Purcell-Murray v. Clark Law Group CA1/1 ( 2014 )

Filed 11/14/14 Purcell-Murray v. Clark Law Group CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
PURCELL-MURRAY CO., INC.,
Plaintiff and Respondent, A139264
v. (San Mateo County
CLARK LAW GROUP et al., Super. Ct. No. CIV520000)
Defendants and Appellants.
INTRODUCTION
Defendants the Clark Law Group (Clark) and Water, Inc. (Water) appeal from the
order denying their special motion to strike the malicious prosecution action filed against
them by plaintiff Purcell-Murray Company, Inc. (PMC) as a strategic lawsuit against
public participation (SLAPP) under Code of Civil Procedure section 425.16 (section
425.16).1 Defendants argue the trial court erred in denying their anti-SLAPP motion
because PMC did not meet its burden of establishing a probability of prevailing on the
merits of its malicious prosecution lawsuit. We affirm.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
I. The Underlying Action
PMC is a distributor of premium kitchen and bath products, including the
Everpure brand of water filtration products manufactured by Pentair Residential
Filtration, LLC (Everpure). Everpure appointed PMC as its distributor for the states of
1
All further statutory references are to the Code of Civil Procedure unless otherwise
indicated.
1
California, Arizona, and Nevada effective September 1, 2008. Previously, Water had
long been the exclusive distributor of Everpure water filtration products in California and
other western states.
Alleging that Everpure had misappropriated Water’s business model and intended
to compete with Water, Water filed an earlier lawsuit against Everpure in federal district
court. The two parties resolved the dispute by signing a “Mutual Termination Agreement
and Release” (Termination Agreement) on July 31, 2008. Under this agreement,
Everpure was allowed to designate another company as the exclusive distributor of
Everpure products. However, Water was given the right to purchase Everpure
replacement cartridges for an undetermined period.
Within months, Everpure advised Water and, more importantly, Water’s
customers, that Water would no longer be providing Everpure products. In January 2009,
Everpure contacted some of Water’s customers by letter to inform them that PMC was its
new distributor and that Water was “no longer an authorized distributor of any type for
Everpure, and has not been an authorized Everpure distributor since August 1, 2008.” On
March 18, 2009, Everpure informed Water that it was terminating Water’s right to sell
Everpure products because it believed Water was selling another manufacturer’s
cartridges and communicating to customers that it was still an Everpure distributor.2
Everpure also claimed Water had not purchased a substantial amount of cartridges from it
since August 2008.
On May 13, 2009, Water, represented by Clark attorneys, filed a new complaint in
the federal court for the Central District of California. It is this complaint that has
generated the instant malicious prosecution action. All 19 of the causes of action stated
in the complaint were made against Everpure. Thirteen of these 19 causes of action were
2
Reportedly, Water sought to convert customers to its new water filtration product,
which went by the name “Body Glove.”
2
also alleged against PMC, including various economic torts and three antitrust claims.3
The litigation centered on Water’s contention that Everpure and PMC had acted in
contravention of the Termination Agreement.
On July 20, 2009, PMC filed a motion for judgment on the pleadings as to the
antitrust claims pled against it.
On October 28, 2009, the district court filed its order granting PMC’s motion to
dismiss the three antitrust claims. Water was granted leave to amend.
On November 9, 2009, Clark filed a First Amended Complaint (FAC) on behalf of
Water. The FAC states 10 causes of action against PMC. It omits the three antitrust
claims.
On May 31, 2011, Water filed a motion to supplement the FAC to add claims that
Everpure’s products were uncertified by the California Department of Public Health.
On August 23, 2011, the district court granted Everpure’s and PMC’s motions to
dismiss the supplemental claims. Water was given leave to amend all but one of these
claims.
On September 2, 2011, Water filed an amended supplemental complaint against
Everpure and PMC, purporting to supplement the FAC with two additional causes of
action.
On September 21, 2011, Everpure and PMC filed motions to dismiss the amended
supplemental complaint.
On October 18, 2011, the district court granted Everpure’s and PMC’s separate
motions to dismiss the supplemental claims without leave to amend.
Everpure and PMC each filed motions for summary judgment as to all remaining
claims. PMC moved for summary judgment and judgment on the pleadings on the claims
3
These claims were for violation of the Sherman Anti-Trust Act (15 U.S.C. §§ 1, 2),
violation of the Clayton Act (15 U.S.C. § 14), and violation of the Cartwright Act (Bus.
& Prof. Code, § 16700 et seq.).
3
stated against it, arguing that its potential liability turned solely on whether Water had
any viable claims against Everpure. PMC contended Water had failed to specifically
identify any wrongful conduct by PMC itself.
On December 19, 2011, the district court filed a 47-page ruling, granting both
motions for summary judgment. The court dismissed the FAC with prejudice and denied
leave to amend. The court noted the key facts, namely, the Termination Agreement and
Everpure’s January 2009 letter to customers, did not involve any conduct by PMC.
Additionally, the court observed Water had not separately responded to PMC’s summary
judgment motion.
On February 21, 2012, the district court entered judgment in favor of PMC and
against Water.
On September 17, 2012, Water filed a notice of appeal as to the February 21, 2012
judgment. Federal Rules of Appellate Procedure require that any appeal be filed within
30 days of entry of judgment. (Fed. Rules App.Proc., rule 4(a)(1).)
On October 29, 2012, PMC filed a motion to dismiss the appeal for lack of
jurisdiction.
On January 25, 2013, the Ninth Circuit issued an order granting PMC’s motion
and dismissing the appeal.
On February 14, 2013, PMC’s Managing Director Matthew Murray added his
signature to a “Settlement Agreement” purporting to resolve the federal action filed by
Water. This agreement was signed by Water and Everpure representatives without words
of limitation, but contained the following typed words above Murray’s signature: “[PMC]
hereby acknowledges receipt of this Settlement Agreement and hereby agrees to be
bound by the terms of the confidentiality agreement as set forth in Paragraph 7.”
4
II. The Current Action
On February 20, 2013, PMC filed its complaint against defendants, alleging causes
of action for malicious prosecution, negligent interference with economic advantage, and
intentional interference with prospective economic advantage.
On March 27, 2013, defendants filed a motion to strike PMC’s complaint under
section 425.16.
On June 17, 2013, the trial court issued its order granting the motion as to the two
business torts pursuant to the litigation privilege of Civil Code section 47, subdivision
(b). It denied the motion directed to the cause of action for malicious prosecution. This
appeal followed.
DISCUSSION
I. Anti-SLAPP Motions
An anti-SLAPP motion is a special statutory “procedure for striking meritless,
chilling causes of action at the earliest possible stages of litigation.” (Gerbosi v. Gaims,
Weil, West & Epstein, LLP (2011) 193 Cal.App.4th 435, 443.) If the defendant makes
the “threshold showing that the challenged cause of action is one ‘arising from protected
activity’ ” (ibid.), then “the burden shifts to the plaintiff to demonstrate a reasonable
probability of prevailing on the merits of his cause of action. [Citations.] ‘Put another
way, the plaintiff “must demonstrate that the complaint is both legally sufficient and
supported by a sufficient prima facie showing of facts to sustain a favorable judgment if
the evidence submitted by the plaintiff is credited.” [Citations.]’ [Citations.] The role of
the trial court is not to weigh the credibility or comparative strength of the parties’
evidence; rather, it determines whether the defendant’s evidence defeats the plaintiff’s
prima facie showing as a matter of law. [Citation.]” (Trapp v. Naiman (2013) 218
Cal.App.4th 113, 119.)
In Cole v. Patricia A. Meyer & Associates, APC (2012) 206 Cal.App.4th 1095, the
court explained the standard of review applicable to an order granting or denying an anti-
5
SLAPP motion: We review such an order “de novo, applying the same two-step
procedure as the trial court. [Citation.] We look at the pleadings and declarations,
accepting as true the evidence that favors the plaintiff and evaluating the defendant’s
evidence ‘ “only to determine if it has defeated that submitted by the plaintiff as a matter
of law.” [Citation.]’ [Citation.] The plaintiff’s cause of action needs to have only ‘
“minimal merit” [citation]’ to survive an anti-SLAPP motion. [Citation.]” (Id. at p.
1105.)
The first step of the anti-SLAPP analysis is not at issue here. “[B]y its terms,
section 425.16 potentially may apply to every malicious prosecution action, because
every such action arises from an underlying lawsuit, or petition to the judicial branch. By
definition, a malicious prosecution suit alleges that the defendant committed a tort by
filing a lawsuit. [Citation.] Accordingly, every Court of Appeal that has addressed the
question has concluded that malicious prosecution causes of action fall within the
purview of the anti-SLAPP statute. [Citations.]” (Jarrow Formulas, Inc. v. LaMarche
(2003) 31 Cal.4th 728, 734-735, fn. omitted (Jarrow).) Here, the parties do not contest
that the challenged action arises from protected activity. Accordingly, we turn to the
merits of PMC’s malicious prosecution claim.
II. Malicious Prosecution
To prevail on a malicious prosecution claim, a plaintiff must show that the prior
action (1) was commenced by or at the direction of the defendant and was pursued to a
legal termination favorable to the plaintiff; (2) was brought or continued without probable
cause; and (3) was initiated with malice. (Zamos v. Stroud (2004) 32 Cal.4th 958, 965,
970 (Zamos).) Water, represented on appeal by Clark, contends PMC did not
demonstrate either that the federal action lacked probable cause, or that it was brought or
maintained with malice. It further asserts the action is barred by the terms of the
February 2013 settlement agreement. Clark additionally argues PMC failed to show it
6
obtained a favorable termination as to the three antitrust claims. We address this last
assertion first.4
A. Favorable Termination
Clark claims Water’s “voluntary abandonment” of the antitrust claims does not
satisfy the favorable termination element of the malicious prosecution tort. We note
Clark did not raise this ground in its motion to the trial court. “Generally, failure to raise
an issue or argument in the trial court waives the point on appeal.” (Kolani v. Gluska
(1998) 64 Cal.App.4th 402, 412, italics omitted.) Thus, the argument is forfeited.
Regardless, the argument fails.
To determine whether the malicious prosecution plaintiff received a favorable
termination, the court considers the judgment as a whole in the prior action. (Casa
Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 341 (Casa Herrera).) However, victory
following a trial on the merits is not required. Rather, the termination simply must reflect
the merits of the action and indicate that the plaintiff is innocent of the alleged
misconduct. (Siebel v. Mittlesteadt (2007) 41 Cal.4th 735, 741.)
Where, as here with respect to the three antitrust claims, a termination is by
dismissal, the termination is deemed favorable when it reflects the opinion of either the
trial court or the prosecuting party that the action either lacked merit or, if pursued, would
result in a decision in favor of the defendant. (Contemporary Services Corp. v. Staff Pro
Inc. (2007) 152 Cal.App.4th 1043, 1056.) Thus, the reasons for the dismissal must be
examined. For example, a voluntary dismissal may be an implicit concession that the
dismissing party cannot maintain the action. (JSJ Limited Partnership v. Mehrban (2012)
205 Cal.App.4th 1512, 1524.) However, a technical or procedural termination, reflecting
neither innocence of nor responsibility for the alleged misconduct, is not favorable for
purposes of a malicious prosecution claim. (Casa Herrera, supra, 32 Cal.4th at pp. 341-
4
PMC’s request that we dismiss Clark’s appeal due to the untimeliness of the filing of its
opening brief is denied.
7
342.) Examples of technical or procedural dismissals include dismissals on statute of
limitations grounds, pursuant to a settlement, or based on laches. (Id. at p. 342.) Here,
the dismissal was based on the merits and not on technical or procedural grounds.
Specifically, the district court’s order dismissing the antitrust claims states, in part:
“Water has alleged no antitrust injury here. Water alleges injury from Everpure’s refusal
to sell it Everpure products, for informing customers that Water was not authorized to sell
Everpure products, and by using rebates . . . to force customers not to do business with
Water. Whatever injury those actions might inflict on Water individually, Water does not
allege that consumers have been harmed in the marketplace.” While the court did grant
leave to amend these claims, it observed “[b]ased on the above discussion, the Court fears
this effort might be a Sisyphean task.” Further, although the court had written no less
than nine pages documenting the multiple flaws contained in Water’s causes of action, it
noted it still had not pointed out every deficiency.
Clark relies on Oprian v. Goldrich, Kest & Associates (1990) 220 Cal.App.3d 337(Oprian) in arguing that Water’s decision to forgo amending the complaint after the
antitrust actions had been dismissed did not constitute a favorable termination because
Water’s decision was made solely to avoid costly litigation. In Oprian, the underlying
plaintiff’s complaint against Oprian was for breach of contract and Oprian cross-
complained for fraud; the jury found against plaintiff on the complaint and in favor of
Oprian on the cross-complaint. On appeal, the appellate court asked plaintiff’s counsel
whether, assuming the court reversed with directions to enter judgment against Oprian on
the cross-complaint, the plaintiff would retry his complaint against Oprian. After counsel
indicated that under those circumstances his client would not endure the expense of a new
trial even though the complaint was meritorious, the court directed the complaint be
dismissed. (Oprian, supra, 220 Cal.App.3d 337, 342-344.) Oprian stands for the
unremarkable proposition that when a plaintiff agrees to voluntarily dismiss his
complaint, the favorable termination element is not satisfied. It does not hold that a
8
voluntary dismissal occurs when a plaintiff elects not to pursue filing an amended
complaint after his or her claims have been dismissed on their merits.
In asserting Water voluntarily abandoned those claims solely because it could not
afford to continue with the antitrust causes of action after the district court granted it
leave to amend, Clark fails to apprehend that these claims were not “abandoned” until
after PMC incurred the expense of having to file a motion to dismiss them. The district
court evidently found PMC’s motion to be meritorious. The fact that the court granted
leave to amend does not negate the fact that the claims, as set forth by Clark on behalf of
Water, were found to be seriously deficient. A reasonable fact finder could thus conclude
defendants’ decision to abandon these claims constituted an acknowledgement the action
lacked merit. (Ross v. Kish (2006) 145 Cal.App.4th 188, 200 (Ross).) In short, Clark’s
attempt to dispute the element of favorable termination fails.
B. Lack of Probable Cause
Defendants claim the court below erred in relying solely upon the conclusions of
the district court to the effect that the there was no admissible evidence to substantiate
Water’s claims against PMC in the federal action. Even if this contention has merit, our
own review of the record on appeal supports the trial court’s ultimate finding.
1. General Principles
“The question of probable cause is ‘whether, as an objective matter, the prior
action was legally tenable or not.’ [Citation.] ‘A litigant will lack probable cause for his
action either if he relies upon facts which he has no reasonable cause to believe to be true,
or if he seeks recovery upon a legal theory which is untenable under the facts known to
him.’ [Citation.] ‘In a situation of complete absence of supporting evidence, it cannot be
adjudged reasonable to prosecute a claim.’ [Citation.] Probable cause, moreover, must
exist for every cause of action advanced in the underlying action. ‘[A]n action for
malicious prosecution lies when but one of alternate theories of recovery is maliciously
asserted . . . .’ [Citations.]” (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th
9
260, 292.) Probable cause “is ‘ “a suspicion founded upon circumstances sufficiently
strong to warrant a reasonable man in the belief that the charge is true.” ’ [Citations.]”
(Bertero v. National General Corp. (1974) 13 Cal.3d 43, 55.)
“Probable cause is a low threshold designed to protect a litigant’s right to assert
arguable legal claims even if the claims are extremely unlikely to succeed. ‘[T]he
standard of probable cause to bring a civil suit [is] equivalent to that for determining the
frivolousness of an appeal [citation], i.e., probable cause exists if “any reasonable
attorney would have thought the claim tenable.” [Citation.] This rather lenient standard
for bringing a civil action reflects “the important public policy of avoiding the chilling of
novel or debatable legal claims.” [Citation.] Attorneys and litigants . . . “ ‘have a right to
present issues that are arguably correct, even if it is extremely unlikely that they will
win . . . .’ ” [Citations.] Only those actions that “ ‘any reasonable attorney would agree
[are] totally and completely without merit’ ” may form the basis for a malicious
prosecution suit. [Citation.]’ [Citation.]” (Plumley v. Mockett (2008) 164 Cal.App.4th
1031, 1047-1048.)
To make a prima facie case of a lack of probable cause in response to the anti-
SLAPP motion, PMC must submit substantial evidence showing no reasonable attorney
would have thought the action was tenable in light of the facts known to defendants at the
time the suit was filed (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811,
817, 822, fn. 6; Ross, supra, 145 Cal.App.4th at p. 202), or that defendants continued
pursuing the lawsuit after they had discovered the action lacked probable cause. (Zamos,
supra, 32 Cal.4th at pp. 966-970.) However, “[w]here there is no dispute as to the facts
upon which an attorney acted in filing [or prosecuting] the prior action, the question of
whether there was probable cause to institute [or continue prosecuting] that action is
purely legal. [Citations.] If there is a dispute as to such facts, that dispute must be
resolved by the trier of fact before the objective standard can be applied by the court.
[Citations.]” (Ross, supra, 145 Cal.App.4th at p. 202.)
10
Defendants claim PMC failed to satisfy its burden of proof to establish that any
aspect of Water’s federal action lacked probable cause. They assert Water had probable
cause to file the federal district court action because Everpure and PMC “misled
customers into believing that Water no longer had the right to sell or promote Everpure
products.” As evidence in support of this assertion, it cites, in part, to the January 2009
letter Everpure sent to its dealers indicating that Water was no longer an authorized
distributor. It also cites to a December 12, 2008 draft letter written by Tom Boor,
Director of Sales for Everpure. This letter also clarifies that PMC would be the new
master distributor and was apparently given to PMC to transmit to dealers. Water argues
on appeal that the federal lawsuit was initiated because the letters did not include a
disclosure of Water’s continued right to sell Everpure products as set forth in the
Termination Agreement. In response, PMC does not assert that the entire complaint was
brought without probable cause. Instead, it draws our attention to the causes of action for
defamation and antitrust, as well as the claims stated in the supplemental complaint.
2. Defamation Claim
“ ‘Defamation is an invasion of the interest in reputation. The tort involves the
intentional publication of a statement of fact which is false, unprivileged, and has a
natural tendency to injure or which causes special damage.’ [Citation.]” (Gilbert v.
Sykes (2007) 147 Cal.App.4th 13, 27.) Defamation has two forms, libel and slander.
(Civ. Code, § 44.) Defamatory publications that are made “by writing, printing, picture,
effigy, or other fixed representation to the eye,” are considered libel. (Civ. Code, § 45.)
Our Supreme Court has stated “that libel includes ‘almost any language which, upon its
face, has a natural tendency to injure a person’s reputation. [Citations.]’ [Citation.]”
(Slaughter v. Friedman (1982) 32 Cal.3d 149, 153.) Slander involves defamatory
publications that are “orally uttered,” and also includes “communications by radio or any
mechanical or other means . . . .” (Civ. Code, § 46.)
11
The federal complaint alleges a cause of action for defamation against both
Everpure and PMC. The complaint asserts the following false statements were
published: “1) [Water] was no longer authorized to sell ‘Everpure’ products; 2) customers
could only purchase ‘Everpure’ products through [PMC] as the exclusive provider of
‘Everpure’ products in the Western United States; 3) that [Water] was selling
‘counterfeit’ ‘Everpure’ products; and 4) that [Water] had ‘falsely advertised’ its
products.”
As noted above, defamation requires the intentional publication of a false
statement of fact that has a natural tendency to injure the plaintiff’s reputation. (Smith v.
Maldonado (1999) 72 Cal.App.4th 637, 645; Raghavan v. Boeing Co. (2005) 133
Cal.App.4th 1120, 1132.) The January 2009 letter from Everpure to its customers states,
in part: “Water, Inc. has decided to take on a line that is competitive with Everpure
products. Thus, while we have worked closely with Water, Inc. in the past as our Master
Distributor, Water Inc. and Everpure are now competitors in this marketplace and we
wanted to make sure that you fully understand the situation. As part of the separation,
Water, Inc. must discontinue using any Everpure materials, displays, etc. We would
appreciate your cooperation in this regard.” The draft letter dated December 12, 2008
contains a virtually identical passage. Significantly, neither letter accuses Water of
selling counterfeit products or engaging in false advertising practices. While such
statements could have potentially been deemed defamatory, we are unable to discern any
defamatory content in the two letters.
Once a plaintiff makes a prima facie showing of facts that would support a
judgment in its favor, the court will “consider[] the defendant’s opposing evidence, but
only to determine if it defeats the plaintiff’s showing as a matter of law. [Citation.]”
(Kashian v. Harriman (2002) 98 Cal.App.4th 892, 906.) The evidence presented by
defendants does not do so. In granting the motion for summary judgment, the district
court observed that while Water claimed Everpure committed commercial disparagement
12
and defamation by telling customers that Water’s cartridges were “counterfeit” and
“knock-offs,” Water had offered no admissible evidence that Everpure had actually
published such statements to any of its customers. Additionally, Water had offered no
evidence that the alleged statements were false statements of fact, rather than non-
actionable opinions on the quality of Water’s cartridges.5 Finally, the court noted Water
had not substantiated the allegation that Everpure had accused Water of falsely
advertising its products.
Water asserts “[t]he issue presented was whether [Everpure and PMC]
misrepresented that Water was no longer authorized to sell Everpure cartridges, and that
therefore dealers could only purchase Everpure from [PMC] as the exclusive provider in
the Western United States.” Even as framed, these contentions do not support an
inference that any defamatory statements were made. At best, they suggest that
Everpure’s letters contained statements that were factually misleading, as opposed to
statements that would tend to injure Water’s reputation.
Similarly, a declaration prepared by Roger W. Clark in connection with the anti-
SLAPP motion states that before filing the federal lawsuit, he obtained information that
PMC representatives had told dealers they could no longer purchase any Everpure
product from Water and placed them under “ ‘extreme pressures’ ” to purchase only from
PMC. However, Water concedes it did not submit a declaration from any such dealer in
opposition to PMC’s motion for summary judgment. Thus there appears to have been no
admissible evidence that any dealer received any communication from PMC or Everpure
that could have been perceived as defamatory. While Water faults PMC for failing to
submit a declaration or deposition testimony from any of the dealers establishing that
these alleged misrepresentations were not made, the existence of a misrepresentation is
5
Only statements of fact are actionable as defamation, while statements of opinion are
constitutionally protected. (Franklin v. Dynamic Details, Inc. (2004) 116 Cal.App.4th
375, 384.)
13
not relevant in a defamation action if the alleged misrepresentations are not defamatory in
nature.
As to the allegation regarding false advertising, included as an exhibit to Clark’s
declaration is a letter to a representative of Water from a customer named Linda M.
Smith, who reported that after she noticed water coming from the bottom of her
“Everhot” Everpure water system, she contacted Everpure and was told that this was
“ ‘not their product and never has been’ ” and had been “ ‘advertised falsely.’ ” This
statement is hearsay and is inadmissible as evidence. Similarly, there is no evidence that
statements concerning “counterfeit” Everpure cartridges were ever actually made to any
of Water’s customers. Again, defendants have not set forth any admissible evidence that
PMC representatives made any defamatory statements.6
Accordingly, we conclude PMC has satisfactorily demonstrated, for purposes of
this appeal, that defendants lacked probable cause to pursue the action for defamation.
Probable cause must exist not only at the commencement of the action, but also at every
stage thereafter, and on every claim asserted. (Mabie v. Hyatt (1998) 61 Cal.App.4th
581, 596-597.) We conclude that the complete absence of admissible evidence as to the
making of a defamatory statement by the time of the dispositive motion for summary
judgment supports a finding that defendants lacked probable cause to continue the
defamation action.
3. The Antitrust Claims
We find an even stronger case with respect to the federal action’s antitrust claims.
While the district court gave Water leave to amend after granting PMC’s motion for
6
We note the district court found the deposition testimony of Wayne Feltenberger, a
Water salesman who testified customers told him that PMC representatives had
disparaged Water’s cartridges, to be inadmissible hearsay. Water questions that ruling in
a footnote in its brief on appeal, claiming the statements had not been offered to prove
their truth. The district court’s ruling was sound as the testimony was offered to prove
the truth of the matter stated, namely, that PMC representatives had indeed made the
allegedly defamatory utterances.
14
judgment on the pleadings, such a ruling does not support the inference that Water had
probable cause to bring the claims in the first place.
As we noted above, the district court found Water had failed to allege antitrust
injury. As an absolute threshold to stating an antitrust claim, a party must allege
“antitrust injury, which is to say injury of the type the antitrust laws were intended to
prevent and that flows from that which makes defendants’ acts unlawful.” (Brunswick
Corp. v. Pueblo Bowl-O-Mat, Inc. (1977) 429 U.S. 477, 489, italics omitted
(Brunswick).) This injury, which must result from the alleged antitrust violation, must be
injury to “the market or to competition in general, not merely injury to individuals or
individual firms . . . .” (McGlinchy v. Shell Chemical Co. (9th Cir. 1988) 845 F.2d 802,
812.) The “failure to allege injury to competition is a proper ground for dismissal by
judgment on the pleadings.” (Id. at p. 813.)
It is established that an exclusive distributorship agreement between a
manufacturer and a distributor causing harm to another distributor is not, standing alone,
sufficient to show antitrust injury. (Rutman Wine Co. v. E. & J. Gallo Winery (9th Cir.
1987) 829 F.2d 729, 735 (Rutman).) Rather, there is no violation unless the agreement is
intended to or actually does harm competition in the relevant market. (Ibid.) Antitrust
laws “were enacted for ‘the protection of competition, not competitors.’ ” (Brunswick,
supra, 429 U.S. at p. 488, italics omitted.) The intent to harm a particular competitor is
not actionable, even if a distributor-competitor is put out of business. (Rutman, supra,
829 F.2d at p. 735; see also Dunn & Mavis, Inc. v. Nu-Car Driveaway, Inc. (6th Cir.
1982) 691 F.2d 241, 243-244.) Therefore, an exclusive distributorship agreement does
not give rise to the requisite inference of intent to harm competition. (See Rutman, supra,
829 F.2d at p. 736.) Even if there were a conspiracy to shut out Water, there would not
necessarily be an antitrust violation absent an anticompetitive effect on the industry as a
whole. (See Oreck Corp. v. Whirlpool Corp. (2d Cir. 1978) 579 F.2d 126, 130, fn. 4.)
15
On appeal, defendants offer no evidence to support an argument that the antitrust
claims had any basis in law or fact. Instead, they argue that the decision to forgo
amending the complaint is the equivalent of a voluntary dismissal done merely for
financial reasons. While a declaration prepared by Roger W. Clark in support of
defendants’ anti-SLAPP motion states that Water could have cured some of the defects
identified by the district court, he does not provide any elaboration. He also
unconvincingly asserts the district court’s substantive conclusions were flawed.
Importantly, he offers little to dispute the court’s finding that Water’s claims failed to
properly allege an antitrust injury, instead of just an injury to itself as an individual
competitor in the market. He also claims the district court erred in that it narrowly
interpreted the complaint’s allegation of a tying arrangement, however he does not set
forth any evidence or legal argument in support of this assertion.
The district court’s analysis was extremely comprehensive, and defendants offer
no factual or legal grounds to undermine the basis of the court’s findings and
conclusions.7 In sum, for purposes of this appeal, PMC has satisfactorily demonstrated
that defendants lacked probable cause to bring the antitrust claims against it. Having so
concluded, we need not address PMC’s arguments concerning the supplemental
complaint.
C. Malice
Defendants assert PMC did not make a prima facie showing of malice. Although
the element of malice is satisfied by showing actual hostility or ill will (Downey Venture
v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 494 (Downey Venture)), it can also be
satisfied by showing the action was initiated primarily for an improper purpose. (Sierra
7
We observe “ ‘[t]he malicious commencement of a civil proceeding is actionable
because it harms the individual against whom the claim is made, and also because it
threatens the efficient administration of justice.’ [Citation.]” (Crowley v. Katleman
(1994) 8 Cal.4th 666, 677.)
16
Club Foundation v. Graham (1999) 72 Cal.App.4th 1135, 1157.) Malice can be shown
by direct evidence or may be inferred from all of the circumstances of the case (Northrup
v. Baker (1962) 202 Cal.App.2d 347, 355), and is ultimately a question of fact for the
jury. (Sheldon Appel Co. v. Albert & Oliker, 47 Cal.3d 863, 874.) Although the fact the
defendant did not have probable cause to initiate or continue the defamation and antitrust
claims does not alone suffice to show malice (Downey Venture, supra, at p. 498, fn. 29),
the absence of probable cause may be considered by the jury when assessing the issue of
malice. (Swat-Fame, Inc. v. Goldstein, 101 Cal.App.4th 613, 633.)
The trial court inferred malice based on its finding that “[t]hroughout the extensive
discovery process, [Water] should have come to the conclusion that it had no admissible
evidence to support these claims, yet continued to prosecute the action.” We agree PMC
has satisfied the minimal burden placed on a plaintiff responding to an anti-SLAPP
motion.8 Going forward, the jury may consider the absence of probable cause for claims
against PMC in the federal litigation as evidence of malice.
Defendants rely on Daniels v. Robbins (2010) 182 Cal.App.4th 204 (Daniels) and
Jarrow, supra, 31 Cal.4th 728. The precise holding in Jarrow was that obtaining
summary judgment on a complaint in the underlying litigation does not, standing alone,
establish malice as a matter of law. (Jarrow, supra, 31 Cal.4th at p. 743.) We note that
Daniels concerned the affirmance of a trial court’s order granting the defendants’ anti-
SLAPP motion. Here, we have an order of the trial court denying defendants’ motion.
From the history summarized above, it can be inferred that defendants prosecuted certain
claims against PMC after becoming aware these claims lacked probable cause, both
8
The probability-of-success stage requires a plaintiff only to prove the challenged cause
of action has “minimal merit.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 93-94.) The
court does not weigh the evidence submitted by each side (Wilson v. Parker, Covert &
Chidester, supra, 28 Cal.4th at pp. 821-822), but only decides whether evidence exists
that, if credited by a jury, would support a judgment in favor of the plaintiff. (Navellier
v. Sletten, supra, 29 Cal.4th at pp. 93-94.)
17
legally and factually. Viewing the evidence in the light most favorable to PMC, its
assertion that defendants acted with malice has at least minimal merit. (Soukup, supra,
39 Cal.4th at p. 291.)
While not overwhelming, there is sufficient circumstantial evidence from which a
trier of fact could conclude the litigation was pursued against PMC for an ulterior
purpose not related to the remedy Water sought in the federal lawsuit. Specifically, there
is circumstantial evidence from which the jury could infer PMC was pursued for the
ulterior purpose of derailing the distribution agreement it had with Everpure. We note
that the federal litigation appears to have been primarily directed at Everpure, raising an
inference of an ulterior motive behind the decision to name PMC as an additional
defendant. This factor could support an inference that defendants used the litigation as an
opportunity to harass PMC. For example, PMC reports that Water knowingly scheduled
a deposition of Laurence Purcell, PMC’s most knowledgeable person, at a time when his
wife was undergoing daily chemotherapy for brain cancer. While Clark claims the only
reason the parties could not stipulate to a continuance was because counsel for Everpure
would not agree to a two-week extension of the discovery and motion cut-off dates, this
discrepancy creates a factual dispute, which, in light of the standard of review that we
must apply, need not be resolved at this stage of the proceedings.9
III. The Settlement Rule
Finally, defendants argue that the settlement rule bars PMC’s action for malicious
prosecution. They cite to multiple cases purporting to set forth that a negotiated
settlement should bar this action. However, PMC’s contention that there was never any
negotiated settlement between PMC and Water is persuasive. The only evidence offered
by defendants in this regard is the document called “Settlement Agreement” dated
9
Water also renews its argument that the voluntary dismissal of its antitrust claims
negates the element of malice. For the reasons stated above, we are unmoved by this
contention.
18
February 1, 2013. The following words of limitation appear above the PMC signature
block: “[PMC] hereby acknowledges receipt of this Settlement Agreement and hereby
agrees to be bound by the terms of the confidentiality agreement as set forth in Paragraph
7.” The sole reference to PMC in the substance of the document states that PMC
understands the reaffirmation of the Termination Agreement between Everpure and
Water “is a material part of the consideration necessary to reach an overall settlement of
the Lawsuit and dismissal of the appeal.” By then, the Ninth Circuit had already
dismissed Water’s appeal as to PMC under its order of January 25, 2013. Thus, PMC’s
representations that it signed the Settlement Agreement merely to indicate its assent to
keeping its terms confidential is a reasonable reading of the contract. To the extent there
is any doubt or ambiguity about the construction of any words of limitation in the
agreement, the doubt is to be resolved in favor of PMC as it was not the drafter of the
document. (Civ. Code, § 1654.) Thus, we do not find the Settlement Agreement to bar
the instant action for malicious prosecution.
DISPOSITION
The order denying the special motion to strike the complaint under section 425.16
is affirmed.
_________________________
Dondero, J.
We concur:
_________________________
Margulies, Acting P.J.
_________________________
Becton, J.*
*
Judge of the Contra Costa County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
19