BKP, Inc. v. Killmer, Lane & Newman, LLP

• Decision Date: 02 December 2021
• Docket Number: Court of Appeals No. 20CA0298
• Citation: 506 P.3d 84,2021 COA 144
• Parties: BKP, INC., Ella Bliss Beauty Bar, L.L.C., Ella Bliss Beauty Bar 2, L.L.C., and Ella Bliss Beauty Bar 3, L.L.C., Plaintiffs-Appellants, v. KILLMER, LANE & NEWMAN, LLP, Mari Newman, and Towards Justice, Defendants-Appellees.
• Court: Colorado Court of Appeals

506 P.3d 84

2021 COA 144

BKP, INC., Ella Bliss Beauty Bar, L.L.C., Ella Bliss Beauty Bar 2, L.L.C., and Ella Bliss Beauty Bar 3, L.L.C., Plaintiffs-Appellants,

v.KILLMER, LANE & NEWMAN, LLP, Mari Newman, and Towards Justice, Defendants-Appellees.

Court of Appeals No. 20CA0298

Colorado Court of Appeals, Division A.

Announced December 2, 2021

Sherman & Howard LLC, Raymond M. Deeny, Heather Fox Vickles, Brooke A. Colaizzi, Denver, Colorado, for Plaintiffs-Appellants

Treece Alfrey Musat P.C., Reza D. Rismani, Denver, Colorado; Killmer, Lane & Newman, LLP, Thomas Kelley, Denver, Colorado, for Defendants-Appellees Killmer, Lane & Newman, and Mari Newman

The Law Office of Brian D. Gonzales, Brian D. Gonzales, Fort Collins, Colorado; Harter Secrest & Emery LLP, Brian M. Feldman, Rochester, New York, for Defendant-Appellee Towards Justice

Opinion by CHIEF JUDGE BERNARD

¶ 1 The plaintiffs in this case, BKP, Inc., Ella Bliss Beauty Bar, L.L.C., Ella Bliss Beauty Bar 2, L.L.C., and Ella Bliss Beauty Bar 3, L.L.C., which we shall collectively call "the employer," filed a lawsuit against defendants, an attorney named Mari Newman and two law firms, Kilmer, Lane & Newman, LLP, and Towards Justice, which we shall cumulatively refer to as "the attorneys." The trial court granted the attorneys’ C.R.C.P. 12(b)(5) motions to dismiss the lawsuit. The employer appeals. We affirm in part, we reverse in part, and we remand the case to the trial court for further proceedings.

I. Background

¶ 2 In May 2018, the attorneys filed a class action lawsuit in federal court on behalf of a nail technician — a person who does manicures and pedicures — who had worked for the employer. The members of the putative class were other nail technicians who had also worked for the employer. The complaint alleged that the employer had violated various wage and employment laws. On the same day, during a press conference announcing the federal lawsuit, Ms. Newman made four allegedly false statements:

1. "For no pay whatsoever, [the nail technicians] have to clean the business, including the bathrooms, because [the employer] is simply too cheap to pay its workers the money they deserve."

2. "Instead of paying the [nail technicians] for every hour that they work, [the employer] pick[s] and choose[s] and only pay[s] for the hours [it] feel[s] like paying."

3. "It is time for businesses to quit financially exploiting women. Oppression of vulnerable workers remains all too common, and this is a particularly audacious case."

4. "It's fairly common in industries that employ populations they think they can take advantage of, like women or immigrants."

¶ 3 Along with the press conference, the attorneys issued a press release that contained, in addition to the third statement above, the allegedly false statement that "[the employer] forced its [nail] technicians to perform janitorial work without pay, refused to pay overtime, withheld tips, and shorted commissions."

¶ 4 About one year after these statements were made, the employer sued the attorneys, asserting that the four statements in the press conference and the statements in the press release amounted to both defamation and intentional interference with contractual relations.

¶ 5 The attorneys asked the trial court to dismiss the claims under C.R.C.P. 12(b)(5), arguing that the statements were not actionable as defamation because they were either (1) subject to the litigation privilege, which we describe below; (2) protected by the Noerr-Pennington doctrine, which we also describe below; or (3) opinions protected by the First Amendment.

¶ 6 In a written order, the trial court granted the attorneys’ motions to dismiss. With respect to the press conference, the court decided that part of the first statement that Ms. Newman made — "For no pay whatsoever, they have to clean the business, including the bathrooms" — and the second statement she made were protected by the Noerr-Pennington doctrine. It then ruled that the latter part of Ms. Newman's first statement — "[The employer] is simply too cheap to pay its workers the money they deserve" — along with the third and fourth statements were protected by the First Amendment because they were opinions, not statements of fact. Last, the court determined that one statement in the press release — "It is time for businesses to quit financially exploiting women. Oppression of vulnerable workers remains all too common, and this is a particularly audacious case"— was protected by the First Amendment because it was an opinion; and that the other statement in the press release — "[The employer] forced its [nail] technicians to perform janitorial work without pay, refused to pay overtime, withheld tips, and shorted commissions." — was protected by the Noerr-Pennington doctrine.

¶ 7 As for the employer's intentional interference with contractual relations claim, the court dismissed it too, concluding that (1) the allegations were conclusory; and (2) there were no actionable defamation allegations that could form the basis for the claim.

II. C.R.C.P. 12(b)(5) Motions

¶ 8 A C.R.C.P. 12(b)(5) motion to dismiss for failure to state a claim upon which relief can be granted tests the formal sufficiency of a plaintiff's complaint. Allen v. Steele , 252 P.3d 476, 481 (Colo. 2011). Such motions are looked upon with disfavor, id. , and we review decisions to grant them de novo, applying the same standards as the trial court, Denver Post Corp. v. Ritter , 255 P.3d 1083, 1088 (Colo. 2011).

¶ 9 When deciding whether to grant a motion to dismiss, a trial court must accept all the allegations of material fact as true, and it must look at them in the light most favorable to the plaintiff. Allen , 252 P.3d at 481. On review, we may consider the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference, and matters proper for judicial notice. Norton v. Rocky Mountain Planned Parenthood, Inc. , 2018 CO 3, ¶ 7, 409 P.3d 331. To avoid being dismissed for failure to state a claim, "a party must plead sufficient facts [in the complaint] that, if taken as true, suggest plausible grounds to support a claim for relief." Patterson v. James , 2018 COA 173, ¶ 23, 454 P.3d 345 (citing Warne v. Hall , 2016 CO 50, ¶ 24, 373 P.3d 588 ).

III. Analysis

A. The Litigation Privilege

¶ 10 We start with the litigation privilege. The trial court's order did not address the attorneys’ litigation privilege argument. But both sides discussed it in their trial court briefs, the attorneys submit in their answer brief that the litigation privilege controls the outcome of this case, and the employer addresses that submission in its reply brief.

¶ 11 "[W]e are in as good a position as the trial court to assess the viability of [the] complaint." Hemmann Mgmt. Servs. v. Mediacell, Inc. , 176 P.3d 856, 859 (Colo. App. 2007). We therefore do not need to remand this case to the trial court to resolve this issue; rather, we can resolve it as a matter of law. See W.O. Brisben Cos., Inc. v. Krystkowiak , 66 P.3d 133, 137 (Colo. App. 2002) (analyzing sufficiency of complaint for the first time on appeal), aff'd on other grounds , 90 P.3d 859 (Colo. 2004).

¶ 12 Whether the litigation privilege applies is a question of law. Club Valencia Homeowners Ass'n v. Valencia Assocs. , 712 P.2d 1024, 1027 (Colo. App. 1985). We review the resolution of questions such as these de novo. Belinda A. Begley & Robert K. Hirsch Revocable Tr. v. Ireson , 2020 COA 157, ¶ 12, 490 P.3d 963 ( Begley II ).

¶ 13 We begin our analysis by asking: What is the litigation privilege?

¶ 14 As a division of this court explained in Club Valencia , 712 P.2d at 1027, Colorado adheres to the description of the privilege found in Restatement (Second) of Torts § 586 (Am. L. Inst. 1977). Section 586 provides that

1. a lawyer "is absolutely privileged to publish defamatory matter" about another person or party;

2. "in communications preliminary to a proposed judicial proceeding"; or

3. "in the institution of, or during the course and as a part of, a judicial proceeding" in which the lawyer participates as counsel;

4. "if it has some relation to the proceeding."

¶ 15 "The purpose of this privilege ... is to afford litigants the utmost freedom of access to the courts to preserve and defend their rights and to protect attorneys during the course of their representation of clients." Club Valencia , 712 P.2d at 1027. As California's Supreme Court has explained, "[i]t is not difficult to imagine the consequences likely to follow in the wake of a rule permitting the defendant in a civil action to institute parallel litigation seeking to impose liability" on the plaintiff's lawyer. Rubin v. Green , 4 Cal.4th 1187, 17 Cal.Rptr.2d 828, 847 P.2d 1044, 1050 (1993). Those adverse consequences include impairing colorable claims by "disrupting access to counsel," intimidating counsel with "an almost certain retaliatory proceeding," distracting counsel by forcing counsel to "defend[ ] a personal countersuit" as well as the original lawsuit, and "dampening ... the unobstructed presentation of claims." Id.

¶ 16 But the privilege has limits. "To be privileged, the alleged defamatory matter must have been made in reference to the subject matter of the proposed or pending litigation, although it need not be strictly relevant to any issue involved in it." Club Valencia , 712 P.2d at 1027. And "the maker of the statement and the recipient must be involved in and closely connected with the proceeding." Id. At the same time, "[n]o strained or close construction will be indulged to exempt a case from the protection of privilege." Id. at 1027-28.

¶ 17 Over the ensuing years, divisions of this court have refined the doctrine.

¶ 18 Significantly, in Buckhannon v. U.S. West Communications, Inc. , 928 P.2d 1331, 1335 (Colo. App. 1996), the division held that the privilege "not only shields attorneys from defamation claims arising from statements made during the course of litigation, but it also bars...