Varian Medical Systems, Inc. v. Delfino, S121400.

• Citation: 35 Cal.4th 180,106 P.3d 958,25 Cal.Rptr.3d 298
• Decision Date: 03 March 2005
• Docket Number: No. S121400.,S121400.
• Court: California Supreme Court
• Parties: VARIAN MEDICAL SYSTEMS, INC., et al., Plaintiffs and Respondents, v. Michelangelo DELFINO et al., Defendants and Appellants.

25 Cal.Rptr.3d 298

35 Cal.4th 180

106 P.3d 958

VARIAN MEDICAL SYSTEMS, INC., et al., Plaintiffs and Respondents, v. Michelangelo DELFINO et al., Defendants and Appellants.

No. S121400.

Supreme Court of California.

March 3, 2005.

Horvitz & Levy, Jon B. Eisenberg, Jeremy B. Rosen, Encino; Law Offices of Randall M. Widmann, Randall M. Widmann, Palo Alto; and Glynn P. Falcon, for Defendants and Appellants.

Cyrus Sanai, Los Angeles, as Amicus Curiae on behalf of Defendants and Appellants.

Levy, Ram & Olson, Karl Olson, San Francisco; Karlene W. Goller, Los Angeles; Thomas W. Newton; Harold W. Fuson, Jr., La Jolla; Stephen J. Burns, Sacramento; Jonathan Donnellan; Davis Wright Tremaine, Duffy Carolan, San Francisco; Levine Sullivan Koch & Schulz, James E. Grossberg, Palm Springs; Riegels Campos & Kenyon and Charity Kenyon, Sacramento, for California Newspaper Publishers Association, Los Angeles Times, Hearst Communications, Inc., The Copley Press, Inc., Ang Newspapers, Inc., McClatchy Newspapers, Inc., Press-Enterprise, Inc., Freedom Communications, Inc., and McNaughton Newspapers as Amici Curiae on behalf of Defendants and Appellants.

Bill Lockyer, Attorney General, Manuel M. Medeiros, State Solicitor General, Tom Greene, Chief Assistant Attorney General, Theodora Berger, Assistant Attorney General, Edward G. Weil and Susan S. Fiering, Deputy Attorneys General, for Bill Lockyer, Attorney General of the State of California as Amicus Curiae on behalf of Defendants and Appellants.

Mark Goldowitz, Berkeley; Margaret C. Crosby, Los Angeles; Peter Eliasberg, Los Angeles; and Jordan Budd, for California Anti-SLAPP Project, American Civil Liberties Union Foundation of Northern California, ACLU Foundation of Southern California and American Civil Liberties Union Foundation of San Diego and Imperial Counties as Amici Curiae on behalf of Defendants and Appellants.

Orrick, Herrington & Sutcliffe, Lynne C. Hermle, Matthew H. Poppe, Menlo Park; Law Offices of Gerald Z. Marer, Gerald Z. Marer; Farella, Braun & Martel, Douglas R. Young, San Francisco; Pillsbury Winthrop, Thomas V. Loran III, Craig E. Stewart and Renee A. Jansen, San Francisco, for Plaintiffs and Respondents.

BROWN, J.

Under Code of Civil Procedure section 425.16, subdivision (b)(1),¹ a defendant may move to strike any cause of action "arising from any act ... in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue...." If the plaintiff cannot demonstrate a "probability" of prevailing on that cause of action (§ 425.16, subd. (b)(1)), then the trial court must strike the cause of action and award the defendant attorney's fees and costs (§ 425.16, subd. (c)). In 1999, the Legislature made the denial of a special motion to strike under section 425.16 appealable. We now determine whether the perfecting of an appeal from the denial of a special motion to strike automatically stays all further trial court proceedings on the merits upon the causes of action affected by the motion. We conclude that it does.

I.

Plaintiffs and respondents Varian Medical Systems, Inc. (Varian Medical) and Varian Semiconductor Equipment Associates, Inc. (Varian Semiconductor) are publicly traded companies. Varian Medical manufactures a variety of medical products, and Varian Semiconductor manufactures equipment for use in the semiconductor chip manufacturing process. For purposes of this action, Varian Medical and Varian Semiconductor are the successors in interest to the original plaintiff, Varian Associates, Inc. (Varian Associates).² At the time of trial, plaintiff and respondent George Zdasiuk was a vice-president of Varian Medical, and plaintiff and respondent Susan Felch was a director at a Varian Semiconductor research center.

Defendants and appellants Michelangelo Delfino and Mary Day are former employees of Varian Associates. Zdasiuk fired Delfino in October 1998 for harassing Felch and other coworkers. Two months later, Day resigned in sympathy. After leaving Varian Associates, Delfino and Day began posting numerous derogatory messages about plaintiffs on the Internet. In response, plaintiffs filed the instant action against Delfino in February 1999, alleging numerous federal and state causes of action³ and seeking injunctive and monetary relief. Delfino then removed the action to federal court. In federal court, plaintiffs added Day as a defendant in July 1999. In April 2000, the federal court granted defendants partial summary judgment on plaintiffs' federal claim and remanded the action back to the superior court.

On remand, plaintiffs filed a third amended complaint in August 2000, alleging seven causes of action predicated on defendants' Internet postings about plaintiffs.⁴ Each defendant then filed, for the first time, a special motion to strike plaintiffs' complaint as a strategic lawsuit against public participation (SLAPP) under section 425.16 (the anti-SLAPP motions). The trial court denied the motions, finding that: (1) the motions were untimely; (2) plaintiffs' causes of action did "not arise from `any act ... in furtherance of [the] right of petition or free speech under the United States or California Constitution in connection with a public issue'"; and (3) plaintiffs demonstrated a "probability they will prevail on their claims."

Defendants appealed. Delfino also filed an ex parte application with the trial court and a petition for writ of supersedeas with the Court of Appeal, seeking to stay further trial court proceedings pending resolution of the appeal pursuant to section 916. The trial court denied the application, and the Court of Appeal summarily denied the petition. We also denied Delfino's petition for review.

After a trial, the jury found defendants liable for libel, invasion of privacy (appropriation of name), breach of contract, and conspiracy, and awarded plaintiffs a total of $425,000 in compensatory damages. The jury further found that defendants acted with malice, fraud, or oppression, and awarded Zdasiuk and Felch $350,000 in punitive damages. The trial court also issued a permanent injunction against defendants.

Following the entry of judgment, the Court of Appeal dismissed as moot defendants' appeal from the order denying their anti-SLAPP motions. Soon after, defendants appealed the judgment. The Court of Appeal modified the injunction but affirmed in all other respects. In doing so, the court disagreed with Mattel, Inc. v. Luce, Forward, Hamilton & Scripps (2002) 99 Cal.App.4th 1179, 121 Cal. Rptr.2d 794 (Mattel), and held "that Code of Civil Procedure section 916 did not automatically stay trial of the lawsuit ... and that therefore the trial court did not lack jurisdiction to conduct the trial." According to the court, the denial of an anti-SLAPP motion is a matter separate from the merits of the lawsuit itself, and the subsequent trial had "no direct impact on the appeal from the order" denying the motion. Thus, the courts in this case had the discretion to grant a stay but did not have to do so. Acknowledging that courts may erroneously refuse to grant a stay despite a meritorious appeal, the court nonetheless concluded "that the benefit of preventing such rare mistakes by automatically staying all trials pending an appeal from an order denying an anti-SLAPP motion is outweighed by the danger of encouraging meritless anti-SLAPP motions and appeals as trial strategy to simply delay the trial of meritorious cases."

We granted review solely on the issue of whether "an appeal from the denial of a special motion to strike under the anti-SLAPP statute (§ 425.16) effects an automatic stay of the trial court proceedings."

II.

Defendants contend an appeal from the denial of an anti-SLAPP motion automatically stays all further trial court proceedings on the merits. Plaintiffs counter that such an appeal does not effect an automatic stay of any trial court proceedings on the merits because those proceedings would have no effect on the appeal. According to plaintiffs, courts have the discretion to stay further proceedings but are not compelled to do so. As explained below, we agree with defendants.

Subject to certain exceptions not relevant here, "the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order."⁵ (§ 916, subd. (a).) The purpose of the automatic stay provision of section 916, subdivision (a) "is to protect the appellate court's jurisdiction by preserving the status quo until the appeal is decided. The [automatic stay] prevents the trial court from rendering an appeal futile by altering the appealed judgment or order by conducting other proceedings that may affect it." (Elsea v. Saberi (1992) 4 Cal.App.4th 625, 629, 5 Cal.Rptr.2d 742 (Elsea).)

To accomplish this purpose, section 916, subdivision (a) stays all further trial court proceedings "upon the matters embraced" in or "affected" by the appeal. In determining whether a proceeding is embraced in or affected by the appeal, we must consider the appeal and its possible outcomes in relation to the proceeding and its possible results. "[W]hether a matter is `embraced' in or `affected' by a judgment [or order] within the meaning of [section 916] depends on whether postjudgment [or postorder] proceedings on the matter would have any effect on the `effectiveness' of the appeal." (In re Marriage of Horowitz (1984) 159 Cal.App.3d 377, 381, 205 Cal.Rptr. 880 (Horowitz).) "If so, the proceedings are stayed; if not, the proceedings are permitted." (Betz v. Pankow (1993) 16 Cal.App.4th 931, 938, 20 Cal. Rptr.2d 841 (Betz).)

The fact that the postjudgment or postorder proceeding may render the appeal moot is not, by...