People v. Rutherford

THE PEOPLE, Plaintiff and Appellant, v. JAMES RUTHERFORD et al., Defendants and Respondents.

E073700

COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION TWO

December 23, 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super.Ct.No. RIC1902577)

OPINION

APPEAL from the Superior Court of Riverside County. Sunshine S. Sykes, Judge. Affirmed.

Michael A. Hestrin, District Attorney, Emily R. Hanks and Timothy S. Brown, Deputy District Attorneys, for Plaintiff and Appellant.

The Civil Justice Association of California and Fred J. Hiestand as Amicus Curiae on behalf of Plaintiff and Appellant.

Bremer Whyte Brown & O'Meara, Benjamin L. Price and Courtney M. Serrato for Defendants and Respondents James Rutherford and The Association for Equal Access.

Callahan & Blaine, Daniel J. Callahan, David J. Darnell and Drew Harbur for Defendants and Respondents Law Offices of Babak Hashemi, Babak Hashemi, Manning Law, Joseph R. Manning, Michael J. Manning and Craig Cote.

I. INTRODUCTION

In this civil action, the People allege in their complaint that defendants and respondents, comprised of two litigants, two law firms, and four attorneys¹ (collectively, defendants), engaged in an unlawful business practice, in violation of the unfair competition law (the UCL) (Bus. & Prof. Code, § 17200, et. seq.), by filing and pursuing approximately 120 "fraudulent ADA lawsuits," falsely accusing Riverside County businesses and individuals of violating the Americans with Disabilities Act (the ADA) (42 U.S.C. § 12181, et seq.), in order to extort monetary settlements from the defendants in the ADA lawsuits. The People seek to enjoin defendants from filing and pursuing fraudulent ADA lawsuits, along with civil penalties of not less than $1,000,000 from each defendant, and "full restitution" to the victims of defendants' unfair "ADA lawsuit scheme."

The trial court sustained defendants' general demurrer to the People's complaint (Code Civ. Proc., § 430.10, subd. (e)), without leave to amend, and entered a judgment of dismissal on the ground that the litigation privilege (Civ. Code, § 47, subd. (b)) protecteddefendants' communications in filing and pursuing the ADA lawsuits. In this appeal, the People claim their UCL claim falls outside the scope of the privilege because it alleges that defendants violated three criminal statutes, each more specific in their operation than the privilege: Penal Code section 484 (theft by false pretenses), Penal Code section 523 (extortion by writing), and Business and Professions Code section 6128, subdivision (a) (deceit and collusion by attorneys). The People also claim that the privilege does not apply because they were not a party to the ADA lawsuits. We agree that the litigation privilege applies to the People's UCL claim, and we affirm the judgment of dismissal.

II. FACTS AND PROCEDURE

A. The Allegations of the People's Complaint²

James Rutherford is a plaintiff in approximately 120 lawsuits, filed in federal court, alleging ADA violations against "Riverside County individuals and/or businesses" (the ADA lawsuits). A4EA, an unincorporated entity founded by Rutherford, is a plaintiff in approximately 26 of the 120 ADA lawsuits in which Rutherford is also a plaintiff. Hashemi Law, and attorney Babak Hashemi, filed the approximate 26 ADA lawsuits in which Rutherford and A4EA are plaintiffs. Manning Law, and attorneys Joseph R. Manning, Jr., Michael J. Manning, and Craig Cote, filed the approximate 94 ADA lawsuits in which only Rutherford is plaintiff. Manning Law "typically" files ADAlawsuits on behalf of Rutherford, and Hashemi Law files ADA lawsuits on behalf of Rutherford and A4EA.

Defendants have collectively filed "some 323 lawsuits"—approximately 300 in federal court, alleging ADA violations, and approximately 23 in state court, alleging violations of the Unruh Civil Rights Act (the Unruh Act) (Civ. Code, § 51 et seq.). The 300 federal court lawsuits also alleged violations of the Unruh Act, and include the 120 ADA lawsuits in which Rutherford, or Rutherford and A4EA, are plaintiffs.

The ADA lawsuits generally contain the "same boilerplate allegations." Each alleges that: Rutherford is a California resident with a qualified ADA disability (see 42 U.S.C. § 12102(2)); Rutherford attempted to visit the businesses of the defendant(s) in the ADA lawsuits on certain dates or in given months; when Rutherford attempted to visit the businesses, he encountered at least one " 'architectural barrier,' " for example, a non-ADA compliant handicap parking space, signage, curb ramp, or access route; as a result of these barriers, Rutherford was "deterred from patronizing" the businesses and "suffered difficulty, humiliation and/or frustration"; following his first attempted visit, and despite the architectural barriers and ADA violations, Rutherford intended to return to the businesses in order to avail himself of their goods and services and to ensure that they complied with the ADA. In each ADA lawsuit, Rutherford and A4EA sought injunctive relief to remedy the ADA violations, plus "mandatory minimum" damages of at least $4,000 for each alleged Unruh Act violation.

Rutherford did not visit any of the businesses sued in the ADA lawsuits "for good faith purposes"; rather, he visited each business for the sole purpose of initiating a federalADA lawsuit against it. Rutherford also had no "good faith intention" to return to any of the businesses, and he did not return to any of the businesses after the ADA lawsuit against each business was filed. Rutherford was never "denied, by way of any architectural barriers, full access and/or full enjoyment at any of the businesses sued" in any of the ADA lawsuits, based on his claimed disabilities. Rutherford had been observed "on multiple occasions, walking and ambulating without difficulty," and engaging in behavior "inconsistent with the claims" in the ADA lawsuits. None of the businesses sued in the ADA lawsuits have any record of Rutherford entering their businesses, including video evidence, purchase or appointment records, or verbal or written complaints concerning the alleged ADA or Unruh Act violations. A4EA is controlled by Rutherford, has "no more than a few members," is "nothing more than a website," and was "used" by defendants "to increase fear and exact settlements" from the defendants sued in the ADA lawsuits.

The complaint thus alleges that Rutherford lacked standing to file and maintain the ADA lawsuits, and that defendants were fully aware of Rutherford's lack of standing, and his ability to fully ambulate without aid, when each ADA lawsuit was filed. "Defendants colluded, conspired and/or otherwise agreed to engage in an ADA lawsuit scheme, designed to defraud, extract and/or extort money settlements from Riverside County individuals and businesses, based on the fraud, misrepresentations and false allegations contained in each and every one of the federal ADA lawsuits."

Based on defendants' pursuit and filing of the ADA lawsuits, the complaint alleges two causes of action against each defendant: the first for engaging in unfaircompetition in violation of Business and Professions Code section 17200 (the UCL claim), and the second for making false and misleading statements in violation of Business and Professions Code section 17500. As part of its UCL claim, the complaint alleges that, by filing and pursuing the ADA lawsuits, each defendant violated Penal Code sections 484 (grand theft) and 523 (extortion by writing).

The complaint further alleges that Hashimi Law, Manning Law, and the four attorney defendants³ violated Business and Professions Code sections 6106 (attorney's commission of any act involving moral turpitude, dishonesty, or corruption constitutes a cause for disbarment or suspension) and 6128 (attorney deceit or collusion, with intent to deceive the court or any party, is a misdemeanor), along with former rules 1-120 and 3-200 of the Rules of Professional Conduct.⁴ The complaint seeks to enjoin defendants from engaging in the "unlawful, unfair, and fraudulent business practices" of filing and pursuing false ADA lawsuits; to impose a civil penalty of not less than $1,000,000 on each defendant, and "full restitution" to the victims of defendants' "ADA lawsuit scheme."

B. Defendants' Demurrer and the Trial Court's Ruling

Defendants filed a general demurrer to the complaint, that is, they claimed it failed to state a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) They argued that their alleged conduct and statements in filing and pursuing the ADA lawsuits were "absolutely protected by California's litigation privilege."⁵ The People opposed the demurrer.

Following a hearing, the trial court concluded that it was very clear that the litigation privilege protected defendants' communications made in, and in furtherance of, the ADA lawsuits, and there was no reasonable possibility that the complaint could be amended to state a cause of action. The court thus sustained the demurrer, without leave to amend, and entered judgment dismissing the complaint. The People filed this timely appeal.

III. DISCUSSION

A. Standard of Review

A general demurrer to a complaint is properly sustained when the complaint fails to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10,subd. (e); see Wittenberg v. Bornstein (2020) 51 Cal.App.5th 556, 566.) Our review of the resulting judgment of dismissal is de novo. (Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512.)

In determining whether the complaint states a cause of action, we assume the truth of its well-pleaded factual allegations, but not...