Boracchia v. Fister

MARC BORACCHIA et al., Plaintiffs and Respondents, v. RYAN FISTER et al., Defendants and Appellants.

A156321

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION ONE

April 15, 2020

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(San Francisco County Super. Ct. No. CGC-17-561848)

Defendants Ryan and Sunshine Fister appeal from the order denying their anti-SLAPP motion¹ which sought to strike plaintiffs Marc Boracchia's and Lea Wivoitt-Boracchia's complaint for defamation and false light invasion of privacy. Assuming for purposes of its ruling that defendants' allegedly defamatory statements were protected activity, the trial court found that plaintiffs met their burden of demonstrating their claims had minimal merit. We conclude the conduct complained of is not protected speech or petitioning activity. Accordingly, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In October 2017, plaintiffs filed a complaint against defendants alleging claims for defamation and false light invasion of privacy. The complaint states that plaintiffs were financial advisors at Northwestern Mutual San Francisco (Northwestern Mutual). Defendants were plaintiffs' clients. Defendants are college-educated professionals and sophisticated investors with a diversified asset portfolio. Defendants told plaintiffs they desired a long-term, low-risk investment to balance their retirement portfolio. Plaintiffs recommended they invest in a cash value life insurance plan.

According to the complaint, plaintiffs "diligently disclosed all relevant facts pertaining to what a cash value life insurance plan was and how it operated." Defendants applied for a policy and were provided a complete liquidity disclosure schedule that showed their investment would be illiquid for several years. Prior to submitting the application to underwriting, the parties held multiple telephone conferences to address defendants' questions and concerns. Defendants acknowledged that they fully understood all aspects of the plan. Their application was approved and a policy was issued in April 2016 (Policy).²

In October 2016, defendants allegedly had a change of heart and sought to get out of the Policy by falsely representing to Northwestern Mutual that plaintiffs had deliberately withheld information about certain aspects of the Policy, including that it could not be fully liquidated after the first year and that plaintiffs' commission on the sale of the Policy was paid out of defendants' contributions. According to plaintiffs, defendants made this false complaint because they suffered buyer's remorse and wanted a full refund.The complaint further alleged that defendants committed defamation per se and placed plaintiffs in a false light because defendants' false statements injured plaintiffs in their occupation by attacking their veracity, integrity, and ethics as financial professionals. Plaintiffs sought $1 million in general damages, as well as special and punitive damages.

Defendants filed a special motion to strike the complaint under section 425.16. They asserted that plaintiffs' causes of action arose from acts in furtherance of their right of petition or free speech in connection with a public issue, and that plaintiffs could not establish a probability of prevailing on their claims. Defendants argued that the complaint was not actionable because their alleged statements to Northwestern Mutual were truthful and were made "in connection with an issue under consideration in an official proceeding authorized by law," entitling them to absolute immunity under the litigation privilege and qualified immunity based on the common interest privilege.

In an accompanying declaration, defendants indicated that as a result of their complaint, Northwestern Mutual agreed " 'there were miscommunications and misunderstandings with regard to the purchase and sale of [the Policy].' " Northwestern Mutual rescinded the Policy and returned their premiums. Northwestern Mutual then terminated plaintiffs' employment and notified the Financial Industry Regulatory Authority (FINRA) of their terminations.

In their opposition to the motion to strike, plaintiffs argued that the complaint did not arise from acts in furtherance of defendants' right to free speech on a public issue because the statements were not made before any kind of official proceeding, nor were they made in connection with an issue of public interest. They also asserted they had established a probability ofprevailing on their claims under the lenient standard of proof applicable to anti-SLAPP motions. Both parties submitted objections to the evidence submitted by the other party.

The trial court denied defendants' motion to strike the complaint. Assuming without deciding that the first prong of the anti-SLAPP inquiry had been satisfied, the court found that plaintiffs had satisfied their burden of showing that there is minimal merit to each of their claims. Specifically, there was sufficient evidence that one or more of the statements made by defendants was provably false and that the statements were made with malice, defeating the common interest privilege. The court further found that the litigation privilege did not apply because the allegedly false statements were not made preliminary to or during a judicial or quasi-judicial proceeding. This appeal followed.

DISCUSSION

I. Applicable Law and Standard of Review

The California Legislature enacted the anti-SLAPP statute to counteract "a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances." (§ 425.16, subd. (a).) A court may order a cause of action "arising from any act" "in furtherance" of the "right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue" to be stricken by means of this special motion. (§ 425.16, subd. (b)(1).) We review the order granting or denying an anti-SLAPP motion de novo. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325.)

"Resolution of an anti-SLAPP motion involves two steps. First, the defendant must establish that the challenged claim arises from activity protected by section 425.16. [Citation.] If the defendant makes the requiredshowing, the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success." (Baral v. Schnitt (2016) 1 Cal.5th 376, 384.)

II. Official Proceeding (§ 425.16, subd. (e)(1))

Defendants base their protected activity argument on two kinds of protected statements or conduct: those made in an official proceeding (§ 425.16, subd. (e)(1)), and conduct connected with a public issue. (§ 425.16, subd. (e)(4).) Section 425.16, subdivision (e)(1) defines protected activity as "any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law." Because FINRA "is an official body for purposes of section 425.16, subdivision (e)(1)," defendants contend that their statements about plaintiffs were made before an "official proceeding." (Fontani v. Wells Fargo Investments, LLC (2005) 129 Cal.App.4th 719, 728 (Fontani), disapproved on another point in Kibler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192, 203, fn. 5.)

As background, "FINRA is a 'self-regulatory organization' under the Securities Exchange Act and is overseen by the Securities and Exchange Commission [(SEC)]. FINRA exercises comprehensive oversight and regulation over all securities firms." (Adjian v. JPMorgan Chase Bank, N.A. (9th Cir. Aug. 31, 2017) 697 Fed.Appx. 528, 529-530; Fontani, supra, 129 Cal.App.4th at p. 728.) FINRA "is the successor to the National Association of Securities Dealers, Inc. [NASD]." (Adjian, at p. 530.) As noted above, in Fontani, the Court of Appeal concluded the NASD qualified as an official body under the anti-SLAPP statute. (Fontani, at p. 728.)

Plaintiffs are investment adviser representatives subject to FINRA's jurisdiction. Northwestern Mutual is "a member of the [FINRA] and, as such, must abide by that body's rules relating to the registration of employees. Article V, section 3 of the [FINRA] by-laws requires members tonotify it 'on a form designated by the [FINRA]' when the association of a registered person with that member is terminated." (Fontani, supra, 129 Cal.App.4th at pp. 725-726.) The designated form is the Uniform Termination Notice for Securities Industry Registration, also known as a Form U-5. (Fontani, at p. 726.) Federal law requires "that FINRA publish information about its members' 'disciplinary actions, regulatory . . . proceedings, and other information required by . . . exchange or association rule, and the source and status of such information.' (15 U.S.C. § 78o-3(i)(5).) FINRA does this through BrokerCheck . . ., which allows members of the public to search for and review the professional history of individual brokers." (Flowers v. Financial Industry Regulatory Authority, Inc. (2017) 16 Cal.App.5th 946, 950, italics omitted.)

Defendants rely on Fontani to argue that their communications with Northwestern Mutual were protected petitioning activity because it resulted in plaintiffs' termination and the filing of a form U-5 with FINRA. In Fontani, an employee sued his former employer, Wells Fargo Investments, Inc., following his termination. (Fontani, supra, 129 Cal.App.4th at p. 725.) Among his allegations, the employee claimed Wells Fargo defamed him and interfered with his prospective business advantage when it submitted a Form U-5 to the NASD describing the reasons for his...