Wastexperts, Inc. v. Arakelian Enter., Inc.

323 Cal.Rptr.3d 263

103 Cal.App.5th 652

WASTEXPERTS, INC., Plaintiff and Appellant,

v.ARAKELIAN ENTERPRISES, INC., Defendant and Respondent.

B325299

Court of Appeal, Second District, Division 4.

Filed July 11, 2024

APPEAL from a judgment of the Superior Court of Los Angeles County, Monica Bachner, Judge. Reversed. (Los Angeles County Super. Ct. No. 22STCV19512)

Frost, Christopher Frost, John D. Maatta and Nicholas Lauber for Plaintiff and Appellant.

Manatt, Phelps & Phillips, Ronald B. Turovsky, Donald R. Brown and Benjamin G. Shatz, Los Angeles, for Defendant and Respondent.

ZUKIN, J.

INTRODUCTION

Here we conclude that a declaratory relief claim filed in response to an attorney’s cease and desist letter in a waste collection dispute is not a strategic lawsuit against public participation (SLAPP). (Code Civ. Proc., § 425.16.)¹ We also conclude that communications sent to non-parties about the dispute fall within the commercial speech exemption to the anti-SLAPP law. (§ 425.17, subd. (c).) Appellant WasteXperts, Inc. (WasteXperts) appeals from the trial court’s order granting a motion to strike its entire complaint. We reverse. We publish to draw attention to our concluding note on civility and persuasive brief writing.

FACTUAL AND PROCEDURAL BACKGROUND

I. The Complaint

In June 2022, WasteXperts filed a complaint against both respondent Arakelian Enterprises, Inc. dba Athens Services (Athens) and the City of Los Angeles (City). The complaint alleged that Athens holds a waste collection franchise from the City. Los Angeles Municipal Code (LAMC) section 66.01 prohibits anyone from hauling waste on City streets without such a franchise, unless they have an express permit from the City.

The contract between Athens and the City permits Athens to impose a "Distance Charge" on individual property owners every time an Athens employee must move a collection bin from its permanent location on the owner’s property to the curbside for collection. Property owners may avoid this charge by moving the bins themselves, in advance of collection. The bins belong to Athens, not the property owners.

WasteXperts charges commercial and multi-family residential property owners a fee to manage their "on-site" waste gathering; this fee includes moving collection bins from their permanent locations on the property to the curbside for Athens to collect. Athens sent WasteXperts a "cease and desist" letter, arguing that WasteXperts was not legally permitted to handle Athens’s bins. The letter came from Athens’s eventual trial counsel and complained that the competition from WasteXperts was "extremely damaging to Athens’ business operations, financial interests, and economic prospects." It threatened that Athens would "exercise all remedies" and "seek damages" for this "tortious conduct" which it asserted was "illegal, unfair, and irresponsible." If WasteXperts did not stop moving the bins to the curb, Athens would "proceed with enforcing [its] rights without any further notice."

At the same time, Athens began refusing to allow WasteXperts to reschedule collection days on behalf of its clients. Athens also sent notices directly to those clients, demanding that the clients compel WasteXperts to stop moving Athens’s bins.

In its complaint, WasteXperts sought seven judicial declarations involving both Athens and the City: (1) that the City has no authority to prevent a property owner from hiring an on-site waste manager, (2) that the City cannot give Athens the exclusive franchise to move collection bins to the curb, (3) that the City cannot require a franchise agreement for on-site waste management, (4) that the contract between the City and Athens did not give Athens a franchise for on-site waste management, (5) that the City did not give Athens the exclusive franchise for moving collection bins to the curb, (6) that ratepayers are not required to allow Athens to move collection bins, and (7) that Athens violated its contract with the City when it declined requests to reschedule collection days.

The complaint also asserted tort claims against Athens for interference with contract, interference with prospective economic advantage, unfair competition, and trade libel.

II. Anti-SLAPP Motion and Discovery Request

Athens responded with an anti-SLAPP motion to strike the entire complaint.² The motion was filed and served on August 17, 2022. Under section 425.16, subdivision (g), discovery was automatically stayed as of that date.

Three court days before the opposition was due, WasteXperts asked Athens if it would stipulate to allow WasteXperts to amend the complaint; as an alternative, WasteXperts asked if Athens would agree to continue the special motion to strike so that WasteXperts could take limited discovery. Athens declined both requests the next day.

WasteXperts then filed an ex parte application asking the trial court to (a) shorten time on a motion to lift the discovery stay and (b) continue the hearing on the anti-SLAPP motion. The application was denied the same day the opposition was due.

III. Trial Court's Order

After hearing argument and taking the matter under submission, the court granted the anti-SLAPP motion. On the first prong of the analysis, the court found that each cause of action was based on Athens’s communications to WasteXperts and its clients. The court concluded that these communications anticipated litigation and were therefore protected activity. It also held that the commercial speech exemption contained in section 425.17, subdivision (c) did not apply here.

Proceeding to the second prong, the court determined that WasteXperts had no probability of obtaining any of the seven judicial declarations it sought. The court reasoned there was no merit to any argument regarding legal limitations on the City’s power, Athens had the correct interpretation of its contract with the City, and WasteXperts had no standing to dispute that interpretation. Finally, the court found that each tort claim was barred by the litigation privilege contained in Civil Code section 47, subdivision (b).³

[1] WasteXperts timely appealed the order granting the motion.⁴

DISCUSSION

WasteXperts challenges both the denial of its request for limited discovery and the anti-SLAPP order. It argues that none of its claims arise from activity protected by section 425.16. It contends that the "commercial speech" exemption contained in section 425.17 applies here. It also claims that it has shown a probability of prevailing on the merits.

I. Analysis

Section 425.16, subdivision (b)(1) provides: "A 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 or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim."

[2, 3] "Anti-SLAPP motions are evaluated through a two-step process. Initially, the moving defendant bears the burden of establishing that the challenged allegations or claims ‘aris[e] from’ protected activity in which the defendant has engaged." (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1061, 217 Cal.Rptr.3d 180, 898 P.3d 905 (Park).) "If the defendant carries its burden, the plaintiff must then demonstrate its claims have at least ‘minimal merit.’ " (Ibid.) At this second stage, the court "does not weigh evidence or resolve conflicting factual claims. Its inquiry is limited to whether the plaintiff has stated a legally sufficient claim and made a prima facie factual showing sufficient to sustain a favorable judgment." (Karal v. Schnitt (2016) 1 Cal.5th 376, 384–385, 205 Cal.Rptr.3d 475, 376 P.3d 604.)

[4–7] "We review de novo the grant or denial of an anti-SLAPP motion. [Citation.] We exercise independent judgment in determining whether, based on our own review of the record, the challenged claims arise from protected activity. [Citations.] In addition to the pleadings, we may consider affidavits concerning the facts upon which liability is based. [Citations.] We do not, however, weigh the evidence, but ac- cept plaintiff’s submissions as true and consider only whether any contrary evidence from the defendant establishes its entitlement to prevail as a matter of law." (Park, supra, 2 Cal.5th at p. 1067, 217 Cal.Rptr.3d 130, 393 P.3d 905.)

A. Protected Activity

[8, 9] A cause of action arises from protected activity where the act underlying the cause of action, "the wrong complained of," is itself protected. (Park, supra, 2 Cal.5th at p. 1060, 217 Cal.Rptr.3d 130, 393 P.3d 905; City of Cotati v. Cashman (2002) 29 Cal.4th 69, 77, 124 Cal.Rptr.2d 519, 52 P.3d 695 (Cotati).) Section 425.16, subdivision (e)(2) protects "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." Communications may be protected under that subdivision if they concern the subject of a present dispute and litigation is " ‘ "contemplated in good faith and under serious consideration." ’ " (Neville v. Chudacoff (2008) 160 Cal. App.4th 1255, 1268, 73 Cal.Rptr.3d 383 (Neville); see also Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115, 81 Cal.Rptr.2d 471, 969 P.2d 564.)

Athens argues that the entire lawsuit is based on its prelitigation correspondence, either directly with WasteXperts or with their mutual clients. WasteXperts disagrees; it also contends that the commercial speech exemption applies to take these statements out of the protection of section 425.16.

We conclude that the claim for declaratory relief is not based on the parties’ prelitigation correspondence, and therefore does not arise from protected activity. We additionally conclude that the remaining claims are...