Trinity Risk Mgmt., LLC v. Simplified Labor Staffing Solutions, Inc.
| Decision Date | 11 January 2021 |
| Docket Number | B297176 |
| Citation | 273 Cal.Rptr.3d 831,59 Cal.App.5th 995 |
| Court | California Court of Appeals Court of Appeals |
| Parties | TRINITY RISK MANAGEMENT, LLC, et al., Cross-complainants and Appellants, v. SIMPLIFIED LABOR STAFFING SOLUTIONS, INC., et al., Cross-defendants and Respondents. |
Burris & Schoenberg, Donald S. Burris, Los Angeles, and Clarissa A. Rodriguez for Cross-complainants and Appellants.
Hill, Farrer & Burrill, Clayton J. Hix and Rodney S. Lasher, Los Angeles, for Cross-defendants and Respondents.
Cross-complainants ask us to reverse the trial court's order granting cross-defendants’ special motion to strike the defamation cause of action in the cross-complaint as a strategic lawsuit against public participation under the anti-SLAPP statute, Code of Civil Procedure section 425.16. We affirm.
Because the trial court's order granting the anti-SLAPP motion is the sole basis for cross-complainants’ contentions on appeal, we recite facts pertinent only to the defamation cause of action.
Simplified Labor Staffing Solutions, Inc. and Simplified Staffing Labor Solutions, LLC (collectively Simplified) are sister entities that provide staffing services, that is, secure payroll services, insurance coverage, licenses, and corporate benefits. Ashish Wahi (Wahi) owns Simplified. Michael Dougan (Dougan) is its chief financial officer. A "major expense in their business operation" is paying for workers’ compensation insurance.
Simplified initiated the underlying action against Trinity Risk Management, LLC (Trinity), affiliated entities Knight Management Group, Inc. and H.J. Knight International Insurance Agency, Inc. (collectively Knight), and other named defendants. Simplified alleged fraud-based claims related to workers’ compensation insurance it had purchased from defendants who sell workers’ compensation insurance to staffing companies. We hereinafter refer to Trinity, Knight and the other defendants collectively as "defendants."
On June 11, 2018, Simplified filed a complaint for fraud, breach of fiduciary duty, rescission, declaratory relief, accounting, and unfair business practices. Simplified alleged defendants "conspired to induce [Simplified] to purchase their worker's compensation insurance through them by claiming that after one year of paying surcharges on the actual premiums for the coverage they required," Simplified would then earn "steep discounts on worker's compensation coverage." Defendants "purported to offer underwriting of insurance risk without being a licensed insurance company, and/or offered for sale insurance coverage as a broker without being a licensed broker ... or by means of misrepresenting the actual party they represented and the nature of the coverage being offered and without disclosing the true coverage afforded, the actual cost or the fees being charged."
On August 3, 2018, Simplified filed a first amended complaint (FAC) against defendants, and added Captive Resources, Inc. (Captive) as another named defendant. The FAC alleged 15 causes of action—the same five causes of action from the original complaint, as well as conversion, tortious interference with contract and prospective economic advantage, and unauthorized access to computer data.
On August 31, 2018, defendants and Captive (cross-complainants) filed a cross-complaint against Simplified, alleging eight causes of action, including defamation. The cross-complainants alleged Simplified and/or Wahi were approximately $2 million dollars in arrears on Simplified's workers’ compensation payments. Relevant to the appeal before us, cross-complainants also alleged the following:
Dougan, chief financial officer of Simplified, "took it upon himself to send a series of emails to Captive Resources representing ... that Simplified and [Knight] were involved in a dispute over the potential lack of insurance coverage that Captive Resources was not properly providing to Simplified, and along the way sparing no expense to threaten Captive Resources, discredit and malign [Knight] and intentionally misrepresent[ed] information." According to cross-complainants, Wahi and Dougan "did not hesitate to disparage [defendants] to their providers, underwriters, and longstanding business relationships."
Cross-complainants further alleged that Wahi and Dougan made these communications "with the specific intention of adversely affecting their reputation in the community by ... misrepresenting corporate information and making disparaging remarks about [cross-complainants] and their profitability, business practices and/or reputation in the community." Their conduct was described as "outrageous and harmful" as the statements to Captive were meant to describe the cross-complainants as "acting deceitful, unethical, and illegal, when they were not." Cross-complainants alleged this "wrongful conduct" caused harm to their reputation and character, causing them to suffer "substantial and direct and consequential damages."
In support of their contentions, cross-complainants provided emails sent from Wahi to Jeff Schultz (senior vice president of Captive) on May 30 and 31, 2018, which they allege were defamatory. Additionally, cross-complainants provided an email sent from Dougan to Schultz of Captive on June 12, 2018, which they also allege was defamatory. The May emails were sent approximately two weeks before Simplified filed its initial complaint on June 11, 2018. And the June 12 email was sent one day after Simplified's initial complaint was filed.
The May 30, 2018 email from Wahi to Schultz at Captive was entitled "Documents needed ASAP." Wahi's email expressed his concerns and included a list of questions about the workers’ compensation insurance policy Simplified had obtained from cross-complainants. Wahi requested documents and information "to understand how the pricing is being determined for [his] current policy." Schultz responded and stated that "this information needs to be requested from the insurance broker of record on the policy ... or from your business partner(s) that control the policy."
The May 31, 2018 email from Wahi to Matt Lanza of Knight requested the same documents and information he had asked for from Schultz. In his email, Wahi told Matt he "did not get much help" from Schultz of Captive, and needs the documents "ASAP."
On June 12, 2018, Dougan emailed Schultz, "[f]ollowing up on ... Wahi's attempt to receive vital information" for which Simplified has a "critical need for ... to resolve our dispute with Knight." He requested "once again [and] in good faith" that Schultz "provide this information which you full well p[oss]ess," to enable Wahi to "address[ ] this dispute."
Dougan's June 12 email to Schultz continued: Dougan concluded his email to Schultz by stating this is the "final time" they are asking Schultz/Captive "to provide this information before you leave Mr. Wahi no alternative to seek other means to obtain it."
Schultz responded that same day, telling Dougan that his "assumptions and accusations pertaining to [Captive] are completely misguided and false." He said these "accusations shows the lack of knowledge and ignorance on your part and your refusal to acknowledge the facts of the situation." Schultz qualified some of Dougan's statements in the prior email as "completely false" and "inflammatory." Schultz stated he "will be forced to cease communications" if Dougan "continue[s] to choose to ignore the facts and circumstances."
On October 2, 2018, Simplified filed a second amended complaint (SAC) against all cross-complainants, repeating its previous causes of actions and adding a claim for misappropriation of trade secrets.
On October 22, 2018, Simplified filed a special motion to strike the defamation cause of action from the August 31, 2018 cross-complaint as a strategic lawsuit against public participation under the anti-SLAPP statute, citing Code of Civil Procedure 1 section 425.16, subdivisions (b)(1), (e)(1), and (e)(2). Simplified requested $24,175 in attorney fees, should it prevail on its anti-SLAPP motion.
On October 29, 2018, one week after the anti-SLAPP motion was filed, Trinity filed a request for dismissal of the cross-complaint without prejudice. The cross-complaint was dismissed the same day.
On February 22, 2019, the trial court granted Simplified's special motion to strike the cross-complaint's defamation cause of action. The court found the filing of the SAC and the dismissal of the cross-complaint did not render the anti-SLAPP motion moot. As to the first prong, the court found Simplified had met its burden to show the pre-litigation and post-litigation email communications come within the scope of the anti-SLAPP motion. As to the second prong, the court found the litigation...
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