Heffernan v. Bilzerian CA2/5 ( 2022 )

Filed 10/25/22 Heffernan v. Bilzerian CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
CURTIS HEFFERNAN, B311531
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 20STCV25549)
v.
DAN BILZERIAN, et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of Los
Angeles County, Gregory Alarcon, Judge. Affirmed.
Ryan Ellis Law and Ryan A. Ellis for Defendant and
Appellant Dan Bilzerian.
Flangas Law Group and Kimberly P. Stein for Defendant
and Appellant Ignite International Ltd.
Workplace Justice Advocates, Tamara S. Freeze and
Brenda Armenta; Lim Law Group and Preston H. Lim for
Plaintiff and Respondent Curtis Heffernan.
________________________
In the course of a dispute between a corporation and one of
its former officers, the corporation’s CEO told a media outlet that
the former officer had been terminated for incompetence. The
former officer sued the corporation, its parent corporation and its
CEO for defamation. The corporation and CEO brought a motion
to strike under Code of Civil Procedure section 425.16, the anti-
SLAPP law. The trial court denied the motion on the basis that
the CEO’s statement about the former officer’s termination did
not concern an issue of public interest. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. Underlying Facts and Allegations of the Complaint
According to his declaration, the CEO (defendant Dan
Bilzerian) is “an actor, Internet personality, and professional
poker player, with a social media following of approximately 50
million people.” He is also the CEO of defendant Ignite
International, Ltd. (Ignite).1 According to Bilzerian, “Ignite is a
1 Ignite is a wholly owned subsidiary of Ignite International
Brands, Ltd., which is also named as a defendant. In the
operative complaint, plaintiff uses “Ignite” to refer to both the
subsidiary and the parent corporation. Defendants largely do the
same, both in the trial court and on appeal. However, only
Bilzerian and the subsidiary pursued an anti-SLAPP motion.
This was no oversight; the parent was, at the time, pursuing a
motion to quash service. Similarly, only Bilzerian and the
subsidiary filed notices of appeal from the denial of the anti-
SLAPP motion; the parent did not. When we called this to the
parties’ attention, Bilzerian and the Ignite entities took the
position that the parent corporation should be considered an
appellant, even though it never filed an anti-SLAPP motion and
never filed a notice of appeal. We disagree; the parent
corporation is not before us. We therefore partially strike the
2
publicly traded company currently listed on the Canadian
Securities Exchange . . . and in the United States on the
QTCQX . . . .”2 It is a “consumer products” company. According
to the operative complaint, Ignite sells cannabidiol, cannabis, and
beverage products.
It is undisputed that plaintiff Curtis Heffernan was, for a
time, employed as an officer of Ignite, and promoted to acting
president. He was terminated from Ignite on June 8, 2020. The
reasons for his termination, however, are disputed.
According to Heffernan, his employment was terminated
when he refused to approve a number of questionable charges –
including hundreds of thousands of dollars of Bilzerian’s personal
expenses – as corporate expenses.3 According to Bilzerian,
Heffernan was terminated because of negligence and
incompetence. Bilzerian took the position that it was Heffernan
who had authorized hundreds of thousands in wasteful expenses.
joint briefs filed by both Ignite entities, to the extent they were
filed on behalf of the parent. We use “Ignite” to refer only to the
subsidiary, the sole corporate appellant. We recognize, however,
that the parties used “Ignite” to refer to both entities and there is
some ambiguity in the record as to which entity was intended by
any particular reference.
2 The record does not reveal the meaning of QTCQX. It may
be a typographical error for OTCQX, an over the counter
exchange.
3 Heffernan filed no declaration in opposition to the anti-
SLAPP motion. Our discussion of his position refers to the
allegations in his operative complaint.
3
Heffernan alleged that, during “a company meeting,” on
June 7, 2020, the day before he was fired, Bilzerian falsely
accused him of “taking drugs” and “acting strange.”
One month later, on July 7, 2020, Heffernan filed suit
against Ignite and Bilzerian, alleging three causes of action. Two
related to his termination (whistleblower retaliation and
wrongful termination in violation of public policy). The third was
for defamation based on Bilzerian’s alleged statement that
Heffernan was taking drugs.
After Heffernan filed the lawsuit, his attorneys issued
press releases.4 Bilzerian was contacted by media outlet TMZ
regarding the complaint. Bilzerian told TMZ, in an interview,
that Heffernan “was fired for incompetence and negligence and
Ignite will be bringing suit against him. His claim is not only
frivolous; it is ridiculous.”
Heffernan responded by filing a first amended complaint,
adding Bilzerian’s statement to TMZ as a second basis for his
defamation cause of action.
2. Defendants’ Anti-SLAPP Motion
Bilzerian had been named solely in the defamation cause of
action. On September 4, 2020, he filed an anti-SLAPP motion,
seeking to strike that cause of action.
“An anti-SLAPP motion presents a means by which a
defendant, sued for conduct in furtherance of the constitutional
right of petition or free speech, can place the burden on a plaintiff
to establish that there is a probability of prevailing on the claim
4 There is no indication in the record as to the content of
these press releases. Bilzerian’s declaration states only, “After
Plaintiff filed his lawsuit and his attorneys issued press releases
and spoke to several press agencies, . . .”
4
or face early dismissal of the action. (Code Civ. Proc., § 425.16,
subd. (b)(1).) If the defendant first establishes a prima facie
showing that a claim is based on so-called ‘protected activity,’ the
burden switches to the plaintiff to establish the lawsuit has at
least minimal merit. [Citation.]” (Ratcliff v. The Roman Catholic
Archbishop of Los Angeles (2022) 79 Cal.App.5th 982, 997.)
The anti-SLAPP statute itemizes four types of protected
activity: “(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.” (Code Civ. Proc., § 425.16, subd. (e).)
Bilzerian argued in his motion that the defamation cause of
action was based on statements that fell within the protection of
subdivision (e)(3) of the statute – as statements made “in a place
open to the public or a public forum in connection with an issue of
public interest.” He argued that his statements about Heffernan
fell within this category because they constituted “criticism of a
professional’s on-the-job performance” which is a matter of public
interest. He elaborated that “potential or current investors in
Ignite, a public company, have an interest in being informed of an
officer’s on-the-job performance, making this a matter of public
interest. Further, as Ignite offers consumers products, the issue
5
of the President of the company’s performance is also an issue of
public concern.”
Bilzerian argued that a number of courts have held that
“internet postings regarding corporate activity” fell within this
category of protected speech. (E.g. Ampex Corp. v. Cargle (2005)
128 Cal.App.4th 1569, 1576 (Ampex).) He acknowledged that “in
determining whether particular communications constitute
protected activity under these prongs of the anti-SLAPP statute,
courts consider three factors: (1) whether the criticized company
is publicly traded; (2) the number of investors; and, (3) whether
the company has promoted itself by means of numerous press
releases.” However, Bilzerian offered no evidence or argument on
the latter two factors, content to rely only on the fact that Ignite
was a public company.
On September 15, 2020, Ignite filed a joinder in Bilzerian’s
motion. (See Barak v. The Quisenberry Law Firm (2006)
135 Cal.App.4th 654, 661 [joinder in an anti-SLAPP motion is
permissible].) Ignite represented that it was joining Bilzerian’s
motion because Ignite’s potential liability for defamation was
based on its alleged vicarious liability for Bilzerian’s statements.
Heffernan filed an opposition to the anti-SLAPP motion,
arguing that the allegedly defamatory statements did not
implicate an issue of public interest as his job performance was
not of concern to a substantial number of people.5 Heffernan’s
5 Heffernan opposed only Bilzerian’s anti-SLAPP motion; he
filed no opposition to Ignite’s joinder. On appeal, Ignite takes the
position that since its joinder was unopposed, the trial court
should have granted its “motion.” But Ignite never filed an anti-
SLAPP motion, it only joined Bilzerian’s. Heffernan’s non-
opposition to Ignite’s joinder simply means that Heffernan did
6
opposition was supported by no evidence; he relied only on the
allegations of his complaint.
After the motion was fully briefed, the court issued its
tentative ruling denying it. The court accepted the unopposed
argument that Bilzerian’s statement to TMZ was in a public
forum for purposes of the anti-SLAPP analysis. Turning to
whether the statements were made in connection with an issue of
public interest, the court concluded that Bilzerian and Ignite
failed in their burden to show a substantial number of people
may have been affected by the subject matter of the statement –
the reasons for Heffernan’s termination from Ignite. The court
particularly considered the three-part test for statements
regarding the performance of corporations, and noted that, while
defendants had established the first part (that Ignite was
publicly traded), they had failed to introduce any evidence on the
remaining two parts (the number of investors and whether Ignite
had promoted itself by press releases).
The matter was heard on February 24, 2021, where
Bilzerian argued against the tentative ruling. He claimed that
Heffernan had made his termination a public issue by going
public with this lawsuit, thereby injecting himself into the public
conversation. He asserted that he had simply responded to
Heffernan’s public allegations.
The court adopted its tentative and denied the motion.
Bilzerian and Ignite filed timely notices of appeal.
not dispute Ignite’s right to join Bilzerian’s motion and tie its
right to anti-SLAPP relief to Bilzerian’s fate.
7
DISCUSSION
1. Standard of Review
“A court evaluates an anti-SLAPP motion in two steps.
‘Initially, the moving defendant bears the burden of establishing
that the challenged allegations or claims “aris[e] from” protected
activity in which the defendant has engaged. [Citations.] If the
defendant carries its burden, the plaintiff must then demonstrate
its claims have at least “minimal merit.” ’ [Citation.] If the
plaintiff fails to meet that burden, the court will strike the
claim.” (Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871,
884 (Wilson).)
We are concerned here solely with the first prong. “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.” (Wilson, supra, 7 Cal.5th
at p. 884.) Whether the claims arise from protected activity is a
matter we consider de novo, evaluating both the content and
context of the alleged activity. (Id. at pp. 884-885.)
Here, defendants argued to the trial court that the
allegedly defamatory statements were protected by subdivision
(e)(3) of the anti-SLAPP law. For the first time on appeal, they
argue that all four subparts of subdivision (e) apply.6 The
6 At oral argument, counsel for Ignite, but not counsel for
Bilzerian, took the position that defendants had based their
motion on all four subparts of subdivision (e). We disagree.
Bilzerian’s motion had argued only that, “The Lawsuit Arises Out
of Defendant’s Statements Made in a Public Forum in Connection
With an Issue of Public Interest, and Thus is Subject to
California’s Anti-SLAPP Statute.” This is the language of
subdivision (e)(3). He did not argue any other subparts applied.
8
California Supreme Court has held that a defendant may not
change its theory of anti-SLAPP protection for the first time on
appeal. (Flatley v. Mauro (2006) 39 Cal.4th 299, 321, fn. 10
[defendant had moved under subdivisions (e)(1) and (e)(4), could
not pursue (e)(2) on appeal].) We therefore limit our analysis to
subdivision (e)(3).
2. Subdivision (e)(3) Does Not Protect Bilzerian’s
Statements
Subdivision (e)(3) categorizes as protected speech “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.” Here, we are concerned with two statements:
Bilzerian’s alleged statement in a “company meeting” that
Heffernan was using drugs and his subsequent statement to TMZ
that Heffernan was terminated for incompetence and negligence.
In his declaration, Bilzerian admitted making the latter
statement to TMZ. As to the former statement, Bilzerian neither
admitted nor denied saying that Heffernan used drugs; he did,
however, deny doing so at a “company meeting.” He stated that
there was no company meeting on June 7, 2020 (the day before
Heffernan’s termination). Instead, he declared that he saw
“other employees of Ignite, the Chief Operating Officer and the
new incoming President meeting and walked by and said hello.”
Bilzerian claimed that he “did ask about [Heffernan] and how he
was doing, as I stated he had been acting strange in the past
couple of weeks.” He added that the decision to terminate
Heffernan was made by the board of directors “through a series of
separate communications, not an official meeting . . . .” Bilzerian
Ignite’s joinder did not purport to expand the scope of the motion
to other subparts of subdivision (e).
9
added, “Even if a meeting would have occurred as Plaintiff
claims, I would have been justified in my opinion that his
behavior might have been due to Plaintiff’s being under the
influence of a controlled substance.”
A. Only Bilzerian’s Statement to TMZ Was Made in a
Public Forum; the Statement Regarding Drugs was
Not
Initially, we must address whether the statements were
made in a place open to the public or public forum. It is
undisputed that Bilzerian’s statement in an interview with media
outlet TMZ was made in a public forum.
The same cannot be said of Bilzerian’s alleged statement
that Heffernan was using drugs, which Heffernan alleged was
made in a “company meeting.” In their opening briefs, Bilzerian
and Ignite assert with no citation to authority, that “[a] company
meeting of a public company is a public forum.” Even if we were
to credit that there was a “company meeting,” there is no
evidence as to the type of meeting – shareholder, employee,
board, annual, official, unplanned, public or private – where
Bilzerian allegedly stated Heffernan was using drugs. Bilzerian,
critically, denied that there was a “company meeting” at all,
declaring that when he spoke to others at Ignite about Heffernan,
he simply added the comments when saying “hello” to other
Ignite employees he saw meeting each other. He further
specifically denied that the decision to terminate Heffernan was
made at a meeting of any kind. Given that Bilzerian’s
declaration is the only evidence on the point as Heffernan
submitted no evidence, we conclude for present purposes that the
statement, if made, was made in the course of a private
conversation, and was therefore not made in a place open to the
10
public or public forum. Bilzerian and Ignite have not met their
burden to establish that it is protected by subdivision (e)(3).
B. The TMZ Statement Was Not Made In Connection
With an Issue of Public Interest
We now turn to whether Bilzerian and Ignite have
established that the second statement, to TMZ, was made “in
connection with an issue of public interest.”7 The statement was
that Heffernan was terminated for incompetence and negligence.
Defendants argue that the issue of public interest implicated by
this statement is the “on-the-job performance of senior executives
in a public company.”
The California Supreme Court has agreed with the
appellate “consensus view that ‘ “a matter of concern to the
speaker and a relatively small, specific audience is not a matter
of public interest,” ’ and that ‘ “[a] person cannot turn otherwise
private information into a matter of public interest simply by
communicating it to a large number of people.” ’ [Citation.]”
(Rand Resources, LLC v. City of Carson (2019) 6 Cal.5th 610, 621
(Rand Resources).)
Shortly after Rand Resources, the California Supreme
Court issued its opinion in FilmOn.com Inc. v. DoubleVerify Inc.
7 Subdivision (e)(3) of the anti-SLAPP statute protects “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” while subdivision (e)(4) protects “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.” (Emphasis added.) As
the language we have emphasized is identical in both
subdivisions, we rely on caselaw interpreting the language in
subdivision (e)(4) as well as subdivision (e)(3).
11
(2019) 7 Cal.5th 133. In FilmOn, the court concluded that the
context of speech is relevant in determining whether it was made
in furtherance of the right of speech in connection with a public
issue. (Id. at p. 140.) Further, the court held that the analysis
requires two parts: first, identifying the issue of public interest
implicated by the speech; and second, asking about the functional
relationship between the speech and the public conversation
about the matter of public interest. (Id. at pp. 149-150.) Context
is relevant to both of these determinations.8 (Geiser v. Kuhns
(2022) 13 Cal.5th 1238, 1252.)
There are three “nonexclusive and sometimes overlapping”
categories of statements in the public interest. “The first is when
the statement or conduct concerns ‘a person or entity in the
public eye’; the second, when it involves ‘conduct that could
directly affect a large number of people beyond the direct
participants’; and the third, when it involves ‘a topic of
widespread, public interest.’ ” (Rand Resources, supra, 6 Cal.5th
at p. 621.) In considering whether Bilzerian’s statement to TMZ
satisfies any of these definitions, we first consider it as a
statement about Heffernan only, then as a statement about
Ignite’s operations and investability.
As a statement about Heffernan personally, Bilzerian’s
representation that he was fired for incompetence and negligence
8 In their briefing, defendants rely on Nygard, Inc. v. Uusi-
Kerttula (2008) 159 Cal.App.4th 1027, 1042, for its tautological
statement that an issue of public interest is any issue “in which
the public takes an interest.” As later authority has noted,
Nygard predates FilmOn by more than a decade, and its
simplified statement of what it means to be an issue of public
interest is no longer viable. (Musero v. Creative Artists Agency,
LLC (2021) 72 Cal.App.5th 802, 822, fn. 8.)
12
meets none of the three categories. First, it does not concern a
person in the public eye. While Bilzerian submitted evidence
that he, personally, had achieved a level of internet celebrity,
there was no evidence that Heffernan had. Bilzerian argued that
Heffernan had injected himself into the public debate by issuing
press releases about this lawsuit itself. But Bilzerian’s evidence
on this point was minimal, consisting only of the statement in his
declaration that Heffernan’s “attorneys issued press releases and
spoke to several press agencies. . . .” With no evidence that
Heffernan himself had joined the conversation, we cannot
conclude he was in the public eye. Second, the statement did not
concern conduct that could directly affect a large number of
people beyond the direct participants. The reasons for
Heffernan’s termination could have little effect on anyone other
than Heffernan. Third, the statement did not concern a topic of
widespread public interest. The Wilson case is illustrative.
There, news network CNN fired the plaintiff and told others,
including prospective employers, that he was terminated for
plagiarism. (Wilson, supra, 7 Cal.5th at p. 899.) When the
plaintiff sued, CNN brought an anti-SLAPP motion, arguing that
the plaintiff’s “professional competence and the reasons for his
termination” were issues of public interest. (Id. at p. 901.) The
California Supreme Court disagreed, holding that while “some
individuals may be so prominent, or in such a prominent position,
that any discussion of them concerns a matter of public interest,”
that is the exception to the rule. Generally, “absent unusual
circumstances, a garden-variety employment dispute concerning
a nonpublic figure will implicate no public issue.” (Ibid.) If the
termination of a CNN employee for plagiarism is not a matter of
13
public interest, the termination of plaintiff for incompetence
surely is not.
The real battle in this case is whether the result is different
if Bilzerian’s statement regarding the reasons for Heffernan’s
dismissal can be construed as a statement regarding Ignite.
Preliminarily, we question whether defendants have established
that Bilzerian’s TMZ statement was, in fact, related to Ignite.
Bilzerian did not provide the full context of the statement; the
entire interview with TMZ is not part of the record. He stated
only that TMZ contacted him “regarding the complaint” and he
stated that Heffernan “was fired for incompetence and negligence
and Ignite will be bringing suit against him. His claim is not
only frivolous; it is ridiculous.” There is nothing indicating that,
in context, Bilzerian represented that Heffernan’s purported
incompetence related to Ignite’s financial status, value as an
investment, or products.
Assuming, without deciding, that defendants have
established a prima facie case that Bilzerian’s TMZ statement
about Heffernan was really a statement about the performance of
Ignite’s management, they must next establish that Ignite’s
management is an issue of public interest. Defendants argue,
correctly, that reports of corporate mismanagement involving
publicly traded companies have been held to be statements of
public interest. But while some cases have simply accepted, with
little analysis, that such statements implicate matters of public
interest when the company is publicly traded (see Muddy Waters,
LLC v. Superior Court (2021) 62 Cal.App.5th 905, 918; GetFugu,
Inc. v. Patton Boggs LLP (2013) 220 Cal.App.4th 141, 151), other
courts have taken a more nuanced approach. Those courts have
asked not only if the corporation is publicly traded, but also the
14
number of investors and whether the company has promoted
itself in the press, in order to determine whether statements
regarding corporate mismanagement truly implicate the public
interest. (Ampex, supra, 128 Cal.App.4th at p. 1576; Summit
Bank v. Rogers (2012) 206 Cal.App.4th 669, 693-694;
ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1008;
see also Global Telemedia Int’l., Inc. v. Doe 1 (C.D. Cal. 2001)
132 F.Supp.2d 1261, 1265.)
We believe the latter cases are the better reasoned, in that
they better reflect the three overlapping categories of statements
in the “public interest.” We are ultimately concerned with
whether the corporate entity is in the public eye, statements
concerning it could directly affect a large number of people, or its
management is a topic of widespread public interest. The mere
fact that a corporation is publicly traded does not by itself meet
any of these categories. But if the company has a large number
of shareholders, statements regarding its mismanagement could
have a direct financial effect on a large number of people. If the
company regularly promotes itself through press releases, it can
be assumed to have generated widespread public interest about
its management.
Here, Bilzerian recognized this three-part test in his
moving papers, but submitted no evidence regarding the number
of shareholders or whether Ignite had promoted itself in the
press. When Ignite joined his motion, it made no effort to fill this
void in proof. The evidence that Ignite’s management is an issue
of public interest consists only of evidence that Ignite is publicly
traded “on the Canadian Securities Exchange . . . and in the
United States on the QTCQX”; and that Bilzerian, personally,
has a large social media following. Without further evidence that
15
Ignite has a large number of shareholders and/or that Ignite,
rather than Bilzerian, is a topic of interest on social media,
defendants have not made a prima facie case that the
management of Ignite is an issue of public interest.9
DISPOSITION
The order denying the anti-SLAPP motion is affirmed.
Bilzerian and Ignite shall pay Heffernan’s costs on appeal.10
RUBIN, P. J.
WE CONCUR:
MOOR, J.
KIM, J.
9 In his reply brief on appeal, Bilzerian states, “This lawsuit
prompted hundreds of public posts on YouTube, numerous media
reports including Forbes, and prompted at least one regulatory
investigation.” These purported facts are not supported by
anything in the record, and we disregard them.
10 Heffernan requests an award of attorney’s fees on appeal.
A prevailing defendant on an anti-SLAPP motion is entitled to
his attorney’s fees. A prevailing plaintiff is entitled to his
attorney’s fees only “[i]f the court finds that the [anti-SLAPP
motion] is frivolous or is solely intended to cause unnecessary
delay.” (Code Civ. Proc., § 425.16, subd. (c)(1).) We believe the
matter is best raised in the trial court in the first instance.
16