Entrepreneur Media v. Smith CA3 ( 2024 )

Filed 10/28/24 Entrepreneur Media v. Smith CA3
NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
ENTREPRENEUR MEDIA, INC., C095545
Plaintiff and Respondent, (Super. Ct. No.
34-2021-00295096-CU-PAG-DS)
v.
SCOTT SMITH,
Defendant and Appellant.
Motions to strike strategic lawsuits against public participation (anti-SLAPP)
cover claims based on statements made “in connection with a public issue.” (Code Civ.
Proc.,1 § 425.16, subds. (b)(1), (e).) Plaintiff Entrepreneur Media, Inc. sued defendant
Scott Smith2 for defamation and other claims based on statements defendant made
1 Undesignated section references are to the Code of Civil Procedure.
2 Plaintiff also sued a corporate entity defendant owns. The trial court found the
Secretary of State and the Franchise Tax Board suspended this entity and it is therefore
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regarding plaintiff’s trademark enforcement practices and other business practices.
Defendant filed an anti-SLAPP motion, which the trial court denied. We affirm the trial
court’s denial, concluding defendant failed to establish the statements involved a public
issue. We also affirm the trial court’s order denying defendant’s motion to disqualify
plaintiff’s counsel.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff filed a complaint on February 23, 2021, alleging eight causes of action
including defamation and various forms of interference with economic and contractual
interests. The complaint explained that plaintiff relies on “revenue from its more than
500,000 subscribers to Entrepreneur® magazine worldwide . . . and visitors to its
entrepreneur.com website, which ha[d] recently averaged more than fifteen million
unique users and more than thirty-nine million page views per month.” Plaintiff also
sells advertising space on these platforms. Plaintiff alleged defendant engaged in “a
campaign of harassment, defamation, and tortious interference” to “discredit and malign
[plaintiff] and its upper management” after plaintiff successfully sued defendant for
trademark infringement.
The complaint alleged three different types of statements supporting its causes of
action. The first were social media posts. Plaintiff alleged defendant made more than
300 “posts making negative reference to [plaintiff] and Entrepreneur® magazine.” The
posts had three main themes: (1) Defendant alleged plaintiff “fraudulent[ly]” attacked
entrepreneurs for using the word “entrepreneur” and included the phrase
“precluded from participating in the present litigation unless and until it cures the
default(s) [that] resulted in the suspension of its powers to operate.” (Underscoring
omitted.) Defendant does not present any evidence or argument on appeal that these
defaults have been cured. We thus do not consider this corporate entity as a party to this
appeal. (Tabarrejo v. Superior Court (2014) 232 Cal.App.4th 849, 861 [“a corporation
that has had its powers suspended ‘lacks legal capacity to prosecute or defend a civil
action during its suspension’ ”].)
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“#trademarkbully” in the posts; (2) defendant asserted plaintiff used racist terms, “such as
the N-word”; and (3) plaintiff was in financial trouble because it published fewer issues
in 2020, had “huge legal bills,” and “many print advertisers cancell[ed] ads due to [the]
COVID-19 pandemic.”
The second type of statements were e-mails defendant sent to advertisers “that
made a series of false and damaging statements intended to make [plaintiff’s] advertisers
pull their advertising from Entrepreneur® magazine.” These e-mails included similar
statements as the posts, asserting the magazine was in financial trouble, that plaintiff is
“ ‘a “trademark bully” that continues to spend large amounts of its dwindling fund[s] on
very high-priced attorneys for [its] extortionist legal attacks against small businesses and
entrepreneurs,’ ” and that plaintiff for years subjected defendant to racist attacks. Some
of the e-mails also alleged, “ ‘[I]t appears that [plaintiff] has been ripping off its
subscribers to the tune of millions of dollars (and others such as writers and
advertisers[]),’ ” and that “ ‘[plaintiff] has stolen/misappropriated at least $2.5[ million]
from its subscribers in just the last several years.’ ”
Finally, plaintiff’s complaint alleged defendant sent e-mails to organizers of
events in which plaintiff’s employees participated. These e-mails included similar
accusations that “[plaintiff] has made a ‘fraudulent, monopolistic, abusive and selective
trademark claim on the word “entrepreneur” ’ ” and plaintiff’s employees make and
defend racist comments against defendant. Defendant also asserted in these e-mails that
plaintiff “hacked” into defendant’s financial accounts.
On August 16, 2021, defendant filed an anti-SLAPP motion seeking dismissal of
plaintiff’s entire complaint, alleging plaintiff’s causes of action were “premised on
[defendant’s] constitutionally protected conduct and communications.” The motion
stated it relied on defendant’s declaration, exhibits, and a request for judicial notice but
no such documents were included in the motion. In defendant’s reply, defendant asserted
he does “not necessarily need to proffer any evidence because the burden falls squarely
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on plaintiff,” but attached the previously referred to evidence to the reply. (Boldface &
capitalization omitted.)
On November 3, 2021, the trial court denied defendant’s anti-SLAPP motion. The
trial court did not consider the evidence attached to defendant’s reply because plaintiff
did not have an opportunity to address it. Thus, based on the parties arguments and an
assessment of relevant cases, the trial court first found defendant failed to carry his
“initial burden of demonstrating the conduct giving rise to the causes of action in the
complaint is in fact protected under the anti-SLAPP statute by virtue [of] its connection
with ‘an issue of public interest’ and as a result, th[e] motion must be denied in its
entirety.” (Underscoring omitted.) The trial court then made alternative findings that
plaintiff established the commercial speech exception and plaintiff met its burden of
showing a probability of prevailing on the merits.
Defendant appeals.
DISCUSSION
I
The Trial Court Did Not Err In Denying Defendant’s Anti-SLAPP Motion
The anti-SLAPP statute, section 425.16, protects against “lawsuits brought
primarily to chill the valid exercise of the constitutional rights of freedom of speech and
petition for the redress of grievances.” (§ 425.16, subd. (a).) It accomplishes this by
subjecting to a special motion to strike any causes of action arising from a person’s right
of petition or free speech “in connection with a public issue.” (§ 425.16, subd. (b)(1).)
“When considering a special motion to strike under section 425.16, the court engages in a
two-step process. [Citation.] First, the court considers whether the defendant has
established that the challenged claim for relief arises from an activity protected under
section 425.16, subdivision (e). [Citation.] Second, the court considers whether the
plaintiff has demonstrated the claim has minimal merit. [Citation.] If the defendant
shows that the plaintiff’s claim for relief arises from a protected activity and the plaintiff
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fails to demonstrate minimal merit, the court must strike the claim for relief.”
(Miszkewycz v. County of Placer (2024) 99 Cal.App.5th 67, 73.)
There are four categories of protected activity under section 425.16, subdivision
(e). The two relevant to this appeal are the third and fourth categories: “[A]ny 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 . . . 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).) Both
require the protected activity to be “in connection with an issue of public interest,” which
the statute does not define, “and it is doubtful an all-encompassing definition could be
provided.” (Weinberg v. Feisel (2003) 110 Cal.App.4th 1122, 1132 (Weinberg).)
This appeal wades into what is a public issue under section 425.16. Defendant
contends the statements underlying plaintiff’s complaint concern a public issue because
“[t]he statements were not made to simply air a private dispute but to warn the public
about [plaintiff’s] business practices and its attacks on small businesses and
entrepreneurs.” We disagree.
“We review de novo an order granting or denying an anti-SLAPP motion.
[Citation.] We must first determine whether the defendant has established that the
challenged claim arises from activity protected under section 425.16, meaning that the
activity itself forms the basis for the claim. [Citations.] Courts should analyze ‘each act
or set of acts supplying a basis for relief, of which there may be several in a single
pleaded cause of action—to determine whether the acts are protected.’ ” (Bishop v. The
Bishop’s School (2022) 86 Cal.App.5th 893, 904.)
In analyzing what defines “ ‘an issue of public interest,’ ” another panel of this
court summarized a “few guiding principles . . . derived from decisional authorities.
First, ‘public interest’ does not equate with mere curiosity. [Citations.] Second, a matter
of public interest should be something of concern to a substantial number of people.
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[Citation.] Thus, a matter of concern to the speaker and a relatively small, specific
audience is not a matter of public interest. [Citations.] Third, there should be some
degree of closeness between the challenged statements and the asserted public interest
[citation]; the assertion of a broad and amorphous public interest is not sufficient
[citation]. Fourth, the focus of the speaker’s conduct should be the public interest rather
than a mere effort ‘to gather ammunition for another round of [private] controversy . . . .’
[Citation.] Finally, ‘those charged with defamation cannot, by their own conduct, create
their own defense by making the claimant a public figure.’ [Citation.] A person cannot
turn otherwise private information into a matter of public interest simply by
communicating it to a large number of people.” (Weinberg, supra, 110 Cal.App.4th at
pp. 1132-1133.)
Defendant’s statements underlying plaintiff’s claims can be grouped into five
topics: (1) plaintiff’s trademark enforcement policies, (2) plaintiff’s financial position,
(3) plaintiff’s racism towards defendant, (4) plaintiff’s hacking of defendant’s financial
accounts, and (5) plaintiff’s “ ‘ripping off’ ” subscribers. Defendant has failed to
establish any of these are public issues under the above principles because defendant
failed to provide any evidence his statements relate to a public interest. Though
defendant contends otherwise, the trial court properly did not consider defendant’s
evidence presented with his reply brief. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522,
1537 [“The general rule of motion practice, which applies here, is that new evidence is
not permitted with reply papers”].)
Defendant instead relies on conjecture with assertions like, “The public has an
interest in a company that engages in discrimination and fraud against consumers.” It
may be true the public is generally interested in combatting fraud, but defendant must
show a substantial portion of the public is specifically interested in combating plaintiff’s
discrimination, fraud, or unfair trademark practices. As our Supreme Court has warned,
“[T]he focus of our inquiry must be on ‘the specific nature of the speech,’ rather than on
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any ‘generalities that might be abstracted from it.’ [Citation.] Defendants cannot merely
offer a ‘synecdoche theory’ of public interest, defining their narrow dispute by its slight
reference to the broader public issue.” (FilmOn.com Inc. v. DoubleVerify Inc. (2019)
7 Cal.5th 133, 152.) And defendant posting these statements to a public site alone is
insufficient. (Weinberg, supra, 110 Cal.App.4th at p. 1133.) Thus, defendant’s failure to
provide any evidence of a specific public interest in the dealings of plaintiff is fatal to his
anti-SLAPP motion.
Donovan v. Dan Murphy Foundation (2012) 204 Cal.App.4th 1500 supports this
conclusion. There, a former director of a foundation sued the foundation and its directors
for wrongfully terminating him after disputes about the foundation’s management and
financial position. (Id. at pp. 1502-1504.) The foundation and directors filed an anti-
SLAPP motion asserting removal of the former director “was in connection with a matter
of public interest because (1) the [f]oundation is in the public eye, (2) it is supervised by
the Attorney General, and (3) its assets are held for the benefit of the public.” (Id. at
p. 1504.) The appellate court reversed the trial court’s grant of the motion because the
foundation and other directors “presented no evidence of widespread public interest in the
financial oversight or governance of the [f]oundation. They submitted no news articles
indicating that the public was interested in these issues, or even in the dispute among
directors of the [f]oundation.” (Id. at pp. 1508-1509, italics added; see id. at p. 1511.)
The appellate court also found insufficient the facts the “[f]oundation is one of the largest
charitable organizations in Southern California, subject to public oversight by the
Attorney General, and that it donates a substantial amount of money every year to
persons and entities that affect millions of Southern Californians” because this does not
transform the private disputes between the directors into “a public issue or an issue of
public interest. . . . Were the law otherwise, every act of the governing body of a large
organization would constitute a matter of public interest.” (Id. at p. 1509.)
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This analysis is directly applicable here. Defendant is contending, without
evidence, the public is necessarily interested in his statements about plaintiff’s operations
and practices due to the subject matter and the size of the organization. Defendant
argues, “[Plaintiff] asserted itself into the public eye, and is more than just a ‘family’
business; i.e., over 40 years in business and over 500,000 subscribers worldwide.” But
this is supposition without support. There is no evidence of a public interest in plaintiff’s
trademark enforcement policies, plaintiff’s financial position, plaintiff’s alleged racism
towards defendant, plaintiff’s alleged hack of defendant’s financial accounts, and
plaintiff’s “ ‘ripping off’ ” subscribers. As found in Donovan, defendant must present
evidence of widespread public interest in these issues even for a large organization that
affects many people; defendant did not.
Defendant argues his statements were a public concern because they were
consumer protection information. “Consumer information, . . . when it affects a large
number of persons, also generally is viewed as information concerning a matter of public
interest.” (Wilbanks v. Wolk (2004) 121 Cal.App.4th 883, 898.) But again, defendant
provides no evidence this is the context in which he made those statements. Context
matters in determining whether a statement is made in connection with a public issue. As
our Supreme Court has said: “[A] court must consider the context as well as the content
of a statement in determining whether that statement furthers the exercise of
constitutional speech rights in connection with a matter of public interest.” (FilmOn.com
Inc. v. DoubleVerify Inc., supra, 7 Cal.5th at p. 149.)
Context is also important for consumer protection information as shown by the
case defendant relies on: Carver v. Bonds (2005) 135 Cal.App.4th 328. There, a
podiatrist sued a newspaper and athletes based on statements the athletes made in the
newspaper about the podiatrist’s and other doctors’ work treating athletes. (Id. at
pp. 341-342.) The appellate court found the statements involved a public issue because
they were “ ‘consumer protection information.’ ” (Id. at p. 343.) The court explained,
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“The article warned readers not to rely on doctors’ ostensible experience treating
professional athletes, and told what it described as ‘a cautionary tale’ of [the podiatrist]
exaggerating that experience to market his practice. Since the statements at issue served
as a warning against [the podiatrist’s] method of self-promotion, and were provided along
with other information to assist patients in choosing doctors, the statements involved a
matter of public concern.” (Id. at p. 344.)
Defendant contends Carver “is essentially what had transpired here.” We disagree
because defendant has not presented any evidence the statements underlying plaintiff’s
complaint were made in the context of promoting consumer protection. In Carver, the
newspaper article presented an evaluation of the doctor’s services, alongside information
about other doctors, to aid patients in choosing doctors. (Carver v. Bonds, supra,135 Cal.App.4th at p. 344.) As stated in another case cited by defendant, the key to
consumer protection information being a public issue is when the “statements were a
warning not to use [the] plaintiffs’ services . . . to aid consumers choosing among”
service providers. (Wilbanks v. Wolk, supra, 121 Cal.App.4th at p. 900.) Defendant
provides no evidence this was the purpose of the statements or that his statements could
be used to such an end. Defendant’s statements largely malign plaintiff’s operations such
as trademark policies, financial position, or racist statements towards defendant. These
do not pertain to plaintiff’s magazine or advertising, or the services it provides to
consumers. Thus, without additional evidence, defendant’s statements are unlike the
evaluation of the doctor’s services in Carver.
The statements about plaintiff hacking defendant’s financial accounts or “ ‘ripping
off’ ” subscribers could have been a warning to consumers. But these could have also
been made to individuals to air a private disagreement between plaintiff and defendant.
Defendant does not provide evidence he made these statements to subscribers to warn
them about plaintiff’s services. Defendant does not even explain how these statements
warn consumers, such as the manner in which plaintiff is “ ‘ripping off’ ” subscribers and
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the basis for this position, like the article in Carver. Simply making challenging
statements about a company does not automatically render them consumer protection
information. Otherwise, all negative statements made about a company would
automatically be a public issue and step one of the anti-SLAPP analysis would be
unnecessary in commercial contexts. We find no law supportive of this broad rule and
defendant presents none. (See Consumer Justice Center v. Trimedica Internat., Inc.
(2003) 107 Cal.App.4th 595, 602 [disapproving of finding all commercial false
advertising speech of public interest “absent facts which truly make that product a matter
of genuine public interest”].)
Without necessary contextual evidence, we conclude defendant has not established
his statements in plaintiff’s complaint are in connection with a public issue. Defendant
therefore has failed to establish the first step of the anti-SLAPP analysis and we
consequently affirm the trial court’s order denying his anti-SLAPP motion.3
3 Defendant makes several additional arguments that lack factual and legal support
and are without merit. (In re S.C. (2006) 138 Cal.App.4th 396, 408 [“To demonstrate
error, appellant must present meaningful legal analysis supported by citations to authority
and citations to facts in the record that support the claim of error”].) These include
defendant’s argument the “Communications Decency Act of 1996, 47 U.S.C. 230 protects
his publications.” (Some italics omitted.) This is clearly incorrect as defendant is not
being treated as a publisher “of information provided by another information content
provider,” he is being sued for his own statements. (Dyroff v. Ultimate Software Grp.,
Inc. (9th Cir. 2019) 934 F.3d 1093, 1097-1098.) Or that defendant is immune under Civil
Code section 47, subdivision (b) for making statements in connection with any
legislative, judicial, or other official proceeding authorized by law. Defendant’s
assertions that “his communications were not only for law enforcement officials, but in
court proceedings as well” are unsupported with any evidence he made these statements
to law enforcement officials or during a court proceeding. (See Weinberg, supra,110 Cal.App.4th 1126-1127 [the “defendant did not report his suspicions to law
enforcement, and there is no evidence that he intended to pursue civil charges against
[the] plaintiff”].)
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II
The Trial Court Did Not Err In Denying Defendant’s Disqualification Motion
Defendant also challenges the trial court’s denial of his motion to disqualify the
law firm representing plaintiff. Defendant filed a disqualification motion alleging that he
approached an attorney, Seth Wiener, in June and July 2016 to represent him and his
significant other in a matter against plaintiff and disclosed confidential information in the
process. Defendant provided screenshots of the Web site for the law firm representing
plaintiff and other Web sites that listed Wiener as an attorney of the law firm representing
plaintiff at the time of the present action. In response, the law firm representing plaintiff
provided a declaration stating Wiener left the firm in mid-2019, but the firm
“inadvertently kept . . . Wiener’s name on its website. His name has now been removed.”
Wiener also provided a declaration stating the same thing and that all work he did for
defendant and defendant’s significant other was through Wiener’s own law practice and
not the firm representing plaintiff.
The trial court denied defendant’s motion under rule 1.18 of the State Bar Rules of
Professional Conduct (rule 1.18), finding: “Wiener is no longer associated with [the
firm],” and thus, when the firm “undertook representation of [plaintiff] in 2021, . . .
Wiener [had] not been working with the firm for two years.” Though defendant provided
evidence Wiener was listed on Web sites as still being at the firm, the issue had been
corrected and the other Web sites were “outdated.”
Defendant contends the trial court erred by relying on “self-serving declarations”
without actual evidence of Wiener’s exit from the firm. Defendant contends his evidence
Wiener “basically ‘switched’ sides on [defendant] and worked for his adversary”
establishes plaintiff’s counsel violated rule 1.18. Plaintiff does not address this issue,
stating it “is not aware of any basis to raise this matter before” this court. Plaintiff is
incorrect. Defendant timely filed a notice of appeal from the trial court denying his
motion to disqualify plaintiff’s counsel, which is an appealable order. (URS Corp. v.
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Atkinson/Walsh Joint Venture (2017) 15 Cal.App.5th 872, 878 [“Of course, orders
granting or denying attorney disqualification motions are immediately appealable in
California state courts”].) And this court filed the notices of appeal from the order
denying disqualification and the order denying the anti-SLAPP motion under the same
case number. We shall therefore address this issue, but conclude defendant has not
proven error.
“Generally, a trial court’s decision on a disqualification motion is reviewed for
abuse of discretion. [Citations.] If the trial court resolved disputed factual issues, the
reviewing court should not substitute its judgment for the trial court’s express or implied
findings supported by substantial evidence.” (People ex rel. Dept. of Corporations v.
SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143.)
Rule 1.18 prohibits any lawyer from representing “a client with interests
materially adverse to those of a prospective client in the same or a substantially related
matter if the lawyer received from the prospective client” confidential information. (Rule
1.18(b), (c).) “If a lawyer is prohibited from representation under this paragraph, no
lawyer in a firm with which that lawyer is associated may knowingly undertake or
continue representation in such a matter.” (Rule 1.18(c), asterisks omitted.)
Defendant asserts the screenshots he provided the trial court showing Wiener was
employed at the law firm representing plaintiff is “substantial evidence as to a conflict of
interest.” This confuses the standard we must apply. The trial court was not required to
accept defendant’s evidence merely because it was substantial, and nor do we. We
instead must review the trial court’s finding for substantial evidence. (People ex rel.
Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., supra, 20 Cal.4th at
p. 1143.) The trial court considered defendant’s evidence but found the countervailing
declarations, including Wiener’s own declaration, persuasively established Wiener was
not at the firm when it represented plaintiff in this matter. These declarations are
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substantial evidence supporting the trial court’s factual findings. We therefore conclude
the trial court did not abuse its discretion by denying defendant’s disqualification motion.
DISPOSITION
The trial court’s orders denying the motion to strike and motion to disqualify
counsel are affirmed. Defendant shall pay costs on appeal. (Cal. Rules of Court, rule
8.278(a)(1)-(2).)
/s/
ROBIE, Acting P. J.
We concur:
/s/
MAURO, J.
/s/
DUARTE, J.
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