Anti-SLAPP Victory — “If You Sue Me, I’ll Sue You!”

This case was especially satisfying because it was not a classic anti-SLAPP case involving defamation, but we persuaded the judge that the matter fell under the anti-SLAPP laws.

SLAPP stands for Strategic Lawsuit Against Public Participation.  A “SLAPP suit” is one designed to silence a defendant, to prevent him from criticizing the plaintiff or, in this case, to keep him from taking a matter to court.  Here, our (future) client had entered into a settlement agreement with the defendant in a prior action. The settlement agreement required the defendant company to pay damages to our client, and contained a confidentiality agreement. Two years after the settlement agreement was signed, the defendant had still not paid the damages to the plaintiff, so he retained our firm to sue to collect the money due under the agreement.

After the defendant company could not be persuaded to pay the money voluntarily, we filed an action for breach of contract, attaching a copy of the settlement agreement. The defendant answered the complaint and also filed a cross-complaint, claiming that it was a breach of the confidentially agreement to attach the settlement agreement to the complaint. Incidentally, counsel for defendant had discussed with me his intention to cross-complain on this basis, and I had warned him that would be a really bad idea. He did so anyway.

The reason the cross-complaint was a bad idea is because it was a SLAPP. Do you see why? Remember again what SLAPP stands for – Strategic Litigation Against Public Participation.  Defendant had breached the settlement agreement, so clearly we were entitled to sue for breach of that contract. That is the public participation – taking a case before a court for redress of a grievance.  By turning around and cross-complaining that our client had breached the agreement by revealing its contents in court, Defendant was in essence suing our client for suing.  Attempting to punish someone for suing should always raise SLAPP concerns, but defense counsel filed the cross-complaint anyway, even after my warnings. We filed our anti-SLAPP motion against Defendant/Cross-Complainant for the cross-complaint.

So let’s run this case through the two-prong, anti-SLAPP analysis. Our burden was to show that the speech was protected under the anti-SLAPP statute. The speech here was the complaint itself, with the settlement agreement attached. Filing a complaint is a specifically protected activity under the anti-SLAPP statute, and comments made in conjunction with litigation are protected under Section 47. There was no issue that our complaint was a protected activity.

That takes us to the second prong, by which the plaintiff, here the cross-complainant, must show a reasonable likelihood of success on the merits of the case, even if the speech is a protected activity.  Our client was required to keep the agreement confidential in exchange for payment of the damages. But the company never paid the money, so our client was excused from performance. Further, to sue for breach of contract, a plaintiff must allege the terms of the agreement. Here, there was no way to allege a breach of contract without specifying the terms of that agreement. The company argued we should have sought to bring the complaint under seal so no one would ever know the terms, but there is not such obligation required under the law.

But the company had an even more fundamental issue with its cross-complaint. The elements of a breach of contract claim are (1) a contract; (2) a breach of that contract; (3) performance by the plaintiff; and (4) damages from the breach. The company was alleging breach of contract, but it had utterly failed to perform. I attached a declaration from our client saying he had never been paid, and the company could say nothing to refute that point. Thus, the company could never prevail on its breach of contract claim because it could not satisfy the performance element.

The court granted our anti-SLAPP motion, threw out the cross-complaint, and the company is on the hook for more than $15,000 in attorney fees.

[UPDATE — October 14, 2011]  This was a strange case.  Despite the anti-SLAPP victory, counsel for the company just refused to acknowledge the findings of the court.  During settlement discussions, he would always bring up the fact that his client was going to sue for breach of contract for our disclosure of the settlement agreement, even though that claim had already been denied by the court.  He maintained this position right up to trial, offering on the courthouse steps to pay our client a fraction of what he was owed in exchange for a promise that the company would not sue on this non-existent claim.  When we refused, defendant responded by agreeing to a stipulated judgment in the full amount we were owed.  I suppose that the strategy was to wait until the last possible moment in the hope that we would blink (many attorneys will do anything to avoid going to trial, but I am not one of those attorneys), but since the agreement contained an attorney fees clause, all this accomplished was a much higher fee award.  To quote John Lennon, “Strange days indeed, most peculiar, Mama.”

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Aaron Morris
Morris & Stone, LLP

Tustin Financial Plaza
17852 17th St., Suite 201
Tustin, CA 92780

(714) 954-0700

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View Aaron Morris, Trial Attorney and Partner at Morris & Stone, with emphasis on Free Speech and Defamation Law.

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