Curtin Maritime Corp. v. Pacific Dredge etc. ( 2022 )

Filed 3/22/22
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
CURTIN MARITIME CORP., D078217
Plaintiff and Respondent,
v. (Super. Ct. No. 37-2019-
00055796-CU-BT-CTL)
PACIFIC DREDGE AND
CONSTRUCTION, LLC, et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of San Diego County,
Richard S. Whitney, Judge. Reversed and remanded with directions.
Law Offices of Clinton D. Hubbard, Clinton D. Hubbard; Miller
Johnson Law, Jon B. Miller, Scott A. Johnson; and Kevin C. Young for
Defendants and Appellants.
King & Spalding, Joseph N. Akrotirianakis, Aaron Craig and Matthew
V.H. Noller for Plaintiff and Respondent.
Curtin Maritime Corp. (Curtin) filed suit against its competitor, Pacific
Dredge and Construction, LLC (Pacific), asserting one cause of action for
violation of the Unfair Competition Law (UCL, Bus. & Prof. Code, § 17200, et
seq.). The parties operate dredging vessels, which are designed to clear
sediment from harbor entrances, and compete for contracts awarded by the
U.S. Army Corps of Engineers (USACE). In its complaint, Curtin alleged
Pacific was ineligible for two contracts it was awarded over Curtin because
its vessel was not “entirely” built in the United States, a violation of the
federal Merchant Marine Act of 1920 (commonly referred to as the Jones Act),
and Pacific defrauded the Coast Guard in its successful application for
certification that the vessel was U.S.-built. These allegations served as the
sole basis for Curtin’s UCL claim.
In response to the complaint, Pacific brought a motion under Code of
Civil Procedure section 425.16 to strike Curtin’s claim, asserting it arose from
protected speech and that Curtin could not show a probability of prevailing
on the merits of its claim.1 The trial court agreed with Pacific that the claim
arose from protected activity, but concluded Curtin had met its burden at this
early stage of litigation to show the claim had minimal merit and denied the
motion. Pacific appeals the ruling, contending the trial court erred because
the claim is preempted by the Jones Act.
After Pacific filed its notice of appeal, Curtin dismissed the underlying
lawsuit and filed a motion to dismiss the appeal as moot. Pacific opposed the
motion, asserting the appeal was viable since reversal of the trial court’s
order would provide Pacific the opportunity to seek attorney fees under the
anti-SLAPP statute. We agree with Pacific that the appeal is not moot, and
dismissal of the appeal is not appropriate. Further, we conclude Curtin has
1 Code of Civil Procedure section 425.16 is commonly referred to as the
anti-SLAPP (strategic lawsuit against public participation) statute. (Jarrow
Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 732, fn. 1.) Subsequent
undesignated statutory references are to the Code of Civil Procedure.
2
not shown a probability of prevailing on the merits of its claim. Accordingly,
we reverse the trial court’s order denying Pacific’s motion to strike and direct
the court to reinstate the case and issue an order granting the anti-SLAPP
motion and striking Curtin’s claim.
FACTUAL AND PROCEDURAL BACKGROUND
In 2015, Pacific purchased a barge-mounted dredging vessel called the
La Encina. The vessel was built in the United States in 1954 by the
American Steel Dredge Company for its original owner, the San Diego Gas &
Electric Company. At the time of Pacific’s purchase, the vessel was in poor
condition and needed a hull replacement.
To begin the renovation of the vessel, Pacific purchased 58 pre-
fabricated steel panels from a domestic manufacturer and arranged for
delivery of 39 of the panels to a shipyard located in Ensenada, Mexico.
Pacific planned to have the panels welded together in Ensenada and shipped
back to Pacific’s shipyard for installation as part of a new hull for La Encina.
Before that work occurred, Pacific’s maritime and Coast Guard
documentation consultant, Paul Larson, provided an opinion letter to
Pacific’s president, Grant Westmorland, concerning whether the foreign work
would “disqualify La Encina from being considered U.S. built” for purposes of
the Jones Act.
Larson explained in his letter that Title 46, Code of Federal
Regulations, section 67.177 prescribes whether rebuilding in a foreign
shipyard of a U.S. built vessel results in the vessel losing its eligibility to
engage in coastwise trade.2 Larson opined that under the regulation, a
2 Under the Jones Act, to perform dredging work in the navigable waters
of the U.S., a vessel must have a coastwise endorsement issued by the Coast
Guard. In order to be eligible for the endorsement, the vessel must be built
in the U.S. (46 U.S.C. § 12112(a)(2)(A), 46 C.F.R. §§ 67.19, 67.97.)
3
vessel is considered “rebuilt foreign” (and thus ineligible for coastwise trade)
if “any considerable part of its hull or superstructure is built upon or
substantially altered outside of the United States.” (46 C.F.R. § 67.177.) The
regulation contains a safe harbor for rebuilt vessels where work performed
outside the country on the hull or superstructure “constitutes 7.5 percent or
less of the vessel’s steelweight prior to the work.” (Id., (b)(3).)
Larson concluded that so long as the La Encina had an existing
coastwise endorsement, the work planned in Ensenada would not jeopardize
its coastwise eligibility because it constituted just .004 % of the vessel’s
steelwork. However, Larson explained that the safe harbor would only apply
if Pacific possessed a coastwise endorsement for the vessel. If not, Larson
recommended Pacific cancel the planned foreign work and instead construct
the new hull in Pacific’s domestic shipyard, then apply to the Coast Guard for
a coastwise determination in accordance with the regulations governing new
vessels.
Although the La Encina was built in the U.S., Pacific could not obtain a
coastwise endorsement because the builder had gone out of business long
before. As a result, Pacific abandoned its plan to assemble a new hull for the
La Encina in Ensenada. The Ensenada shipyard had not completed the
welding work. It had moved the panels into place and supported them with
tack-welding, which the shipyard owner described as a temporary process to
keep metal pieces aligned before permanent welding occurs. The panels were
then sent to Pacific’s shipyard in San Diego.
There, the tack welds to the 39 panels were gouged or grinded out and
the 58 new steel panels were incorporated into a new vessel Pacific named
the Sandpiper. The construction of the Sandpiper occurred in San Diego in
Pacific’s shipyard. Pacific reused some parts of the La Encina, but the parts
4
for the vessel’s hull and superstructure were sourced, assembled, and
constructed entirely in the United States. After the Sandpiper was
constructed, Pacific petitioned the Coast Guard for a certificate of
documentation and coastwise endorsement, which was granted on
October 25, 2016.
In 2016, the USACE solicited bids for a multi-year dredging project at
the Santa Barbara harbor. Curtin and Pacific were the only two bidders and
the USACE awarded the contract to Pacific, which had the lower bid and
would use the Sandpiper to perform the work. Thereafter, the Coast Guard’s
National Vessel Documentation Center (NVDC) received a complaint that the
Sandpiper was not eligible for a coastwise endorsement because it was built
in Mexico, and therefore had been improperly awarded the contract.
On December 13, 2017, the director of the NVDC, Christina Washburn,
notified Pacific that the agency had opened an investigation into whether
certain vessels were foreign rebuilt, and made a demand under its
regulations for information and documentation. Washburn’s letter noted that
Pacific’s responses were subject to penalties under the Jones Act if
misrepresentations were made to the Coast Guard. On January 7, 2018, an
NVDC staff attorney sent an email to Westmorland seeking additional
specific information about the construction of the Sandpiper.
Pacific provided the requested information and documents to the
NVDC and retained Larson to investigate its vessels and prepare a report
addressing the NVDC’s concerns. The information and Larson’s report were
sent to the NVDC staff attorney on January 11, 2018. Larson’s report
provided detailed information regarding the original repair plans for La
Encina, the work performed in Mexico, the termination of that work, and the
return to San Diego of the 39 steel panels later incorporated into the
5
Sandpiper. On January 18, 2018, the staff attorney emailed Westmorland
and stated that based on the information Pacific provided, the NVDC’s review
of Pacific’s vessels was closed. The coastwise endorsement previously
granted for the Sandpiper remained valid.
In 2019, the USACE solicited bids for another multi-year contract to
perform dredging services in the Santa Barbara harbor. On October 21,
2019, days before the bids were due, Curtin filed the underlying complaint in
this case against Pacific. As noted, the complaint contains just one cause of
action, violation of the UCL based solely on Curtin’s allegation that the
Sandpiper was not eligible for its coastwise endorsement.3 Curtin asserted
that Pacific fraudulently misrepresented information about the construction
of the Sandpiper to the Coast Guard.
After Curtin’s complaint was filed, both parties submitted their bids for
the USACE contract for dredging work in the Santa Barbara harbor.
Pacific’s bid was again lower than Curtin’s bid. Before the contract was
awarded, Curtin submitted a bid protest to the USACE asserting that the
Sandpiper was a foreign-built vessel and that Pacific had defrauded the
Coast Guard in obtaining its coastwise endorsement. In December 2019, the
USACE rejected the protest, concluding Pacific’s bid was sufficiently
responsive and that a disputed coastwise endorsement was not an adequate
basis under the applicable laws for the rejection of a bid.
3 The UCL proscribes “unfair competition,” which the statute describes
as “any unlawful, unfair or fraudulent business act or practice and unfair,
deceptive, untrue or misleading advertising….” (Bus. & Prof. Code, § 17200.)
“By proscribing ‘any unlawful’ business practice, ‘section 17200 “borrows”
violations of other laws and treats them as unlawful practices’ that the unfair
competition law makes independently actionable.” (Cel-Tech
Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th
163, 180.)
6
Shortly after, Pacific filed its anti-SLAPP motion, asserting Curtin’s
claim was based on Pacific’s exercise of its right to petition and free speech in
the form of its application for a coastwise endorsement to the Coast Guard.
Pacific also asserted Curtin could not show a probability of prevailing on its
complaint. Curtin was granted leave to conduct limited discovery and then
filed its opposition to the motion, arguing both that its claim did not arise
from protected speech and that even if it did, it had a probability of
prevailing.
Pacific’s reply brief was supported by additional evidence of the work in
Ensenada and the Coast Guard’s issuance of the coastwise endorsement,
which it had also submitted to the NVDC. Pacific argued Curtin had not met
its burden to show a probability of prevailing because both the Coast Guard
and the USACE had reviewed the issue and found the Sandpiper eligible for
the endorsement, and because the position advanced by Curtin, that the tack-
welding that had been done on the steel plates disqualified the Sandpiper,
was meritless. Pacific also asserted that Curtin’s argument lacked merit
because the endorsement was not required for the vessel for the Santa
Barbara contracts at issue.
The court issued a tentative ruling denying the motion before the
hearing on Pacific’s motion. At the hearing, Pacific’s counsel argued that the
court did not have jurisdiction to second guess the Coast Guard’s
determination that the Sandpiper was eligible for its coastwise endorsement.
Further, he asserted there was no evidence any information about the La
Encina or the assembly of the Sandpiper was withheld from the Coast Guard.
At the conclusion of the hearing, the court confirmed its tentative ruling
denying the motion.
7
In its final order, the court explained it agreed with Pacific that
Curtin’s claim arose from protected speech. However, the court found that
the opinion of the plaintiff’s ship building expert, that the Sandpiper was not
eligible for the coastwise endorsement because of the tack-welding in
Ensenada of the steel plates that later became part of the Sandpiper’s hull,
was sufficient to demonstrate “minimal merit” of the UCL claim. Pacific
timely appealed from the order denying its anti-SLAPP motion.
After Pacific filed its opening brief in the appeal, Curtin filed a motion
to dismiss the appeal as moot based on its recent voluntary dismissal of the
underlying complaint. Pacific opposed the motion, and this court issued an
order deferring its decision on the motion to the merits determination.
DISCUSSION
I
Legal Standards
Section 425.16 sets a procedure for striking “lawsuits that are ‘brought
primarily to chill the valid exercise of the constitutional rights of freedom of
speech and petition for the redress of grievances.’ ” (Kibler v. Northern Inyo
County Local Hosp. Dist. (2006) 39 Cal.4th 192, 197.) Under section 425.16,
the “trial court evaluates the merits of the lawsuit using a summary-
judgment-like procedure at an early stage of the litigation.” (Varian Medical
Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 192 (Varian).)
Section 425.16 provides in pertinent part: “A cause of action against a
person arising from any act of that person in furtherance of the person’s right
of petition or free speech under the United States Constitution or the
California Constitution in connection with a public issue shall be subject to a
special motion to strike, unless the court determines that the plaintiff has
established that there is a probability that the plaintiff will prevail on the
8
claim.” (§ 425.16, subd. (b)(1).) Resolution of an anti-SLAPP motion “thus
involves two steps. ‘First, the court decides whether the defendant has made
a threshold showing that the challenged cause of action is one “arising from”
protected activity. [Citation.] If the court finds such a showing has been
made, it then must consider whether the plaintiff has demonstrated a
probability of prevailing on the claim.’ ” (Oasis West Realty, LLC v. Goldman
(2011) 51 Cal.4th 811, 819‒820.) “ ‘Only a cause of action that satisfies both
prongs of the anti-SLAPP statute—i.e., that arises from protected speech or
petitioning and lacks even minimal merit—is a SLAPP, subject to being
stricken under the statute.’ ” (Id. at p. 820.)
“An ‘ “act in furtherance of a person’s right of petition or free
speech …” ’ includes any written or oral statement made before a legislative,
executive, or judicial body, or any other official proceeding authorized by law,
or in connection with an issue under consideration by such body or in such
proceeding. (§ 425.16, subd. (e)(1) & (2).) The moving party need not
separately demonstrate that such an oral or written statement concerns an
issue of public significance.” (Midland Pacific Building Corp. v. King (2007)
157 Cal.App.4th 264, 271.) The statute is construed broadly to maximize
protection for acts in furtherance of the right to petition. (§ 425.16, subd. (a)
[“The Legislature finds and declares that it is in the public interest to
encourage continued participation in matters of public significance, and that
this participation should not be chilled through abuse of the judicial process.
To this end, this section shall be construed broadly.”].)
For purposes of both prongs of an anti-SLAPP motion, “[t]he court
considers the pleadings and evidence submitted by both sides, but does not
weigh credibility or compare the weight of the evidence. Rather, the court’s
9
responsibility is to accept as true the evidence favorable to the plaintiff ....”
(HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212.)
A defendant’s burden on the first prong is not an onerous one. A defendant
need only make a prima facie showing that plaintiff's claims arise from the
defendant’s constitutionally-protected free speech or petition rights. (See
Governor Gray Davis Com. v. American Taxpayers Alliance (2002) 102
Cal.App.4th 449, 456.) With respect to the second prong, “in order to
establish the requisite probability of prevailing (§ 425.16, subd. (b)(1)), the
plaintiff need only have ‘ “stated and substantiated a legally sufficient
claim.” ’ [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.” ’ ” (Navellier v. Sletten (2002) 29
Cal.4th 82, 88–89.)
“Review of an order granting or denying a motion to strike under
section 425.16 is de novo. [Citation.] [Like the trial court, we] consider ‘the
pleadings, and supporting and opposing affidavits … upon which the liability
or defense is based.’ (§ 425.16, subd. (b)(2).)” (Soukup v. Law Offices of
Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3.) Our de novo review “includes
whether the anti-SLAPP statute applies to the challenged claim.” (Thomas v.
Quintero (2005) 126 Cal.App.4th 635, 645.) “[W]e apply our independent
judgment to determine whether” the claim arises from acts done in
furtherance of the defendants’ “right of petition or free speech in connection
with a public issue.” (Ibid.) “[W]e must then independently determine, from
our review of the record as a whole, whether [the plaintiffs have] established
a reasonable probability that [they will] prevail on [their] claims.” (Ibid.)
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II
Motion to Dismiss Appeal
In its motion to dismiss and respondent’s brief, Curtin argues that
because it dismissed its complaint against Pacific without prejudice during
the pendency of this appeal, the appeal is now moot. We disagree and deny
Curtin’s motion to dismiss.
A defendant who prevails in moving to strike a complaint under
section 425.16 is entitled to recover the attorney fees and costs it incurred in
bringing the motion to strike. (§ 425.16, subd. (c).) This includes the right to
recover such fees and costs incurred when prevailing as a respondent on
appeal. (Wilkerson v. Sullivan (2002) 99 Cal.App.4th 443, 448; Evans v.
Unkow (1995) 38 Cal.App.4th 1490.)
As a general matter, a plaintiff may voluntarily dismiss the complaint
with or without prejudice upon request to the court clerk, prior to trial.
(§ 581, subds. (b) & (c).) Once a notice of appeal has been filed in the trial
court, however, section 916 provides for an automatic stay of trial court
proceedings “upon the matters embraced” in or “affected” by the appeal.
Because the trial court proceedings were stayed when Pacific filed its notice
of appeal, the trial court lacked jurisdiction to dismiss the case thereafter.
(Varian, supra, 35 Cal.4th at pp. 188‒189 [trial court had no jurisdiction to
proceed with trial and enter judgment after appeal filed from order denying
anti-SLAPP motion to strike].)
Curtin argues that Varian only precludes a trial court from acting after
the filing of an appeal, and here it was the clerk who performed a ministerial
act in recording its request for dismissal. However, whether a matter is
embraced in or affected by the appeal, and thus outside the jurisdiction of the
trial court, turns not on whether the matter was handled by the clerk or the
11
judge, but on whether it would have any bearing on the effectiveness of the
appeal. (Varian, supra, 35 Cal.4th at p. 189.) Here, dismissing the case
would impact the effectiveness of Pacific’s appeal, since it would foreclose the
opportunity to recover attorney fees and costs as the prevailing party under
section 425.16 upon reversal of the trial court’s order denying Pacific’s
motion.
Because the trial court was without jurisdiction to dismiss the case
during the pendency of the appeal, the dismissal is void on its face and does
not render the appeal moot. Even if the dismissal were valid, we would not
be compelled to dismiss the appeal as moot. “ ‘When no effective relief can be
granted, an appeal is moot and will be dismissed.’ ” (MHC Operating Limited
Partnership v. City of San Jose (2003) 106 Cal.App.4th 204, 214.) This court
can grant effective relief because our reversal of the denial of Pacific’s motion
to strike the complaint entitles it to an award of attorney fees and costs
under section 425.16, subdivision (c).4
4 In support of its argument that the appeal is moot, Curtin relies
primarily on an unpublished federal Ninth Circuit case, Mireskandari v.
Associated Newspapers, LTD. (9th Cir. 2016) 665 Fed.Appx. 570. In addition
to carrying no precedential value, the case is not analogous to the situation
presented here. In Mireskandari, the defendant moved to strike all of the
plaintiff’s claims. (Id. at p. 571.) The court granted the motion with respect
to all but two claims, which defendant appealed. (Ibid.) While the appeal
was pending, the plaintiff dismissed the complaint and refiled the case in
state court. (Ibid.) The appellate court dismissed the plaintiff’s merits
appeal as moot, but affirmed the trial court’s attorney fees order, concluding
both parties’ challenge of the award, including defendant’s appeal asserting
the award was too low, was meritless. (Id. at p. 572.) Mireskandari does not
support dismissal of this appeal, where defendants’ challenge the denial of
their motion to strike and are entitled to attorney fees under the statute if
they succeed.
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III
Anti-SLAPP Order
Pacific argues that Curtin failed to show a probability of success on the
merits of its claim because the claim is precluded by federal maritime law.
Curtin responds both that the trial court erred by finding its claim arises
from protected activity, and that reversal on the second prong is unavailable
because Pacific failed to establish its affirmative defense of preemption in the
trial court and it showed its claim has merit. We agree with Pacific that the
court correctly determined Curtin’s claim arose from protected petitioning
activity and that Curtin failed to meet its burden on the second prong of the
anti-SLAPP analysis.
A
With respect to the first prong on the anti-SLAPP analysis, Pacific
argues the trial court correctly determined that Curtin’s claim arose from its
protected petitioning activity of obtaining a coastwise endorsement. Curtin
responds that its claims are based on Pacific’s “bidding and contracting
practices,” which do not fall within the protection of the anti-SLAPP statute.
“ ‘The phrase “arising from” in section 425.16, subdivision (b)(1) has
been interpreted to mean that “the act underlying the plaintiff’s cause” or
“the act which forms the basis for the plaintiff’s cause of action” must have
been an act in furtherance of the right of petition or free speech.’ ” (Kajima
Engineering and Const., Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921,
928–929 (Kajima).) Using Kajima as its model, Curtin attempts to reframe
the basis of its claim, arguing it arises not from the protected activity of
obtaining a coastwise endorsement from the Coast Guard, but instead
asserting the claim arises from Pacific’s act of bidding on the Santa Barbara
dredging projects with an invalid coastwise endorsement.
13
The trial court rejected this argument. The court concluded, quoting
the complaint, that Curtin’s UCL claim “is based on [Pacific] ‘submitting a
false application for a coastwise endorsement for Sandpiper to the United
States Coast Guard and then obtaining and performing the USACE Santa
Barbara Harbor Maintenance Dredging contract with a dredge that was not
built in the United States.’ ” The court continued, “[w]hile [Curtin] asserts
that the act of performing a contract cannot be categorized as an act in
furtherance of the right of petition or free speech, the gravamen of [Curtin’s]
allegations are that [Pacific] lied about the Sandpiper and consequently
obtained and performed the contract[ ] as a result of the lie. … The
performing of the contract is only wrongful because Defendants obtained a
coastwise endorsement for Sandpiper through [allegedly] dishonest means.”
We agree with the trial court that the basis for Curtin’s claim is not the
bidding and performance of the contract, but rather Curtin’s allegation that
Pacific obtained a coastwise endorsement (allowing it to compete with Curtin)
based on falsified information. As the trial court correctly pointed out,
without this fundamental allegation, Curtin has no basis for its claim.
Accordingly, the claim arose from protected petitioning activity. (See
Midland Pacific Building Corp. v. King, supra, 157 Cal.App.4th at p. 272
[“The focus of the statute is not the form of the plaintiff's cause of action, but
the defendant’s activity that gives rise to the asserted liability.”].)
Kajima, on which Curtin primarily relies, is unlike this case and
supports our holding that its claim arose from protected activity. In Kajima,
a contractor for the City of Los Angeles filed suit against the City for breach
of contract. (Kajima, supra, 95 Cal.App.4th at pp. 924‒925.) The City
counter-sued for breach of contract and fraud, and the contractor moved to
strike the City’s complaint on the ground that it arose from the contractor’s
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protected activity of bringing the initial claims. (Id. at p. 925.) The trial
court denied the motion with respect to all but one claim, finding the breach
of contract claims did not arise from protected activity but instead were
related to the contractor’s performance of the work it was contracted for by
the City. (Id. at p. 926.)
The court of appeal affirmed, reiterating the principal that “oppressive
litigation tactics” alone do not support an anti-SLAPP. (Kajima, supra, 95
Cal.App.4th at pp. 933–934.) Rather, to obtain protection from the statute,
the claims themselves must arise from the speech or petitioning activity.
(Ibid.) In Kajima, the City’s claims were based on conduct of the contractor
that occurred well before it filed suit, not on the filing of the suit. Here, as
explained, the claims arose from Pacific’s conduct of obtaining a coastwise
endorsement from the Coast Guard, protected petitioning activity under
section 425.16, subdivision (e), not the actual work performed under the
contract.
B
With respect to the second prong of the anti-SLAPP analysis, as an
initial matter we reject Curtin’s assertion that Pacific’s argument is waived
for purposes of appeal. As noted, the moving party’s burden on an anti-
SLAPP motion is to establish that the claims at issue arose from protected
activity. Once that burden is satisfied, the party opposing the motion must
show a probability of prevailing on its claims. This burden includes
overcoming any legal defense raised by the defendant. (See Traditional Cat
Assn., Inc. v. Gilbreath (2004) 118 Cal.App.4th 392, 398 [the anti-SLAPP
statute “contemplates consideration of the substantive merits of the
plaintiff's complaint, as well as all available defenses to it, including, but not
limited to constitutional defenses”].) Further, even if the issue is one not
15
raised in the trial court, so long as the relevant facts are not in dispute, the
existence of a legal defense that precludes the claim is properly considered on
appeal. (See Argentieri v. Zuckerberg (2017) 8 Cal.App.5th 768, 789
[determining that its consideration of a defense not directly raised by parties
below was proper].)5
In addition, although Pacific’s points and authorities in support of its
motion did not raise the defense, its answer to Curtin’s complaint included
four affirmative defenses asserting Curtin’s UCL claim based exclusively on a
violation of the Jones Act was not viable. The answer asserted the trial court
was without jurisdiction to hear the claim, the claim was preempted, the
claim was subject to deference to the Coast Guard’s enforcement powers, and
the claim was subject to the primary jurisdiction of the Coast Guard. Indeed,
Curtin’s brief opposing the motion to strike argued that the defense of
preemption was not available because it’s UCL lawsuit furthered the
purposes of the Jones Act and was not in conflict with the law.
Further, at the hearing on its motion, Pacific’s counsel opened his
argument by asserting that Curtin was trying to circumvent the Coast
Guard’s coastwise determination and that the threshold issue was whether
Curtin could prevent Pacific from using its valid coastwise endorsement by
the Coast Guard. These arguments sufficiently raised the issue of whether
5 In support of its argument that Pacific waived the defense for purposes
of its anti-SLAPP motion by not briefing the issue more thoroughly in the
trial court, Curtin cites People v. Braum (2020) 49 Cal.App.5th 342 and
Carian v. Dept. of Fish & Wildlife (2015) 235 Cal.App.4th 806. These cases
are not relevant to the issues here. Neither involved an anti-SLAPP motion
and both involved attempts to introduce new facts on appeal. (See Braum, at
p. 362 [rejecting new factual arguments on appeal from judgment entered
after summary judgment] and Carian, at p. 819 [rejected new factual
arguments on appeal from denial of motion for attorney fees under section
1021.5].)
16
the trial court had the authority to reexamine the Coast Guard’s conclusion
that Pacific had not violated the Jones Act. (See In re A.J. (2019) 39
Cal.App.5th 1112, 1117 [no waiver on appeal where objection sufficient to
inform the court and opposing party of the issue].)
C
As discussed, Pacific argues that the trial court erred by finding Curtin
had met its burden to show a probability of prevailing on the claim because
the alleged violation of the Jones Act, the sole basis for the claim, is
preempted by federal law. Curtin responds that the ruling was correct
because there was a question of material fact as to whether the Sandpiper
was actually assembled in Mexico, and this question cannot be resolved in
Pacific’s favor as a matter of law. We disagree with Curtin. Because the
Coast Guard is the sole arbiter of whether a vessel is eligible for the
coastwise endorsement, and here determined the Sandpiper is eligible,
Curtin cannot prevail on its claim as a matter of law and the motion to strike
must be granted.
1.
“Under the supremacy clause of the United States Constitution (U.S.
Const., art. VI, cl. 2), federal law ‘shall be the supreme Law of the Land.’
(Brown v. Mortensen (2011) 51 Cal.4th 1052, 1059 (Brown).) Therefore
Congress may preempt state laws to the extent it believes such action is
necessary to achieve its purposes.” (Fischer v. Time Warner Cable Inc. (2015)
234 Cal.App.4th 784, 790–791 (Fischer).)
“Congress may exercise that power expressly, or the courts may infer
preemption under one of three implied preemption doctrines: conflict,
obstacle, or field preemption. (Brown, supra, 51 Cal.4th at p. 1059.) Express
preemption occurs when Congress defines the extent to which a statute
17
preempts state law. (Viva! Internat. Voice for Animals v. Adidas Promotional
Retail Operations, Inc. (2007) 41 Cal.4th 929, 935.) Conflict preemption
exists when it is impossible to simultaneously comply with both state and
federal law. (Ibid.) Obstacle preemption occurs when state law stands in the
way of full accomplishment and execution of federal law. (Ibid.) Field
preemption applies when comprehensive federal regulations leave no room
for state regulation.” (Fischer, supra, 234 Cal.App.4th at p. 791.)
“Preemption may be based either on federal statutes or on federal
regulations that are properly adopted in accordance with statutory
authorization. As a result, a federal agency acting within the scope of its
congressionally delegated authority may preempt state regulation and
‘render unenforceable state or local laws that are otherwise not inconsistent
with federal law.’ ” (Fischer, supra, 234 Cal.App.4th at p. 791.)
“In pre-emption analysis, courts should assume that ‘the historic police
powers of the States’ are not superseded ‘unless that was the clear and
manifest purpose of Congress.’ ” (Arizona v. United States (2012) 567 U.S.
387, 400.) “[B]ecause the States are independent sovereigns in our federal
system, we have long presumed that Congress does not cavalierly pre-empt
state-law causes of action. In all pre-emption cases, and particularly in those
in which Congress has ‘legislated ... in a field which the States have
traditionally occupied,’ [citation], we ‘start with the assumption that the
historic police powers of the States were not to be superseded by the Federal
Act unless that was the clear and manifest purpose of Congress.’ ”
(Medtronic, Inc. v. Lohr (1996) 518 U.S. 470, 485 (Medtronic).)
However, the primacy of state police power is not universal. “An
assumption of nonpre-emption is not triggered when the State regulates in
18
an area where there has been a history of significant federal presence.”
(United States v. Locke (2000) 529 U.S. 89, 108 (Locke).)
2.
Contrary to Curtin’s arguments, the presumption against preemption
that applies in other regulatory contexts is not appropriate here. Unlike the
cases in other areas Curtin cites, there is a lengthy history of significant
federal presence in the regulation of maritime activity. (See, e.g., Locke,
supra, 529 U.S. at p. 99 [“The authority of Congress to regulate interstate
navigation, without embarrassment from intervention of the separate States
and resulting difficulties with foreign nations, was cited in the Federalist
Papers as one of the reasons for adopting the Constitution.”].) “The federal
acts and regulations with respect to vessels on the navigable waters of the
United States are elaborate.” (Kelly v. Washington (1937) 302 U.S. 1, 4.)
Thus, unlike other areas of federal law, maritime activity is “an area
traditionally within the purview of federal regulation” and not entitled to a
presumption against conflict preemption. (LaPlante v. Wellcraft Marine
Corp. (2001) 94 Cal.App.4th 282, 290.)
That is especially true with respect to the Jones Act requirement at
issue here, mandating vessels engaged in coastwise trade in the country’s
navigable waters be U.S.-built. In Douglas, the U.S. Supreme Court
explained that “[t]he basic form for the comprehensive federal regulation of
trading and fishing vessels was established in the earliest days of the Nation
and has changed little since. Ships engaged in trade with foreign lands are
‘registered,’.... ‘The purpose of a register is to declare the nationality of a
vessel ... and to enable her to assert that nationality wherever found.’
[Citations.] Vessels engaged in domestic or coastwise trade or used for
fishing are ‘enrolled’.... ‘The purpose of an enrollment is to evidence the
19
national character of a vessel and to enable such vessel to procure a license.’ ”
(Douglas v. Seacoast Projects, Inc. (1977) 431 U.S. 265, 272‒273 (Douglas).)
3.
The vessel documentation and coastwise trade laws are extensive and
are set forth in the U.S. Code and administered by the Coast Guard. Under
the current vessel documentation and coastwise trade laws, a qualified vessel
may participate in the U.S. coastwise trade “only if the vessel has been issued
a certificate of documentation with an endorsement for that trade ....” (46
U.S.C. § 12102(a).) A certificate of documentation may be obtained from the
Coast Guard by filing an Application for Initial Issue, Exchange, or
Replacement of Certificate of Documentation. (46 U.S.C. § 12104; 46 C.F.R.
§ 67.141.) A Certificate of Documentation with a coastwise endorsement may
be issued upon the filing of the application and a “determination of
qualification by the Director, National Vessel Documentation Center ....” (46
C.F.R. § 67.15(b).) At that point, “a vessel for which a coastwise endorsement
is issued may engage in the coastwise trade.” (46 U.S.C. § 12112(b).)
The Coast Guard’s process for determining if a vessel is considered
U.S.-built is set forth in the Coast Guard’s regulations. Under 46 C.F.R.
section 67.97, a vessel is considered U.S.-built if “(a) [a]ll major components
of its hull and superstructure are fabricated in the United States; and
(b) [t]he vessel is assembled entirely in the United States.” Additional
regulations provide that if a vessel is “later rebuilt outside the United
States,” it can be disqualified from obtaining a coastwise endorsement if
either “a major component of the hull or superstructure” was not built in the
U.S., or if the work performed abroad “constitutes more than 10 percent of
the vessel’s ... discounted lightship weight.” (46 C.F.R. § 67.177(a) and (b)(1);
Shipbuilders Council of Am., Inc. v. United States Coast Guard (4th Cir.
20
2009) 578 F.3d 234, 241.) Once a vessel obtains its certificate of
documentation with its coastwise endorsement from the Coast Guard, a
federal statute provides the certificate is “conclusive evidence of qualification
to engage in a specified trade….” (46 U.S.C. § 12134.)
The Coast Guard has the authority to enforce its documentation
requirements. 46 U.S.C. section 12151(b)(1) and (2) authorize the Coast
Guard to seize a vessel if its owner makes misrepresentations in applying for
or using a certificate of documentation. In addition, misstatements on an
application for a certificate of documentation are subject to monetary
penalties of up to $15,000 per day, as well as criminal penalties including
fines and imprisonment. (46 U.S.C § 12151; 18 U.S.C. § 1001.) The Coast
Guard’s regulations and authorizing statutes also provide for administrative
review of its actions. Under 46 C.F.R. section 67.12, “[a]ny person directly
affected by a decision or action taken under this part by or on behalf of the
Coast Guard may appeal therefrom ….”6
We agree with Pacific that these extensive federal provisions give the
Coast Guard the exclusive authority to determine eligibility for a coastwise
endorsement, and this authority cannot be circumvented by a UCL claim
6 Similarly, 46 C.F.R. section 1.03-45, titled “Appeals from decisions or
actions involving documentation of vessels,” states “Any person directly
affected by a decision or action of an officer or employee of the Coast Guard
acting on or in regard to the documentation of a vessel under part 67 or part
68 of this title, may make a formal appeal of that decision or action to the
Director of Inspections and Compliance (CG–5PC), in accordance with the
procedures contained in § 1.03–15 of this subpart. The decision of the
Director of Inspections and Compliance (CG–5PC), on such an appeal will
constitute final agency action.” Under 46 C.F.R. section 1.03-15, an appeal
must be made within 30 days of the Coast Guard decision or action.
21
based exclusively on a violation of the Jones Act.7 Allowing such a claim
creates a potential conflict between state and federal law. Indeed, in this
case Curtin is specifically seeking such a conflict, asking the state court to
reevaluate the documentation provided by Pacific to the Coast Guard and
overturn the Coast Guard’s determination that the Sandpiper was U.S.-built.
Such a result is not tenable. (See Buckman Co. v. Plaintiffs’ Legal Committee
(2001) 531 U.S. 341, 350 (Buckman) [holding “state-law fraud-on-the-FDA
claims” (i.e., state tort claims for injury caused by a medical device approved
by the Food and Drug Administration (FDA) based on alleged
misrepresentation to the FDA) “inevitably conflict with the FDA’s
responsibility to police fraud” and are thus preempted]; Nathan Kimmel, Inc.
v. DowElanco (9th Cir. 2002) 275 F.3d 1199, 1205 (Kimmel) [plaintiff’s claim
for intentional interference with prospective economic advantage, based on a
claim that pesticide manufacturer submitted false information to the federal
Environmental Protection Agency (EPA), was preempted by comprehensive
federal regulatory scheme aimed at controlling the use, sale, and labeling of
pesticides].)
Curtin asserts “Pacific does not and cannot argue that compliance with
state and federal law is impossible.” This assertion is wrong. The core of
Pacific’s argument is that compliance with Curtin’s interpretation of the UCL
7 Curtin devotes several pages in its brief to argue that the Jones Act
does not create field preemption. We agree. The federal statutory and
regulatory scheme allows for supplemental state regulation of waters within
their borders that does not conflict with federal law. (See, e.g., Douglas,
supra, 431 U.S. at p. 277 [Holding Virginia law prohibiting non-resident
vessels, enrolled and licensed under federal law, from fishing in its
waterways was preempted, but noting “that States may impose upon federal
licensees reasonable, nondiscriminatory conservation and environmental
protection measures otherwise within their police power.”].)
22
and compliance with the federal law is not possible. As explained, Pacific has
complied with federal law. The Coast Guard investigated the same complaint
raised by Curtin in this litigation and concluded that the Sandpiper was U.S.-
built and properly awarded a coastwise endorsement. Now, Curtin asks the
state court to override this determination and find that under the Jones Act
the Sandpiper is not U.S.-built. Such a determination directly conflicts with
the valid federal determination obtained by Pacific and therefore is
preempted.
The case both parties cite extensively, Buckman, supports this
determination. In Buckman, the plaintiffs sued a consultant for the
manufacturer of a medical device, orthopedic bone screws, who assisted in
obtaining approval of the device from the FDA. The plaintiffs, who were
injured by the device, asserted the consultant made fraudulent
misrepresentations to the FDA that resulted in improper approval, and that
as a result the consultant was liable under state tort law for injuries caused
by the devices. (Buckman, supra, 531 U.S. at pp. 347–348.) Resolving a split
of authority as to whether such claims were preempted by the Federal Food,
Drug, and Cosmetics Act (FDCA) as amended by the Medical Device
Amendments of 1976 (MDA), the U.S. Supreme Court held the claims were
preempted. (Id. at p. 347.)
In so holding, the court first determined there was no presumption
against preemption because “the relationship between [the] federal agency
and the entity it regulates is inherently federal in character,” and “[p]olicing
fraud against federal agencies is hardly ‘a field which the States have
traditionally occupied ….’ ” (Buckman, supra, 531 U.S at p. 347.) The court
then held the plaintiff’s “fraud-on-the-FDA” claims impermissibly conflicted
with the regulatory scheme established by the FDCA and MDA. (Ibid.) The
23
court noted that the misrepresentations at issue were “prompted by the
MDA, and the very subject matter of [the consultant’s] statements were
dictated by that statute’s provisions.” (Id. at pp. 347–348.)
The court concluded that Congress had enacted the comprehensive
scheme to regulate the process in which the allegedly fraudulent statements
had been submitted to the FDA. The regulations set forth specific disclosure
requirements accompanied by various provisions aimed at detecting,
deterring, and punishing false statements. (Buckman, supra, 531 U.S at
p. 348.) Because maintaining a flexible approach to enforcement was “a
critical component of the statutory and regulatory framework under which
the FDA pursue[d] difficult (and often competing) objectives,” the state law
fraud-on-the-FDA claims would “inevitably conflict with the FDA’s
responsibility to police fraud consistently with the [FDA]’s judgment and
objectives.” (Id. at pp. 349–350.) In addition, the court concluded the claims
would frustrate federal regulatory objectives by increasing the burdens on the
FDA’s processes. (Id. at p. 351.)
Critically, in distinguishing cases where a presumption against
preemption was applied, the court explained that unlike cases based on
traditional tort law principals, the claims “exist[ed] solely by virtue of the
FDCA disclosure requirements.” (Buckman, supra, 531 U.S. at p. 353.) Just
as in Buckman, the relationship between Pacific and the Coast Guard is
“inherently federal in character.” (Id. at p. 347.) The U.S.-built requirement
is created solely by the Jones Act, no parallel state requirement exists.
Pacific’s dealings with the Coast Guard were “prompted by” the Jones Act,
and the requirement that its vessel be U.S.-built was “dictated by that
statute’s provisions.” (Id. at pp. 347‒348.) As in Buckman, the requirement
that the Sandpiper be U.S.-built to be eligible for a coastwise endorsement
24
(and therefore eligible for the USACE contracts) “originates from, is governed
by, and terminates according to federal law.”8 (Id. at p. 347.)
Allowing a state law claim under the UCL premised only on this
violation of the Jones Act conflicts with the accomplishment of the regulatory
objectives given to the Coast Guard by the U.S. Congress. Allowing such a
claim imposes extraneous burdens on the administration of strictly federal
vessel documentation laws by subjecting applicants to “the shadow of 50
states’ tort regimes.” (Buckman, supra, 531 U.S at pp. 350‒351.) The
burdens of such litigation would increase the costs of vessel certification,
potentially frustrating coastwise trade and undermining the Coast Guard’s
ability to accomplish its regulatory obligations.
Further, allowing such a claim conflicts with the enforcement scheme
established by federal law and administered by the Coast Guard, which
includes severe penalties for a violation of the Jones Act like that alleged
here. Critically, permitting Curtin’s claim creates a danger (one Curtin
invites) that state courts will find liability based on their own construction or
8 Curtin asserts that an “essential aspect of Buckman’s reasoning” was
that the FDCA expressly prohibits private enforcement of its requirements
and that the Jones Act contains no such prohibition, taking it outside the
scope of Buckman’s preemption holding. According to Curtin, the lack of a
federal right of action here weighs against preemption. Curtin misconstrues
Buckman. Where, as here, there are significant enforcement mechanisms in
place, the lack of a private right of action does not lead to the conclusion that
there is no preemption. Buckman’s holding was limited to the preemption by
the FDCA of the state law fraud-on-the-FDA claims at issue, and did not
apply to every claim that involved a violation of the FDCA. Buckman
distinguished the claims found not to be preempted in Medtronic, supra, 518
U.S. 470, which were based on a manufacturer’s alleged failure to use
reasonable care in the production of the product and violation of the FDCA.
(Buckman, supra, 531 U.S. at p. 352.) Thus, the existence of a prohibition of
private enforcement was not central to Buckman in the way Curtin contends.
Rather it is one factor to be considered in the conflict preemption analysis.
25
application of law that conflicts with the interpretation of the agency, the
Coast Guard, charged with administering the law. (See Kimmel, supra, 275
F.3d at pp. 1206‒1207 [“we are troubled that an applicant’s disclosure under
[the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)] FIFRA,
although not challenged by the EPA (the very agency empowered by Congress
to enforce FIFRA), may be judged illegal under state law”].)
Our conclusion that Curtin’s claim is preempted is distinguishable from
the cases Curtin cites that involve state claims that parallel a federal law,
but do not conflict with it. These cases involve situations where the state law
remedies at issue supplement the federal claim or provide stricter standards.
For example, in Rose v. Bank of America, N.A. (2013) 57 Cal.4th 390, the
court held that a UCL claim premised on the bank defendant’s violation of
the federal Truth in Saving Act (TISA, 12 U.S.C. § 4301, et seq.) was
permissible. Despite a recent congressional repeal of a private right of action
under TISA itself, which the bank argued showed congressional intent to
preempt private claims under state law, the federal law expressly
“preserve[d] the authority of states to regulate bank disclosures so long as
state law is consistent with TISA.” (Rose, at p. 394.) Accordingly, the court
held that an action under the UCL based on TISA did not create a conflict
26
with the federal law.9 (See also McClellan v. I-Flow Corp. (9th Cir. 2015) 776
F.3d 1035, 1040‒1041 [rejecting preemption of state tort claim against
manufacturer of medical device based on failure-to-warn theory;
distinguishing Buckman because claims were not based on representations
made to the FDA]; Stengel v. Medtronic Inc. (9th Cir. 2013) 704 F.3d 1224,
1233 [state-law negligence claim based on a failure-to-warn the FDA of risks
associated with a previously approved medical device “not preempted, either
expressly or impliedly, by the MDA” because it “rests on a state-law duty that
parallels a federal-law duty under the MDA”].); Quesada v. Herb Thyme
Farms, Inc. (2015) 62 Cal.4th 298 304, 323‒324(Quesada) [state truth-in-
advertising claims not preempted by federal organic certification programs
because they do not interfere with “Congress’s purposes and objectives of
establishing uniform national standards for organic production and
labeling”]; and Farm Raised Salmon Cases (2008) 42 Cal.4th 1077, 1098‒
1099 [UCL claims based on California law mirroring federal law not
preempted].)
9 Curtin states that a federal district court case cited by Pacific, which
analyzed an almost identical claim to Curtin’s, Offshore Service Vessels,
L.L.C. v. Surf Subsea, Inc. (E.D. La., Oct. 17, 2012, No. CIV.A. 12-1311) 2012
WL 5183557, should not be followed because it erroneously based its finding
of preemption solely on “the existence of an ‘enforcement scheme established
by federal law and administered by a federal agency.’ ” This is not a fair
characterization of the case. Like here, the district court relied on Buckman
and other preemption decisions to conclude that a violation of the Louisiana
Unfair Trade Practices and Consumer Protection Law could not be based on
the Jones Act where the Coast Guard had issued a valid coastwise
endorsement. (Id. at pp. *8-14.) The decision was based on the court’s
determination that its adjudication of the claim was in conflict with the
enforcement scheme established by the Jones Act and enforced by the Coast
Guard; not solely because of the scheme’s existence. (Ibid.)
27
In contrast, here, Curtin seeks to use the UCL to overturn a federal
determination of coastwise endorsement eligibility—creating a direct conflict
with the federal regulator’s decision. Curtin can point to no underlying state
policy that would support an independent basis for it to challenge the Coast
Guard’s determination. Only federal law prohibits the use of vessels
constructed abroad in coastwise trade. (Cf. Quesada, supra, 62 Cal.4th at
pp. 310, 313 [federal Organic Foods Act acts as a floor, not a ceiling on the
policing of mislabeling and deception in the sale of food, which “is
quintessentially a matter of long-standing local concern”], and id. at p. 323
[UCL and false advertising claims “do not contest [defendant’s] ability to do
anything its federal certification [under the Organic Food Acts] permits it to
do.”].) Curtin’s assertion that conflict preemption does not apply because
“consumer protection laws such as the UCL” are “within the states’ historic
policing powers,” does not adequately account for the nature of its only claim,
which is based solely on the violation of the federal Jones Act and without
which its case has no basis. In other words, no state concern is involved in
the “unfair competition” Curtin alleges Pacific engaged in.
Finally, it is no answer to say, as Curtin does, that its UCL claim
“seeks only to ensure Pacific fairly competes with [Curtin] by complying with
the Jones Act’s requirement that vessels be assembled entirely in the United
States,” and that Curtin “would have that claim even if Pacific had never
sought or received a coastwise endorsement.” This is not the situation before
us, and we decline to speculate on the viability of such a claim. Here the
Coast Guard examined the Sandpiper and the documentation of its
construction and determined it was entirely U.S.-built, and eligible for
coastwise endorsement. This determination cannot be re-adjudicated by a
28
state court under the UCL in the manner advanced by Curtin. Thus, Curtin
failed to meet its burden to show a probability of prevailing on its claim.
DISPOSITION
The trial court’s order denying Pacific’s motion to strike is reversed.
On remand the trial court is directed to reinstate the case and issue an order
granting the anti-SLAPP motion and striking Curtin’s claim. Costs are
awarded to appellant.
McCONNELL, P. J.
WE CONCUR:
HALLER, J.
IRION, J.
29