Monster Energy Co. v. Schechter

• Decision Date: 11 July 2019
• Docket Number: S251392
• Citation: 249 Cal.Rptr.3d 295,7 Cal.5th 781,444 P.3d 97
• Court: California Supreme Court
• Parties: MONSTER ENERGY COMPANY, Plaintiff and Respondent, v. Bruce L. SCHECHTER et al., Defendants and Appellants.

7 Cal.5th 781

444 P.3d 97

249 Cal.Rptr.3d 295

MONSTER ENERGY COMPANY, Plaintiff and Respondent,

v.Bruce L. SCHECHTER et al., Defendants and Appellants.

S251392

Supreme Court of California.

July 11, 2019

Bremer Whyte Brown & O’Meara, Keith G. Bremer, Jeremy S. Johnson, Newport Beach, Benjamin L. Price, Newport Beach; Grignon Law Firm, Margaret M. Grignon, Long Beach, and Anne M. Grignon for Defendants and Appellants.

Shook, Hardy & Bacon, Frank C. Rothrock, Gabriel S. Spooner and Victoria P. McLaughlin, Irvine, for Plaintiff and Respondent.

Murchison & Cumming, Edmund G. Farrell, III, Los Angeles; Walsh Pizzi O’Reilly Falanga, Peter J. Pizzi and Katherine M. Romano for International Association of Defense Counsel as Amicus Curiae on behalf of Plaintiff and Respondent.

Opinion of the Court by Corrigan, J.

Here the parties to a tort action agreed to settle their lawsuit. Their agreement was reduced to writing and included several provisions purporting to impose confidentiality obligations on the parties and their counsel. All parties signed the agreement and their lawyers signed under a notation that they approved the written agreement as to form and content.

Counsel allegedly violated the agreement by making public statements about the settlement and were sued, inter alia, for breach of contract. Counsel urged they were not personally bound by the confidentiality provisions and moved to dismiss the suit under the anti-SLAPP¹ statutes. As to the cause of action at issue here, the trial court denied counsels’ motion. The Court of Appeal reversed that ruling, concluding the notation meant only that counsel recommended their clients sign the document. We conclude the notation does not preclude a factual finding that counsel both recommended their clients sign the document and intended to be bound by its provisions.

I. BACKGROUND

In 2012, Wendy Crossland and Richard Fournier sued Monster Energy Company ("Monster Energy") for products liability and wrongful death following the death of their daughter. (Hereafter "the Crossland suit.") Bruce L. Schechter and his firm R. Rex Parris Law Firm represented Crossland and Fournier.² In 2015, the parties entered into a confidential settlement agreement. The agreement stated that it was made "on the behalf of the settling Parties, individually, as well as on the behalf of their, without limitation, respective beneficiaries, trustees, principals, attorneys , officers, directors, shareholders, employers, employees, parent company(ies), affiliated company(ies), subcontractors, members, partners, subsidiaries, insurers, predecessors, successors-in-interest, and assigns."³ (Emphasis added.) The agreement included a confidentiality clause: "The Parties understand and acknowledge that all of the terms, conditions and details of this Settlement Agreement including its existence are to remain confidential. Plaintiffs and their counsel agree that they will keep completely confidential all of the terms and contents of this Settlement Agreement, and the negotiations leading thereto, and will not publicize or disclose the amounts, conditions, terms, or contents of this Settlement Agreement in any manner .... [¶] Specifically, and without limitation, Plaintiffs and their counsel of record , individually and on behalf of themselves and their principals, partners, agents, attorneys, servants, representatives, parents, spouse, dependents, issue, heirs, insurers, predecessors, successors-in-interest and assigns agree and covenant, absolutely and without limitation, to not publicly disclose to any person or entity, including, but not limited to, newspapers, magazines, television, fliers, documentaries, brochures, Lawyers & Settlements, VerdictSearch (or the like), billboards, radio, newsletters, and/or the Internet" certain facts related to the settlement. (Emphasis added.) The agreement continued that "[i]n regard to any communication concerning the settlement of this Action, the Parties and their attorneys and each of them hereby agree that neither shall make any statement about the Action, each other party or Defendants’ products in relation to this Action, in the media, including but not limited to print, television, radio or Internet," and any comment "shall be limited to the following, or words to their effect: ‘This matter has been resolved.’ " (Emphasis added.) The agreement also contained other provisions referring to attorneys for the parties in the Crossland suit.⁴ The agreement was signed by the parties. The parties’ attorneys, including Schechter, signed under the preprinted notation "APPROVED AS TO FORM AND CONTENT."

Shortly after the settlement, an article appeared on the website "LawyersandSettlements.com" entitled " ‘Substantial Dollars’ for Family in Monster Energy Drink Wrongful Death Suit." The article, written by Brenda Craig, attributed several quotes to Schechter. According to the article, "Schechter’s most recent case resulted in ‘substantial dollars’ for the family of a 14-year-old that went to the mall with girlfriends in the summer of 2011, drank two Monster Energy drinks and died of cardiac arrest

. [¶] Schechter can’t reveal the exact amount because he says, ‘Monster wants the amount to be sealed.’ " The article describes how Schechter has filed three additional suits against Monster Energy and quotes his statements that he believes its products are unsafe. The article concluded with a link and a phone number for "Monster Energy Drink Injury Legal Help." Craig attested to the accuracy of Schechter’s statements quoted in the article.

Monster Energy sued defendants Schechter and R. Rex Parris Law Firm, alleging four causes of action: breach of contract; breach of the implied covenant of good faith; unjust enrichment; and promissory estoppel. Defendants filed a special motion to strike the complaint ( Code Civ. Proc., § 425.16 ), arguing the suit implicated Schechter’s constitutional free speech rights. The court denied the motion as to the breach of contract claim but granted it as to the other causes of action. The court found "the settlement clearly contemplates counsel as being subject to the agreement" and noted that "Schechter signed the agreement." The court concluded that the "suggestion that [Schechter] is not a party to the contract merely because he approved it as to form and content only is beyond reason." The Court of Appeal reversed the trial court’s denial of the anti-SLAPP motion as to the breach of contract claim. (See Monster Energy Co. v. Schechter (2018) 26 Cal.App.5th 54, 236 Cal.Rptr.3d 669.)

II. DISCUSSION

A. Legal Background

" Code of Civil Procedure section 425.16 sets out a procedure for striking complaints in harassing lawsuits that are commonly known as SLAPP suits ... which are brought to challenge the exercise of constitutionally protected free speech rights." ( Kibler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192, 196, 46 Cal.Rptr.3d 41, 138 P.3d 193.) A cause of action arising from a person’s 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 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 claim will prevail. ( Code Civ. Proc., § 425.16, subd. (b)(1).) "The anti-SLAPP statute does not insulate defendants from any liability for claims arising from the protected rights of petition or speech. It only provides a procedure for weeding out, at an early stage, meritless claims arising from protected activity. 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 required showing, the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success. We have described this second step as a ‘summary-judgment-like procedure.’ [Citation.] 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. It accepts the plaintiff’s evidence as true, and evaluates the defendant’s showing only to determine if it defeats the plaintiff’s claim as a matter of law. [Citation.] ‘[C]laims with the requisite minimal merit may proceed.’ " ( Baral, supra, 1 Cal.5th at pp. 384-385, 205 Cal.Rptr.3d 475, 376 P.3d 604, fn. omitted.) The grant or denial of an anti-SLAPP motion is reviewed de novo. ( Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1067, 217 Cal.Rptr.3d 130, 393 P.3d 905.) As to the second step, a plaintiff seeking to demonstrate the merit of the claim "may not rely solely on its complaint, even if verified; instead, its proof must be made upon competent admissible evidence." ( San Diegans for Open Government v. San Diego State University Research Foundation (2017) 13 Cal.App.5th 76, 95, 218 Cal.Rptr.3d 160 ; see Grenier v. Taylor (2015) 234 Cal.App.4th 471, 480, 183 Cal.Rptr.3d 867 ; City of Costa Mesa v. D’Alessio Investments, LLC (2013) 214 Cal.App.4th 358, 376, 154 Cal.Rptr.3d 698 ; Paiva v. Nichols (2008) 168 Cal.App.4th 1007, 1017, 85 Cal.Rptr.3d 838.)

It is undisputed that defendants met their first-step showing. The issue here is whether Monster Energy sufficiently established a probability of prevailing on its breach of contract claim. That claim, in turn, hinges on whether defendants were bound by the confidentiality provisions of the Crossland settlement. "A settlement agreement is a contract, and the legal principles which apply to contracts generally apply to settlement contracts. [Citation.] An essential element of any contract is ‘consent.’ [Citations.] The ‘consent’ must be ‘mutual.’ [Citations.] ‘Consent is not...