Contemporary Services Corp. v. Staff Pro

• Decision Date: 27 June 2007
• Docket Number: No. G037750.,G037750.
• Citation: 152 Cal.App.4th 1043,61 Cal.Rptr.3d 434
• Court: California Court of Appeals Court of Appeals
• Parties: CONTEMPORARY SERVICES CORPORATION et al., Plaintiffs and Appellants, v. STAFF PRO INC. et al., Defendants and Respondents.

61 Cal.Rptr.3d 434

152 Cal.App.4th 1043

CONTEMPORARY SERVICES CORPORATION et al., Plaintiffs and Appellants, v. STAFF PRO INC. et al., Defendants and Respondents.

No. G037750.

Court of Appeal, Fourth District, Division 3.

June 27, 2007.

Philipson & Simon, Anahiem, Jeffrey S. Simon, David A. Simon; Martin & McCormick, Kathy J. McCormick and John D. Martin, Victorville, for Plaintiffs and Appellants.

Gibbs Giden Locher & Turner, Los Angeles, James M. Gansinger; Baer & Troff and Eric L. Troff for Defendants and Respondents.

OPINION

FYBEL, J.

INTRODUCTION

Contemporary Services Corporation (CSC) and its president Damon Zumwalt (collectively plaintiffs) appeal from the judgment entered after the trial court granted Staff Pro Inc. and its president Cory Meredith's (collectively defendants) special motion to strike plaintiffs' first amended complaint under Code of Civil Procedure section 425.16, Commonly referred to as the anti-SLAPP (strategic lawsuit against public participation) statute. (All further statutory references are to the Code of Civil Procedure unless otherwise specified.) Plaintiffs contend the trial court erred by granting the motion because (1) each claim alleged in the first amended complaint was based on statements and conduct which fell within the commercial speech exemption set forth in section 425.17, subdivision (c), and thus was immune from challenge under the anti-SLAPP law; and (2) plaintiffs demonstrated a probability of prevailing on each claim contained in the first amended complaint. Plaintiffs also contend the trial court abused its discretion by denying their request to conduct limited discovery, in the form of taking Meredith's deposition, while defendants' motion was pending.

We affirm. Although the alleged statements and conduct were critical of a business competitor, the commercial speech exception set forth in section 425.17, subdivision (c), does not apply. Plaintiffs failed to carry their burden of demonstrating a probability of prevailing on any of their claims. The trial court did not err by denying plaintiffs' request to take Meredith's deposition because plaintiffs failed to file a noticed motion seeking such limited discovery pending defendants' special motion to strike, as required by section 425.16, subdivision (g).

BACKGROUND¹

CSC and Staff Pro are competitors in the business of providing event staffing and audience management services to public and private venue operators and hosts in California. CSC and Staff Pro have an extensive litigious history together. Over the course of the past six years, CSC and Staff Pro have prosecuted and defended several lawsuits against each other in San Diego, Los Angeles and Orange Counties.

I. CSC INITIATES LOS ANGELES ACTION; STAFF PRO INITIATES UNDERLYING ACTION; STAFF PRO VOLUNTARILY DISMISSES COMPLAINT IN UNDERLYING ACTION

The first lawsuit relevant to this appeal was filed in 2001 by CSC against Staff Pro, Meredith, and several other individuals, in Los Angeles County Superior Court (the Los Angeles action). CSC's first amended complaint in the Los Angeles action alleged claims for below-cost pricing and violations of the Unfair Practices Act.

In June 2004, defendants filed a complaint in Los Angeles County Superior Court against plaintiffs for defamation and unfair competition (the underlying action). In October 2004, CSC filed a cross-complaint against defendants in the underlying action for defamation and violation of Business and Professions Code section 17200. The Los Angeles County Superior Court issued an order stating the Los Angeles action and the underlying action were related cases within the meaning of rule 7.3(f) of the Superior Court of Los Angeles County, Local Rules.

During the litigation of the Los Angeles action, CSC took the depositions of three of Staff Pro's biggest clients: Kevin Johnstone, director of trade shows for the National Association of Music Merchants in San Diego; David Gordon, general manager of the Long Beach Convention Center; and Timothy Ryan, president of Anaheim Arena Management, Inc. During those depositions, CSC's attorney, David Simon, showed each deponent various declarations, each of which had been signed by one of seven former Staff Pro employees who had been "`let go'" from Staff Pro after they were suspected of possible involvement in a theft ring. The declarations stated, inter alia, that the former employees had been instructed by Staff Pro to overbill clients.

During certain of the ex-employees' depositions, some of them admitted they did not have personal knowledge of the statements asserted in their respective declarations. One of those former employees, Larry Lopez, invoked the Fifth Amendment to the United States Constitution and refused to answer questions about the truth of the matters asserted in his declaration. Lopez admitted he had been paid $2,000 by CSC to sign his declaration, and he further testified that another former Staff Pro employee, Ranel Caldeo, had been paid $1,500 by CSC to sign a similar declaration.

In December 2004, the assigned discovery referee in the Los Angeles action, retired superior court Judge Eli Chernow, found "CSC's conduct of discovery in this case has been conducted as a form of unfair competition to present to StaffPro clients derogatory information about Staff-Pro that is not reasonably designed to elicit factual information relevant to this lawsuit." The referee ordered CSC to pay sanctions in the amount of $9,900 for its conduct. On June 27, 2005, the trial court in the Los Angeles action adopted the discovery referee's order.

Defendants filed a motion for terminating sanctions in the Los Angeles action based on allegations CSC had stolen or authorized the theft of Staff Pro documents. On June 30, 2005, the trial court denied defendants' motion for terminating sanctions, but stated, "CSC's receipt of a disc containing documents stolen from Staff Pro warrants the imposition of certain evidentiary sanctions.... [¶] Larry Lopez testified at deposition that he turned the disc over to Plaintiffs counsel in September 2003; Mr[.] Simon (Plaintiffs counsel) states that he received it 'shortly before June 2, 2004'. He says he got it from `his client', but he doesn't say who actually gave it to him, or how, or when, or the circumstances. Lopez admits that Simon never asked how he got the disc or what was on it, but took the 5th when asked about what he told Simon." The minute order further stated, "Lopez invoked the 5th amendment when asked whether Mr. Simon has ever offered him any money. He also invoked the 5th when queried about whether he had ever asked Mr. Simon for money. He invoked the 5th when asked whether Simon ever requested that he copy Staff Pro material. Mr. Simon's failure to address these specific issues in his declaration in opposition to the motion is very troubling, to say the least." The court imposed evidentiary sanctions against CSC, and further ordered CSC and its counsel to pay Staff Pro's reasonable attorney fees and costs incurred in "bringing the conduct of CSC and its counsel before the Court."

Trial in both the Los Angeles action and the underlying action was scheduled to begin March 13, 2006. The Los Angeles action could not be continued because CSC was up against the five-year failure to prosecute rule under section 583.310. According to Staff Pro's counsel, Staff Pro was facing "hot only the enormous costs of preparing its defense in the Los Angeles Action, but needed to both conduct and respond to a tremendous amount of discovery in the Underlying Action. Outstanding were CSC's demand for further responses to eighteen special interrogatories, Staff Pro's responses to another sixty[-]two special interrogatories, and three depositions which CSC had noticed. At the same time, Staff Pro was contending that CSC had failed to properly respond to two hundred and thirty[-]four special interrogatories and Staff Pro needed to notice several depositions. [¶] ... Defendants did not have the financial resources to prepare for and try both the Los Angeles Action and the Underlying Action at the same time."

After consulting with defendants' counsel, Meredith agreed to voluntarily dismiss defendants' complaint in the underlying action in order to "concentrate [defendants' energies and resources on the impending Los Angeles Action." On January 12, 2006, defendants' complaint in the underlying action was dismissed without prejudice.

Meredith declared that at the time of the dismissal, he believed the underlying action was valid. Defendants' counsel further stated, "[a]t no time did I ever form the professional opinion that Staff Pro's and Mr. Meredith's Complaint for Defamation in the Underlying Action would not succeed."

II. MEREDITH SENDS E-MAIL TO CUSTOMERS REGARDING STATUS OF LITIGATION

During the "first quarter of 2006," Meredith drafted and sent an e-mail to nine individuals. The e-mail stated, "[d]ue to your involvement with this case, I wanted to update you on the court[`]s findings." The e-mail further stated that (1) "[i]n an effort to create evidence CSC paid ex-Staff Pro employees to make false statements in declarations [which] ... were then presented to Staff Pro's clients in an effort to create doubt in Staff Pro's clients' minds"; (2) CSC uses the courts as a weapon against its competitors and has made "baseless accusations" against defendants; (3) CSC was found by a court as having used a lawsuit against Staff Pro as a form of unfair competition; (4) CSC was allowed to go on a "`fishing' expedition for facts" and allowed to copy over 500,000 of Staff Pro's documents, but refused to provide any meaningful discovery to Staff Pro, and was sanctioned for its conduct in discovery; (5) the court granted Staff Pro's motion for summary adjudication in the Los Angeles action on the claim of predatory pricing; (6) Staff Pro was awarded additional attorney fees as sanctions against CSC in the Los...