AWI Builders v. Alliant Consulting CA2/4 ( 2021 )

Filed 10/22/21 AWI Builders v. Alliant Consulting CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
AWI BUILDERS, INC., et al., B294662, B297189,
B298699, B300834
Plaintiffs and Appellants,
(Los Angeles County
v. Super. Ct. No. BC696666)
ALLIANT CONSULTING, INC.,
et al.,
Defendants and Respondents.
APPEAL from judgments and orders of the Superior Court for Los
Angeles County, Robert B. Broadbelt III, Judge. Affirmed.
Pacheco & Neach, Rod Pacheco, Brian Neach; Feldman &
Associates, Inc., Mark A. Feldman, David J. Sire, Jr.; Richards, Watson
& Gershon, Steven A. Nguy and T. Peter Pierce for Plaintiffs and
Appellants.
Manning & Kass, Ellrod, Ramirez, Trester, Al M. De La Cruz and
Ladell Hulet Muhlestein for Defendants and Respondents Alliant
Consulting, Inc. and Christa Schott.
Koeller, Nebeker, Carlson & Haluck, William L. Haluck, Zachary
M. Schwartz and Greg K. Koeller for Defendants and Respondents
Anthony aka “Tony” Rackaukas, Donde McCament, Elaine Noce and
County of Orange.
Collins Muir + Stewart LLP, Samuel J. Muir, Rebecca J. Chmura
and David C. Moore for Defendant and Respondent GKK Works.
DeCarlo & Shanley, Desmond C. Lee and Yuliya S. Mirzoyan for
Defendants and Respondents Carpenters-Contractors Cooperation
Committee, Pete Rodriguez and David Kersh.
Division of Labor Standards Enforcement and David D. Cross for
Defendants and Respondents State of California and Maria Sandoval.
_______________
This opinion addresses multiple appeals taken from orders
granting, or granting in part, five special motions to strike the second
amended complaint filed by plaintiffs AWI Builders, Inc. (AWI),
Construction Contractors Corporation (CCC), Zhirayr “Robert”
Mekikyan, and Anna Mekikyan, and from orders awarding attorney
fees with respect to each of those motions.1 The second amended
complaint alleged causes of action for violation of civil rights under
section 1983 of title 42 of the United States Code (section 1983) as well
as state tort claims against five sets of defendants: (1) Alliant
Consulting, Inc. (Alliant) and Christa Schott (collectively, the Alliant
defendants); (2) County of Orange (OC), Anthony aka “Tony”
Rackaukas, Donde McCament, and Elaine Noce (collectively, the OC
1 We ordered all of the appeals consolidated for purposes of oral
argument and decision.
2
defendants); (3) GKK Works (GKK); (4) Carpenters-Contractors
Cooperation Committee, Inc. (Quad-C), Pete Rodriguez, and David
Kersh (collectively, the Quad-C defendants); and (5) the State of
California (State) and Maria Sandoval (the State defendants).
The trial court granted in full the special motions to strike (also
known as anti-SLAPP motions, brought under Code of Civil Procedure
section 425.16 (hereafter section 425.16)) brought by the Alliant
defendants, the OC defendants, GKK, and the Quad-C defendants and
dismissed all claims against those parties. The court granted in part
the State defendants’ anti-SLAPP motion and dismissed all but the
section 1983 claim against Sandoval.
On appeal from these orders and the orders awarding attorney
fees to all of the defendants, plaintiffs raise numerous arguments as to
why the anti-SLAPP statute does not apply to certain claims and how
they established a probability of prevailing on some of the claims. We
have considered all of those arguments, including those raised for the
first time on appeal, and conclude the trial court did not err in granting
the anti-SLAPP motions, and that the court conducted the proper legal
analysis of the attorney fee motions and did not abuse its discretion in
awarding fees to all defendants. Accordingly, we affirm all of the
orders.
BACKGROUND
A. Preliminary Background Information
Plaintiff AWI is a public works construction company. AWI is
owned by plaintiffs Robert and Anna Mekikyan, who also own plaintiff
3
CCC, another construction company. In early 2013, AWI successfully
bid on two public works projects for Riverside County (Riverside), and
was awarded a $14 million contract for the rehabilitation of the Public
Defender’s building (the PD project) and a $13.5 million contract on a
project known as the Riverside County Regional Medical Center (the
Medical Center project). CCC was a subcontractor of AWI on the
Medical Center project.
Riverside hired defendant GKK as a consultant to provide
construction management services on both the PD project and the
Medical Center project. Issues arose during construction on the PD
project, and by the end of 2013, AWI made Riverside officials aware
that it was contemplating litigation; AWI filed a government claim
against Riverside in early 2014.
In late 2013 or early 2014, Riverside asked GKK to find a labor
compliance specialist. After receiving bids for that work, GKK entered
into subconsultant agreements with defendant Alliant to provide labor
compliance services on the PD project, the Medical Center project, and
another project that AWI previously had worked on. Alliant began to
provide those services in January or March of 2014.2
The events at issue in this lawsuit originate with the retention of
Alliant to provide labor compliance monitoring services. To put in
2 There is conflicting evidence regarding when Alliant began providing
monitoring services with respect to the Riverside projects. Defendant Christa
Schott, the president and sole owner of Alliant testified at one point that
Alliant started its work on the projects in March 2014, and later testified that
it started in January 2014. The date of the subconsultant agreement was
April 14, 2014.
4
context the conduct of the various parties, an understanding of
California’s prevailing wage law is required.
B. The Prevailing Wage Law
For more than 90 years, contractors and public entities involved in
construction of public works in California have been governed by
California’s prevailing wage law (Lab. Code, §§ 1720-1861; originally
enacted by Stats. 1931, ch. 397, p. 910). This law was “enacted in
response to the economic conditions of the Depression, when the
oversupply of labor was exploited by unscrupulous contractors to win
government contracts when private construction virtually stopped.”
(State Building & Construction Trades Council of California v. Duncan
(2008) 162 Cal.App.4th 289, 294.) The law furthers the declared “policy
of this state to vigorously enforce minimum labor standards in order to
ensure employees are not required or permitted to work under
substandard unlawful conditions or for employers that have not secured
the payment of compensation, and to protect employers who comply
with the law from those who attempt to gain a competitive advantage at
the expense of their workers by failing to comply with minimum labor
standards.” (Lab. Code, § 90.5, subd. (a); see Lusardi Construction Co.
v. Aubry (1992) 1 Cal.4th 976, 985.)
The prevailing wage law provides that “[e]xcept for public works
projects of one thousand dollars ($1,000) or less, not less than the
general prevailing rate of per diem wages for work of a similar
character in the locality in which the public work is performed, and not
less than the general prevailing rate of per diem wages for holiday and
5
overtime work fixed as provided in this chapter, shall be paid to all
workers employed on public works.” (Lab. Code, § 1771; see also Lab.
Code, § 1774 [“The contractor to whom the contract is awarded, and any
subcontractor under him, shall pay not less than the specified
prevailing rates of wages to all workmen employed in the execution of
the contract”].)
To ensure compliance with this requirement, the prevailing wage
law requires each contractor and subcontractor on a public work project
to “keep accurate payroll records, showing the name, address, social
security number, work classification, straight time and overtime hours
worked each day and week, and the actual per diem wages paid to each
journeyman, apprentice, worker, or other employee employed by him or
her in connection with the public work.” (Lab. Code, § 1776, subd. (a).)
The term “payroll records” is defined as “[a]ll time cards, cancelled
checks, cash receipts, trust fund forms, books, documents, schedules,
forms, reports, receipts or other evidences which reflect job
assignments, work schedules by days and hours, and the disbursement
by way of cash, check, or in whatever form or manner, of funds to a
person(s) by job classification and/or skill pursuant to a public works
project.” (Cal. Code Regs., tit. 8, § 16000.)
The contractor must inform the body awarding the contract of the
location of the payroll records and, as relevant here, those records must
be “available for inspection at all reasonable hours at the principal
office of the contractor” as follows: (1) they must be “made available for
inspection or furnished upon request to a representative of the body
awarding the contract and the Division of Labor Standards
6
Enforcement [DLSE] of the Department of Industrial Relations” (Lab.
Code, § 1776, subd. (b)(2)); (2) they must be made available to the public
if requested (although the request must be made through either the
body awarding the contract or DLSE)3 (Lab. Code, § 1776, subd. (b)(2));
and (3) “[n]otwithstanding any other provision of law, . . . law
enforcement agencies investigating violations of law shall, upon
request, be provided nonredacted copies” of the payroll records (Lab.
Code, § 1776, subd. (f)(1)). These requirements to maintain the payroll
records and allow inspection must be reflected in the contract for the
public work. (Lab. Code, § 1776, subd. (i).)
The body that awarded the contract for a public work must “take
cognizance of violations” of the prevailing wage law and must promptly
report any suspected violations to the Labor Commissioner. (Lab. Code,
§ 1726, subd. (a).) If the awarding body determines as a result of its
own investigation that there has been a violation, it may withhold
contract payments after giving written notice to the contractor or
subcontractor. (Lab. Code, §§ 1726, subd. (b), 1771.6, subd. (a).)
If the Labor Commissioner determines after an investigation that
there has been a violation, he or she must issue a civil wage and penalty
assessment to the contractor or subcontractor, or both. (Lab. Code,
§ 1741, subd. (a).) The assessment must be served not later than 180
3 The law includes measures to protect the privacy of employees when
the payroll records are made available to the public. (Lab. Code, § 1776,
subd. (e)). Those measures are less restricted when the member of the public
requesting the records is a multiemployer Taft-Hartley trust fund (29 U.S.C.
§ 186(c)(5)) or a joint labor-management committee established under federal
law. (Ibid.)
7
days after the filing of a valid notice of completion of the public work or
180 days after acceptance of the public work, whichever occurs last.
(Ibid.) The amount of the assessment is based upon the difference
between the prevailing wage and the amount actually paid to each
worker, plus a penalty of not less than $40 (or $120, if the violation was
willful) for each calendar day for each worker paid less than the
prevailing wage. (Lab. Code, § 1775.) If an assessment is issued, the
body that awarded the contract must, before making any further
payments to the contractor, withhold and retain all amounts required to
satisfy the assessment. (Lab. Code, § 1727, subd. (a).)
In addition to investigations by the awarding body, the Labor
Commissioner, and law enforcement agencies, the prevailing wage law
provides another avenue to enforce the law. Section 1771.2 of the Labor
Code provides that “[a] joint labor-management committee established
pursuant to the federal Labor Management Cooperation Act of 1978 (29
U.S.C. Sec. 175a) may bring an action in any court of competent
jurisdiction against an employer that fails to pay the prevailing wage to
its employees, as required by this article, or that fails to provide payroll
records as required by [Labor Code] Section 1776.”4 (Lab. Code,
§ 1771.2, subd. (a).) Such an action may be commenced no later than 18
months after the filing of a valid notice of completion of the public work
or 18 months after acceptance of the public work, whichever is later.
(Ibid.)
4 It appears that defendant Quad-C may be a joint labor-management
committee.
8
The consequences for contractors and subcontractors found to
have committed violations of the prevailing wage law are not solely
monetary. For example, the Labor Commissioner is required to
maintain a public list of the names of each contractor and subcontractor
who has been found to have committed a willful violation. (Lab. Code,
§ 1741, subd. (c)(1).) The contractor’s or subcontractor’s name remains
on the list for a minimum of three years. (Lab. Code, § 1741, subd.
(c)(3).) If the Labor Commissioner finds that a contractor or
subcontractor is in violation of the prevailing wage laws with intent to
defraud, that contractor or subcontractor, or any entity in which the
contractor or subcontractor has any interest, is ineligible to bid on or be
awarded a contract for, or to perform work as a subcontractor on, a
public works project for a period of not less than one year or more than
three years. (Lab. Code, § 1777.1, subd. (a).) If the contractor or
subcontractor is found to have committed two or more separate willful
violations, that ban is for three years. (Lab. Code, § 1777.1, subd. (b).)
This ban also applies if a contractor or subcontractor fails to provide a
timely response to a request by DLSE to produce certified payroll
records in accordance with Labor Code section 1776 (after notice and
time to correct). (Lab. Code, § 1777.1, subd. (c).)
Finally, the contractor or subcontractor who violates the
prevailing wage law may be criminally prosecuted. If the contractor or
subcontractor fails to maintain accurate payroll records or fails to make
them open to inspection, he or she is guilty of a misdemeanor. In
addition, a contractor or subcontractor “who takes, receives, or
conspires with another to take or receive, for his or her own use or the
9
use of any other person any portion of the wages of any worker or
working subcontractor, in connection with services rendered upon any
public work is guilty of a felony.” (Lab. Code, § 1778.)
With these provisions of the prevailing wage law in mind, we
continue our summary of the facts of this case.
C. The Events Leading to the Present Dispute
1. Alliant Begins Its Labor Compliance Work
Immediately upon being retained as a labor compliance monitor
for Riverside, Alliant, through its president Schott, conducted a full
labor compliance audit review of the payroll and supporting forms that
AWI had provided for the Medical Center project. Alliant issued its
preliminary findings to Riverside, based upon Schott’s audit, on
March 31, 2014. Alliant reported it was apparent that AWI was using
several subcontractors who were not on the original subcontractor list
included in the bid paperwork, and that one of the listed subcontractors
had its license suspended due to failure to comply with bonding
requirements. Alliant also reported that multiple contractors appeared
to be paying less than the prevailing wage, and that many contractors
(including AWI) had missed a pre-determined wage increase for some of
the trades. Finally, Alliant reported that many required forms,
statements, and/or information were missing.
On April 3, 2014, Schott met with Robert Mekikyan to review
labor law requirements regarding the Medical Center project. Schott
explained her and Alliant’s role, on behalf of Riverside, in assessing
AWI’s and CCC’s compliance with labor laws, particularly the
10
prevailing wage law, with regard to Riverside’s public works
construction projects. Schott conducted a similar meeting with Mr.
Mekikyan regarding the PD project on May 7, 2014. At both meetings,
Schott provided to Mr. Mekikyan three-page checklists for AWI and for
CCC setting forth labor law requirements applicable to each contract.
Each checklist included a paragraph stating that contractors and
subcontractors were required under Labor Code section 1776 to keep
accurate payroll records and that those records “shall be made available
for inspection at all reasonable hours at the principal office of the
contractor/subcontractor . . . pursuant to Labor Code Section 1776.”
Each checklist was signed by the payroll officer for AWI or CCC. The
payroll officers for both AWI and CCC also signed a “Certification of
Understanding and Authorization” for both the Medical Center project
and the PD project that, among other things, certified that the
principals and the authorized payroll officers of AWI and CCC had read
and understood the labor wage standards pertaining to each project,
and would provide the documents required under the labor laws.5
5 In addition, the contracts that AWI had entered into with Riverside for
the PD project and for the Medical Center project had included, in accordance
with Labor Code section 1776, subdivision (i), a provision stating: “The
Contractor, and each subcontractor, shall keep an accurate record showing
the names of and actual hours worked each calendar day and each calendar
week by all laborers, workmen, and mechanics employed by them in
connection with the Work contemplated by this Contract, which record shall
be open at all reasonable hours to the inspection of the County or its officers
or agents and to the Division of Labor Standards Enforcement of the
Department of Industrial Relations.”
11
As part of its labor compliance monitoring, Alliant went on site at
both projects to interview workers. In early May 2014, Schott expressed
concern to principals at GKK that the hours worked, classifications
used, and total number of documented workers on site were not
accurately reflected in AWI’s payroll records. Therefore, she told GKK
that she would issue a formal request for information to AWI to verify
that all workers were being paid the appropriate prevailing wage.6 In
June 2014, Alliant made a formal request to AWI for copies of cancelled
checks and time sheets for the Medical Center project; AWI refused to
comply.
2. Riverside Terminates Its Contract With AWI For the PD
Project
As noted, disputes arose in late 2013 between AWI and Riverside
regarding the PD project, and AWI threatened litigation. Riverside
retained GKK as a consultant to address the threatened litigation,
assess Riverside’s liability, and make recommendations. By mid-2014,
Riverside concluded it was in its best interest, and in the best interest
of the PD project, to pursue a termination for convenience with AWI.
GKK subsequently was retained by Riverside to provide construction
management services to facilitate the termination of AWI from the
6 Schott also told GKK that she had been informed that the Riverside
district attorney’s office was pursuing criminal charges against Mr. Mekikyan
and AWI. Apparently, Riverside deputy county counsel Marsha Victor had
told Schott about the purported criminal investigation. It appears, however,
that the Riverside district attorney’s office did not start an investigation until
April of 2015.
12
project and the transition to a new general contractor. AWI was
removed from the PD project in late July 2014. However, AWI
continued its work on the Medical Center project.
3. Alliant Obtains Documents From a Locked File Cabinet
Alliant continued its labor compliance monitoring of AWI’s
Riverside projects. During one of Alliant’s site visits to the Medical
Center project, a worker approached Alliant employees and told them
that all journeymen AWI workers were paid a flat hourly rate of $16 per
hour, and that they worked 10 hours per day and most Saturdays but
were not given any break periods or overtime pay. The worker also told
the Alliant employees that AWI stored time sheets and daily sign-in
sheets in its job trailer on site.
Schott consulted with Riverside deputy county counsel Marsha
Victor regarding what could be done to obtain the payroll records AWI
kept in its job trailer. After that consultation, on October 24, 2014, an
Alliant employee and Chuck Waltman, an official from Riverside, went
to the Medical Center project site trailer with a document scanner to
scan the payroll records, including the time sheets and daily sign-in
sheets, stored there. When they arrived, AWI staff called Mr.
Mekikyan on the phone to tell him that Waltman and an Alliant
employee were at the trailer and demanding documents. Mr. Mekikyan
spoke on the phone with Waltman, and told him that Waltman did not
have his permission to be in his office or to access the documents.
Nevertheless, Waltman and the Alliant employee broke the lock on the
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file cabinet in which the documents were stored, and scanned the
documents on site.
Using the scanned documents, Alliant conducted a full audit,
cross-referencing all of the hours reported on the time sheets and daily
sign-in sheets to the certified payroll documents AWI had submitted to
Riverside and/or Alliant. Alliant discovered that AWI had engaged in a
substantial underreporting of hours and workers: many workers were
not reported on the certified payroll documents, those documents
reported four or eight hours of work when the time sheets showed the
workers consistently worked 10 hours, and the certified documents did
not report work performed on Saturdays and holidays even though the
time sheets indicated work was performed on those days.
4. Schott Files Complaints With the Labor Commissioner
Based upon the information from the scanned documents, as well
as an affidavit signed by an AWI worker stating that AWI workers were
paid $16 per hour with no overtime pay, on November 20, 2014, Schott
filed complaints with the Labor Commissioner regarding AWI’s and
CCC’s violation of the prevailing wage law with respect to the Medical
Center project. A few weeks later, in December 2014, Schott filed
similar complaints against AWI and CCC with respect to the PD
project.
All of the cases were assigned to Maria Sandoval, an investigator
for the DLSE. Sandoval communicated directly with Schott, and Schott
provided her with the information Alliant had obtained, including
contact information for workers on the two projects. Sandoval reviewed
14
the records that Schott had provided; she also sent questionnaires to
workers who were listed on AWI’s certified payroll reports and
interviewed those workers who responded. In mid-2015, the DLSE
issued a civil wage and penalty assessment of more than $500,000
against AWI for the PD project; the issuance of the assessment allowed
Riverside to withhold payments it owed to AWI under the contract.
Schott continued to provide information to Sandoval about the Medical
Center project, which was still ongoing.
AWI requested review of the PD project penalty assessment, and
asked DLSE for copies of any documents DLSE relied upon in its
determination to issue the assessment. Although a party against whom
a civil wage and penalty assessment has been issued has a right to
obtain copies of those documents, Sandoval’s supervisor told Sandoval
not to release the questionnaires.7 Sandoval then contacted Schott to
verify that DLSE could allow AWI to copy the documents Schott
provided to Sandoval, including affidavits from workers, time sheets
Alliant obtained from the job trailer, and pay stubs. Although Schott
conceded that AWI was entitled under the prevailing wage law to look
at the documents, she contacted Dan Stack with the Riverside district
attorney’s office to ask how she should respond Stack then went to see
Sandoval, looked at the files she had, and instructed her that DLSE was
7 Under the prevailing wage law, the DLSE is required during its
investigation to keep confidential the name of, and any other information
that may identify, any employee who reports a violation. (Lab. Code, § 1736.)
15
not to release the affidavits, questionnaires, and certain notes that
contained the identity of complaining workers.
5. Investigations of AWI by Quad-C and the Riverside and OC
District Attorneys’ Offices
The DLSE was not the only agency investigating AWI’s alleged
labor law violations. On May 30, 2014, representatives of the Iron
Workers Union brought to the OC district attorney’s office forged labor
documents relating to a public work project that AWI was constructing
in OC (the OC Fair project). Shortly thereafter, defendant Donde
McCament, a deputy district attorney in the Public Works Unit of the
OC district attorney’s office, and defendant Elaine Noce, an investigator
for that office, initiated a criminal investigation into AWI’s possible
unlawful business practices relating to the OC Fair project. As part of
that investigation, on December 17, 2014, Noce served a search warrant
for the bank records of AWI, CCC, and the Mekikyans.
Sometime before March 2015, defendant Quad-C had begun an
investigation into AWI’s compliance with labor laws at the Medical
Center project. According to defendant Pete Rodriguez, who worked for
Quad-C, it was Quad-C’s practice to conduct investigations into possible
violations and take their findings to district attorneys’ offices.
Rodriguez had met Schott at a workshop and knew that she was
working on the Medical Center project; they assisted each other in their
16
investigations by sharing information they had found regarding those
violations.8
By March 2015, the Riverside district attorney’s office also had
begun its own investigation of AWI, CCC, and the Mekikyans. As part
of that investigation, Riverside district attorney investigator Daniel
Stack met with Schott to discuss AWI. Stack had told Schott to bring to
their meeting any information she had about AWI; Schott brought
Alliant’s reports of action for the PD project and the Medical Center
project.
At around the same time, Schott also met with McCament and
Noce in the OC district attorney’s office. By April 3, 2015, at the
request of McCament and Noce, Schott was gathering information
regarding workers at the PD project and Medical Center project who
also worked at the OC Fair project. Riverside knew of, approved, and
paid for Schott’s work in assisting the OC district attorneys’ office.
Over the next few months or more, Schott met several times with
the Riverside and OC district attorney’s offices, both separately and
together. Rodriguez from Quad-C attended some of those meetings. In
one of the early meetings, Schott and Rodriguez were asked to contact
some of the workers at the Medical Center project to gather evidence
regarding AWI’s compliance with the prevailing wage law. One of the
workers from whom Schott and Rodriguez sought to get information
8 Rodriguez was better able to communicate with some of the workers
because he spoke Spanish and Schott did not, although she had employees at
Alliant who were native Spanish speakers.
17
was Todd Hawk, who had been the site superintendent on the PD
project. On March 12, 2015, Schott wrote to Rodriguez that Hawk
“collected and kept the workers time sheets and he knew
EVERYTHING that [Mr. Mekikyan] was up to. For some reason
however, [Mr. Mekikyan] takes care of him financially so [Hawk] won’t
talk though he has teased us that he may.” Sometime later, Hawk (who
had attended the meeting Schott had held with Mr. Mekikyan in May
2014 to review AWI’s obligations under the prevailing wage law)
provided documents to Alliant.
In July 2015, at the request of Riverside district attorney
investigator Stack, Schott drafted a narrative for Stack to use to obtain
a search warrant, which described the alleged scheme by Mr. Mekikyan,
AWI, and CCC to violate the prevailing wage law. Schott had sent her
first draft of the narrative to Rodriguez to have him give it more
“oomph” because she had no experience drafting this kind of document.
Rodriguez asked defendant David Kersh (also of Quad-C) for help;
Kersh rewrote the draft, and Rodriguez forwarded it to Schott, who
then forwarded it to Stack.
On October 6, 2015, the Riverside and OC district attorneys’
offices jointly obtained search warrants for the Mekikyans’ home and
business locations; the search warrants were executed the following
day. Schott continued to provide information regarding possible
violations of the prevailing wage law to the OC district attorney’s office
at least through November 2016. The OC district attorney’s office
ultimately filed a civil complaint against AWI, CCC, and the Mekikyans
18
on February 20, 2018, for violations of state labor codes and unlawful,
unfair, and fraudulent business practices.
D. The Complaint and Anti-SLAPP Motions
AWI filed the original complaint in this action on March 8, 2018.
The operative second amended complaint was filed on April 20, 2018,
before any defendant had filed an answer or responsive pleading to the
original or first amended complaints. The complaint alleged seven
causes of action, as follows:
• First cause of action for violation of civil rights under section 1983,
brought by the Mekikyans against all defendants except the State
of California and OC, alleging that defendants conspired to create,
cause, encourage or seek unlawful investigations and prosecutions
by district attorney offices, and unlawful investigations and
administrative prosecutions by DLSE.
• Second cause of action for violation of civil rights under section
1983, brought by the Mekikyans against OC (a Monell claim),9
alleging that OC and its district attorney, defendant Rackaukas,
failed to adequately train or supervise prosecutors to ensure they
follow constitutional guarantees.
• Third cause of action for negligent interference with contractual
relations, brought by all plaintiffs against all defendants, alleging
interference with plaintiffs’ contracts with Riverside, the State of
9 Monell v. Department of Social Services (1978) 436 U.S. 658 (Monell).
19
California, subcontractors, suppliers, bond companies, and owners
of other construction projects.
• Fourth cause of action for negligent interference with prospective
economic opportunity, brought by all plaintiffs against all
defendants, alleging interference with plaintiffs’ probable
economic opportunities with respect to a variety of multi-million
dollar construction projects.
• Fifth cause of action for intentional interference with contractual
relations, brought by all plaintiffs against all defendants.
• Sixth cause of action for intentional interference with prospective
economic opportunity, brought by all plaintiffs against all
defendants.
• Seventh cause of action for negligent supervision, brought by all
plaintiffs against GKK, alleging that GKK failed to monitor the
activities and conduct of Alliant.
Each set of defendants filed special motions to strike under section
425.16. The trial court granted in full the motions filed by the Alliant
defendants, the OC defendants, GKK, and the Quad-C defendants, and
dismissed the complaint in its entirety as to those defendants. The
court denied the State defendants’ motion as to the section 1983 claim
alleged against Sandoval and granted the motion as to the remaining
claims alleged against both State defendants. Further details regarding
the allegations of the complaint, the motions, and the trial court’s
rulings will be provided, as necessary, in the Discussion portion of this
opinion.
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DISCUSSION
Plaintiffs do not challenge the trial court’s rulings on the anti-
SLAPP motions as to all claims and defendants. Instead, plaintiffs
limit their challenges to the following:
• With respect to the first cause of action as alleged against the
Alliant defendants, McCament, Noce, GKK, and the Quad-C
defendants, plaintiffs contend that section 1983 claims are not
subject to the anti-SLAPP statute. Plaintiffs also contend they
established a probability of prevailing as to the Alliant
defendants, McCament, Noce, and the Quad-C defendants.
• With respect to the second cause of action against OC, plaintiffs
contend the conduct alleged is not protected under the anti-
SLAPP statute.
• Plaintiffs do not challenge the court’s rulings as to any defendant
with respect to the third cause of action.
• With respect to the fourth, fifth, and sixth causes of action as
against the State defendants only, plaintiffs contend the anti-
SLAPP statute does not apply to the extent the claims are based
upon the State defendants’ withholding of information it relied
upon in issuing the civil wage and penalty assessment.
• With respect to the fifth cause of action as against the Alliant
defendants and GKK, plaintiffs contend they established a
probability of prevailing.
• With respect to the seventh cause of action against GKK, plaintiffs
contend their claim does not arise from conduct protected by the
21
anti-SLAPP statute and, in any event, they established a
probability of prevailing.
In addition to these challenges, plaintiffs challenge an evidentiary
ruling of the trial court with respect to the anti-SLAPP motions brought
by the OC defendants, GKK, and the Quad-C defendants, in which the
court sustained those defendants’ objections to the admission of Schott’s
deposition testimony. Finally, plaintiffs challenge the awards of
attorney fees to each set of defendants on three grounds: (1) section
1983 preempts the mandatory attorney fee provision of section 425.16;
(2) the trial court failed to conduct the proper legal analysis; and (3) the
trial court abused its discretion in awarding fees to the OC defendants
for time spent reviewing their investigative records.
We begin our discussion with a brief summary of the law
governing anti-SLAPP motions, then address the evidentiary ruling,
followed by plaintiffs’ contentions as to each of the challenged causes of
action, and finally the award of attorney fees to each set of defendants.
A. Law Governing Anti-SLAPP Motions
The anti-SLAPP statute “is designed to protect defendants from
meritless lawsuits that might chill the exercise of their rights to speak
and petition on matters of public concern. [Citations.] To that end, the
statute authorizes a special motion to strike a claim ‘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).)”
(Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 883–884
22
(Wilson).) Such claims will be stricken “unless the court determines
that the plaintiff has established that there is a probability that the
plaintiff will prevail on the claim.” (§ 425.16, subd. (b)(1).)
A special motion to strike may be directed at entire causes of
action as pleaded in the complaint, or at specific allegations within a
cause of action. As the Supreme Court explained in Baral v. Schnitt
(2016) 1 Cal.5th 376, “[t]he anti-SLAPP procedures are designed to
shield a defendant’s constitutionally protected conduct from the undue
burden of frivolous litigation. It follows, then, that courts may rule on
plaintiffs’ specific claims of protected activity, rather than reward artful
pleading by ignoring such claims if they are mixed with assertions of
unprotected activity.” (Id. at p. 393.)
A special motion to strike involves a two-step process. First, the
defendant bringing the motion must demonstrate that the plaintiff’s
claims arise from protected conduct in which the defendant has
engaged. Second, if the defendant meets that burden, the burden shifts
to the plaintiff to demonstrate that those protected claims “have at least
‘minimal merit.’” (Park v. Board of Trustees of California State
University (2017) 2 Cal.5th 1057, 1061 (Park).)
“The defendant’s first-step burden is to identify the activity each
challenged claim rests on and demonstrate that that activity is
protected by the anti-SLAPP statute. A ‘claim may be struck only if the
speech or petitioning activity itself is the wrong complained of, and not
just evidence of liability or a step leading to some different act for which
liability is asserted.’ [Citation.] To determine whether a claim arises
23
from protected activity, courts must ‘consider the elements of the
challenged claim and what actions by the defendant supply those
elements and consequently form the basis for liability.’ [Citation.]
Courts then must evaluate whether the defendant has shown any of
these actions fall within one or more of the four categories of ‘“act[s]”’
protected by the anti-SLAPP statute.” (Wilson, supra, 7 Cal.5th at p.
884.)
Those four categories of protected acts are found in subdivision (e)
of section 425.16. That subdivision provides that an “‘act in furtherance
of a person’s right of petition or free speech . . . 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).)
We review the trial court’s determination on a special motion to
strike de novo. Like the trial court, “‘[w]e consider “the pleadings, and
supporting and opposing affidavits . . . upon which the liability or
defense is based.” [Citation.] However, we neither “weigh credibility
[nor] compare the weight of the evidence. Rather, [we] accept as true
24
the evidence favorable to the plaintiff [citation] and evaluate the
defendant’s evidence only to determine if it has defeated that submitted
by the plaintiff as a matter of law.” [Citation.]’ [Citation.]” (Flatley v.
Mauro (2006) 39 Cal.4th 299, 326.)
B. Evidentiary Ruling
In opposing each of the anti-SLAPP motions, the primary source
of evidence plaintiffs relied upon in attempting to establish a
probability of prevailing was the transcript of a deposition of Schott
taken on January 17, 2017 and March 6, 2017 in a lawsuit AWI filed
against Riverside. The OC defendants, GKK, the Quad-C defendants,
and the State defendants objected to the consideration of Schott’s
deposition testimony, and the trial court sustained on hearsay grounds
the objections of the OC defendants, GKK, and the Quad-C defendants.
Therefore, the court did not consider the Schott testimony when ruling
on those three motions. However, by the time the trial court ruled on
the State defendants’ motion, the California Supreme Court had
decided Sweetwater Union High School Dist. v. Gilbane Building Co.
(2019) 6 Cal.5th 931, in which the Court held that a transcript of
testimony given under oath, although hearsay, is admissible for
purposes of prosecuting or opposing an anti-SLAPP motion. (Id. at pp.
943–944.) Accordingly, the trial court overruled the State defendants’
objection to the Schott testimony.
In appealing from the orders granting the motions brought by the
OC defendants, GKK, and the Quad-C defendants, plaintiffs contend
the trial court prejudicially erred in refusing to consider Schott’s
25
testimony, and that the court’s orders should be reversed on this basis.
While we agree the trial court erred in excluding Schott’s testimony, we
decline to reverse on this ground. Instead, in conducting our de novo
review we will consider all of the evidence submitted by the parties,
including the Schott testimony.
C. First Cause of Action (Section 1983 Claim)
1. Step One: Applicability of Anti-SLAPP Statute
In the first cause of action under section 1983, the Mekikyans
alleged that the Alliant defendants, McCament, Noce, GKK, the Quad-C
defendants, and Sandoval, acting under color of law through their
participation and service as agents of law enforcement or government
agencies, deprived plaintiffs of their constitutional rights by conspiring
and acting to create, cause, encourage, or seek unlawful investigations
and prosecutions by the OC and Riverside district attorneys’ offices and
the DLSE. In the trial court, plaintiffs argued that none of the claims
alleged in the complaint, including the section 1983 claim, arose from
conduct protected under the anti-SLAPP statute because the gravamen
of their claims related to the defendants’ soliciting and causing
procurement of AWI’s confidential and proprietary documents and their
participation in strategy meetings, and therefore did not implicate any
defendant’s exercise of his or her constitutional rights to petition or free
speech.
The trial court rejected plaintiffs’ characterization of the basis for
their claims, finding instead that, with respect to the section 1983
claim, all of the injury-producing conduct was undertaken as part of
26
criminal investigations or in connection with an issue under
consideration in an official proceeding. Therefore, the court found that
the section 1983 claim was subject to the anti-SLAPP statute under
section 425.16, subdivisions (e)(2) and (e)(4).
On appeal, plaintiffs do not argue that their section 1983 claim
does not arise from conduct that comes within scope of the anti-SLAPP
statute. Instead, they argue that the anti-SLAPP statute cannot be
applied to section 1983 claims at all because its application would affect
plaintiffs’ substantive federal rights. Plaintiffs acknowledge in their
opening briefs that they did not raise this issue below, but they ask this
court to exercise its discretion to consider this purely legal issue. We
will do so. (JKC3H8 v. Colton (2013) 221 Cal.App.4th 468, 477 [noting
that an appellate court may exercise its discretion to consider a new
theory on appeal where the issue is one of law alone].) Unfortunately
for plaintiffs, however, this new theory does not assist them.
The issue whether the anti-SLAPP statute applies to section 1983
claims filed in a California state court has been addressed in four
published appellate opinions, the most recent of which was issued after
plaintiffs had filed two of the four appellants’ opening briefs in this
matter. As that recent opinion explains, “[a]n analysis of whether to
apply the anti-SLAPP statute to a federal claim [brought] in state court
begins with the observations that the anti-SLAPP statute is a
procedural law, rather than a substantive immunity [citations], and
that a forum generally applies its own procedural law to cases before it.
[Citation.] As such, the anti-SLAPP statute will apply to adjudication
of a federal claim in state court unless either (1) ‘the federal statute
27
provides otherwise’ [citation], or (2) the anti-SLAPP statute ‘affect[s]
plaintiffs’ substantive federal rights,’ and is thus preempted.” (Patel v.
Chavez (2020) 48 Cal.App.5th 484, 487–488, italics omitted (Patel).)
As plaintiffs note in their opening briefs, and as the Patel court
observed, the three prior cases to consider the issue addressed only the
first possibility, relying only on the procedural versus substantive
distinction and finding that nothing in section 1983 imposes federal
procedural law upon state courts trying civil rights actions. (Patel,
supra, 48 Cal.App.5th at p. 488, citing Bradbury v. Superior Court
(1996) 49 Cal.App.4th 1108, 1117–1118; Vergos v. McNeal (2007) 146
Cal.App.4th 1387, 1392, fn. 4; Tichinin v. City of Morgan Hill (2009)
177 Cal.App.4th 1049, 1055–1056.) Plaintiffs’ contention that the anti-
SLAPP statute does not apply to section 1983 claims is based upon the
second possibility, i.e., that the anti-SLAPP statute interferes with
section 1983’s operation in protecting a plaintiff’s federal rights.
Plaintiffs argue that that interference arises with respect to the award
of attorney fees: while a prevailing defendant in a section 1983 case
may recover attorney fees only in exceptional cases (see, e.g., Herb
Hallman Chevrolet, Inc. v. Nash-Holmes (9th Cir. 1999) 169 F.3d 636,
645), the anti-SLAPP statute mandates an award of attorney fees to a
prevailing defendant (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1141–
1142 (Ketchum)). Thus, plaintiffs argue that the anti-SLAPP statute is
preempted because it subjects section 1983 plaintiffs to liability for
attorney fees they would not otherwise be required to pay.
28
We disagree. As plaintiffs note, whether a state procedural law
applies to a federal claim in state court “turns on ‘whether the state law
purports to alter or restrict federally created rights.’” (Citing Williams
v. Horvath (1976) 16 Cal.3d 834, 837.) But the anti-SLAPP statute’s
mandatory fee provision does not apply unless the plaintiff is unable to
demonstrate that the federal claim he or she has alleged has “at least
‘minimal merit’” (Park, supra, 2 Cal.5th at p. 1061), under a standard in
which the court must accept as true the evidence favorable to the
plaintiff and does not weigh credibility or compare the weight of the
evidence (Flatley v. Mauro, supra, 39 Cal.4th at p. 326). In other words,
the mandatory fee provision comes into play only after it has been
established that the plaintiff’s federal claim has no merit. And while
we acknowledge that the specter of liability for the defendant’s attorney
fees might discourage some plaintiffs from bringing questionable claims
that arise from a defendant’s exercise of his or her constitutional right
of petition or free speech, it cannot be said that the anti-SLAPP
statute’s mandatory fee provision alters or restricts section 1983’s
operation. Or, as the Patel court put it, the possibility that some
plaintiffs might be discouraged from pursuing some section 1983 claims
“does not rise to the level of defeating a plaintiff’s ability to vindicate
his [or her] federal rights through a section 1983 claim, particularly in
light of the low bar plaintiffs must meet in order to save such claims
and avoid attorney fees under the anti-SLAPP statute.” (Patel, supra,
48 Cal.App.5th at p. 490.)
29
2. Step Two: Probability of Prevailing
We need not go into detail regarding plaintiffs’ showing in the
trial court, or the trial court’s rulings, on step two of the anti-SLAPP
motion procedure. Instead, we address only the arguments plaintiffs
make on appeal.
As plaintiffs observe, “[t]o state a claim for relief in an action
brought under § 1983, [plaintiffs] must establish that they were
deprived of a right secured by the Constitution or laws of the United
States, and that the alleged deprivation was committed under color of
state law.” (American Mfrs. Mut. Ins. Co. v. Sullivan (1999) 526 U.S.
40, 49–50.) Plaintiffs contend that the deprivation in the present case
was committed under color of state law: they note that McCament and
Noce of the OC district attorney’s office do not dispute that they acted
under color of state law, and argue that the Alliant defendants and the
Quad-C defendants could be held liable under section 1983 as willful
participants in joint action with the state or its agents. (Citing Kirtley
v. Rainey (9th Cir. 2003) 326 F.3d 1088, 1092.) Plaintiffs also contend
that all of these defendants deprived plaintiffs of their constitutional
rights by violating the Fourth Amendment in two ways.
First, plaintiffs contend that by secretly collecting documents and
other information to assist in the prosecution of plaintiffs, often at the
request of McCament and Noce, the Alliant defendants and the Quad-C
defendants (along with McCament and Noce) conducted unreasonable
searches without plaintiffs’ consent in violation of the Fourth
Amendment. (Citing U.S. v. Mazzarella (9th Cir. 2015) 784 F.3d 532,
539–540.) Second, plaintiffs contend that McCament, Noce, and the
30
Alliant defendants committed a separate violation of plaintiffs’ Fourth
Amendment rights when an Alliant employee and a Riverside official
(Waltman) entered AWI’s business office at the Medical Center project
and, despite Mr. Mekikyan’s expressed denial of permission, scanned
documents that were in a locked file cabinet. We find no violation of the
Fourth Amendment in either instance.
The first clause of the Fourth Amendment to the United States
Constitution provides that “[t]he right of the people to be secure in their
persons, houses, papers, and effects, against unreasonable searches and
seizures, shall not be violated.” (U.S. Const., 4th Amend.) “This text
protects two types of expectations, one involving ‘searches,’ the other
‘seizures.’ A ‘search’ occurs when an expectation of privacy that society
is prepared to consider reasonable is infringed.” (U.S. v. Jacobsen
(1984) 466 U.S. 109, 113.) The United States Supreme Court has
“consistently construed this protection as proscribing only governmental
action; it is wholly inapplicable ‘to a search or seizure, even an
unreasonable one, effected by a private individual not acting as an
agent of the Government or with the participation or knowledge of any
governmental official.’” (Ibid.) Thus, a violation of this provision occurs
only if an agent of the government conducts a warrantless search of
materials or premises over which the possessor has a reasonable
expectation of privacy. (Maryland v. Macon (1985) 472 U.S. 463, 469.)
In this case, even assuming that to the extent the Alliant
defendants and Quad-C defendants obtained materials or information
at the behest of the OC defendants or the Riverside district attorney’s
office they acted under color of law, plaintiffs had no reasonable
31
expectation of privacy over those materials or information.10 The
evidence in the record is that the materials or information these
defendant obtained consisted of the names and contact information of
people who worked at the PD project site or the Medical Center project
site, time sheets, daily sign-in sheets, cancelled checks showing the
payments made to the workers, and other information related to the
wages paid to workers at both sites. In other words, defendants
obtained “payroll records” as defined in section 16000 of the California
Code of Regulations that, under Labor Code section 1776 and the
contracts plaintiffs signed, plaintiffs were required to make available to
Riverside and its agents (such as the Alliant defendants), law
enforcement agencies (such as the OC and Riverside district attorneys’
offices), and members of the public (such as the Quad-C defendants). As
such, plaintiffs had no reasonable expectation of privacy with respect to
those materials and information.
Plaintiffs argue that even if they did not have a reasonable
expectation of privacy over the payroll records, they presented evidence
that at least some of the documents the Alliant defendants obtained
10 Moreover, to the extent plaintiffs assert that the Alliant defendants
collected the information in that file cabinet at the behest of McCament and
Noce, there is no evidence to support this assertion. Instead, the evidence in
the record establishes that McCament and Noce were unaware of the
existence of any investigation of AWI in Riverside until at least December 16,
2014, two months after the Alliant defendants scanned the documents in the
file cabinet, and that Schott did not meet or communicate with McCament or
Noce until sometime around March of 2015. Thus, there is no evidence to
support the assertion that the Alliant defendants were acting under color of
law with respect to this event.
32
were confidential, sensitive, or privileged. They also argue that Schott’s
admission in her deposition testimony that Alliant procured documents
without consent by breaking into a locked cabinet establishes that there
was an unlawful search of a business premises. Not so.
First, the only evidence plaintiffs offer to support their assertion
that the Alliant defendants obtained confidential documents other than
payroll records is the declaration by Mr. Mekikyan that plaintiffs filed
in opposition to the Alliant defendants’ anti-SLAPP motion. But that
declaration states only that a supervisor with AWI (Hawk), had access
to confidential, sensitive, and privileged documents regarding AWI and
CCC, and that Mr. Mekikyan “[is] aware that” Hawk “sold [his]
company’s documents” to Schott and “stole documents from my
companies and gave them to” the OC district attorney’s office, Alliant,
and the Quad-C defendants. Mr. Mekikyan does not explain how he
became “aware” of Hawk’s conduct, nor does he identify exactly what
documents Hawk purportedly gave to any of the defendants.11 Thus,
11 In his declaration filed in opposition to GKK’s anti-SLAPP motion
(which was filed after the trial court had granted the Alliant defendants’ anti-
SLAPP motion), Mr. Mekikyan provided an additional detail. Although he
still declared that he “[is] aware” that Hawk “sold [his] company’s
documents” to Schott, who then delivered them to the OC district attorney’s
office, the new declaration states that he “later became aware that Mr. Hawk
stole documents, confidential bank and tax information included, from my
companies and gave them to” the OC district attorney’s office, Alliant, and
the Quad-C defendants. The addition of “confidential bank and tax
information” is insufficient to show that the documents included anything
other than payroll records, since pay stubs and cancelled paychecks, which
Schott admitted were some of the documents she obtained, would include
bank and tax information.
33
the declaration does not provide evidence that any of the defendants
gathered confidential material from Hawk.
Plaintiffs argue that even without Mr. Mekikyan’s declaration,
“[a] reasonable inference may be drawn that at least some of the
documents gathered by Alliant were non-payroll records, to which
[plaintiffs] had a reasonable expectation of privacy,” because Schott
never testified that Alliant gathered only payroll records. But a
reasonable inference must have some basis in the evidence. (Evid.
Code, § 600, subd. (b) [“An inference is a deduction of fact that may
logically and reasonably be drawn from another fact or group of facts
found or otherwise established in the action”].) And, while it is true
that Schott never explicitly testified that Alliant gathered only payroll
records, the only documents or information to which she referred in her
testimony were payroll records; there was no testimony about the
gathering of any non-payroll-related confidential information.
Second, even if Alliant acted under color of law when it obtained
the time sheets and sign-in sheets from the locked cabinet in AWI’s job
site trailer (although it is clear that it did not do so at the behest of the
OC district attorney’s office, as explained in fn. 10, ante), there was no
unlawful search. By accepting a public work construction job—and by
signing the contract for the Medical Center project—AWI agreed to
comply with Labor Code section 1776. That statute provides that
payroll records “shall be available for inspection at all reasonable hours
at the principal office of the contractor.” (Lab. Code, § 1776, subd. (b).)
Therefore, AWI did not have a reasonable expectation of privacy with
34
respect to its on-site office to the extent it was storing its payroll records
there.
In short, because plaintiffs did not have a reasonable expectation
of privacy with regard to payroll records or the office in which they were
stored, the defendants’ gathering of documents and other information
did not constitute an unlawful search in violation of the Fourth
Amendment. As this is the only conduct plaintiffs have identified on
appeal as the basis for their section 1983 claim against the Alliant
defendants, McCament, Noce, and the Quad-C defendants, their claim
fails as a matter of law. Therefore, the trial court did not err in
granting those defendants’ anti-SLAPP motions with respect to that
claim.
D. Second Cause of Action (Section 1983 Monell Claim)
1. Step One: Applicability of Anti-SLAPP Statute
The second cause of action alleges a section 1983 claim under
Monell, supra, 436 U.S. 658, against OC for violation of the Mekikyan’s
civil rights. The cause of action includes several paragraphs alleging
unethical behavior by defendant Rackaukas generally, as well as a
failure to train his employees, which the complaint alleges established a
custom of unethical behavior. The complaint then alleges that
Rackaukas’s and the OC district attorney’s office’s “failure to
adequately train and or supervise prosecutors to ensure they follow
constitutional guarantees such as due process, the Fourth Amendment
right against unreasonable searches and seizures, and other rights of
citizens, proximately caused the harm to Plaintiffs described herein.”
35
In their anti-SLAPP motion, the OC defendants did not
distinguish between the first cause of action and the second cause of
action with regard to the first step of the anti-SLAPP analysis. Instead,
they argued that plaintiffs’ unlawful labor violations and business
practices with regard to the OC Fair project was an issue under
consideration and review by an executive body (the OC district
attorney’s office) and therefore the OC defendants’ conduct and
statements made during the investigation into plaintiffs’ conduct was
protected under subdivisions (e)(2) and (e)(4) of section 425.16. In
granting the anti-SLAPP motion, the trial court also did not distinguish
between the first and second (or the other) causes of action in the first
step of its analysis. Instead, it found that the conduct upon which
plaintiffs sought to hold the OC defendants liable was “the entire four-
year criminal investigation into Plaintiffs’ business practices as a whole
and not a singular event that occurred during the course of the
investigation. Therefore, the gravamen of Plaintiffs’ claims against the
County Defendants is actually the allegation that the County
Defendants conspired with Schott (and others) to illegally investigate
Plaintiffs’ businesses for labor code violations in order to help both
Riverside County and Orange County in avoiding payments to AWI for
certain construction projects and in avoiding any legal repercussions
from doing so.”
On appeal, plaintiffs fault the OC defendants for failing to address
in their motion how OC’s alleged policy and custom of failing to
adequately train and supervise prosecutors and employees qualifies as
protected activity. Plaintiffs contend the trial court erred by following
36
the OC defendants’ lead in lumping the failure to train and supervise
allegations with the different and separate allegations of investigatory
and prosecutorial misconduct asserted in the other causes of action.
Plaintiffs assert that the allegations that OC failed to train and
supervise are entirely separate from the allegations of investigatory and
prosecutorial misconduct, and do not describe conduct protected by the
anti-SLAPP statute. We disagree.
As noted, “[t]o determine whether a claim arises from protected
activity, courts must ‘consider the elements of the challenged claim and
what actions by the defendant supply those elements and consequently
form the basis for liability.’” (Wilson, supra, 7 Cal.5th at p. 884.) In
City of Canton, Ohio v. Harris (1989) 489 U.S. 378 (City of Canton), the
United States Supreme Court explained what must be proved to
establish a Monell claim: “a municipality can be liable under § 1983
only where its policies are the ‘moving force [behind] the constitutional
violation.’ Only where a municipality’s failure to train its employees in
a relevant respect evidences a ‘deliberate indifference’ to the rights of
its inhabitants can such a shortcoming be properly thought of as a city
‘policy or custom’ that is actionable under § 1983. . . . [¶] In resolving
the issue of a city’s liability, the focus must be on adequacy of the
training program in relation to the tasks the particular officers must
perform.” (Id. at pp. 389–390.)
In other words, the determination whether a municipality is liable
under a Monell claim turns on the whether the specific constitutional
violation alleged was the result of a training program that was “so
likely to result in the violation of constitutional rights, that the
37
policymakers of the [municipality] can reasonably be said to have been
deliberately indifferent to the need [for more or different training].”
(City of Canton, supra, 489 U.S. at p. 390.) Thus, plaintiffs’ Monell
claim cannot be established without a showing that (1) McCament’s and
Noce’s investigation was conducted in accordance with OC’s training
program and (2) that the training program was so likely to result in the
Fourth Amendment violations alleged here that OC can reasonably be
said to have been indifferent to the need for more or different training.
Therefore, for purposes of the first step analysis under the anti-SLAPP
statute, the Monell claim arises, at least in part, on McCament’s and
Noce’s conduct during their investigation in anticipation of criminal
and/or civil prosecution of plaintiffs.
There cannot be any question that an investigation by a district
attorney’s office into possible unlawful or unfair business practices of a
contractor on a public work project constitutes “conduct in furtherance
of the exercise of the constitutional right of petition . . . in connection
with a public issue or an issue of public interest.” (§ 425.16, subd. (e)(4);
cf. Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (1996) 47
Cal.App.4th 777, 784 [communications preparatory or in anticipation of
litigation are protected by the anti-SLAPP statute]; accord, Briggs v.
Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115.)
Therefore, we conclude plaintiffs’ second cause of action for violation of
civil rights under section 1983 arises from conduct protected by the
anti-SLAPP statute.
38
2. Step Two: Probability of Prevailing
Plaintiffs do not separately challenge the trial court’s ruling with
regard to whether they established a probability of prevailing. As
discussed in Section C.2., ante, because plaintiffs did not have a
reasonable expectation of privacy with regard to payroll records or the
office in which they were stored, the defendants’ gathering of documents
and other information did not constitute an unlawful search in violation
of the Fourth Amendment. Therefore, plaintiffs’ section 1983 claim
necessarily fails, and we affirm the trial court’s ruling granting the OC
defendants’ anti-SLAPP motion with regard to the second cause of
action.
E. Fourth, Fifth, and Sixth Causes of Action With Respect to the State
Defendants (Negligent and Intentional Interference With
Prospective Economic Opportunity and Intentional Interference
With Contract Claims)
1. Step One: Applicability of Anti-SLAPP Statute
In their anti-SLAPP motion, the State defendants identified the
allegations upon which plaintiffs’ claims against Sandoval and the State
were based, including allegations that Sandoval had withheld
documents that AWI and CCC had requested. The State defendants
then argued that all of the claims were based upon conduct protected
under subdivisions (e)(1) and (e)(2) of section 425.16 because the acts at
issue “were made in connection with an official proceeding authorized
by law.”
39
In their opposition to the State defendants’ motion, plaintiffs
addressed the first step analysis as to all claims in a single paragraph.
Plaintiffs argued that the anti-SLAPP statute does not protect claims
“‘arising from any act having any connection, however remote, with an
official proceeding,’” and that the State defendants could not “fairly to
be said to be exercising any constitutional right, including one that is
captured by CCP § 425.16(e)(1) or (2).”
In finding that all of the claims were subject to the anti-SLAPP
statute the trial court noted that plaintiffs failed to cite to evidence or
the allegations of the complaint in support of their argument. The court
also observed that plaintiffs did not dispute that the allegations against
the State defendants were based upon the investigation by the DLSE,
nor did plaintiffs dispute “that such conduct includes preparation of
written or oral statements in furtherance of the DLSE investigation,
including Sandoval’s refusal to hand over documents requested by AWI
and CCC.”
On appeal, plaintiffs contend the trial court erred because their
fourth, fifth, and sixth causes of action against the State defendants
arose from the State defendants’ conduct in withholding documents,
and not from any written or oral statements. Therefore, plaintiffs argue
that subdivisions (e)(1) and (e)(2) of section 425.16 do not apply because
those subdivisions apply only to written or oral statements or writings.
Plaintiffs also argue that the anti-SLAPP statute’s catchall provision,
subdivision (e)(4), does not apply because the State defendants had a
mandatory duty to release the documents to AWI, and their failure to
40
do so was not in furtherance of any right of petition or free expression.
We disagree.
First, we have held that the failure to disclose information in
connection with an official proceeding falls within section (e)(2) of the
anti-SLAPP statute. (Suarez v. Trigg Laboratories, Inc. (2016) 3
Cal.App.5th 118 (Suarez).) In Suarez, the plaintiff had entered into an
agreement with the defendant business and its owner to provide
business consulting services at a set hourly rate. After several months
the parties orally agreed to expand the scope of the work, for which the
plaintiff would receive, among other compensation, a percentage of any
sale of the defendant business. (Id. at p. 120.) The relationship
between the parties broke down, and the defendant terminated the
plaintiff’s employment. The plaintiff then sued the defendant business
for quantum meruit to recover the fair value of the services he had
rendered. (Id. at p. 121.) While settlement negotiations were going on
in that case, the owner of the defendant business learned that a
prospective investor intended to submit a letter of intent to purchase
the business, and the owner instructed the parties involved to
communicate only with his attorney in order to “keep the contents [of
the letter of intent] within attorney client privilege” for purposes of the
quantum meruit lawsuit. (Ibid.) Shortly thereafter, the plaintiff, who
was unaware of the potential sale of the business, agreed to settle the
quantum meruit case. (Ibid.)
When the plaintiff later learned that the defendant had concealed
the letter of intent from him, he filed another lawsuit against the
defendant seeking to rescind the settlement agreement based upon the
41
defendant’s fraudulent concealment of the prospects for sale of the
business. (Suarez, supra, 3 Cal.App.5th at pp. 121–122.) The
defendant filed an anti-SLAPP motion, asserting that the plaintiff’s
claims arose out of communications that took place during the course of
the quantum meruit action. The trial court granted the motion, and the
defendant appealed, arguing that the plaintiff’s claims were not
premised on the defendant’s statements, but rather on its active
concealment and nondisclosure of the letter of intent. (Id. at pp. 122–
124.)
We affirmed the trial court’s ruling. We noted that in Navellier v.
Sletten (2002) 29 Cal.4th 82 (Navellier), the Supreme Court examined
whether the anti-SLAPP statute applied to an action alleging
misrepresentations and failure to disclose. (Suarez, supra, 3
Cal.App.5th at pp. 123–124.) In that case, the defendant failed to
disclose that he was not in agreement with the terms of a release in a
federal action, and that failure to disclose induced the plaintiffs to file
an amended federal action; the defendant then claimed that he did not,
and did not intend to, release his claims. (Navellier, supra, 29 Cal.4th
at p. 89.) The Supreme Court found that the defendant’s conduct in the
negotiation and execution of the release—his “acts (or omissions)”—fell
within subdivision (e)(2) of the anti-SLAPP statute. (Id. at p. 90.)
We observed that the Supreme Court’s finding “is consistent with
established free speech jurisprudence,” which holds that the right to
free speech “encompasses what a speaker chooses to say, and what a
speaker chooses not to say.” (Suarez, supra, 3 Cal.App.5th at p. 124.)
42
Therefore, we held that the defendant’s failure to disclose the letter of
intent was protected under subdivision (e)(2) of the anti-SLAPP statute.
(Id. at p. 125.) The Third District relied upon this holding in
Crossroads Investors, L.P. v. Federal National Mortgage Assn. (2017) 13
Cal.App.5th 757 (Crossroads), in reversing the trial court’s denial of an
anti-SLAPP motion as to a claim arising from the defendant’s failure to
provide information the plaintiff had requested in a bankruptcy case.
(Id. at p. 779.) The appellate court had ruled in a prior opinion12 that
the claim did not arise from protected activity, finding that a
defendant’s silence was not protected under the express language of the
anti-SLAPP statute. But by the time the court reconsidered the appeal,
we had issued our decision in Suarez. Relying upon our decision and
the Supreme Court’s decision in Navellier, the Third District held that
“failure to disclose can be protected petitioning activity for purposes of
. . . section 425.16.” (Crossroads, supra, 13 Cal.App.5th at p. 779, fn. 9.)
Plaintiffs do not address these cases in their briefs. Instead, they
rely upon Swanson v. County of Riverside (2019) 36 Cal.App.5th 361(Swanson) to argue that subdivisions (e)(1) and (e)(2) of section 425.16
do not apply to non-communicative conduct such as the withholding of
documents. Swanson is distinguishable. In that case, an individual
was taken by the police to a county medical center for an involuntary
72-hour hold under Welfare and Institutions Code section 5150. The
12 The Supreme Court had granted review of the case, depublished the
original opinion, and transferred the matter back to the appellate court to
reconsider the appeal in light of Baral v. Schnitt, supra, 1 Cal.5th 376.
43
medical center released him before 72 hours had elapsed, and he
returned home, where he bludgeoned three people to death. Surviving
family members sued the county for negligence, and the county filed a
special motion to strike under the anti-SLAPP statute. (Swanson,
supra, 36 Cal.App.5th at p. 364.) The trial court denied the motion, and
the appellate court affirmed.
The appellate court rejected the county’s contention that the
plaintiffs’ claim arose from the county’s evaluation and recommendation
that the individual be discharged, which the county asserted was a
statement made in an official proceeding. (Swanson, supra, 36
Cal.App.5th at p. 372.) The court observed that the plaintiffs “have not
sued the County because of the substance of statements made in
connection with the [72-hour hold] procedures. They have sued the
County to challenge as negligent the decision to release [the individual]
before the expiration of 72 hours. Thus, the gravamen of the complaint
is negligence. [¶] . . . There is nothing in the County’s decision to
release [the individual] before the 72-hour hold that implicates the
rights of free speech or petition.” (Id. at p. 373.) Therefore, the court
held that the plaintiffs’ claims did not arise from conduct protected by
the anti-SLAPP statute. (Ibid.)
Plaintiffs here describe the Swanson court’s holding as turning on
the distinction between conduct and speech, and attempt to analogize
the circumstances in Swanson with the circumstances in the present
case, arguing that plaintiffs’ claims “arise from Sandoval’s unlawful
conduct in withholding documents—not from any written or oral
44
statements.” Their analogy is inapt. The court in Swanson did not base
its holding on the distinction between conduct and speech. Instead, it
found the anti-SLAPP statute did not apply because the plaintiffs’
claims were based upon the county’s negligence in its medical
treatment. Swanson does not assist plaintiffs here, where the claims
arose from Sandoval’s withholding of documents in the course of an
official proceeding. That conduct is protected under subdivision (e)(2) of
the anti-SLAPP statute, as explained in Crossroads, Suarez, and
Navellier.
But even if that subdivision did not apply, we conclude that the
conduct at issue is protected under the catchall provision of section
425.16, subdivision (e)(4).
We note that plaintiffs did not argue in the trial court that this
provision did not apply. Nevertheless, plaintiffs ask that we exercise
our discretion to consider their argument on appeal, since it raises a
question of law. Inasmuch as it was the State defendants’ burden to
establish that the causes of action arose from conduct protected by the
anti-SLAPP statute, but they failed to address whether the conduct at
issue came within the catchall provision, we will address plaintiffs’
argument.
In arguing that subdivision (e)(4) of the anti-SLAPP statute does
not apply, plaintiffs rely upon Anderson v. Geist (2015) 236 Cal.App.4th
79 (Anderson). In that case, the plaintiff alleged that deputies of the
San Bernardino Sheriff’s Department unlawfully entered her home to
attempt to execute a bench warrant that had been recalled and, in the
45
process, made defamatory statements to the plaintiff’s neighbors. (Id.
at p. 82.) The plaintiffs filed a lawsuit against the defendants alleging
various claims arising from the deputies’ allegedly unlawful conduct.
The defendants filed an anti-SLAPP motion, which the trial court
denied, finding that the defendants failed to support their motion with
affidavits or declarations, and that the defendants failed to show that
the action arose from an act in furtherance of the defendants’ right of
petition or free speech. (Id. at p. 84.)
The appellate court affirmed. The court explained: “Execution of
an arrest warrant is of course ‘an act in furtherance of a criminal
prosecution,’ as defendants put it. But that does not necessarily make
it ‘conduct in furtherance of the exercise of the constitutional right of
petition’ in the meaning of section 425.16, subdivision (e)(4). At base,
the execution of a warrant is not an exercise of rights by the peace
officer; it is the performance of a mandatory duty, at the direction of the
court. [Citation.] Because peace officers have no discretion in whether
or not to execute a warrant issued by the court, it seems unlikely that a
lawsuit asserting claims arising from such activity could have the
chilling effect that motivated the Legislature to adopt the anti-SLAPP
statute, or that extending protections of the anti-SLAPP statute to such
activity would serve the statute’s goals. [Citation.] [¶] Moreover, to
qualify for protection under section 425.16, subdivision (e)(4), the
conduct at issue must be ‘in connection with a public issue or an issue of
public interest’—that is, it must ‘concern[] a topic of widespread public
interest and contribute[] in some manner to a public discussion of the
topic.’ [Citation.] In their briefing on appeal, defendants fail to make
46
any argument as to why their execution of a warrant in the
circumstances of this case—a routine misdemeanor warrant in a case
that apparently attracted precisely zero public interest or discussion—
might meet this standard, and we find nothing in the record that might
support an argument to that effect.” (Anderson, supra, 236 Cal.App.4th
at pp. 86–87.)
Anderson is distinguishable. In contrast to that case, in the
present case Sandoval withheld documents during the course of an
administrative proceeding in which she was a representative of one of
the parties, i.e., the DLSE, an agency of the State, and thus was part of
the petitioning conduct. The determination of what documents should
be withheld involved some exercise of discretion, since DLSE is required
under Labor Code section 1736 to keep confidential any information
that may identify any employee who reported a violation. Thus, unlike
in Anderson, it is likely that a lawsuit asserting claims arising from the
exercise of that discretion as part of the petitioning process could have
the chilling effect the Legislature sought to eliminate by enacting the
anti-SLAPP statute. Finally, while the execution of the warrant in
Anderson was done in connection with a case that had no relation to
any public issue, the withholding of documents in the present case was
done in connection with an administrative proceeding involving an
important public issue, i.e., the violation of labor laws by contractors on
a public work project. In short, we hold that plaintiffs’ state tort claims
based upon the State defendants’ withholding of documents are
protected by subdivision (e)(4) of the anti-SLAPP statute.
47
2. Step Two: Probability of Prevailing
Plaintiffs do not challenge the trial court’s ruling as to step two of
the anti-SLAPP analysis, relying solely on their assertion that the anti-
SLAPP statute does not apply. Accordingly, having found that the
statute does apply, we affirm the trial court’s ruling granting the State
defendants’ anti-SLAPP motion as to the fourth, fifth, and sixth causes
of action.
F. Fifth Cause of Action With Respect to the Alliant Defendants and
GKK (Intentional Interference With Contract Claim)
Plaintiffs do not challenge the trial court’s ruling that the fifth
cause of action with respect to the Alliant defendants and GKK arose
from protected activity under the anti-SLAPP statute. Therefore, we
will address only the court’s ruling that plaintiffs failed to establish a
probability of prevailing on the fifth cause of action for intentional
interference with contractual relations against those defendants.
In the fifth cause of action, plaintiffs alleged that defendants knew
or had reason to know that plaintiffs had valid contracts with Riverside
and the State, as well as “existing contractual relations with numerous
other entities, including but not limited to subcontractors, suppliers,
bond companies, and the owners of construction projects within the
counties of Riverside, Orange and Los Angeles.” The complaint alleged
that defendants intentionally disrupted “the contractual relationships,”
which damaged plaintiffs.
The complaint did not identify exactly which contracts allegedly
were disrupted and caused damage to plaintiffs. Nor did plaintiffs
48
identify those contracts in their oppositions to the Alliant defendants’
and GKK’s anti-SLAPP motions. In their opening brief on appeal from
the trial court’s ruling on those motions, however, plaintiffs identify
AWI’s contract for the PD project as the contract with which the Alliant
defendants and GKK interfered.
Plaintiffs contend they established a probability of prevailing
against the Alliant defendants because they presented evidence that
Alliant and Schott knew of the existence of the contract for the PD
project and “set out to disrupt the contractual relationship between
AWI and Riverside” by gathering documents from AWI without Mr.
Mekikyan’s knowledge, falsely advising GKK (the project manager) that
the Riverside district attorney’s office was pursuing criminal charges
against Mr. Mekikyan and AWI, interacting directly with Riverside
instead of communicating through GKK, and visiting the PD project site
10 to 15 times between May and July of 2014, when AWI was
terminated from the project. Plaintiffs contend this evidence—along
with evidence purportedly showing that Schott had an incentive to see
AWI replaced with a new contractor—shows that Alliant and Schott’s
actions “were designed to induce Riverside to terminate its contract
with AWI on the PD Office Project.” And, since they presented evidence
that Riverside terminated its contract with AWI in July 2014 and that
as a result AWI lost future revenue under the contract, plaintiffs
contend they established that Alliant and Schott intentionally
interfered with AWI’s contract with Riverside for construction of the PD
project.
49
With regard to GKK, plaintiffs contend that as Alliant’s employer
on the PD project, GKK was vicariously liable for intentional
interference with the contract under the rule of respondeat superior.
They assert they established a probability of prevailing against GKK
because they presented evidence that GKK employed Alliant and
oversaw its performance of labor compliance services on the PD project
and was responsible for Alliant’s actions; since Schott’s interference
with the PD project was foreseeable, GKK was liable for that
interference under the rule of respondeat superior.
The fault in plaintiffs’ argument is that even assuming the
evidence submitted was sufficient to establish intentional interference
with the PD contract, the statute of limitations barred their claim. The
statute of limitations for an intentional interference with contractual
relations claim is two years. (Code Civ. Proc., § 339(1); Kolani v. Gluska
(1998) 64 Cal.App.4th 402, 408.) “Generally speaking, a cause of action
accrues at ‘the time when the cause of action is complete with all of its
elements.’” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797,
806 (Fox.) The elements of a cause of action for intentional interference
with contractual relations are: “‘(1) a valid contract between plaintiff
and a third party; (2) defendant’s knowledge of this contract; (3)
defendant’s intentional acts designed to induce a breach or disruption of
the contractual relationship; (4) actual breach or disruption of the
contractual relationship; and (5) resulting damage.’” (Quelimane Co. v.
Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55.) In the present
case, the cause of action was complete when the contractual
relationship was disrupted, which immediately caused the alleged
50
damages. That occurred in July 2014, when Riverside terminated its
contract with AWI for the PD project. Plaintiffs did not file the original
complaint in this action until March 2018, more than four years after
that termination.
Plaintiffs contend, however, that the statute of limitations does
not bar their claim because of the discovery rule. Under the discovery
rule, accrual of a cause of action is postponed “until the plaintiff
discovers, or has reason to discover, the cause of action. [Citations.] [¶]
A plaintiff has reason to discover a cause of action when he or she ‘has
reason at least to suspect a factual basis for its elements.’” (Fox, supra,
35 Cal.4th at p. 807.) The California Supreme Court has explained that
“by discussing the discovery rule in terms of a plaintiff’s suspicion of
‘elements’ of a cause of action, it was referring to the ‘generic’ elements
of wrongdoing, causation, and harm. [Citation.] In so using the term
‘elements,’ we do not take a hypertechnical approach to the application
of the discovery rule. Rather than examining whether the plaintiffs
suspect facts supporting each specific legal element of a particular
cause of action, we look to whether the plaintiffs have reason to at least
suspect that a type of wrongdoing has injured them.” (Ibid.) Once
becoming aware of an injury, “plaintiffs are required to conduct a
reasonable investigation . . . and are charged with knowledge of the
information that would have been revealed by such an investigation.”
(Id. at p. 808.)
Here, plaintiffs were aware of the injury when Riverside
terminated the PD project contract in July 2014, or at the latest when
Schott filed her complaint against AWI regarding the PD project in
51
December 2014. They contend, however, they were not aware of the
alleged wrongdoing until March 2017, when Schott was deposed in the
lawsuit AWI brought against Riverside. In support of this contention,
they point to the declaration of Mr. Mekikyan, in which he stated that
he was not aware of the involvement of the Riverside and OC district
attorneys’ offices investigations or of Schott’s assistance or true
intentions until that deposition. But the fifth cause of action (as
described in the appellants’ opening brief) was based upon the Alliant
defendants’ and GKK’s alleged interference with the PD project
contract, and the evidence establishes that the Riverside and OC
district attorneys’ offices did not contact Schott until around March of
2015, after the PD project contract was terminated. Thus, the district
attorneys’ investigations, and Schott’s assistance with those
investigations, played no part in the termination of the PD project
contract. Accordingly, the discovery rule does not apply to postpone the
accrual of plaintiffs’ fifth cause of action against the Alliant defendants
and GKK.
G. Seventh Cause of Action (Negligent Supervision Claim)
1. Step One: Applicability of Anti-SLAPP Statute
In their seventh cause of action, plaintiffs alleged that GKK had a
duty to supervise and monitor the activities and conduct of Alliant, and
that GKK breached that duty by negligently failing to adequately
supervise Alliant, which caused plaintiffs injury. GKK did not directly
address these allegations in the first step of its analysis in its anti-
SLAPP motion, instead arguing that “all of GKK’s alleged actions in the
52
[complaint] were part of the County of Riverside’s pre-litigation
consulting activities and are therefore protected.”
In their opposition to the motion (which was filed shortly after the
trial court granted the Alliant defendants’ anti-SLAPP motion),
plaintiffs also fail to directly address the allegations of the seventh
cause of action. Instead, plaintiffs simply stated that “[t]he gravamen
of the [entire complaint] is that GKK improperly and negligently
supervised its agent, Alliant,” then quoted (without any analysis) from
a variety of cases in which courts cautioned that the anti-SLAPP
statute does not apply in all cases in which the First Amendment is
implicated or in which there is any connection with an official
proceeding.
In its reply brief, GKK noted plaintiffs’ attempt to recharacterize
the complaint as arising from GKK’s alleged negligent supervision. It
argued that all of the conduct alleged involved “speech and acts”
concerning an issue under consideration by a legislative body
(Riverside’s investigation into plaintiffs’ labor practices) and “a matter
made open to the public that concerns an issue of public interest”
(including the expenditure of taxpayer dollars and the public interest in
overseeing the appropriation of public funds), and therefore all claims
arose from conduct protected by the anti-SLAPP statute. (Citing
§ 425.16, subds. (e)(1) to (e)(4).) GKK specifically argued that its
“conduct in their relationship with ALLIANT . . . is protected activity
under [subd. (e)(4) of § 425.16].”
Addressing the seventh cause of action in its order granting
GKK’s motion, the trial court noted that the negligent supervision claim
53
was based upon different conduct by GKK than the other claims. The
court agreed with GKK’s assertion in its reply brief that the negligent
supervision claim arose from GKK’s acts and omissions in furtherance
of petitioning activity, i.e., a governmental investigation into AWI’s
labor practices. The court therefore found that GKK met its burden to
show that all causes of action alleged against it arose from conduct
protected under subdivisions (e)(2) and (e)(4) of the anti-SLAPP statute.
On appeal, plaintiffs argue that neither subdivision applies to
their negligent supervision claim because that claim “arises from the
financial injury [plaintiffs] incurred as a result of GKK failing
adequately to supervise Alliant and Schott under their contract. . . .
GKK’s failure to do so is not a matter of public concern.” Plaintiffs
point to the Supreme Court’s decision in Rand Resources, LLC v. City of
Carson (2019) 6 Cal.5th 610 (Rand), in which Rand Resources (Rand)
had been hired by the City of Carson as the city’s exclusive agent to
negotiate with the National Football League (NFL) about the possibility
of building a football stadium in the city. After the city replaced Rand
with a different developer, Rand sued the city, its mayor, and the rival
developer. (Id. at p. 614.) The complaint included allegations that the
rival developer and the mayor exchanged confidential emails to discuss
matters relating to building a stadium in the city, that the mayor
regularly sent the rival developer confidential city documents related to
the development of a stadium, and that the mayor and the rival
developer were involved in discussions regarding how to get around the
city’s agreement with Rand. The complaint also alleged that the rival
developer, with the knowledge and support of the city and its mayor,
54
contacted NFL representatives and purporting to be an agent of the city
with respect to bringing an NFL franchise to the city. (Id. at p. 618.)
Examining Rand’s claims for tortious breach of contract and fraud,
the Supreme Court noted that the crux of those claims was that the
defendants concealed and affirmatively lied about the city’s breach of
the exclusivity provision in its agreement with Rand. Rand alleged that
the mayor and rival developer conspired to conceal that breach by
meeting in secret, exchanging confidential emails, and other conduct,
and that the mayor and other defendants made affirmative
misrepresentations regarding their knowledge of the rival developer’s
activities and the status of the city’s agreement with Rand. (Rand,
supra, 6 Cal.5th at p. 622.) The Supreme Court found that although the
claims arose from the defendants’ statements, those statements were
not made in connection with an issue before the city council (and thus
were not protected under subd. (e)(2) of § 425.16) or an issue of public
interest (and thus not protected under subd. (e)(4)).
Addressing subdivision (e)(4), the court stated: “[T]he parties
agree that building an NFL stadium in the City is a matter of public
interest. But defendants’ speech concerned only the narrower issue of
who should represent the City in the negotiations with the NFL. The
affirmative misrepresentations, for instance, concerned only the
falsehoods that [the mayor] did not know [the rival developer] and was
not aware of his involvement in the NFL negotiations, and that the City
would continue to let Rand be its exclusive agent if his company made
‘reasonable progress.’ Neither of these statements was directed to the
public issue of whether to ‘hav[e] an NFL team, stadium, and associated
55
developments in Carson’ or what trade-offs might be entailed in the
process. [Citation.] Rather, what [the mayor and another defendant]
misrepresent—the issue ‘in connection with’ their statements—was the
identity of the City’s agent in negotiations with the NFL.” (Rand,
supra, 6 Cal.5th at p. 623.)
In rejecting the defendants’ argument that “the issue of who
served as the City’s agent was a matter of public significance because
‘the better the negotiating party, the more likely that an NFL stadium
would be delivered,’” the court “reject[ed] the proposition that any
connection at all—however fleeting or tangential—between the
challenged conduct and an issue of public interest would suffice to
satisfy the requirements of section 425.16, subdivision (e)(4).
[Citations.] [¶] At a sufficiently high level of generalization, any
conduct can appear rationally related to a broader issue of public
importance. What a court scrutinizing the nature of speech in the anti-
SLAPP context must focus on is the speech at hand, rather than the
prospects that such speech may conceivably have indirect consequences
for an issue of public concern.” (Rand, supra, 6 Cal.5th at p. 625.)
Seizing upon this language, plaintiffs here argue that although
“GKK’s failure to properly supervise Alliant and Schott has at a very
general level some connection to the assertedly public issue of the
investigation of AWI[,] . . . the specific conduct being challenged—
GKK’s negligence in shirking its supervisorial duties—is not itself an
issue of public interest.” Plaintiffs, however, take an overly specific
view of the conduct being challenged. To be sure, the conduct alleged
was GKK’s purported negligent supervision. But what GKK was
56
supervising was the investigation into violations of labor laws by a
contractor on public works projects. By supervising, GKK was
participating—albeit negligently (allegedly)—in the investigation
itself—an investigation preparatory to filing administrative claims
against AWI and CCC. Therefore, plaintiffs’ claim for negligent
supervision arose from GKK’s petitioning conduct “in connection with a
public issue.” (§ 425.16, subd. (e)(4).)
2. Step Two: Probability of Prevailing
Plaintiffs contend they established a probability of prevailing
because they submitted evidence that GKK allowed Alliant to operate
without any oversight, which allowed Alliant and Schott to (1) obtain
information from AWI without Mr. Mekikyan’s knowledge; (2) take
documents from AWI’s office without permission or a warrant; (3)
provide AWI documents to the OC district attorney’s office without a
warrant; (4) provide information to the OC and/or Riverside district
attorneys’ offices for those offices to obtain search warrants; (5) file
complaints with DLSE and then urge DLSE not to release certain
documents when AWI requested them; (6) exaggerate the magnitude of
AWI’s wage violations to the OC district attorney’s office; and (7)
misrepresent to the OC district attorney’s office that AWI prohibited
Schott from talking to AWI’s subcontractors.
As discussed in Section C.2., ante, in light of the prevailing wage
law, there was nothing improper in Alliant or Schott obtaining
information from AWI’s payroll records, whether as part of her
investigation on behalf of Riverside or as an agent of the OC and/or
57
Riverside district attorneys’ offices. With regard to the alleged
exaggeration or misrepresentation to the OC district attorney’s office,
there was no evidence presented to suggest that those statements were
acted upon or caused any damage to plaintiffs. Finally, while there is
evidence that Sandoval from the DLSE contacted Schott to ask whether
DLSE should allow AWI to copy certain documents that Schott had
provided to DLSE, there is no evidence to show that GKK’s alleged
failure to supervise Alliant or Schott caused plaintiffs harm due to
DLSE’s withholding of documents. The evidence shows that at the time
Sandoval contacted Schott, Schott (at Riverside’s direction) was
assisting the Riverside district attorney’s office with its own
investigation of AWI. The evidence also shows that immediately after
Sandoval contacted Schott, Schott contacted Riverside district attorney
investigator Stack to ask him to respond to Sandoval’s question, and
Stack then went to the DLSE to look at the documents to determine if
the release of those documents might jeopardize the case against AWI.
Thus, to the extent Schott participated in DLSE’s decision to withhold
documents from AWI, it was the Riverside district attorney’s office,
rather than Schott, that made the determination whether to
recommend withholding them.
In short, plaintiffs failed to present evidence sufficient to establish
a probability of prevailing on the negligent supervision claim, i.e.,
evidence to show that GKK’s alleged failure to properly supervise
Alliant and Schott caused injury to plaintiffs. Accordingly, we affirm
the trial court’s ruling granting GKK’s anti-SLAPP motion with regard
to the seventh cause of action.
58
H. Attorney Fee Awards
Following the granting of their anti-SLAPP motions, each group of
defendants filed motions for attorney fees under section 425.16. The
Alliant defendants sought $227,180 in fees; the trial court awarded
$85,155. The OC defendants sought $93,445; the trial court awarded
$71,655. GKK sought $70,460.30; the trial court awarded $39,577. The
Quad-C defendants sought $114,375.33 for the anti-SLAPP motion and
$15,475 for the fee motion; the trial court awarded a total of $77,673.60
for both motions. And the State defendants sought $11,087.50; the trial
court awarded $6,037.55.
Plaintiffs appeal from all five orders. With respect to all of the
orders, plaintiffs argue that mandatory fee provision set forth in section
425.16, subdivision (c) is preempted by federal law when applied to a
section 1983 cause of action. With respect to all of the orders except the
one awarding fees to the State defendants, plaintiffs argue the trial
court did not apply the proper legal test in evaluating the fee motions
because the court failed to determine whether the fees related to
duplicative legal arguments in several of the anti-SLAPP motions
should have been significantly reduced. Finally, plaintiffs contend the
trial court erred by awarding fees to the OC defendants for time spent
reviewing thousands of pages of investigative records, arguing that that
effort was completely unnecessary to the legal arguments those
defendants asserted in their anti-SLAPP motion. We address each
argument in turn.
59
1. Federal Preemption
Plaintiffs’ argument that federal law preempts application of the
anti-SLAPP statute’s mandatory fee provision to a section 1983 claim is,
like plaintiffs’ argument that the anti-SLAPP statute does not apply to
section 1983 claims at all, raised for the first time on appeal. Because it
is a pure question of law, we will exercise our discretion to consider it.
As we discussed in Section C.2., ante, as a procedural law, the
anti-SLAPP statute (including its attorney fee provision) applies to the
adjudication of a federal claim brought in state court “unless either (1)
‘the federal statute provides otherwise’ [citation], or (2) the anti-SLAPP
statute ‘affect[s] plaintiffs’ substantive federal rights,’ and is thus
preempted.” (Patel, supra, 48 Cal.App.5th at p. 488.) Plaintiffs concede
that federal law provides no express basis to exempt a section 1983
claim from application of the anti-SLAPP statute. However, they argue
that the mandatory fee provision of the anti-SLAPP statute affects
plaintiffs’ substantive federal rights.
As plaintiffs observe, the United States Supreme Court has held
that a defendant who prevails on a section 1983 claim may recover his
or her attorney fees under section 1988 of title 42 of the United States
Code (section 1988) “only where the suit was vexatious, frivolous, or
brought to harass or embarrass the defendant.” (Hensley v. Eckerhart
(1983) 461 U.S. 424, 429, fn. 2.) Plaintiffs contend that the anti-SLAPP
statute’s mandatory fee provision is preempted by federal law because it
“undermines entirely Congress’ remedial regime for Section 1983
violations” because a defendant is automatically entitled to attorney
fees without having to show that plaintiffs’ section 1983 claim was
60
objectively frivolous. Plaintiffs also contend the mandatory fee
provision affects plaintiffs’ federal rights and thus is preempted because
it strips courts of the discretion that section 1988 provides to deny fees
to defendants who prevail on section 1983 claims. We are not
persuaded.
What plaintiffs’ arguments ignore is that defendants who prevail
on an anti-SLAPP motion against a section 1983 claim are not awarded
attorney fees because they prevailed on a section 1983 claim. They are
awarded fees to compensate them for defending against a meritless
claim brought by a “party seeking to ‘chill the [defendants’] valid
exercise of the constitutional rights of freedom of speech and petition for
the redress of grievances.’” (Ketchum, supra, 24 Cal.4th at p. 1131; see
also Liu v. Moore (1999) 69 Cal.App.4th 745, 750 [“The purpose of
section 425.16 is clearly to give relief, including financial relief in the
form of attorney’s fees and costs, to persons who have been victimized
by meritless, retaliatory SLAPP lawsuits because of their ‘participation
in matters of public significance’”].) As we observed in Del Rio v. Jetton
(1997) 55 Cal.App.4th 30, where we held that section 1988 does not
preempt a claim for malicious prosecution brought by a party who
prevailed on a section 1983 claim: “State law is preempted to the extent
that it actually conflicts with federal law, as when it is impossible for a
private party to comply with both state and federal requirements, or
when the state law imposes an obstacle to the accomplishment of the
will of Congress. [Citation.] No such obstacle exists in this case.
Congress intended the fee-shifting provision in section 1988 to
encourage plaintiffs to bring good faith civil rights actions, and to deter
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plaintiffs from bringing civil rights actions which lack foundation.” (Id.
at pp. 36–37.) The anti-SLAPP statute’s mandatory fee provision is
entirely consistent with that congressional intent. In short, there is no
federal preemption.
2. Duplicative Time
The method for computing attorney fees for a successful anti-
SLAPP motion is well established. The court “begins with a touchstone
or lodestar figure, based on the ‘careful compilation of the time spent
and reasonable hourly compensation of each attorney . . . involved in
the presentation of the case.’” (Ketchum, supra, 24 Cal.4th at pp. 1131–
1132.) The fee award “should ordinarily include compensation for all
the hours reasonably spent.’” (Id. at p. 1133.) However, the court “must
carefully review attorney documentation of hours expended; ‘padding’ in
the form of inefficient or duplicative efforts is not subject to
compensation.” (Id. at p. 1132.)
The Supreme Court has instructed that “[t]he ‘“experienced trial
judge is the best judge of the value of professional services rendered in
his court, and while his judgment is of course subject to review, it will
not be disturbed unless the appellate court is convinced that it is clearly
wrong.”’” (Ketchum, supra, 24 Cal.4th at p. 1132.) “‘“‘A decision will not
be reversed merely because reasonable people might disagree. “An
appellate tribunal is neither authorized nor warranted in substituting
its judgment for the judgment of the trial judge.” [Citation.] In the
absence of a clear showing that its decision was arbitrary or irrational,
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a trial court should be presumed to have acted to achieve legitimate
objectives and, accordingly, its discretionary determinations ought not
be set aside on review.’ [Citation.]” Accordingly, an abuse of discretion
transpires if “‘the trial court exceeded the bounds of reason’” in making
its award of attorney fees. [Citation.]’ [Citation.]” (Premier Medical
Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163
Cal.App.4th 550, 557 (Premier Medical).)
In the present case, plaintiffs try to avoid the deferential abuse of
discretion standard of review by contending that the trial court failed to
conduct the proper legal analysis in ruling on defendants’ attorney fee
motions because it failed to examine whether defendants sought fees
reflecting duplicative efforts. (569 East County Boulevard LLC v.
Backcountry Against the Dump, Inc. (2016) 6 Cal.App.5th 426, 434 [“the
determination of whether the trial court selected the proper legal
standards in making its fee determination is reviewed de novo [citation]
and, although the trial court has broad authority in determining the
amount of reasonable legal fees, the award can be reversed for an abuse
of discretion when it employed the wrong legal standard in making its
determination”].) However, the trial court’s orders granting the
attorney fee motions belie plaintiffs’ assertion that the court failed to
select the proper legal standards. In fact, in each order, the trial court
noted its obligation to award fees only for the hours reasonably
expended, and to reduce the award where an attorney’s efforts were
duplicative. And, in each order, the trial court excluded hours it
concluded were unnecessary or duplicative.
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That the trial court did not expressly state it was reducing the
hours for which it awarded fees due to the fact that there were
numerous arguments made by multiple sets of defendants is not
evidence that the court did not apply the proper legal analysis. The
court was not required to issue a statement of decision with specific
findings, and “‘“[a]ll intendments and presumptions are indulged to
support [the judgment] on matters as to which the record is silent, and
error must be affirmatively shown.”’” (Ketchum, supra, 24 Cal.4th at p.
1140; see also Rey v. Madera Unified School Dist. (2012) 203
Cal.App.4th 1223, 1244 [“It is the trial court’s role to examine the
evidence and we presume the trial court performed its duty”].) In any
event, plaintiffs’ assertion that fees should not be awarded for hours
expended on arguments when multiple defendants raised substantially
similar arguments is not supported by law or logic. Plaintiffs cite to no
case law, and we have found none, that holds a trial court is required to
reduce an attorney fee award to account for arguments made by
multiple parties represented by separate attorneys. Moreover, while
some of the arguments made by the defendants may have been
“duplicative,” the work done by the attorneys for each set of defendants
was not necessarily unreasonable. The attorneys for each set of
defendants owed a duty to their clients, and to the court, to conduct
their own analysis of the issues to ensure that the issues they raised
had a basis in law and the facts.
The trial court was “‘“the best judge of the value of professional
services rendered in his court.”’” (Ketchum, supra, 24 Cal.4th at p.
1132.) We have no cause to second guess its determination here.
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3. Review of Investigative Records
The OC defendants’ attorney fee motion sought to recover fees for
the hours their attorneys spent reviewing “voluminous documentation”
from the OC district attorney’s office.13 As one of the attorneys stated
in his declaration filed in support of the motion, he “had to spend
numerous hours reviewing the [district attorney’s] extensive, four-year
criminal investigation into Plaintiffs’ illegal business practices . . .
because the [district attorney’s] investigation was the crux of Plaintiffs’
[complaint], [and he] could not prepare an appropriate defense to
Plaintiffs’ allegations until [he] had comprehensively analyzed said
investigation. The expenses incurred reviewing this information was
‘inextricably intertwined’ with [the OC defendants’] anti-SLAPP motion,
and necessary in order for [them] to succeed on such motion.”
Plaintiffs argued in opposition to the OC defendants’ motion that
fees for the hours spent reviewing the OC district attorney’s
investigation should not be awarded because that review was not
necessary to bring an anti-SLAPP motion. The trial court addressed
plaintiffs’ argument in its order awarding fees. It credited the OC
defendants’ attorney’s statement that the review and analysis of the
documents related to the OC district attorney’s investigation was
“inextricably intertwined” with the anti-SLAPP motion, and found that
13 This review of documentation was listed in a chart the OC defendants
submitted in support of their motion, which set out the number of hours
billed by each attorney every month, with a list of tasks for each month. The
review of documentation was one of many tasks listed in May 2018; one of the
attorneys billed 23.4 hours that month, and the other attorney billed 51.5
hours.
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billing for that review and analysis was not unreasonable or unrelated
to the anti-SLAPP motion.
On appeal, plaintiffs contend the trial court’s conclusion
“‘exceeded the bounds of reason’ in the context of the legal ground
advanced in the [OC defendants’] anti-SLAPP motion” because none of
the OC defendants’ legal defenses asserted in that motion had anything
to do with the investigative files. It is not enough for plaintiffs to
simply argue that the details of the OC district attorney’s investigation
was not necessary to the arguments the OC defendants made in the
anti-SLAPP motion. Plaintiffs must make “‘“‘a clear showing that [the
trial court’s] decision was arbitrary or irrational’”’” before we may
conclude there was an abuse of discretion. (Premier Medical, supra, 163
Cal.App.4th at p. 557.) They have not done so here. Accordingly, we
affirm the trial court’s order.
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DISPOSITION
All of the orders granting the special motions to strike and
motions for attorney fees filed by defendants are affirmed. All of the
defendants shall recover their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
WILLHITE, J.
We concur:
MANELLA, P. J.
COLLINS, J.
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