ORDER DENYING DEFENDANT'S SPECIAL MOTION TO STRIKE
PHYLLIS J. HAMILTON, District Judge.
Defendant's special motion to strike the complaint pursuant to California Code of Civil Procedure § 425.16 came on for hearing before this court on May 21, 2014. Plaintiffs appeared by their counsel Lawrence Gornick, Dennis Canty, and Jeffrey Kaiser, and defendant appeared by its counsel Frank Kelly, Amir Nassihi, and Kevin Underhill. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, the court hereby DENIES the motion.
This is a case filed as a proposed class action by plaintiffs Michael J. Sansoe ("Sansoe") and Eric Frazer dba DE Landscaping ("Frazer") against defendant Ford Motor Company ("Ford"), alleging violation of the Song-Beverly Consumer Warranty Act, Cal. Civ. Code § 1790, et seq.; unlawful, unfair, and fraudulent business practices, in violation of California Business & Professions Code § 17200; violation of the Consumer Legal Remedies Act, Cal. Civ. Code § 1750; and a claim for declaratory relief.
Plaintiffs filed the original complaint on October 29, 2013. On December 9, 2013, approximately six weeks after the original complaint was filed, the parties stipulated to the filing of the first amended complaint ("FAC"), which was then filed on December 10, 2013. Pursuant to the same stipulation, Ford filed an answer to the FAC on January 14, 2014.
Each of the two named plaintiffs purchased new vehicles from Ford. Sansoe bought a Ford F250 truck in late 2007. During the next few years, he brought the truck to the dealer for warranty repairs on several occasions. On October 10, 2012, attorney Jon Jacobs wrote to Ford on Sansoe's behalf and threatened to sue if Ford did not replace Sansoe's truck or reimburse him. After reviewing the matter, Ford made a settlement offer in a letter dated October 24, 2012, addressed to Mr. Jabobs. Sansoe accepted the offer and signed a release.
Plaintiff Eric Frazer, who does business as DE Landscaping, bought a Ford F450 truck in late 2007. He also had numerous problems with the truck, and brought it in to the dealer on multiple occasions for warranty repairs. On November 8, 2012, Mr. Jacobs wrote to Ford on behalf of Frazer, threatening to sue if Ford did not replace Frazer's truck or reimburse him. After reviewing the matter, Ford made an offer in a letter dated December 14, 2012, addressed to Mr. Jabobs. Frazer eventually accepted the offer, and he too, signed a release.
Plaintiffs assert that in reacquiring the vehicles, Ford violated the "Lemon Law," Civil Code § 1790, et seq., by taking excessive and unpermitted deductions for "Wear and Tear," and also by requiring the owners to make certain improvements to the vehicles at their own expense before Ford would take the vehicles back.
Neither the original complaint nor the FAC mentions the settlements or releases, and does not reference the fact that an attorney had negotiated the settlements on plaintiffs' behalf. Ford asserts that it first learned that the disputes may have been settled when reviewing its claims files after plaintiffs filed the complaint in this action, and that it included the issue in its portion of the joint case management statement filed on February 6, 2014. In their portion of the joint statement, plaintiffs denied they had been "parties to `agreements releasing claims,'" but added that even if they had been, they would dispute the legal effect of such agreements, suggesting that settlements and/or releases of Song-Beverly claims are legally precluded because that would constitute a "waiver" of the act's protections under Civil Code § 1790.1.
Plaintiffs claimed they intended to move for partial summary judgment on "Ford's defense that plaintiffs have waived or released their claims," and Ford noted that it was "evaluating motion practice related to the prior settlements." At the case management conference on February 13, 2014, plaintiffs' counsel advised the court that they had just learned of the releases that week.
In lieu of setting pretrial dates, the court agreed to give the parties additional time so they could meet and confer regarding various matters including the issue of the releases and a proposed schedule for class certification and early dispositive motions. The court set the date for the further case management conference for April 10, 2014, which was later continued to June 5, 2014.
Based on the discussion at the case management conference, the court anticipated that one or both of the parties would be filing early motions for summary judgment, which the court had indicated it would authorize. However, on March 28, 2014, following a period of back-and-forth emails and other communications following the initial CMC conference, Ford filed the present motion — a special motion to strike under California's anti-SLAPP statute, Cal. Civ. P. Code § 425.16.
A. Legal Standard
Under California law, Strategic Litigation Against Public Participation (SLAPP) suits masquerade as ordinary lawsuits but are brought to deter common citizens from exercising their political or legal rights or to punish them for doing so. Cal. Civ. P. Code § 425.16. California's anti-SLAPP statute authorizes the filing of a "special motion to strike" any "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 . . . in connection with a public issue." Cal. Civ. P. Code § 425.16(b)(1);
An anti-SLAPP motion is available to defendants in federal court.
In determining whether an action must be stricken under the anti-SLAPP statute, the court engages in a two-step inquiry.
B. Defendant's Motion
Ford seeks an order striking the complaint. Ford argues, first, that plaintiffs' causes of action arise from the protected activity of engaging in settlement discussions regarding threatened litigation. The anti-SLAPP statute defines four kinds of conduct that may constitute acts "in furtherance of a person's right of petition or free speech" for purposes of the statute. Cal. Civ. P. Code § 425.16(e). Here, Ford asserts, its alleged conduct falls within the second category, "any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law." Cal. Civ. P. Code § 425.16(e)(2).
Ford acknowledges that on its face, this language might be read as limited to communications directed to an official body during its review, but argues that it is much broader than that. Ford asserts that the communications need not be made in court or even directed to the court, and that there does not need to be an official proceeding underway at all.
Ford agrees that there is a limit, because the statute requires an act "in connection with" litigation; but asserts that the degree of connection required is minimal, and notes that the California Supreme Court has held that a prelitigation communication is privileged so long as it "relates to litigation that is contemplated in good faith and under serious consideration."
Here, Ford contends, there is no question that this requirement is met, because the settlement offers were made in response to a letter from plaintiffs' former attorney, Mr. Jacobs, expressly threatening to sue, and requesting a settlement offer. A number of courts have held that statements made during settlement negotiations are protected conduct, so that causes of action based on them are subject to anti-SLAPP motions.
While some of the above-cited cases involved settlement negotiations that took place after a lawsuit had been filed,
Ford argues that in the present case, plaintiffs' claims — that "Ford insisted, as a condition of reacquiring Lemon Cars pursuant to the Lemon Law, that [p]laintiffs and other class members pay to remedy what Ford claimed was Wear and Tear, or to accept a reduction in the repurchase price for said Wear and Tear, in addition to the Statutory Mileage Formula deduction," FAC ¶ 10 — arise from protected activity because they are based on allegedly illegal settlement offers and other statements. Ford argues that this theory is the gravamen of the entire case.
Ford contends that it is undisputed that both sides "contemplated" litigation at the time of the discussions that led to the settlements, because plaintiffs' former lawyer Mr. Jacobs threatened legal action in his initial demand letters. Ford argues that under
In its second main argument, Ford contends that plaintiffs will be unable to show a probability that they will prevail on their claims, for four reasons — because plaintiffs have already settled their claims; because the claims are barred by the litigation privilege; because the complaint is not legally sufficient as it is not pled with particularity and does not allege a duty to disclose or justifiable reliance, among other things; and because plaintiffs have not alleged any harm caused by Ford and thus lack standing under § 17200.
The court finds that the motion must be DENIED. As an initial matter, the court finds that the motion was untimely, as it was not filed within 60 days of the date plaintiffs filed the FAC. Under Civil Code § 425.16(f), an anti-SLAPP motion "may be filed within 60 days of the service of the complaint, or, in the court's discretion, at any later time upon which terms it deems proper." Here, the complaint was filed on October 29, 2013, and the FAC was filed on December 10, 2013. The anti-SLAPP motion was filed on March 28, 2014, three-and-a-half months after the FAC was filed. Thus, even counting from the filing of the FAC,
Ford neither requested leave of court to file the motion after the 60 days had elapsed, nor provided any persuasive justification in its moving papers for the late filing. Were that the only problem with Ford's motion, the court might be inclined to offer Ford the opportunity to further brief the issue. However, the court finds that Ford has not made out a prima facie case that the causes of action asserted in the FAC "arise from" Ford's protected activity.
The acts that form the basis of plaintiffs' claims are Ford's alleged deductions from the repurchase price of the Lemon vehicles for claimed Wear and Tear as a condition of completing the re-acquisition transaction. While it may be that Ford's written response to plaintiffs' counsel's demand letter was a protected activity, plaintiffs' causes of action do primarily not arise from Ford's written response, but rather from the alleged act or practice of deducting from the repurchase price amounts that plaintiffs assert were not authorized deductions under the Song-Beverly Act.
The court "must focus on `the substance of' the lawsuit to determine whether it arose from [a party's] protected activities."
Because the court finds that Ford has not made a prima facie showing that plaintiffs' claims "arise from" Ford's protected activity, there is no necessity for the court to consider whether plaintiffs have shown that they are likely to prevail on their claims.
In accordance with the foregoing, the court DENIES the motion.