COMPOSITE TECHNOLOGY CORPORATION v. BRITTSAND055583.
COMPOSITE TECHNOLOGY CORPORATION, Plaintiff and Respondent,
BRIAN BRITTSAN, Defendant and Appellant.
BRIAN BRITTSAN, Defendant and Appellant.
Court of Appeals of California, Fourth Appellate District, Division One.
March 12, 2010.
Not to be Published in Official Reports
Composite Technology Corporation (CTC) sued Brian Brittsan, its former chief operating officer, for breach of contract, breach of the covenant of good faith and fair dealing, fraud and unfair business practices, alleging Brittsan retained CTC documents and disclosed confidential information after he was terminated from CTC. Brittsan moved to strike the complaint under California's anti-SLAPP (strategic lawsuit against public participation) statute (Code Civ. Proc., § 425.16),
Brittsan appeals the order, contending the trial court erred in denying his motion because the complaint arose from activity protected by the right to petition and by the right of free speech on an issue of public interest. We find these contentions to be without merit, and accordingly, we affirm.
FACTUAL AND PROCEDURAL HISTORY
From December 2004 to early 2006, Brittsan worked as the chief operating officer for CTC under a written consulting agreement. The consulting agreement provided he would maintain the confidentiality of CTC's documents and information and, upon termination, would return all documents containing confidential CTC information. Brittsan was terminated on February 10, 2006. In April 2006 he signed a "General Mutual Release and Full Satisfaction Agreement" (release agreement) with CTC, under which he received $30,000. In consideration for that payment, Brittsan agreed to return all CTC documents and information in his possession to CTC, and acknowledged his continuing obligation of confidentiality to the company.
In December 2008 Brittsan was served with a subpoena by Mercury Cable & Energy, LLC, in a lawsuit filed by CTC against Mercury for patent infringement, unfair competition and theft of trade secrets (the Mercury subpoena). Brittsan possessed documents responsive to the subpoena, including specification sheets for CTC's products, financial data, sales projections, marketing materials, e-mail correspondence, testing data, and client presentations, and he provided the documents to counsel for CTC. The documents Brittsan possessed were later produced to Mercury in the Mercury litigation. In the meantime CTC filed the complaint in this case, naming Brittsan as the sole defendant.
CTC's complaint asserts four causes of action: (1) breach of the written consulting and release agreements, based on Brittsan's taking and/or keeping confidential CTC property and documents and disclosing confidential CTC information to third parties; (2) breach of the covenant of good faith and fair dealing, based on the same allegations; (3) fraud, based on allegations that Brittsan entered into the release agreement without intending to perform his obligations under it; and (4) unfair competition in violation of Business and Professions Code section 17200, based on the foregoing contract and fraud allegations.
Brittsan filed a motion to strike under section 425.16, contending CTC's complaint was an attempt to quash disclosures in the Mercury litigation and therefore arose from protected conduct. Brittsan submitted an accompanying declaration stating he "did not discuss anything [he] saw with anyone"; "did not show documents to anyone"; but "did save documents in the event [he] determined it was appropriate to file a whistleblower action in Court."
CTC opposed the motion to strike, arguing that although the Mercury litigation had alerted it to the fact that Brittsan kept copies of its confidential documents and disclosed confidential CTC information to Mercury, the action arose out of private business matters to which the anti-SLAPP statute does not apply. As examples of the disclosures made by Brittsan, CTC submitted copies of e-mails between Brittsan and certain Mercury principals and executives discussing CTC's business relationships and technology and Brittsan's suspicions of illegal activity occurring at CTC.
In response, Brittsan objected that CTC failed to authenticate the e-mails. He continued to argue that CTC's lawsuit was "meant to intimidate" him from producing documents and testifying in the Mercury litigation. Brittsan asserted, but provided no supporting evidence, that he was "seriously considering filing a whistleblower lawsuit," and had "sought out the advice of counsel in his pre-litigation whistleblower contemplation."
The trial court denied the motion to strike, finding CTC's causes of action set forth in the complaint arose from "the obligations set forth in the Consulting Agreement and Release Agreement," not from protected activity. The court found "[t]he only connection between the gravamen of plaintiff's claims and the documents" Brittsan produced pursuant to subpoena "is that the documents tend to support the causes of action alleged against defendant." The court also noted Brittsan's declaration "admits that he did not return all of plaintiff's property." Finally, the court held that CTC "has demonstrated a probability of prevailing on its causes of action." The court also overruled Brittsan's objections to the admissibility of the e-mails.
On appeal, Brittsan contends that the trial court erred in denying his motion to strike under section 425.16, the anti-SLAPP statute, because his complaint arose from protected activity. Specifically, Brittsan asserts the complaint arose from activity protected by the right to petition under section 425.16, subdivision (e)(1) and (2), including his response to the Mercury subpoena and a whistleblower lawsuit he contemplated filing. In addition, Brittsan contends the complaint arose from his communications about CTC's alleged misconduct and financial problems, which he contends were free speech on a public issue or issue of public interest, protected under section 425.16, subdivision (e)(4). We address each of these contentions in turn, after discussing the law and standard of review applicable to this case.
A. The Anti-SLAPP Statute and Standard of Review
We review a trial court's order denying an anti-SLAPP motion de novo. (Soukup v. Law Offices of Herbert Hafif (2006)
To meet the threshold burden, a defendant moving to strike under section 425.16 must show the act underlying each cause of action was "`"itself . . . an act in furtherance of the right of petition or free speech,"`" falling within one of the four categories of section 425.16, subdivision (e). (Equilon Enterprises v. Consumer Cause, Inc. (2002)
The requirement to show a cause of action "`aris[es] from'" a protected act "is not always easily met." (Equilon, supra, 29 Cal.4th at p. 66.) Even if a claim is triggered by protected activity, it may not be stricken under the anti-SLAPP statute unless the claim is actually based on such conduct. (Cotati, supra, 29 Cal.4th at p. 77.) It is not sufficient to show some protected activity is implicated in the allegations of the complaint. Rather, "it is the principal thrust or gravamen of the plaintiff's cause of action that determines whether the anti-SLAPP statutes applies . . ., and when the allegations referring to arguably protected activity are only incidental to a cause of action based essentially on nonprotected activity, collateral allusions to protected activity should not subject the cause of action to the anti-SLAPP statute." (Martinez v. Metabolife Internat., Inc. (2003)
B. Brittsan Fails to Show CTC's Causes of Action Arise from Activity Protected by the Right to Petition Under Section 425.16
Attempting to meet his threshold burden to show CTC's causes of action arose from protected activity, Brittsan contends the complaint arose from his response to the Mercury subpoena and his contemplation of whistleblower litigation, which he asserts was conduct protected by the right of petition under section 425.16, subdivision (e)(1) and (2), respectively. We address each of these contentions in turn.
1. CTC's Causes of Action Did Not Arise from Brittsan's Response to the Mercury Subpoena
Brittsan contends that "CTC's lawsuit arises from [his] communications regarding Mercury's lawfully issued subpoenas in a pending litigation," which he claims are protected activity made before a judicial proceeding and concerning an issue before a judicial proceeding under section 425.16, subdivision (e)(1) and (2).
Responding to a subpoena may be protected petitioning activity under section 425.16 where a cause of action arises from that activity. (See, e.g., Greka Integrated, Inc. v. Lowrey (2005)
CTC alleges Brittsan breached his contracts and the associated covenant of good faith and fair dealing by retaining documents and disclosing information to third parties, not by responding to the Mercury subpoena.
It is immaterial, as Brittsan claims, whether CTC asserted its causes of action as a litigation tactic "in response to, or in retaliation for," Brittsan's response to the subpoena, because our analysis turns "on the substance of [the] lawsuit," not on plaintiff's "subjective intent." (Cotati, supra, 29 Cal.4th at p. 78; Paul v. Friedman (2002)
2. Brittsan Failed to Show His Retention of Documents and Disclosure of CTC Information Was Protected Activity
Brittsan next contends CTC's complaint is based on protected activity because he retained CTC documents in contemplation of filing a whistleblower lawsuit regarding alleged improper conduct by CTC's officers and directors, and that "any communications regarding those matters would be protected activity under the anti-SLAPP statute." We disagree that Brittsan has met his burden to show that either his retention of documents or his disclosure of CTC information is conduct protected as prelitigation activity under section 425.16.
Communications made in preparation for litigation may fall within the protection afforded to the right of petition under section 425.16. (Briggs, supra, 19 Cal.4th at p. 1115.) The litigation-related activity protected under section 425.16 subdivision (e)(1) and (2) is expressly limited to communications, and does not include actions that are noncommunicative unless they are necessarily related to protected conduct. (Rusheen v. Cohen (2006)
a. Brittsan fails to show any connection between the activity which is the subject of CTC's complaint and the anticipated whistleblower litigation.
Attempting to show that his acts giving rise to CTC's complaint constituted protected prelitigation activity, Brittsan argues his retention of CTC documents and alleged disclosures of confidential information were connected to potential whistleblower litigation. His attempts are unavailing.
Brittsan fails to show that the retained documents — which included technical data and specifications, financial projections, marketing materials and client presentations — were necessarily related to any whistleblower lawsuit. (Rusheen, supra, 37 Cal.4th at pp. 1052, 1065 [§ 425.16, subd. (e)(1) & (2) do not include actions that are noncommunicative unless they are necessarily related to protected conduct].) Contrary to his repeated claim on appeal that he showed the documents to his attorney, Brittsan's declaration plainly denies ever showing the documents to anyone, and states he kept the documents "in the event" he decided to file such an action. Brittsan never describes the documents or their significance to potential whistleblower litigation, and never describes any illegal activity by CTC. Brittsan therefore fails to establish any basis for his argument that his retention of documents was protected prelitigation activity.
Brittsan also fails to show his e-mailed disclosures of confidential CTC information to Mercury executives were (1) related to any potential whistleblower litigation and (2) sent to parties interested in that litigation.
Brittsan thus fails to show that either his retention of CTC documents or alleged disclosures relate to any potential whistleblower litigation, as required to merit protection under the anti-SLAPP statute. (Neville, supra, 160 Cal.App.4th at p. 1266; Rusheen, supra, 37 Cal.4th at p. 1065.)
b. Brittsan fails to show he seriously considered or proposed a whistleblower litigation.
Despite his numerous appellate assertions to the contrary, Brittsan points to no evidence that he had a serious, good faith intention to file a whistleblower lawsuit. (Neville, supra, 160 Cal.App.4th at p. 1268.) Brittsan's own declaration discussing the reasons he retained the CTC documents merely states he did so "in the event I determined it was appropriate to file a whistleblower action in Court." (Italics added.) No lawsuit was filed. Indeed, two months after his CTC termination, Brittsan signed an agreement with CTC under which he released all claims "relating in any way to CTC," which is inconsistent with his later assertions in his reply brief to the trial court and on appeal that he expected to file a whistleblower lawsuit.
In sum, Brittsan fails to support his contention that his retention of documents or disclosure of information was protected activity. (Rhino Electric Supply, supra, 137 Cal.App.4th at pp. 1127-1128 [statement in collection letter that supplier would pursue all available legal remedies was insufficient to show serious consideration of litigation].)
Brittsan's reliance on Fox Searchlight Pictures, Inc. v. Paladino (2001)
In sum, Brittsan does not make the required showing that the acts underlying CTC's complaint constituted protected prelitigation conduct. We therefore conclude the trial court did not err in denying his motion to strike under section 425.16.
B. Brittsan Has Waived His Claim That His Disclosures Are an Exercise of Free Speech Protected Under Section 425.16
On appeal, Brittsan contends his conduct furthered his rights of free speech in connection with a public issue or issue of public interest, which is activity protected from SLAPP suits under section 425.16, subdivision (e)(4). We disagree. As we will explain, Brittsan has waived this issue by not raising it in the trial court. Even if he had not waived the claim, Brittsan fails to show CTC's complaint arises from conduct falling within the protection for free speech under section 425.16.
1. Brittsan Waived Any Argument the Complaint Was Subject to a Motion to
Strike Under Section 425.16, Subdivision (e)(4)
As a rule, arguments not raised in the trial court may not be asserted for the first time on appeal. (Peterson v. John Crane, Inc. (2007)
On appeal, Brittsan contends that CTC's complaint is based on his commenting on its illegal and improper conduct, which he contends is an issue of public interest for which protection is afforded pursuant to section 425.16, subdivision (e)(4). However, Brittsan never suggested to the trial court that his conduct was protected under section 425.16, subdivision (e)(4). Having relied exclusively on section 425.16, subdivision (e)(1) and (2) in the trial court, Brittsan may not now expand his theory to encompass the other subdivisions on appeal. (Flatley, supra, 39 Cal.4th at p. 321, fn. 10.)
2. Brittsan's New Theory That CTC Sued Him for His Exercise of Free Speech on a Public Issue or Issue of Public Interest Lacks Merit
Even if Brittsan had not waived his claim under subdivision (e)(4), we would nevertheless conclude that he fails to show that the CTC complaint arose from activity in furtherance of his right of free speech on a public issue or issue of public interest.
Section 425.16, subdivision (e)(4) provides for a motion to strike based on "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)(4).) For purposes of section 425.16, subdivision (e)(4), an issue must be one of concern to a substantial number of people, not merely a private controversy of interest to the speaker and a relatively small, specific audience. (Weinberg v. Feisel (2003)
Brittsan fails to demonstrate how the documents he retained or the e-mails he sent to Mercury executives were related to any issue of widespread public interest or were of concern to a broad segment of society. Brittsan submitted no evidence to the trial court establishing a relationship between his alleged disclosures about CTC's supposed illegal activity and any matter affecting numerous persons "beyond the direct participants," or involving a topic of "widespread public interest" or ongoing controversy. (Commonwealth Energy Corp. v. Investor Data Exchange, Inc. (2003)
Unlike the cases upon which Brittsan relies, nothing here shows there was interest by or on behalf of any broad segment of society in CTC's financial issues or alleged misconduct. (Global Telemedia International, Inc. v. Doe 1 (2001)
Brittsan argues that the e-mails submitted by CTC are "free speech concerning an issue of public interest because they discuss, in general, improper conduct by officers and directors of a [publicly] traded company and the related financial difficulties." However, because the e-mails were sent only to principals and executives of CTC's competitor, Brittsan must show his disclosures occurred "in the context of an ongoing controversy, dispute or discussion, such that it warrants protection by a statute that embodies the public policy of encouraging participation in matters of public significance," which he fails to do. (Du Charme, supra, 110 Cal.App.4th at p. 119 (italics added); Mann v. Quality Old Time Service, Inc. (2004)
We therefore conclude section 425.16, subdivision (e)(4) does not apply and Brittsan did not meet his threshold burden to establish his alleged misconduct was protected by the anti-SLAPP statute. (§ 425.16, subd. (b)(1).) Accordingly, the trial court did not err in denying his motion to strike.
Having concluded the anti-SLAPP protection under section 425.16 does not apply to this lawsuit, we need not address whether CTC has demonstrated a probability of prevailing on the complaint. (Navellier, supra, 29 Cal.4th at pp. 88-89.)
The order denying the motion to strike is affirmed.
MCCONNELL, P. J.
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