PetRays Veterinary Radiology Consultants v. DVM Insight CA4/1 ( 2013 )

Filed 12/16/13 PetRays Veterinary Radiology Consultants v. DVM Insight CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
PETRAYS VETERINARY RADIOLOGY D062821
CONSULTANTS,
Plaintiff and Appellant,
(Super. Ct. No. 37-2010-00099243-
v. CU-BT-CTL)
DVM INSIGHT, INC. et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of San Diego County, Randa
Trapp, Judge. Affirmed.
Miller Barondess, Erik S. Syverson and Benjamin Taylor for Plaintiff and
Appellant.
Schor & Freeland and Cynthia A. Freeland for Defendants and Respondents.
Plaintiff and appellant PetRays Veterinary Radiology Consultants (PetRays)
appeals the trial court's grant of summary judgment in favor of defendants and
respondents DVM Insight, Inc. (DVM), Mathew Wright, D.V.M. (Dr. Wright), Animal
Insides, Inc. (AII) and Stephen Walters (Walters) (sometimes collectively, defendants) in
PetRay's action for intentional interference with prospective economic advantage, trade
libel, false advertising and unfair business practices. Judgment affirmed.
FACTUAL AND PROCEDURAL BACKGROUND
A. Overview
PetRays provides veterinary telemedicine/teleradiology consulting services. At all
times relevant, a veterinary specialist retained by PetRays to service its clients was
required to sign PetRays's standard "Proprietary Information and Non-Solicitation
Agreement" (noncompete agreement). One of the terms of the noncompete agreement
required the specialist to refrain for a period of two years, after either he or she ceased
working for PetRays or PetRays ceased servicing a client, from performing services for
any such client other than when the specialist was acting on behalf of PetRays
(noncompete provision). A veterinary radiologist hired by PetRays to read radiograph
images remotely was free to terminate his or her contractual relationship with PetRays at
any time and to work for other veterinary telemedicine service providers, subject to the
noncompete provision.
DVM also provided teleradiology consulting services under the service name
Sight Hound Radiology (Sight Hound). DVM contracted with veterinarians, veterinary
clinics and veterinary hospitals to read X-rays for veterinarians. To provide this service,
DVM in turn entered into contracts with veterinary radiologists. Veterinary radiologists
who read cases for DVM could accept or reject a case based on availability and were free
2
to read X-rays for other teleradiology companies, including PetRays. Unlike PetRays,
DVM did not require its veterinary radiologists to sign a covenant not to compete.
For veterinarians and others in the veterinary medicine field that desired to
establish their own telemedicine services, DVM offered access to a proprietary software
platform (DVM platform). A client that utilized the DVM platform did not need to
contract with Sight Hound radiologists to read cases but rather could retain its own
radiologists to read cases through the DVM platform. The DVM platform allowed
veterinarians to interact with radiologists to facilitate the interpretation of radiograph
images.
Dr. Wright at all times relevant was a principal in and the president of DVM.
Walters was DVM's computer programmer and a co-owner of DVM. Dr. Wright also
was a principal in and the president of AII, a media company. Until September 2011, AII
maintained a website on which it posted, among other things, a video and articles about
teleradiology.
B. Dr. Linda Mellema
Dr. Mellema in 2007 agreed to provide DVM veterinary radiology services. Dr.
Mellema worked as an independent contractor for DVM, could accept or reject a case
based on her availability and could work for other companies. In July 2009, while
working for DVM, Dr. Mellema began working part time as a veterinary radiologist for
PetRays. Dr. Mellema signed PetRays's standard noncompete agreement. "In her
capacity as a PetRays employee, Dr. Mellema worked scheduled shifts reading cases for
3
PetRays' clients. As a PetRays' employee, Dr. Mellema did not have any marketing
responsibility and was not responsible for business development. Her sole responsibility
was to read X-rays for PetRays' clients."
In about May 2010, "Dr. Mellema accepted a case through DVM for a [veterinary
clinic]. At that time, Anne Bahr, a member of the PetRays team of board-certified
veterinary radiology specialists and one of the people to whom Dr. Mellema reported at
PetRays [(Dr. Bahr)], called and told Dr. Mellema that she could not read cases for [this
clinic] because [it] was a former PetRays[] client and to read for [this clinic] on behalf of
DVM would constitute a violation of the provision in Dr. Mellema's [noncompete
agreement] . . . ."
Dr. Mellema called Dr. Wright and informed him of her conversation with Dr.
Bahr. Dr. Wright responded by email and expressed his regrets about the situation and
asked Dr. Mellema about her "comfort level" in reading cases for hospitals that sent cases
to PetRays. Dr. Wright also stated his view that the noncompete provision would "not
hold up" but recommended Dr. Mellema retain an attorney to be "100% certain."
In response, Dr. Mellema emailed Dr. Wright and stated she had done some
Internet research on her own regarding the enforceability of the noncompete provision
and, in her view, it would be unenforceable in California. Dr. Mellema told Dr. Wright
that her sister-in-law, who was an attorney, was going to look into the issue for her. Dr.
Mellema also stated her view that PetRays would have to prove that she caused PetRays
4
"fiscal damage," which she believed PetRays could not do because it seemed unlikely
PetRays could show she "made [PetRays] clients leave [its] service."
Dr. Wright responded by email asking that Dr. Mellema let him know what she
finds, ostensibly after her sister-in-law looked into the issue, and agreeing with Dr.
Mellema that it would be "tough" for PetRays "to prove that you [i.e., Dr. Mellema]
caused [PetRays] damage as you only work a few days a week and these clinics left
PetRays and you had less than nothing to do with it." Dr. Wright also stated in this email
that he "could not resist" writing an article about the "noncompete deals" teleradiologists
were being asked to sign and noted he would forward it to Dr. Mellema after his lawyer
gave him "the OK."
After considering her conversation with Dr. Bahr and knowing how quickly
veterinary clinics and hospitals change ownership, Dr. Mellema concluded that the
noncompete agreement "created restrictions that, if enforceable, would be too onerous for
[her] in the future." As such, she informed Dr. Bahr she was leaving PetRays.
In notifying Dr. Bahr by email of her intent to leave PetRays, Dr. Mellema said
she simply wanted to "be able to sit down in front of her computer when her schedule
permitted and to read a case for someone in need." Dr. Mellema further explained that
when she signed the noncompete agreement she was "not concerned by its terms because
it was never her intention to steal any clients. However, when Dr. Bahr pointed out . . .
that [Dr. Mellema] could not read cases for [the clinic] because of its prior affiliation with
PetRays, Dr. Mellema realized that there could be hundreds of clinics that previously
5
were PetRays[] clients about which she had no knowledge but which could create a
potential problem under the [noncompete] [a]greement if she read for those clinics." As a
result, Dr. Mellema's employment with PetRays ended on May 31, 2010.
C. Dr. Laura Ziegler
In 2002, Dr. Ziegler commenced work for a university. Through her work, she
became familiar with and worked with DVM and Dr. Wright. In 2010, Dr. Ziegler left
the university and agreed in May 2010 to provide services to DVM as a veterinary
radiologist. Dr. Ziegler also considered employment with PetRays and several other
teleradiology companies.
"While discussing employment opportunities with PetRays, Dr. Ziegler was
presented with [PetRays's standard noncompete] agreement . . . that contained a provision
prohibiting competition [i.e., the noncompete provision]. Dr. Ziegler found the provision
to be confusing, concerning and incomprehensible. In particular, the provision read
'[c]ontractor [i.e., Dr. Ziegler] agrees that he/she will not . . . solicit or provide services or
sell an[y] product in competition with Practice [i.e., PetRays] to any current or former
healthcare facility in the Practice provided services during the period that Contractor was
employed by the Practice whether in the capacity as a contractor, employee, owner or
otherwise with respect to any business conducted by the Practice or any of its affiliates,
except for the benefit of the Practice or any of its subsidiaries or affiliates.'" The
provision was clarified and, given that Dr. Ziegler was in need of a job, she signed the
noncompete agreement containing the noncompetition provision among other terms on
6
June 3, 2010. Dr. Ziegler also subsequently signed contracts with several other
teleradiology companies that either lacked covenants not to compete or contained
covenants that were less restrictive than the noncompete provision in the PetRays'
agreement.
"After signing the Agreement, but before reading any cases for PetRays, Dr.
Ziegler grew very concerned about the restrictive provisions in [that] [a]greement. Dr.
Ziegler spoke to many people with experience in business and contracts, both with and
without specific knowledge of teleradiology in general or PetRays specifically, and all
cautioned against making commitments to a company with such a restrictive noncompete
agreement if alternatives were available. Having known Dr. Wright for several years, Dr.
Ziegler reached out to him to speak, in very general terms, about her concerns about
restrictive contract terms without disclosing to him the specific names of the companies
with which Dr. Ziegler was considering contracting. Dr. Ziegler did not provide Dr.
Wright with copies of any agreements that she had signed with any teleradiology
company. With respect to PetRays, Dr. Wright suggested that Dr. Ziegler speak with Dr.
Linda Mellema about her experience with the noncompetition provision in her contract
with PetRays, which Dr. Ziegler did. Dr. Mellema relayed to Dr. Ziegler that she had
been informed by Anne Bahr, that she could not read cases for a particular former client
of PetRays because said reading would constitute a violation of Dr. Mellema's
noncompetition agreement.
7
"Because Dr. Ziegler had other contracts at the time, and because the
noncompetition provision in the [noncompete agreement] seemed very restrictive to Dr.
Ziegler, she decided that it would be best for her to end her relationship with PetRays,
which she did in or about June 2010. [¶] Dr. Ziegler never did read any cases for
PetRays and did not ever have access to any of its client information.
"Dr. Wright did not provide Dr. Ziegler with legal advice nor did Dr. Ziegler rely
on anything that Dr. Wright said to be dispositive of whether the noncompetition
provision in [the noncompete agreement] was enforceable. Dr. Ziegler never provided
Dr. Wright with a copy of [the noncompete agreement]. Dr. Wright did not induce Dr.
Zeigler, either directly or indirectly, to terminate her employment with PetRays. The
decision to terminate Dr. Zeigler's employment relationship with PetRays was Dr.
Ziegler's alone."
D. Publication of Materials on AII's Website
In early 2010, DVM posted on AII's website a video (DVM video). Although this
two-minute animated promotional video did not specifically mention PetRays by name,
PetRays contends the criticism at the end of the video of the "'big boys'" in the veterinary
teleradiology field was directed at it and a few other veterinary teleradiology companies.
The DVM video (which was included in the record and independently reviewed by this
court) stated that there are a "lot of options" in the teleradiology field and that "many of
the other guys" operate their businesses like "robot sweat shop[s]." The video also stated
that DVM's competitors provided "nameless, faceless service"; produced "cheap, junky"
8
radiology reports with "wishy-washy" findings; offered "false promises" such as 30-day
free trials; and employed inexperienced radiologists who would not commit to a
diagnosis, among other statements.
Also in early 2010, AII posted on its website an article written by Dr. Wright titled
"Teleradiology is NOT a commodity" (commodity article). This article criticized
"commoditized radiology services" that hire "inexperienced and underpaid radiologists"
who are "pressured to create wishy[-]washy reports because they need to meet deadlines."
The commodity article includes a footnote listing the entities that are not "commodity
teleradiology services" and notes "there are many others" not on that list. PetRays was
omitted from the list. According to PetRays, the commodity article, much like the DVM
video, was allegedly directed at it by "clear implication."
Dr. Wright also wrote an article that was posted in 2010 on AII's website entitled
"If you sign a 2 year noncompete covenant for cyberspace you are essentially
unemployable if you leave your current position" (noncompete article). This article—
which ostensibly was the one referenced by Dr. Wright in his email to Dr. Mellema—
notes a trend in corporate veterinary teleradiology requiring "employees to sign a contract
that includes [a] covenant not to compete with the employer should they ever terminate
their employment." It further notes that such covenants are a "problem in our industry";
that in the author's opinion "radiologists who agree to these terms of employment are at a
serious disadvantage for a period of two years after they terminate employment with the
owner"; that the author is not sure "whether or to what extent" courts will enforce such
9
covenants but that the author "do[es] know that the answer varies from state to state"; and
that signing such a covenant "that covers cyberspace, regardless of the legality or
enforceability of these contracts, makes you [i.e., the radiologist] essentially
unemployable or, at best, puts you at a serious disadvantage" because, among other
things, the clients are "fickle when it comes to teleradiology" as they "change providers
or they may use multiple providers at the same time for different types of cases," and thus
it "is very likely, if not certain, that you will be asked to read for hospitals that sent cases
to your former employer."
E. Operative Complaint
PetRays's operative complaint asserted causes of action for intentional interference
with prospective economic advantage, trade libel, false advertising and unfair business
practices.
PetRays alleged that the video and articles posted by defendants made "numerous
false, disparaging and misleading statements about the consulting services offered by
PetRays and other companies like it," as discussed ante; that "[c]onsumers and
companies and professionals within the veterinary medicine industry viewed these
comments and understood these comments to refer to [PetRays]"; and that the statements
by defendants were "false and misleading and disparage the quality of [PetRays's] goods
and services" because, among other things, "[e]ach of PetRays['s] clients has a personal
account manager who connects the client with the PetRays[] specialist whose expertise
the client seeks" and each diagnostic report is personalized and signed by the PetRays
10
veterinary specialist who created the report and who is available to answer further
questions about the report.
PetRays further alleged the defamatory statements by defendants induced
consumers, companies and professionals within the veterinary medicine industry not to
deal with PetRays, to its financial detriment, and led veterinary radiologists like Drs.
Mellema and Ziegler not to work for PetRays.
PetRays also alleged Dr. Wright in 2010 began approaching several of PetRays's
veterinary specialists to work for DVM. According to PetRays, Dr. Wright allegedly
"began a campaign to cause these specialists to breach or disrupt their contractual and/or
non-contractual business relationship" with PetRays and provided these specialists "legal
advice . . . without a law license by reviewing their contracts with [PetRays] and
providing legal interpretations and advice related to said contracts and the legal effect of
said contracts. The conduct by [Dr.] Wright was independently wrongful because,
among other things, [Dr.] Wright was engaging in the unlawful and unlicensed practice
of law in the state of California in violation of California law and the California Bar
Rules of Professional Conduct. Additionally, the conduct by defendants was
independently wrongful because, among other things [Dr.] Wright suggested that these
specialists steal clients from PetRays" and take them to DVM.
PetRays alleged that after Dr. Wright spoke with Drs. Mellema and Ziegler and
"provided them legal advice with regard to their contracts" with PetRays, each doctor
11
terminated her agreement with PetRays so each "would be free to treat former and/or
current clients of PetRays on behalf" of DVM.
PetRays in its operative complaint alleged on information and belief that
defendants used foreign-based veterinarians with no United States veterinary licenses to
provide radiology services in California, among other states, which practice was
"unlawful and unfair" inasmuch as it allowed defendants to compete unfairly in the
veterinary radiology marketplace by artificially lowering defendants' expenses and by
allowing defendants to read radiology reports 24-hours a day, which in turn harmed
PetRays because it hired only properly-licensed veterinarians and, as such, its costs and
expenses rose in order to compete with defendants.
F. Summary Judgment
Defendants moved for summary judgment or, in the alternative, summary
adjudication. The court granted the motion for summary judgment, ruling as follows:
"Plaintiff and defendants both provide teleradiology services to veterinarians. [¶]
In the 1st cause of action for Intentional Interference with Prospective Economic
Advantage plaintiff alleges Sight Hound, DVM Insight and Dr. Wright knew of plaintiff's
existing agreements with plaintiff's now former veterinarian radiologists, Drs. Mellema
and Ziegler. Dr. Wright, with the approval of DVM and Sight Hound, induced them to
terminate their business relationships with plaintiff by engaging in the unlawful practice
of law by providing legal advice to Drs. Mellema, [Ziegler] and other veterinary
radiologists regarding the legal meanings and effects of their contracts with plaintiff.
12
"Plaintiff also claims that Wright engaged in the unlawful practice of law as part
of its 2nd cause of action for unfair business practices.
"B&P § 6125 provides that 'No person shall practice law in California unless the
person is an active member of the State Bar.' It is well settled in California that
'practicing law' means more than just appearing in court; it includes legal advice and
counsel and the preparation of legal instruments and contracts by which legal rights are
secured although such matter may or may not be pending in a court. (Estate of Condon
(1998) 65 Cal.App.4th 1138, 1142[.])
"Here, there is direct evidence that Wright did not provide legal advice. Neither
Dr. Zeigler nor Dr. Mellema considered the communications with Wright to be legal
advice. Dr. Wright did opine that Dr. Mellema's noncompete agreement would not hold
up but also advised she should speak to an attorney about it to be 100% certain. (Wright
Declaration; Defendants' Exs. J, K; Plaintiff's Exs. 1, 9[.]) That statement is insufficient
to create a triable issue whether Dr. Wright was engaging in the unauthorized practice of
law.
"Claims based on Wright's alleged practice of law fail because there is no evidence
presented to create a triable issue that he was practicing law when he communicated with
Drs. Mellema and Ziegler about noncompete agreements, such as the one in plaintiff's
contracts. Without an underlying wrong, the cause of action for intentional interference
with prospective economic relations fails. (Della Penna v. Toyota Motor Sales, U.S.A.,
13
Inc. (1995) 11 Cal.4th 376, 392-393[.]) Further, to the extent the unfair business
practices claim is premised on Dr. Wright's alleged practice of law, it too fails.
"In the 2nd cause of action for unfair business practices, 3rd cause of action for
false advertising and 4th cause of action for trade libel, plaintiff alleges that defendants
stated on the internet that any radiologist that enters into a contract with plaintiff will be
unemployable in the marketplace because plaintiff requires its veterinary radiologists to
sign a 2 year noncompete agreement. Defendants allegedly marketed their veterinary
teleradiology consulting services to the public in a video and two articles posted on the
internet which contain untrue statements and disparage the quality of plaintiff's services.
"There is no dispute that neither the video nor the two articles refer specifically to
plaintiff by name. The statement on which the claim is based must specifically refer to or
be 'of and concerning' the plaintiff in some way. (Blatty v. New York Times Co. (1986)
42 Cal.3d 1033, 1042[.]) The 'of and concerning' or specific reference requirement limits
the right of action only to those that are the direct object of criticism and not those who
merely complain of nonspecific statements they believe caused them some hurt. The
implication must be clear. (Id. 1044[.])
"In the video, defendants are contrasted against the 'Big Guys' who operate like
sweatshops, provide 'wishy-washy reports' and are like factories. The 'Big Boys'
advertise and attend trade shows. The 'Commodity' article criticizes commoditized
radiology services and concludes with a footnote listing those entities that are not
commoditized. Plaintiff is not listed. The 'Non-Compete' article warns against signing a
14
noncompete agreement. Wright opines that a radiologist who agrees to such terms of
employment is at a serious disadvantage for a period of two years after they terminate
employment with the owner. (Defendants' Exs. A-C[.])
"Plaintiff maintains anyone with knowledge of the veterinary teleradiology
industry understood the video and articles to refer to plaintiff. Plaintiff acknowledges
there are at least three 'Big Boys' in the industry. Evidence is presented that some
wondered if . . . the publications were about plaintiff and vague references to unidentified
persons in the industry who understood them to be about plaintiff or referred to several
companies, including plaintiff. (Powell Declaration; Wallack Declaration; Defendants'
Ex. M; Plaintiff's Ex. 4[.]) The evidence shows only that the publications might be about
plaintiff and other companies, which is insufficient to create a triable issue.
"Moreover, both the unfair business practices claim and false advertising claim
require plaintiff to show it suffered injury in fact and lost money as a result of the unfair
competition or false advertising. (B&P §§ 17204, 17535[.]) Restitution is limited to the
return of money or property that was once in the possession of plaintiff. (Korea Supply
Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1149[.])
"Although plaintiff claims it lost customers and revenue as a result of the
defendants' conduct, it has not produced sufficient evidence to create a triable issue. The
court notes that in a deposition on October 10, 2011, Dr. Powell, plaintiff's Person Most
Knowledgeable, testified that he did not know anyone that stopped doing business with
plaintiff because of the video or anything Dr. Wright said. He had not done any
15
investigation to determine if plaintiff had lost customers and had no documents to show
any customers stopped dealing with plaintiff because of anything said by defendants.
The video did not affect recruitment. He did not know the names of anyone who
understood the articles to refer to plaintiff. In fact, he had no idea how many clients were
lost in the last year and had done no analysis of financial harm. He did know that a few
customers were lost but had no idea if it was because of anything Dr. Wright did while at
the same time acknowledging that some were lost for other unrelated reasons. He also
testified a lot of clients left DVM to join plaintiff and that plaintiff's 2010 revenue was up
compared to the previous year and continues to grow. This is contrasted with his
declaration in which he states plaintiff lost revenue of $1 million. This is based on a
spreadsheet showing seven companies who no longer use plaintiff's services, along with
their estimated volume, estimated monthly payments and the date lost. This spreadsheet
evidence is speculative in that it suggests only an expectant interest rather than a
possessory interest to support a restitutionary interest. (Defendants' Ex[s]. G, M;
Plaintiff's Ex. 5 at Ex. B[.]) Further, there is no showing that these customers were lost
as a result of defendants' conduct.
"In addition, a cause of action for trade libel requires plaintiff to prove special
damages, such as loss of prospective contracts with its customers. It is not enough to
show a general decline in business from the falsehood even when no other cause is
apparent. Plaintiff must identify the particular purchasers who have refrained from
16
dealing with it and specify the transactions of which it claims to have been deprived.
(Erlich v. Etner (1964) 224 Cal.App.2d 69, 73-74[.])
"Plaintiff has not shown that any statements made in the video or articles were
false or produced sufficient evidence that it suffered special damages as a result to
support the claim for trade libel.
"Inasmuch as the unfair business practices is also based on allegations that
defendants use[] a foreign veterinary radiologist, provides veterinary services while
partially owned by a non-veterinarian and/or uses a trademark without permission,
plaintiff has not shown any damages as a result of these allegedly unlawful activities.
"For all these reasons, the claims for unlawful business practices, false advertising
and trade libel fail.
"Lastly there is no triable issue as to the personal liability of defendants Dr.
Wright or Walters. Defendants acting in their representative capacities as managing
agents of defendants corporations are not always immune from liability. Where
plaintiff's action is for an intentional tort, all person[s] who are shown to have
participated are liable for the full amount of damages. (Golden v. Anderson (1967) 256
Cal.App.2d 714, 719-720[.]) Defendants pled the affirmative defense of privilege in their
answer so this defense was not waived. Further, there are no intentional torts remaining.
Lastly, although plaintiff argues there is a triable issue whether they were alter egos of
the defendant corporations, no evidence has been presented to support an alter ego
theory.
17
"This ruling disposes of the case in its entirety.
"IT IS SO ORDERED."
DISCUSSION
A. Guiding Principles
Summary judgment is granted when a moving party establishes the right to entry
of judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) "The purpose of the
law of summary judgment is to provide courts with a mechanism to cut through the
parties' pleadings in order to determine whether, despite their allegations, trial is in fact
necessary to resolve their dispute. [Citation.]" (Aguilar v. Atlantic Richfield Co. (2001)
25 Cal.4th 826, 843.)
A defendant moving for summary judgment bears the initial burden of proving
that there is no merit to a cause of action by showing that one or more elements of the
cause of action cannot be established or that there is a complete defense to that cause of
action. (Code Civ. Proc., § 437c, subd. (o)(1), (2); see also Aguilar v. Atlantic Richfield
Co., supra, 25 Cal.4th at p. 850.) If the defendant makes such a showing, the burden
shifts to the plaintiff to demonstrate the existence of a triable issue of one or more
material facts as to that cause of action or as to a defense to the cause of action. (Aguilar
v. Atlantic Richfield Co, supra, at pp. 850-851.) If the plaintiff does not make such a
showing, summary judgment in favor of the defendant is appropriate. In order to obtain a
summary judgment, "all that the defendant need do is to show that the plaintiff cannot
establish at least one element of the cause of action . . . ." (Id. at p. 853.)
18
On appeal from the entry of summary judgment, "[w]e review the record and the
determination of the trial court de novo." (Kahn v. East Side Union High School Dist.
(2003) 31 Cal.4th 990, 1003.) "While we must liberally construe plaintiff's showing and
resolve any doubts about the propriety of a summary judgment in plaintiff's favor,
plaintiff's evidence remains subject to careful scrutiny. [Citation.] We can find a triable
issue of material fact 'if, and only if, the evidence would allow a reasonable trier of fact to
find the underlying fact in favor of the party opposing the motion in accordance with the
applicable standard of proof.' [Citation.]" (King v. United Parcel Service, Inc. (2007)
152 Cal.App.4th 426, 433; see Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 163
["responsive evidence that gives rise to no more than mere speculation cannot be
regarded as substantial, and is insufficient to establish a triable issue of material fact"].)
B. Intentional Interference with Prospective Economic Advantage
1. Governing Law
To prevail on a claim of intentional interference with prospective economic
advantage (interference claim), a plaintiff must show: "'"(1) an economic relationship
between the plaintiff and some third party, with the probability of future economic
benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional
acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption
of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts
of the defendant." [Citations.]' [Citation.]" (Korea Supply Co. v. Lockheed Martin Corp.
(2003) 29 Cal.4th 1134, 1153.)
19
Particularly relevant to the case at bar, in the third element of this tort a plaintiff
must show the defendant engaged in an independently wrongful act beyond the act of the
interference itself. (Korea Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th at pp.
1153, 1165.) "[A]n act is independently wrongful if it is unlawful, that is, if it is
proscribed by some constitutional, statutory, regulatory, common law, or other
determinable legal standard." (Id. at p. 1159; see also Della Penna v. Toyota Motor
Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393.)
Here, PetRays contends it presented sufficient evidence of an independent
wrongful act by Dr. Wright (ostensibly on behalf of all defendants)—his alleged
unauthorized practice of law in violation of Business and Professions Code section 6125.
This statute provides: "No person shall practice law in California unless the person is an
active member of the State Bar." According to PetRays, Dr. Wright engaged in the
unauthorized practice of law when he communicated with Drs. Mellema and Ziegler
about the noncompete provision in their contracts with PetRays.
The term "'practice law'" is not statutorily defined (Birbrower, Montalbano,
Condon & Frank v. Superior Court (1998) 17 Cal.4th 119, 127-128), and our Supreme
Court has "conceded" that "ascertaining whether a particular activity falls within this
general definition may be a formidable endeavor" (Baron v. City of Los Angeles (1970) 2
Cal.3d 535, 543). The practice of law encompasses activities such as rendering a legal
opinion to a client, recommending how a client should proceed, counseling a client
regarding his or her legal rights or acting as his or her representative, whether or not a
20
matter is pending before a court. (State Bar of California v. Superior Court (1929) 207
Cal. 323, 335; Benninghoff v. Superior Court (2006) 136 Cal.App.4th 61, 68.) "In close
cases, the courts have determined that the resolution of legal questions for another by
advice and action is practicing law 'if difficult or doubtful legal questions are involved
which, to safeguard the public, reasonably demand the application of a trained legal
mind.' [Citations.]" (Baron v. City of Los Angeles, supra, at p. 543.)
2. Analysis
Initially, we reject PetRays's contention (bordering on the frivolous) that the court
erred when it overruled PetRays's objections to the testimony in the declarations of Drs.
Mellema and Ziegler that they did not believe Dr. Wright was providing them legal
advice when they communicated with him about their noncompete agreements with
PetRays because such testimony allegedly lacked foundation and constituted improper
expert testimony. Whether (or not) they believed they were seeking legal advice from
Dr. Wright and whether (or not) they believed he was providing such advice is clearly
germane to the issue of whether Dr. Wright was engaging in the unauthorized practice of
law when he communicated with them regarding their noncompete agreements with
PetRays. (See, e.g., Johnston v. Benton (1925) 73 Cal.App. 565, 569 ["Whenever the
question of the intention of a person is at issue, it may be proved by the direct testimony
of such person"]; Cope v. Davison (1947) 30 Cal.2d 193, 200 ["The state of mind of a
person, like the state or condition of the body, is a fact to be proved like any other fact
when it is relevant to an issue in the case, and the person himself may testify directly
21
thereto"]; see also Barragan v. Lopez (2007) 156 Cal.App.4th 997, 1003 [a court's
evidentiary rulings are reviewed for abuse of discretion].)
Turning to the merits and the testimony provided by Dr. Ziegler, the evidence is
undisputed that she was confused and concerned by the noncompete provision in the
noncompete agreement she signed with PetRays. As such, Dr. Ziegler reached out to
many people with experience in business and contracts, and all of them cautioned her
about entering into a contract with such a restrictive noncompete provision.
In addition, the evidence is undisputed that Dr. Zeigler also reached out to Dr.
Wright—and not vice versa—regarding her concerns over the noncompete provision. Dr.
Wright advised her to speak to Dr. Mellema, which in fact Dr. Ziegler did when she
learned that Dr. Bahr from PetRays had called and told Dr. Mellema she could not read a
case for DVM because it involved a former client of PetRays. Because Dr. Zeigler had
contracts with other radiology companies that either did not include an anti-competition
provision or included a provision that was less onerous than the one in the PetRays
noncompete agreement, the undisputed evidence shows Dr. Zeigler decided it was in her
best interest to end her relationship with PetRays before she read a single case for the
company.
Dr. Zeigler also testified under penalty of perjury that she did not rely on anything
Dr. Wright "said to be dispositive of whether the non-competition provision in the
[noncompete] [a]greement was enforceable"; that she did not provide Dr. Wright with a
copy of the PetRays noncompetition agreement before she discussed her concerns about
22
the noncompete provision with him; that "Dr. Wright did not induce [her], either directly
or indirectly, to terminate [her] employment with PetRays"; and that the decision to leave
PetRays "was [hers] alone."
In light of this undisputed evidence, we conclude AII, DVM and Dr. Wright
satisfied their burden of persuasion to show there was no triable issue of material fact
with respect to the third element of PetRays's interference claim. (See Aguilar v. Atlantic
Richfield Co., supra, 25 Cal.4th at p. 850.) As such, the burden then shifted to PetRays to
establish by competent and admissible evidence that a triable issue of material fact still
remains in connection with this issue. (Id. at pp. 850-851.)
In an attempt to satisfy this burden with respect to Dr. Zeigler, PetRays proffered
evidence to show that Dr. Wright knew of the existence of the agreement between Dr.
Ziegler and PetRays and that he discussed the noncompete provision with her, which it
contends is sufficient evidence for the issue of whether he engaged in the unauthorized
practice of law to go to the jury. We disagree.
First, mere knowledge of, and even some discussion (albeit in "very general
terms") concerning, the existence of the noncompete agreement and/or the noncompete
provision between Dr. Ziegler and PetRays in no way supports a finding Dr. Wright was
engaged in the unauthorized practice of law. "An issue of fact can only be created by a
conflict of evidence. It is not created by 'speculation, conjecture, imagination or guess
work.' [Citation.] Further, an issue of fact is not raised by 'cryptic, broadly phrased, and
23
conclusory assertions' [citation], or mere possibilities [citation]." (Sinai Memorial
Chapel v. Dudler (1991) 231 Cal.App.3d 190, 196-197.)
Second, even construing the evidence favorably to PetRays (see Branco v. Kearny
Moto Park, Inc. (1995) 37 Cal.App.4th 184, 189), we conclude it is insufficient to allow
the issue of whether Dr. Wright was engaged in the unauthorized practice of law to go to
the jury. For example, there is no evidence that Dr. Ziegler was a "client" of Dr.
Wright's; that she sought a legal opinion from Dr. Wright regarding the validity of the
noncompete provision; that he held himself out as a person with whom Dr. Ziegler could
confide and trust to provide her with a legal opinion concerning the validity of the
noncompete provision; or that he advised Dr. Ziegler regarding the validity of this or any
other provision in the noncompete agreement and/or her legal rights in connection with
that agreement. (See Baron v. City of Los Angeles, supra, 2 Cal.3d at pp. 542-543.)
Thus, on this record we conclude PetRays has failed to proffer sufficient
admissible evidence to establish a triable issue of fact showing that Dr. Wright engaged
in the unauthorized practice of law in violation of Business and Professions Code section
6125.
Turning next to Dr. Mellema, she testified under penalty of perjury that she left the
employ of PetRays because she was unable to read cases for other radiology companies
as a result of the noncompete provision and that she realized there could be "hundreds of
clinics that previously were PetRays[] clients about which [she] had no knowledge but
which could create a potential problem under the Agreement if [she] read for those
24
clinics." Dr. Mellema also testified that she did her own Internet research regarding the
enforceability of the noncompete provision; that her sister-in-law, who was an attorney,
was going to look into the issue of enforceability for her; that Dr. Wright neither provided
her with legal advice nor did she rely on anything he said to be "dispositive of whether
the non-competition provision in the Agreement was enforceable"; and that she alone
decided to terminate her employment relationship with PetRays and her decision to do so
was based on her conversation with Dr. Bahr.
From the foregoing evidence, we also conclude AII, DVM and Dr. Wright
satisfied their threshold burden to show there was no triable issue of material fact that Dr.
Wright was engaged in the unauthorized practice of law by allegedly advising Dr.
Mellema regarding the enforceability, or lack thereof, of the noncompete provision. (See
Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.)
In an attempt to satisfy its burden to establish an issue of material fact (see Code
Civ. Proc., § 437c, subd. (p)(1)), PetRays relies on some email exchanges between Drs.
Mellema and Wright. In his email, Dr. Wright noted he was "sorry . . . about the PetRays
stuff"—ostensibly a reference to Dr. Mellema's conversation with Dr. Bahr—and noted
he was not sure what he could do to help Dr. Mellema but to let him know if she believed
otherwise. Dr. Wright also asked Dr. Mellema about her "comfort level" in reading cases
for former clients of PetRays and, in this context, stated his view that the noncompete
provision in the PetRays agreement would "not hold up" but that Dr. Mellema should
seek the advice of an attorney to be "100% certain" on this issue.
25
The record shows Dr. Mellema responded by email that she "most likely" would
"end up reading cases that [involved] former PetRays['s] clients" because, in her view,
PetRays allegedly would have to show she caused them "fiscal damage" to enforce the
noncompete provision. Dr. Wright stated in response, "[l]et me know what you find,"
and agreed with Dr. Mellema that it would be "tough" for PetRays to show Dr. Mellema
caused it damage inasmuch as she only worked for the company "a few days a week and
these companies left PetRays and you had less than nothing to do with it." Dr. Wright
also indicated he had written an article about "noncompete deals" for radiologists.
Liberally construing such evidence in the light most favorable to PetRays (see
Howard v. Omni Hotels Management Corp. (2012) 203 Cal.App.4th 403, 420), we
nonetheless conclude these statements by Dr. Wright fall well short of establishing a
triable issue of fact that he engaged in the unauthorized practice of law in connection
with the enforceability of the noncompete provision in PetRays's noncompete agreement.
(See Baron v. City of Los Angeles, supra, 2 Cal.3d at pp. 542-543.) Instead, these
statements show that Dr. Wright was interested as a business owner and competitor of
PetRays in determining whether Dr. Mellema was willing to continue reading cases for
DVM even after Dr. Bahr had told Dr. Mellema that she could not read a case for DVM
because the clinic was a former client of PetRays. They also show that Dr. Mellema was
seeking legal advice not from Dr. Wright but instead from her sister-in-law, after Dr.
Mellema had done her own research on the Internet regarding the enforceability of
covenants not to compete in Texas and in California.
26
The fact Dr. Wright said it would be "tough" for PetRays to show damages does
not establish a triable issue of fact he was engaged in the unauthorized practice of law.
When considered in context, Dr. Wright's statement was in response to Dr. Mellema's
view as a layperson—based on her own Internet research—that the noncompete provision
was unenforceable absent a showing of "fiscal damage" (whatever that term means). Dr.
Wright was thus merely agreeing with Dr. Mellema as opposed to providing her with
legal advice and otherwise engaging in the practice of law. This conclusion is buttressed
by the fact in this same email he also asked Dr. Mellema to let him know what she finds
after her sister-in-law, an attorney, looked into the issue, which further shows Dr. Wright
was not giving Dr. Mellema legal advice.
Finally, the noncompete article Dr. Wright mentioned in his email also does not
establish a triable issue of fact on this issue. Our independent review of this article shows
it was not written to provide radiologists general legal advice regarding the
enforceability, or lack thereof, of covenants not to compete. Indeed, the noncompete
article expressly states that it is not providing any advice regarding whether such
covenants will "hold up in court."
Rather, the noncompete article is written from the prospective of a business owner
engaged in the teleradiology business, as demonstrated by the article's discussion
regarding the reason or reasons a company might not hire a teleradiologist who
previously had signed a contract that included a covenant not to compete. We thus
independently conclude PetRays did not create a triable issue of fact with respect to the
27
third element of its cause of action for interference with prospective economic advantage
and, therefore, summary judgment was properly granted as to this cause of action.
C. Trade Libel (and False Advertising)
1. Governing Law and Additional Background
Trade libel is the publication of matter disparaging the quality of another's
property that results in pecuniary loss to the plaintiff. (Leonardini v. Shell Oil Co. (1989)
216 Cal.App.3d 547, 572.) To constitute trade libel, a statement must be false. (Ibid.;
see also Polygram Records, Inc. v. Superior Court (1985) 170 Cal.App.3d 543, 548.)
Because the gravamen of a trade libel claim is the allegation that the defendant
made false statements of fact that injured the plaintiff's business, the "limitations that
define the First Amendment's zone of protection" apply. (Blatty v. New York Times Co.
(1986) 42 Cal.3d 1033, 1042, cert. den. (1988) 485 U.S. 934.) A claim based on an
injurious false statement such as trade libel "must specifically refer to, or be 'of and
concerning,' the plaintiff in some way." (Ibid.)
"The 'of and concerning' or specific reference requirement limits the right of action
for injurious falsehood, granting it to those who are the direct object of criticism and
denying it to those who merely complain of nonspecific statements that they believe
cause them some hurt. To allow a plaintiff who is not identified, either expressly or by
clear implication, to institute such an action poses an unjustifiable threat to society. For
example, as a federal court has cautioned, the absence of the 'of and concerning'
requirement 'could invite any number of vexatious lawsuits and seriously interfere with
28
public discussion of issues, or groups, which are in the public eye. Statements about a
religious, ethnic, or political group could invite thousands of lawsuits from disgruntled
members of these groups claiming that the portrayal was inaccurate and thus libelous.
Such suits would be especially damaging to the media, and could result in the public
receiving less information about topics of general concern.' [Citation.]" (Blatty v. New
York Times Co., supra, 42 Cal.3d at p. 1044.)
Here, the parties agree the DVM video and the commodity and noncompete
articles do not expressly mention PetRays by name. However, the parties disagree on
whether the DVM video and/or the two articles specifically refer to, and thus are "of and
concerning," PetRays by "clear implication." (See Blatty v. New York Times Co., supra,
42 Cal.3d at p. 1044.)1
We conclude defendants proffered sufficient evidence to satisfy their initial burden
of persuasion that there is no merit to this cause of action because of the publications'
lack of a specific reference to PetRays and, thus, the burden then shifted to PetRays to
1 We note from the record that defendants in connection with trade libel did not
contend in their motion for summary judgment/adjudication that the statements published
in the DVM video were merely nonactionable expressions of opinion as opposed to
allegations of fact. (See, e.g., Copp v. Paxton (1996) 45 Cal.App.4th 829, 837-838
[noting the "issue whether a communication was a statement of fact or opinion 'is a
question of law to be decided by the court'" and noting that in "making the distinction, the
courts have regarded as opinion any 'broad, unfocused and wholly subjective comment,'
[citation] such as that the plaintiff was a 'shady practitioner' [citation] 'crook' [citation], or
'crooked politician' [citation]"]; see also Ferlauto v. Hamsher (1999) 74 Cal.App.4th
1394, 1404 [noting phrases about plaintiff such as "'creepazoid attorney' and 'loser
wannabe lawyer' are classic rhetorical hyperbole which 'cannot "reasonably [be]
interpreted as stating actual facts."' [Citation.]"].)
29
produce admissible evidence and demonstrate the existence of a triable issue on this
issue. (See Aguilar v. Atlantic Richfield Co, supra, 25 Cal.4th at pp. 850-851.)
PetRays contends the court erred when it found the DVM video and/or the two
articles did not identify it by "clear implication" because the "veterinary teleradiology
industry is highly specialized and includes so few large companies that any reasonable
observer with knowledge of veterinary teleradiology would understand that they refer to
PetRays." In support of this contention, PetRays proffered the testimony of Frank Powell
(Dr. Powell), a principal and manager of PetRays, and Seth Wallack (Dr. Wallack), a
licensed veterinary radiologist who, along with Dr. Wright, founded DVM in 2006.
Dr. Powell testified in 2010 he viewed the DVM video and read the noncompete
and commodity articles and understood these publications were referring to PetRays. Dr.
Powell further generally testified that through his "conversations with veterinary
radiologists" who saw these same publications, he became "aware that others in the
industry" also understood these publications to refer to PetRays. Dr. Powell, however,
identified only one such veterinary radiologist, Dr. Wallack, that Powell states saw the
DVM video and read the noncompete article and believed they (but not the commodity
article) referred to PetRays.
Dr. Wallack testified he founded DVM with Dr. Wright in 2006 and sold his
interest in DVM to Dr. Wright and Walters in 2009. Dr. Wallack testified he saw the
DVM video in 2010 and understood it "to be referring to several teleradiology
companies, one of which is PetRays, which was at that time, and remains, one of the
30
biggest companies in the industry." Dr. Wallack did not testify that he read the
noncompete article and understood that article also was referring to PetRays by
implication.
2. Analysis
Initially, we reject PetRays's contention that the trial court abused its discretion
when it granted summary judgment because the "only proof of a material fact" (see Code
Civ. Proc., § 437c, subd. (e)) allegedly offered by defendants that the DVM video and/or
the two articles did not refer to PetRays allegedly was Dr. Wright's "state of mind, or lack
thereof, and that fact is sought to be established solely by [his] affirmation thereof" (see
ibid.). This contention ignores the fact that the DVM video and the two articles
themselves do not mention PetRays. In any event, as discussed post, whether Dr. Wright
intended or did not intend to refer to PetRays in these publications is largely irrelevant.
Even construing the evidence liberally in favor of PetRays, we conclude it is
insufficient to create a triable issue of fact in connection with the specific reference
requirement for trade libel. As the principal and manager of PetRays, we independently
conclude Dr. Powell's own subjective belief that the DVM video and/or the two articles
referred by "clear implication" to PetRays is of limited significance on the issue of
whether the audience to whom these publications were directed—veterinarians and
veterinary radiologists—objectively understood one or more of these publications
referred to PetRays. (See Blatty v. New York Times Co., supra, 42 Cal.3d at p. 1046
[noting the specific reference requirement is based on whether it was "reasonably
31
understood" by readers that the alleged injurious falsehood—failing to include plaintiff's
novel on the best-seller list—referred to plaintiff]); see also Yow v. National Enquirer,
Inc. (E.D.Cal. 2008) 550 F.Supp.2d 1179, 1190 [denying motion to dismiss because it
could not "be determined as a matter of law that a reasonable reader giving the ordinary
meaning to the words of the article[] would not clearly identify Plaintiff" as one of the
women who used cocaine with a celebrity in the back of a bar and then took that celebrity
to her home (italics added)]; Barger v. Playboy Enterprises, Inc. (N.D.Cal. 1993) 564
F.Supp. 1151, 1153 [noting the injurious statement must be "reasonably susceptible of
special application to a given individual"].)
Regarding Dr. Powell's testimony that he had conversations with veterinary
radiologists who allegedly also viewed the DVM video and/or the articles and, based on
those conversations, allegedly told him they too understood the video and/or articles
referred to PetRays, we conclude that, even if admissible,2 this evidence also is
insufficient to establish a triable issue of material fact on the First Amendment specific
reference requirement. Other than Dr. Wallack, Dr. Powell in his declaration does not
identify by name any of the veterinary radiologists he communicated with; the number of
2 The record shows defendants objected to this portion of Dr. Powell's testimony on
several grounds including hearsay and lack of foundation. The hearsay objection appears
well taken. However, the court overruled these objections as well as all others raised by
defendants because the objections were not in the format set forth in California Rules of
Court, rule 3.1354(b) for written objections. (Cf. Guthrey v. State of California (1998)
63 Cal.App.4th 1108, 1119-1120 [noting that a "motion for summary judgment must be
decided on admissible evidence" and noting that "'[m]atters which would be excluded
under the rules of evidence if proffered by a witness in a trial as hearsay, conclusions or
impermissible opinions, must be disregarded in supporting affidavits'"].)
32
such individuals he allegedly spoke to; when those communications took place; the
context of those communications; and perhaps most importantly, the basis of the alleged
collective understanding of such individuals (i.e., veterinary radiologists) with whom he
communicated that the alleged injurious statements in the DVM video and/or articles
referenced PetRays by "clear implication." (See Blatty v. New York Times Co., supra, 42
Cal.3d at p. 1044.)
Turning to Dr. Wallack's testimony, we conclude it too is insufficient to create a
triable issue of fact on the specific reference requirement. As noted ante, Dr. Wallack
testified he saw the DVM video (but neither article) in 2010 and understood it referred to
"several teleradiology companies," including PetRays. Dr. Wallack did not testify that he
understood any of the alleged injurious statements in the video specifically referred to
PetRays, as opposed to the "several" other teleradiology companies he generally
referenced.
In any event, the record shows that Dr. Wallack was a business partner of Dr.
Wright beginning in 2006 and ending in December 2009 and that Dr. Wallack's own
company continued to own and use the same trademark DVM was using in DVM's
business dealings with clients. Looking at Dr. Wallack's testimony in context (see Isuzu
Motors Ltd. v. Consumers Union of United States, Inc. (C.D.Cal. 1998) 12 F.Supp.2d
1035, 1045), we conclude the testimony he understood the DVM video referred to
PetRays is insufficient to create a triable issue of fact on the overarching issue of whether
the audience to whom these publications were directed—veterinarians and veterinary
33
radiologists—reasonably understood the alleged injurious statements in this publication
referred to PetRays. (See Blatty v. New York Times Company, supra, 42 Cal.3d at p.
1046.)
Focusing on the publications themselves, based on our independent review, we
conclude they also do not create a triable issue of fact on the First Amendment specific
reference requirement. Assuming for present purposes the commodity article involves
allegations of fact as opposed to nonprovable expressions of opinion (see Copp v. Paxton,
supra, 45 Cal.App.4th at p. 837), we conclude the fact that PetRays was not included in a
list of companies identified in the article that allegedly do not provide "commodity
teleradiology services" does not mean the commodity article was "of or concerning"
PetRays, particularly given the fact the article also says "[t]here are many other"
teleradiology companies not appearing on the list that are not commoditized. (See Blatty
v. New York Times Co., supra, 42 Cal.3d at p. 1044 [the specific reference requirement
"limits the right of action for injurious falsehood" by denying relief to "those who merely
complain of nonspecific statements that they believe cause them some hurt" (italics
added)].)
Similarly, the noncompete article is not "of or concerning" PetRays as the article
merely contains the opinions of Dr. Wright, its author and then business owner, regarding
covenants not to compete and why in his opinion such clauses are not a good thing.
Finally, the DVM video—assuming it contains factual statements that can be
proven to be true or false as opposed to nonactionable expressions of opinion—also is
34
insufficient to create a triable issue of fact on the specific reference requirement. Our
review of the video shows it contrasts the services DVM offered (through its dba Sight
Hound) with those of its competitors. In making this comparison, the video refers to its
competitors in a variety of ways, including: companies that "advertise"; companies that
attend "shows"; companies that send unsolicited facsimile transmissions to an inbox;
"many of the other guys"; merely the "other guys"; and finally, at the very end, the "Big
Boys." Thus, although PetRays claims it was one of the "Big Boys" referenced in the
video, it is clear the video was not so limited and instead identifies many other
companies—regardless of whether they are (or are not) "Big Boys" in the industry—as
competitors who, according to the video, operate teleradiology businesses less favorably
than DVM.3
Because the focus of the DVM video is not just limited to a few teleradiology
companies but instead potentially includes a vast number of companies operating such
businesses, and because of the constitutional limitations placed on injurious falsehood
3 We will assume for purposes of argument only that at all times relevant PetRays
was in fact one of the "Big Boys" in the described industry. We note the evidence
proffered by PetRays on this issue is less than persuasive, including, by way of example
only, its contention that Dr. Wright admitted that the group of "Big Boys" in the industry
numbered only six or seven members. In reviewing the record cite given by PetRays to
support this alleged admission, we note it is to the first page of Dr. Wright's deposition
testimony that he gave on October 7, 2011, as opposed to the exact page where Dr.
Wright allegedly testified to this fact, and we further note Dr. Wright was deposed on
additional days thereafter. We reviewed in the record multiple pages of Dr. Wright's
deposition transcript given over the course of days but could not find support for his
alleged admission. (See Cal. Rules of Court, rule 8.204(a)(1)(C) [a brief must "[s]upport
any reference to a matter in the record by a citation to the volume and page number of the
record where the matter appears"].)
35
claims that "broadly protect free-expression and free-press values" (see Blatty v. New
York Times Co., supra, 42 Cal.3d at p. 1043), when considering in context the alleged
injurious falsehoods published in the video, we conclude the DVM video is insufficient to
raise a triable issue on the specific reference requirement. We thus independently
conclude the grant of summary judgment on this claim was proper.
Moreover, given that PetRays's false advertising cause of action was premised
solely on the DVM video and the two articles, as established by the operative complaint,
and given our conclusion these publications were not "of or concerning" PetRays, we
further conclude the grant of summary judgment on this claim was proper. That is, there
is no triable issue of material fact that PetRays's alleged injury-in-fact or loss of money or
property (which we assume for present purposes) "was the result of, i.e., caused by the
. . . false advertising," inasmuch as that advertising did not expressly or impliedly
reference PetRays. (See Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322; see
also Blatty v. New York Times Co., supra, 42 Cal.3d at pp. 1042-1043 [noting that
"[a]lthough the limitations that define the First Amendment's zone of protection for the
press were established in defamation actions, they are not peculiar to such actions but
apply to all claims whose gravamen is the alleged injurious falsehood of a statement:
'[t]hat constitutional protection does not depend on the label given the stated cause of
action' [citation], and no cause of action 'can claim . . . talismanic immunity from
constitutional limitations' (New York Times Co. v. Sullivan [(1964)] 376 U.S. [254,]
269)"].)
36
D. Unlawful/Unfair Competition
California's unfair competition law (UCL) "prohibits, and provides civil remedies
for, unfair competition, which it defines as 'any unlawful, unfair or fraudulent business
act or practice.'" (Kwikset Corp. v. Superior Court, supra, 51 Cal.4th at p. 320, quoting
Bus. & Prof. Code, § 17200.) "Its purpose 'is to protect both consumers and competitors
by promoting fair competition in commercial markets for goods and services.'
[Citation.]" (Kwikset Corp., at p. 320.) A plaintiff has standing to assert a claim under
the UCL if the plaintiff "'"has suffered injury in fact and has lost money or property" as a
result of unfair competition . . . .'" (Id. at pp. 320-321.)
PetRays's operative complaint alleges the following wrongful acts/unlawful
conduct by defendants to support its unlawful competition cause of action brought under
Business and Professions Code section 17200 et seq.: their publication of injurious
statements of fact in the DVM video and/or the two articles; Dr. Wright's unauthorized
practice of law; their interfering with the business relationships of PetRays's radiologists;
their use of a trademark registered to a third party; their operation of a veterinary
corporation with a non-veterinarian owner (i.e., Walters); and finally, their use of
unlicensed foreign-based veterinary radiologists.
In light of our conclusions ante that defendants did not interfere with PetRays's
prospective economic advantage, Dr. Wright did not engage in the unauthorized practice
of law and the publications containing the alleged injurious statements of fact were not
"of or concerning" PetRays, we turn to the remaining allegations of unlawful conduct by
37
defendants. We independently conclude defendants proffered sufficient evidence to
satisfy their initial burden of persuasion that PetRays lacks standing to pursue its
unlawful competition claim. The burden thus shifted to PetRays to produce admissible
evidence and demonstrate the existence of any triable issues on the remaining claims.
(See Aguilar v. Atlantic Richfield Co, supra, 25 Cal.4th at pp. 850-851.)
We conclude there is no triable issue of material fact that PetRays sustained an
injury in fact caused by defendants' use of a trademark owned by a third party. We reach
the same conclusion with respect to the allegation that defendants allegedly operated a
veterinary corporation with a non-veterinarian owner (i.e., Walters).
Finally, with regard to defendants' alleged use of a single foreign-based
radiologist, which PetRays states (through the declaration of Dr. Powell) caused it to lose
"substantial business," we note that PetRays's own operative complaint states that since
2007 it also has been providing veterinary telemedicine consulting services 24 hours a
day, seven days a week.
In any event, we independently conclude the statements by Dr. Powell that
PetRays allegedly lost "substantial business" and was put at a "great disadvantage" by
defendants' alleged use of a single foreign-based radiologist is insufficient to create a
triable issue of fact to show that DVM's alleged unlawful business practice in this
instance caused PetRays's injury in fact, particularly when PetRays also claims it lost
substantial business as a result of the DVM video and/or the two articles. (See Kwikset
Corp. v. Superior Court, supra, 51 Cal.4th at pp. 320-321.) PetRays "cannot avoid
38
summary judgment based on mere speculation and conjecture [citation], but instead must
produce admissible evidence raising a triable issue of fact," which we conclude it has not
done on this issue. (See Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th
1509, 1524.) Therefore, summary judgment was properly granted on PetRays's unlawful
competition claim.4
DISPOSITION
The judgment in favor of defendants DVM, Dr. Wright, AII and Walters is
affirmed. Defendants are awarded their costs of appeal.
BENKE, Acting P. J.
WE CONCUR:
HUFFMAN, J.
McINTYRE, J.
4 In light of our conclusion that summary judgment was properly granted as to all
claims, whether Dr. Wright and/or Walters are individually liable on any one of those
claims- is moot.
39