti-SLAPP statute protects—and thus
    “subject[s] to a special motion to strike”—any “cause of
    action . . . arising from any act of [a] person in furtherance of the
    person’s right to petition or free speech under the United States
    6
    Constitution or the California Constitution in connection with a
    public issue.” (Code Civ. Proc., § 425.16, subd. (b)(1).)
    When a party moves to strike a cause of action (or portion
    thereof) under the anti-SLAPP statute, a trial court has two
    tasks. (Barry v. State Bar of California (2017) 2 Cal.5th 318, 321
    (Barry).)
    First, the court must evaluate whether the moving party
    has “made a threshold showing that the challenged cause of
    action arises from protected activity.” (Rusheen v. Cohen (2006)
    
    37 Cal. 4th 1048
    , 1056.) This evaluation turns on two subsidiary
    questions: (1) What conduct does the challenged cause of action
    “arise[] from”; and (2) is that conduct “protected activity” under
    the anti-SLAPP statute?
    A cause of action “arises from” protected activity when the
    “cause of action itself” is “based on” protected activity. (City of
    Cotati v. Cashman (2002) 
    29 Cal. 4th 69
    , 78 (City of Cotati);
    Briggs v. Eden Council for Hope & Opportunity (1999) 
    19 Cal. 4th 1106
    , 1114 (Briggs) [“arises from” means “based upon”].)
    Whether a cause of action is itself based on protected activity
    turns on whether its “‘“principal thrust or gravamen”’” is
    protected activity—that is, whether the “‘core injury-producing
    conduct’” warranting relief under that cause of action is protected
    activity. (Colyear v. Rolling Hills Community Assn. of Rancho
    Palos Verdes (2017) 9 Cal.App.5th 119, 134.)
    “[W]hether [activity] is protected under the anti-SLAPP
    statute” turns “not [on] First Amendment law, but [rather on] the
    statutory definitions in [Code of Civil Procedure] section 425.16,
    subdivision (e).” (City of Montebello v. Vasquez (2016) 1 Cal.5th
    409, 422 (City of Montebello).) Code of Civil Procedure section
    425.16, subdivision (e) defines four categories of protected
    7
    activity. Two are pertinent here—namely, (1) “any written or
    oral statement or writing made before a legislative, executive, or
    judicial proceeding, or any other official proceeding authorized by
    law,” and (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.” (Code Civ. Proc., § 425.16, subd.
    (e)(1) & (2).)
    Second, and only if the court concludes that the litigant has
    made this “threshold showing,” the court must examine whether
    the nonmoving party has “established . . . a probability that [it]
    will prevail” on the challenged cause(s) of action. (Code Civ.
    Proc., § 425.16, subd. (b)(1); Oasis West Realty, LLC v. Goldman
    (2011) 
    51 Cal. 4th 811
    , 819-820 (Oasis West).) This burden is met
    if the nonmoving party demonstrates that any challenged cause
    of action has “minimal merit” (Navellier v. Sletten (2002)
    
    29 Cal. 4th 82
    , 94), and it does so by making a “prima facie factual
    showing sufficient to sustain a favorable judgment” on that cause
    of action 
    (Baral, supra
    , 1 Cal.5th at pp. 384-385). In assessing
    the sufficiency of this showing, a court is to “consider the
    pleadings, and supporting and opposing affidavits” (Code Civ.
    Proc., § 425.16, subd. (b)(2)), but must “‘“accept as true the
    evidence favorable to the [nonmoving party] and evaluate the
    [moving party’s] evidence only to determine if it has defeated that
    submitted by the [nonmoving party] as a matter of law.”’” (Oasis
    West, at p. 820.) If the nonmoving party satisfies its burden, the
    anti-SLAPP motion must denied; if it fails to do so, the pertinent
    cause of action must be dismissed. 
    (Barry, supra
    , 2 Cal.5th
    at p. 321.)
    8
    II.    The Alcoholic Beverage Control Act
    The Alcoholic Beverage Control Act (Act) is designed,
    among other things, “to eliminate the evils of unlicensed and
    unlawful manufacture, selling, and disposing of alcoholic
    beverages.” (§ 23001.) To accomplish this end, the Act divides up
    the distribution chain for alcohol into three tiers—namely,
    (1) “manufacturers,” (2) “wholesalers” or distributors, and
    (3) “retailers” (§§ 23012, 23021, & 23023); requires each to be
    licensed (§§ 23300, 23356, 23378, 23393, 23394, 23396, & 23402);
    and generally prohibits each from having an ownership interest
    in the others (§§ 23772, 23776, & 23784).
    “The sale of beer is . . . highly regulated.” (Crown Imports,
    LLC v. Superior Court (2014) 
    223 Cal. App. 4th 1395
    , 1406-1407
    (Crown Imports).) That is because, in addition to the Act’s
    general provisions, several provisions specifically regulate the
    contractual relationships between “beer manufacturers” (or
    brewers) and “beer wholesalers” (or distributors). (§ 25000 et
    seq.) The Act requires their agreements to be in writing and to
    specifically “designate [the] territorial limits” of any grant of
    distribution rights. (§ 25000.5, subds. (a) & (b).) The Act
    prohibits a brewer from retaining the power to terminate a
    distribution agreement “solely” due to the “beer [distributor’s]
    failure to meet a sales goal or quota” unless that goal or quota is
    “commercially reasonable under the prevailing market
    conditions.” (§ 25000.7, subd. (a).) And the Act permits a brewer
    to contractually reserve the right to prohibit a distributor from
    changing its ownership, but renders the brewer “liable in
    damages to the” distributor if the brewer “unreasonably
    withholds consent or unreasonably denies approval of a sale,
    transfer, or assignment of any ownership interest.” (§ 25000.9.)
    9
    Section 25000.2 dictates the procedures to be followed when
    a “successor beer manufacturer . . . acquires the rights to
    manufacture” held by a brewer, and then “cancels any of the
    [brewer’s] existing beer [distributor’s] rights to distribute the
    product.” (§ 25000.2, subd. (b).) The successor brewer “cancels” a
    distribution contract if it “terminate[s], reduce[s], [does] not
    renew, [does] not appoint or reappoint, or cause[s] any of the
    same.” (§ 25000.2, subd. (a)(4).) The pertinent procedure is as
    follows. First, the successor brewer must “notify” the existing
    distributor of its “intent to cancel any of the existing
    [distributor’s] rights to distribute the product.” (§ 25000.2, subd.
    (c)(1).) Second, the entity the new brewer wants to be its new
    distributor—whom the Act calls the “successor beer
    manufacturer’s designee”—is required to “negotiate in good faith”
    with the existing distributor to “determine the fair market value
    of the affected distribution rights.” (§ 25000.2, subd. (d); see also
    § 25000.2, subd. (a)(9) [defining “[s]uccessor beer manufacturer’s
    designee”].) “Fair market value” is defined as “all elements of
    value, including, but not limited to, goodwill.” (§ 25000.2, subd.
    (a)(6).) If the existing distributor and the successor brewer’s
    preferred distributor can “agree to the fair market value,” then
    the successor brewer’s preferred distributor “shall compensate
    the existing” distributor “in the agreed amount.” (§ 25000.2,
    subd. (d).) If they “are unable to mutually agree,” then the
    successor brewer’s preferred distributor “shall initiate
    arbitration . . . to determine the issue of compensation for the fair
    market value of the affected distribution rights” following the
    timelines set forth in the statute, and if the existing distributor
    does not appeal the arbitration award, the successor brewer’s
    preferred distributor must pay the existing distributor that
    10
    amount. (§ 25000.2, subd. (f).) The existing distributor continues
    to distribute the beer until and unless the above-described
    procedures have run their course and the existing distributor
    receives the amount fixed by negotiation or arbitration.
    (§ 25000.2, subds. (e) & (g).)
    III. Analysis
    A.    Do Mission’s Claims Arise From Protected
    Activity?
    Pabst argues that the trial court erred in concluding that
    Mission’s breach of contract and declaratory relief claims did not
    arise from protected activity because (1) those claims are based
    upon Pabst’s letter purporting to cancel the Agreement, and
    (2) that letter invokes section 25000.2’s procedures and is
    accordingly preparatory to statutorily mandated arbitration,
    which constitutes an official proceeding within the meaning of
    Code of Civil Procedure section 425.16, subdivision (e)(1) and (2).
    The two parts of Pabst’s argument dovetail exactly with the two
    subsidiary questions underlying the first step of anti-SLAPP
    statute analysis: What conduct is the basis for the challenged
    claim(s), and does that conduct constitute protected activity? We
    turn to each question.
    1.     What conduct by Pabst is Mission challenging?
    A claim is subject to the anti-SLAPP statute only if conduct
    constituting protected activity “itself is the wrong complained of.”
    
    (Park, supra
    , 2 Cal.5th at p. 1060, italics in original; City of
    
    Cotati, supra
    , 29 Cal.4th at p. 78.) Thus, where a plaintiff’s claim
    is based upon “an action or decision” of the defendant, it is not
    enough that some protected activity by the defendant precedes
    that action or decision, that some protected activity is the means
    of communicating that action or decision, or that some protected
    activity constitutes evidence of that action or decision. To fall
    11
    under the anti-SLAPP statute, the challenged action or decision
    itself must be protected activity. (Park, at pp. 1060-1061.)
    Accordingly, where a plaintiff’s claim attacks only the
    defendant’s decision to undertake a particular act, and if that
    decision is not itself protected activity, that claim falls outside
    the ambit of the anti-SLAPP statute. Thus, in Park, our
    Supreme Court held that the anti-SLAPP statute did not apply to
    a claim challenging a university’s decision to deny tenure to a
    professor, even though the decision was communicated in writing
    and even though the university dean’s comments supplied
    evidence of discriminatory animus. 
    (Park, supra
    , 2 Cal.5th
    at pp. 1068-1069.) In Ulkarim v. Westfield LLC (2014)
    
    227 Cal. App. 4th 1266
    , 1275-1276, 1279, the court held that the
    anti-SLAPP statute did not apply to a claim challenging a
    landlord’s decision to terminate a tenancy, even though the
    landlord subsequently served a notice to quit and filed an
    unlawful detainer lawsuit. And in McConnell v. Innovative
    Artists Talent & Literary Agency, Inc. (2009) 
    175 Cal. App. 4th 169
    , 176-177, the court held that the anti-SLAPP statute did not
    apply to a claim challenging an employer’s decision to wrongfully
    terminate employees, even though the employer later sent a
    letter terminating those employees. Only when the decision that
    the plaintiff attacks is itself protected activity will the anti-
    SLAPP statute apply. (See City of 
    Montebello, supra
    , 1 Cal.5th
    at p. 423 [decision to cast a particular vote as part of a city
    council meeting constitutes “protected activity”].)
    In this case, Mission’s breach of contract and declaratory
    relief claims challenge Pabst’s decision to terminate the
    Agreement. That is because both claims challenge Pabst’s right
    to terminate the Agreement and, in particular, Pabst’s assertion
    12
    that section 25000.2 provides such a right. Pabst’s subsequent
    letter merely communicated Pabst’s decision to terminate, but
    “that communication does not convert [Mission’s] suit into one
    arising from such speech.” 
    (Park, supra
    , 2 Cal.5th at p. 1068.)
    Pabst raises two challenges to this reasoning. First, Pabst
    argues that Kibler v. Northern Inyo County Local Hospital Dist.
    (2006) 
    39 Cal. 4th 192
    (Kibler) supports its position that every
    aspect of a statutorily mandated proceeding, including the
    decision itself, is protected activity. Kibler held that a hospital’s
    decision to revoke a doctor’s staff privileges as part of a
    statutorily mandated peer review process constituted protected
    activity under the anti-SLAPP statute. (Id. at pp. 199-200.) A
    handful of cases read Kibler to stand for the proposition that
    every aspect of a statutorily mandated procedure constitutes
    protected activity. (See DeCambre v. Rady Children’s Hospital-
    San Diego (2015) 
    235 Cal. App. 4th 1
    , 22; Nesson v. Northern Inyo
    County Local Hospital Dist. (2012) 
    204 Cal. App. 4th 65
    , 78-79, 82-
    84.) However, our Supreme Court’s recent decision in Park
    expressly disapproves of that reading. Kibler, noted Park, “did
    not address whether every aspect of a hospital peer review
    proceeding involves protected activity” and thus “does not stand
    for the proposition that disciplinary decisions reached in a peer
    review process, as opposed to statements in connection with that
    process, are protected.” 
    (Park, supra
    , 2 Cal.5th at pp. 1069-1070,
    italics added.) In short, Kibler does not disturb the otherwise
    clear distinction between claims based on a defendant’s decision
    and claims based on the means by which that decision is
    communicated.
    Second, Pabst contends that Mission’s claims are
    necessarily based on Pabst’s letter because Mission’s claims
    13
    cannot be based on Pabst’s decision to terminate the Agreement.
    Mission’s claims cannot be based on the decision to terminate,
    Pabst continues, because Pabst’s decision did not take effect—
    and any claims attacking the decision itself were not ripe—until
    such time as Mission lost its distribution rights, which did not
    occur under section 25000.2 until Classic and Beauchamp paid
    Mission the amount of those rights as fixed in the arbitration.
    This contention ignores that a breach need not be effected to be
    actionable. A plaintiff may sue for anticipatory breach when the
    other party “‘positively repudiates the contract by acts or
    statements indicating that [it] will not or cannot substantially
    perform essential terms thereof . . . .’” (Guerrieri v. Severini
    (1958) 
    51 Cal. 2d 12
    , 18 (Guerrieri).) In such an instance, the
    party “‘“can treat the repudiation as an anticipatory breach and
    immediately seek damages for breach of contract.”’” (Ferguson
    v. City of Cathedral City (2011) 
    197 Cal. App. 4th 1161
    , 1168
    (Ferguson); see generally Civ. Code, § 1440.) In this case,
    Mission’s claims attack Pabst’s decision to repudiate the
    Agreement; as noted above, the fact that the repudiation was
    communicated through a letter does not alter the basis of those
    claims.
    2.    Is that conduct protected activity?
    The anti-SLAPP statute expressly delineates the four
    categories of activity that constitute “act[s] . . . in furtherance of
    [a] person’s right of petition or free speech under the United
    States Constitution or the California Constitution.” (Code Civ.
    Proc., § 425.16, subds. (b)(1) & (e).) As noted above, two of those
    categories are relevant to this case—namely, (1) “any written or
    oral statement or writing made before a legislative, executive, or
    judicial proceeding, or any other official proceeding authorized by
    14
    law,” and (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.” (Code Civ. Proc., § 425.16, subd.
    (e)(1) & (2).)
    As a general rule, “private contractual arbitration” is
    “not . . . an ‘official proceeding authorized by law’” under Code of
    Civil Procedure section 425.16, subdivision (e)(1) and (2), even
    though arbitration awards are subject to judicial confirmation or
    vacation. (Century 21 Chamberlain & Associates v. Haberman
    (2009) 
    173 Cal. App. 4th 1
    , 7-9.) That is because “[a]rbitration is
    not a judicial proceeding,” but rather “an alternative thereto.”
    (Id. at p. 8.) However, where arbitration is statutorily mandated
    as part of a regulatory scheme, it does constitute an “official
    proceeding authorized by law” within the meaning of the anti-
    SLAPP statute. (Id. at p. 9; Mallard v. Progressive Choice Ins.
    Co. (2010) 
    188 Cal. App. 4th 531
    , 538-539 (Mallard).) Thus,
    arbitration mandated by Insurance Code section 11580.2
    qualifies as an official proceeding because that statute requires
    every automobile liability insurance policy that covers bodily
    injury to provide coverage for bodily injury damages caused by
    uninsured motorists and mandates the contractual arbitration of
    disputes regarding that coverage. (Mallard, at pp. 539-541; see
    Ins. Code, § 11580.2, subds. (a) & (f).) Arbitration conducted
    pursuant to the Mandatory Fee Arbitration Act (§ 6200 et seq.)
    qualifies as an official proceeding because such arbitration is
    “established by statute to address a particular type of dispute”
    and is mandatory for the attorney if the client agrees in writing
    to arbitration. (Philipson & Simon v. Gulsvig (2007)
    
    154 Cal. App. 4th 347
    , 358 (Philipson); § 6200, subd. (c); accord,
    15
    
    Kibler, supra
    , 39 Cal.4th at pp. 198-200 [peer review proceeding
    to evaluate the staff privileges of physicians qualifies as an
    “official proceeding” because it is mandated by statute and
    subject to judicial review by administrative mandate].)
    If a statutorily mandated arbitration proceeding qualifies
    as an official proceeding, the acts of a party to that proceeding
    may constitute protected activity. A party’s initiation of such an
    official proceeding is certainly protected activity. 
    (Briggs, supra
    ,
    19 Cal.4th at p. 1115 [“‘“[t]he constitutional right to
    petition . . . includes the basic act of filing litigation”’”]; Chavez
    v. Mendoza (2001) 
    94 Cal. App. 4th 1083
    , 1087 [“filing a lawsuit is
    an exercise of a party’s constitutional right of petition”];
    see 
    Philipson, supra
    , 154 Cal.App.4th at p. 358 [filing cross-
    complaint].) A party’s subsequent acts during the proceeding
    also qualify. 
    (Mallard, supra
    , 188 Cal.App.4th at pp. 539-541
    [issuing subpoena in midst of arbitration].) A party’s preceding
    acts may also qualify as protected activity if they are
    “‘communications preparatory to or in anticipation of the
    bringing of an action or other official proceeding.’” (Briggs,
    at p. 1115.) But such preparatory communications do not qualify
    as a protected activity if future litigation is not anticipated, and
    is therefore only a “possibility”—and this is true even if the
    communication is a necessary prerequisite to any future
    litigation. (People ex rel. Fire Ins. Exchange v. Anapol (2012)
    
    211 Cal. App. 4th 809
    , 827-828 (Anapol).) Thus, an insured’s
    submission of a claim to an insurance company is usually not
    protected activity because, absent prior failed negotiations or the
    like, “the insured will have no reason to believe the claim will be
    denied and litigation will follow.” (Ibid.; see also Beach v. Harco
    National Ins. Co. (2003) 
    110 Cal. App. 4th 82
    , 94 [conduct of
    16
    insurer in delaying response to claim is not protected activity
    because it “occurred long before any arbitration or other
    proceeding commenced”].)
    Mission’s claims do not involve protected activity for two
    reasons. First, as we have concluded above, Mission’s claims are
    based upon Pabst’s decision to terminate the Agreement—not
    Pabst’s subsequent letter communicating that decision. That
    decision precedes and is unconnected with any official proceeding.
    Second, even if we were to assume that Mission’s claims are
    premised on Pabst’s subsequent letter, that letter does not
    qualify as protected activity. Although section 25000.2’s
    mandatory arbitration undoubtedly qualifies as an official
    proceeding under the governing precedent, Pabst’s letter is not
    preparatory to such an arbitration. That is because section
    25000.2 first contemplates that the existing distributor and
    successor brewer’s designated distributors negotiate in good faith
    and resort to arbitration only if negotiations fail. (§ 25000.2,
    subd. (f).) Like the insured who files a claim not knowing
    whether the insurer will pay the claim or fight the claim in
    litigation, Pabst had “no reason to believe” that arbitration “will
    follow” from its letter because Mission, Classic, and Beauchamp
    could well have negotiated a settlement and obviated any need
    for arbitration. 
    (Anapol, supra
    , 211 Cal.App.4th at pp. 827-828.)
    For these reasons, the anti-SLAPP statute does not apply.
    B.    Do Mission’s Claims Have Minimal Merit?
    Pabst further contends that Mission’s two claims lack the
    minimal merit necessary to withstand its anti-SLAPP motion.
    Specifically, Pabst asserts that Mission cannot prove (1) any
    breach of contract because section 25000.2 independently confers
    upon brewers a right to terminate a distribution contract, or
    17
    (2) any damages arising from any breach because Mission was
    made whole by Classic’s and Beauchamp’s payment reflecting the
    fair market value of Mission’s distribution rights. Because any
    breach of contract claim requires proof of a contractual duty,
    breach of that duty, causation, and damages (Oasis 
    West, supra
    ,
    51 Cal.4th at p. 821), and because Mission’s declaratory relief
    claim that there was no valid termination in effect seeks a
    declaration that Pabst breached the contract (Code Civ. Proc.,
    § 1060 [authorizing suit for a “declaration of . . . rights . . . with
    respect to another”]), Mission is required to make out a prima
    facie case that Pabst breached the Agreement and that Mission
    was damaged by that breach. Although the trial court did not
    evaluate whether Mission’s claims had minimal merit, we have
    the discretion to do so (Schwarzburd v. Kensington Police
    Protection & Community Services Dist. Bd. (2014)
    
    225 Cal. App. 4th 1345
    , 1355; Roberts v. Los Angeles County Bar
    Assn. (2003) 
    105 Cal. App. 4th 604
    , 615-616), and will exercise that
    discretion in this case because the issue is squarely presented
    and because no California court has construed section 25000.2.
    We will consider each contested element.
    1.    Has Mission made a prima facie showing that
    Pabst breached the Agreement?
    Because Pabst’s termination of the Agreement rested solely
    on its position that section 25000.2 confers upon brewers an
    independent right to terminate a distribution contract, whether
    Mission has made out a prima facie case for the element of
    breach turns on whether section 25000.2 confers such a right.
    This is a question of statutory interpretation, which we review de
    novo. (Weatherford v. City of San Rafael (2017) 2 Cal.5th 1241,
    1247.)
    18
    Our “‘“fundamental task”’” in interpreting a statute is to
    “‘“effectuate the law’s purpose.”’” (City of San Jose v. Superior
    Court (2017) 2 Cal.5th 608, 616-617, quoting Sierra Club
    v. Superior Court (2013) 
    57 Cal. 4th 157
    , 165-166.) Because the
    best indicator of our Legislature’s intent is found in the words of
    the statute itself, we start with the statute’s plain text. (Ibid.)
    We construe the text “‘“in the context of the statutory framework
    as a whole”’” and give that text “a plain and commonsense
    meaning.”’” (Id. at p. 616) Unless a literal reading of the text
    “‘“would result in absurd consequences”’” or unless the text
    “‘“permits more than one reasonable interpretation,”’” our inquiry
    both starts and stops with the text. (Ibid.) In those limited
    situations where we look beyond the text, we may also consider
    “‘“the statute’s purpose, legislative history, and public policy.”’”
    (Id. at pp. 616-617.)
    The text of section 25000.2 sets forth the procedures that
    must be followed when a “successor beer manufacturer . . .
    acquires the rights to manufacture . . . a product” and “cancels
    any of the existing [distributor’s] rights to distribute the product.”
    (§ 25000.2, subd. (b)(1) & (2).) The statute prescribes what
    happens after the successor brewer cancels, but nothing in the
    statute’s text expressly grants the successor brewer the precursor
    right to cancel distribution rights. (Accord, Maita Distributors,
    Inc. v. DBI Beverage (N.D.Cal. 2009) 
    667 F. Supp. 2d 1140
    , 1147
    (Maita) [“Nothing in the statutory text [of section 25000.2]
    expressly grants a right of cancellation”]; Mussetter Distributing,
    Inc. v. DBI Beverage Inc. (N.D.Cal. 2010) 
    685 F. Supp. 2d 1028
    ,
    1030 (Mussetter) [same].) More to the point, nothing in the
    statute’s text expressly grants the successor beer manufacturer
    19
    the further right to cancel distribution rights regardless of its
    contractual obligations with the existing distributor.
    Nor can we infer an implied right to cancel distribution
    contracts—with or without impunity—from section 25000.2’s
    legislative history. To begin, section 25000.2 was sponsored by
    the California Beer and Beverage Distributors. (Assem. Com. on
    Governmental Organization, Analysis of Sen. Bill No. 574 (2007-
    2008 Reg. Sess.) June 27, 2007, pp. 3-4
    ). It seems
    highly unlikely that an organization representing distributors
    would sponsor legislation that would deprive their members of
    their negotiated contractual rights. Moreover, section 25000.2
    was enacted to address a specific problem: Brewers were buying
    up and consolidating more and more brands of beer and then
    seeking to use their own network of distributors, so there was a
    need for “an authorized and structured process to insure the
    timely payment of fair and market-based compensation for the
    transfer of brands between” distributors. (Ibid.; see also Sen.
    Rules Com., Off. of Sen. Floor Analyses, Analysis of Sen. Bill No.
    574 (2007-2008 Reg. Sess.) as amended Aug. 27, 2007, p. 6
    .) Solving
    this problem does not require brewers to be granted an
    unvarnished right to terminate their distributorship contracts.
    Not surprisingly, the only two decisions to have interpreted
    section 25000.2—the federal district court decisions in Maita and
    Mussetter—have also concluded that section 25000.2 does not
    expressly or implicitly grant a successor brewer a right to cancel
    20
    distribution contracts. 
    (Maita, supra
    , 667 F.Supp.2d at pp. 1147-
    1148; 
    Mussetter, supra
    , 685 F.Supp.2d at p. 1030.)
    Pabst concedes that section 25000.2 does not expressly
    confer upon successor brewers an independent right to cancel
    distributorship without incurring any contractual liability, but
    offers seven reasons why section 25000.2 implicitly confers such a
    right and why Maita and Mussetter are both wrongly decided.
    First, Pabst asserts that section 25000.2 was designed to
    facilitate “efficient breaches of contract”—that is, the successor
    brewers may breach the distributorship contracts as long as their
    newly designated distributor pays the existing distributor the
    statutorily mandated fair market value of the transferred
    distribution rights. Pabst argues that our Legislature’s intent to
    allow for efficient breaches of contract under section 25000.2 is
    analogous to its intent to allow for such breaches under section
    25000.9, the provision requiring brewers to pay an existing
    manufacturer damages if the brewer “unreasonably” refuses to
    allow that distributor to transfer its distribution rights to another
    distributor. (See Crown 
    Imports, supra
    , 223 Cal.App.4th at p.
    1407, fn. 14 [“section 25000.9 is simply a manifestation of the
    doctrine of efficient breach of contract”].) Pabst’s argument
    misapprehends the concept of efficient breach of contract. That
    concept supports a rule that allows one party to a contract to
    breach and pay damages rather than perform, at least where it is
    “worth more [to that party] to breach rather than to perform.”
    (Huynh v. Vu (2003) 
    111 Cal. App. 4th 1183
    , 1198-1199.) That
    concept does not, as Pabst seems to suggest, support a rule that
    allows the breaching party to avoid paying damages for
    breaching the contract by having someone else pay a subset of
    those damages. Indeed, the Crown Imports case looked to the
    21
    damages amount in section 25000.9 only because the
    distributorship contract specifically incorporated state statutory
    law; Crown Imports did not purport to effect a wholesale
    substitution of the statutory measure of damages for the usual
    damages arising from a breach of contract. (Crown Imports,
    at p. 1407, fn. 14.) Nothing in section 25000.2 prevents a
    successor brewer, like Pabst, from engaging in an efficient breach
    of contract by canceling its distributorship contracts; critically,
    however, nothing in section 25000.2 immunizes a brewer from
    the full amount of damages it must pay for such an efficient but
    nevertheless wrongful breach.
    Second, Pabst contends that section 25000.2’s legislative
    history requires us to imply that section 25000.2 grants brewers
    the right to cancel their distributorship contracts and immunity
    from breach of contract liability when they do so. Pabst points to
    a number of letters, including a letter from the California Beer
    and Beverage Distributors, that were submitted to legislators
    and that stated the authors’ view that section 25000.2 “takes the
    brewer out of the process and effectively out of litigation” and
    thus “will end brand transfer litigation to the economic benefit of
    both brewers and California beer distributors.” 6 These letters do
    not support—let alone compel—the conclusion that section
    25000.2 gives brewers a “get out of litigation free” card. To begin,
    these letters reflect the opinions of entities lobbying our
    Legislature, not the Legislature itself. Moreover, the letters on
    their face simply recognize that section 25000.2 “takes the brewer
    out of the process” of negotiating, arbitrating, and if there is an
    6     We grant Pabst’s request to judicially notice these letters,
    which are part of section 25000.2’s legislative history. (Evid.
    Code, §§ 452, subd. (c) & 459.)
    22
    appeal, litigating, the fair market value of the distribution rights;
    the letters in no way reflect the view that section 25000.2 takes
    brewers out of all litigation, even litigation for violating their
    contractual obligations. Indeed, the brewer in Maita offered the
    same letters in support of its argument that section 25000.2
    conferred a right to cancel contracts and concomitant immunity
    for doing so; Maita concluded that “this snippet of legislative
    history . . . [was] not sufficient” to support that argument.
    
    (Maita, supra
    , 667 F.Supp.2d at pp. 1147-1148.)
    Third, Pabst notes that section 25000.2 provides that
    “arbitration” conducted under its auspices “shall be the means of
    determining compensation . . . for the fair market value of the
    affected distribution rights” (§ 25000.2, subd. (f), italics added),
    and asserts that the word “the” implies that section 25000.2’s
    remedy is exclusive. But the exclusivity of section 25000.2
    regarding the means of fixing damages for the fair market value
    of distribution rights does not speak to the preceding right to
    terminate those rights or the right to initiate litigation seeking
    damages over and above “the fair market value of the affected
    distribution rights.”
    Fourth, Pabst argues that the “primary right” theory
    mandates that section 25000.2 be read to grant a brewer the
    right to terminate an existing distributorship agreement and to
    foreclose any lawsuit for breach of the agreement. Otherwise,
    Pabst explains, the existing distributor will be allowed to
    impermissibly “split its claim” for damages—getting some
    damages from the newly designated distributors under section
    25000.2’s negotiation and arbitration process and some damages
    from the successor brewer in breach of contract litigation.
    23
    Pabst overreads the primary right theory. “The primary
    right theory . . . provides that a ‘cause of action’ is comprised of a
    ‘primary right’ of the plaintiff”; a “primary right” is the “right to
    be free from the particular injury suffered.” (Crowley
    v. Katleman (1994) 
    8 Cal. 4th 666
    , 681-682.) Because a “primary
    right” is “‘indivisible’” and “‘gives rise to but a single cause of
    action’” (Mycogen Corp. v. Monsanto Co. (2002) 
    28 Cal. 4th 888
    ,
    904), the doctrine prevents a plaintiff from “split[ting] a single
    cause of action and try[ing] it piecemeal” (Ford Motor Co.
    v. Superior Court (1973) 
    35 Cal. App. 3d 676
    , 679; Mycogen Corp.,
    at p. 904 [“‘The primary right theory . . . is invoked . . . when a
    plaintiff attempts to divide a primary right and enforce it in two
    suits’”]). However, the “‘primary right theory has a fairly narrow
    field of application’” (Grisham v. Philip Morris U.S.A., Inc. (2007)
    
    40 Cal. 4th 623
    , 642), and as our Supreme Court has observed, is
    “ill-suited to the anti-SLAPP context” 
    (Baral, supra
    , 1 Cal.5th
    at p. 395).
    Although a distributor may have a single primary right—
    and hence a single claim—not to be injured by a breach of its
    distribution contract, a distributor does not impermissibly split
    that claim when it is shunted into a statutorily mandated
    procedure for evaluating the fair market value of its distribution
    rights and thereafter files suit for the wrongful breach of that
    contract to collect damages over and above the fair market value
    of its rights. Our Legislature’s decision to create the potential for
    litigation to occur in two fora is not the distributor’s decision to
    split a claim, and thus does not run afoul of the primary right
    doctrine or require us to construe section 25000.2 to foreclose all
    attempts by the distributor to seek relief outside the statutorily
    mandated procedure.
    24
    Fifth, Pabst argues that section 25000.2 must be read to
    foreclose any lawsuit by an existing distributor against the
    brewer because such a lawsuit will always be either unripe or
    moot. It will be unripe, Pabst claims, until the existing
    distributor is paid by the newly designated distributors because,
    until that time, the existing distributor will continue to exercise
    its distribution rights. (§ 25000.2, subds. (e) & (g).) But once the
    distributor is paid, Pabst continues, the distributor’s lawsuit
    instantly becomes moot because the payment makes the
    distributor whole and makes any declaratory relief redress for a
    “past wrong.” (See Babb v. Superior Court (1971) 
    3 Cal. 3d 841
    ,
    848 [declaratory relief “‘operates prospectively, and not merely
    for the redress of past wrongs”].) This argument is flawed. Pabst
    is incorrect that a distributor’s claim for breach of contract is not
    ripe as long as it continues to distribute the brewer’s beer
    because, as noted above, the distributor may sue for anticipatory
    breach. 
    (Guerrieri, supra
    , 51 Cal.2d at p. 18; 
    Ferguson, supra
    ,
    197 Cal.App.4th at p. 1168.) Pabst is also incorrect that a
    distributor’s claim is moot once the newly designated distributors
    remit the fair market value of the distribution rights because, as
    discussed below, additional damages may be available if there is
    a wrongful breach and there remains a live “actual controversy”
    warranting declaratory relief regarding those additional damages
    and the wrongful breach that caused them.
    Sixth, Pabst contends that section 25000.2 must be read to
    foreclose a distributor’s subsequent lawsuit for breach of contract
    because that lawsuit will always be barred by California’s
    litigation privilege. 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
    25
    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 applies to
    communications made in “private arbitration proceedings.”
    (Moore v. Conliffe (1994) 
    7 Cal. 4th 634
    , 645.) The privilege
    immunizes a defendant from liability for all claims (other than
    malicious prosecution) based on privileged communications
    (Flatley v. Mauro (2006) 
    39 Cal. 4th 299
    , 322), including breach of
    contract claims (Feldman v. 1100 Park Lane Associates (2008)
    
    160 Cal. App. 4th 1467
    , 1485-1486). However, because, as
    discussed above, Mission’s lawsuit is based upon Pabst’s decision
    to terminate the Agreement (and not Pabst’s subsequent
    communication of that decision), Mission’s lawsuit is not barred
    by the litigation privilege. The same would be true for all
    lawsuits by distributors premised on the successor brewer’s
    decision to breach the distributorship contract, so the litigation
    privilege does not dictate that we interpret section 25000.2 to bar
    all distributor lawsuits for breach of contract.
    Lastly, Pabst points to the earlier rulings of the trial court
    and the arbitrator in this case rejecting Mission’s entreaties to
    halt the arbitration. Pabst urges that these rulings stand for the
    proposition that section 25000.2 forecloses Mission’s—and hence,
    any distributor’s—subsequent breach of contract lawsuit. Pabst
    overreads the prior rulings. Those rulings simply refused to halt
    the ongoing section 25000.2 proceedings; they said nothing about
    the viability of Mission’s civil lawsuit for damages. Indeed, the
    arbitrator in his final award went out of his way not to foreclose
    Mission’s lawsuit.
    For these reasons, we hold that section 25000.2 does not
    independently confer upon brewers the right to cancel their
    26
    existing distributorship contracts and does not immunize them
    from liability for any wrongful cancellation of those contracts. 7
    Because Pabst offers no other basis for its decision to terminate
    the Agreement, Mission has made out a prima facie case that
    Pabst breached the Agreement.
    2.     Has Mission made a prima facie showing that
    Pabst’s cancellation of the Agreement caused it damage?
    A plaintiff is entitled only to a “single recovery” for “a
    distinct harm suffered.” (Tavaglione v. Billings (1993) 
    4 Cal. 4th 1150
    , 1158-1159; Renda v. Nevarez (2014) 
    223 Cal. App. 4th 1231
    ,
    1237.) A plaintiff suing for breach of contract is entitled to
    recover as damages “the amount which will compensate . . . for all
    the detriment proximately caused thereby, or which, in the
    ordinary course of things, would be likely to result therefrom.”
    (Civ. Code, § 3300.) These damages include: (1) “general
    damages,” which are damages that “flow directly and necessarily
    from a breach of contract” (Lewis Jorge Construction
    Management, Inc. v. Pomona Unified School Dist. (2004)
    
    34 Cal. 4th 960
    , 968 (Lewis Jorge), and which include lost profits
    (Sargon Enterprises, Inc. v. University of Southern California
    (2012) 
    55 Cal. 4th 747
    , 773-774); (2) “special” or consequential
    damages, which are damages that “do not arise directly and
    inevitably” but which are recoverable to the extent they “were
    either actually foreseen . . . or were ‘reasonably foreseeable’ when
    the contract was formed” (Lewis Jorge, at p. 970); (3) nominal
    7      We accordingly have no occasion to reach Mission’s further
    contention that construing section 25000.2 to immunize successor
    brewers from breach of contract liability for wrongful termination
    of distribution contracts would unconstitutionally impair the
    contract rights of distributors. (U.S. Const., art. I, § 10;
    Cal. Const., art. I, § 9.)
    27
    damages (Civ. Code, § 3360; Sweet v. Johnson (1959)
    
    169 Cal. App. 2d 630
    , 632-633); and, if the contract so provides,
    (4) attorney’s fees to the prevailing party (Civ. Code, § 1717; Code
    Civ. Proc., § 1021).
    Given the breadth of damages available when a contract is
    breached, an existing distributor’s receipt of the “fair market
    value of the affected distribution rights” under section 25000.2
    does not necessarily make that distributor whole. Even if the fair
    market value provided for by section 25000.2 encompasses the
    distributor’s lost profits (e.g., Tri County Wholesale v. Labatt
    USA Operating Co. (6th Cir. 2016) 
    828 F.3d 421
    , 423, 430-431),
    the distributor may also be entitled to consequential damages
    arising from a wrongful breach as well as attorney’s fees (and, of
    course, nominal damages). Nor is there any danger that an
    existing distributor would be unjustly enriched by receiving
    duplicative damages because courts can and will offset against
    any civil jury award amounts that are duplicative of payments
    made under section 25000.2’s procedures. (E.g., Clayworth
    v. Pfizer, Inc. (2010) 
    49 Cal. 4th 758
    , 777 [noting how “the problem
    of duplicative recoveries could be addressed by allowing damages
    already paid to be offset”].)
    Pabst resists this conclusion with two further arguments.
    First, it argues that a distributor would not be entitled to
    injunctive relief that would unwind the transfer of distribution
    rights. However, whether or not section 25000.2 forecloses
    injunctive relief that would unwind a transfer (a question not
    before us now), Mission has still made out a cognizable claim for
    damages and declaratory relief that survives Pabst’s anti-SLAPP
    motion.
    28
    Second, Pabst asserts that Mission has adduced insufficient
    proof of damage because its assertion that it has suffered
    “approximately $2,500,000 per year” in lost “expected annual
    gross profits” to its company as a whole—over and above the lost
    value of its distribution rights—is too “conclusory”; Pabst
    complains that Mission did not explain how its estimate was
    calculated. Pabst forfeited this argument by not objecting to this
    evidence on this basis before the trial court. (Evid. Code, § 353;
    Gonzalez v. Santa Clara County Dept. of Social Services (2017)
    9 Cal.App.5th 162, 173.) Even if the objection were not forfeited,
    the trial court would not have abused its discretion in considering
    the evidence. (People v. Waidla (2000) 
    22 Cal. 4th 690
    , 725.)
    Although a court “determining whether the plaintiff has made a
    prima facie evidentiary showing on the second prong of the anti-
    SLAPP inquiry” should “disregard declarations lacking in
    foundation or personal knowledge, or that are argumentative,
    speculative, impermissible opinion, hearsay, or conclusory”
    (Dwight R. v. Christy B. (2013) 
    212 Cal. App. 4th 697
    , 714), the
    estimate in this case was provided by Mission’s president and
    was based on his personal knowledge; the president’s failure to
    “show his math” does not render the estimate conclusory.
    29
    DISPOSITION
    The order is affirmed. Mission is entitled to its costs on
    appeal.
    CERTIFIED FOR PUBLICATION.
    ______________________, J.
    HOFFSTADT
    We concur:
    _________________________, Acting P. J.
    ASHMANN-GERST
    _________________________, J. *
    GOODMAN
    *     Retired judge of the Los Angeles Superior Court, assigned
    by the Chief Justice pursuant to article VI, section 6 of the
    California Constitution.
    30