Strategic Lawsuits Against Public Participation – better know as SLAPP lawsuits – have proliferated in California and around the country over the past two decades. SLAPP lawsuits are often strategically utilized to intimidate and silence potential litigants by burdening them with the cost of legal defense until they must abandon their lawsuit. SLAPP lawsuits have become so popular there is even a new litigation response known as the “SLAPPback.” California has developed a substantial body of case law, as it was the first state to enact such legislation, and many other state’s SLAPP statutes and decisions are modeled after California. To avoid potential malpractice liability it is important to know the fundamentals of a SLAPP lawsuit and how to either file one as a plaintiff, or be able to respond to a SLAPP lawsuit on behalf of your client.
In the first significant anti-SLAPP case of 2014, Tourgeman v. Nelson & Kennard, 2014 DJDAR 587 (Jan. 16, 2014), Justice Cynthia Aaron of the 4th District Court of Appeal penned an instructive opinion examining in detail how to apply the public interest exemption to certain class action and representative actions brought solely in the public interest where three specified conditions are met. The secondary holding in Tourgeman rejected the approach taken in Coltraine v. Shewalter, 66 Cal. App. 4th 94 (1998), which allows a trial judge “discretion” to determine the prevailing party in cases where the plaintiff dismisses the complaint in lieu of opposition for purposes of an attorney fees award, and instead adopted the approach taken in Liu v. Moore, 69 Cal. App. 4th 745 (1999), which held that the defendant must prevail in the anti-SLAPP motion as a precondition to an award of fees, thus depriving the trial court of discretion to determine the prevailing the party. Rather, the court must hear the anti-SLAPP motion or decide which party would have won the anti-SLAPP motion.
Tourgeman brought a putative class and representative action against Dell Financial Services and respondents, Nelson & Kennard, contending that respondents violated the Fair Debt Collection Practices Act (FDCPA) while attempting to collect a debt incurred in connection with his purchase of a Dell computer. Tourgeman filed the single cause of action against for violation of the unfair competition law on behalf of himself, “members of the class, and of the general public.” He claimed that Nelson & Kennard continued to send collection letters and file collection lawsuits without “enacting proper measures to ensure that they obtain complete and accurate information about consumers before sending out collection letters and/or filing suits.”
Respondents filed a special motion to strike and Tourgeman voluntarily dismissed the action; respondents then filed a motion for attorney fees. The trial court determined that Tourgeman failed to establish the public interest exemption under Code of Civil Procedure Section 425.17(b), that he could not show a probability of prevailing on prong two because he presented no opposition, and thus granted the motion and awarded fees. The Court of Appeal reversed.
The gravamen of Tourgeman’s single cause of action was that Nelson & Kennard “generated a collection letter to Tourgeman on a sample form template” that misidentified the original creditor of Tourgeman’s loan, and that because Scott Kennard “spent very little time reviewing this letter, and did not review [Tourgeman’s] file or account notes, before signing it,” he had not been “meaningfully involved” as required by the FDCPA. Tourgeman further alleged that Nelson & Kennard had “sent collections to hundreds of consumers that falsely identified the consumer’s original creditor” and that Kennard had not conducted any “meaningful review” before signing those letters either. He claimed that Nelson & Kennard had filed a lawsuit against that misidentified the original creditor of his loan, that he had incurred over $38,000 in legal fees defending the lawsuit, and that Nelson & Kennard had eventually dismissed the lawsuit without prejudice.
It is clear that the act of sending collection letters and filing lawsuits fall right into the anti-SLAPP statute’s official proceeding prong. However, Tourgeman supported the public interest exemption of Section 425.17(b) by analyzing the allegations of the complaint with reference to each of the elements of the public interest exemption, which mirror the elements of Section 1021.5 for private attorney general attorney fees. No extrinsic evidence was needed for plaintiff to establish the exemption under Section 425.17(b).
First, Tourgeman’s lawsuit was brought “solely in the public interest or on behalf of the general public.” “The term `public interest’ is used to define suits brought solely for the public’s good or on behalf of the public.” Including the term “solely” in the statute shows legislative intent that Section 425.17 (b) not apply to an action that seeks a more narrow advantage for a particular plaintiff. Here, Tourgeman merely sought injunctive relief directed at preventing respondents from engaging in unlawful, unfair and/or fraudulent debt collection practice in the future. In addition, “it is highly unlikely Tourgeman will again be the subject of respondent’s debt collection efforts.”
Second, respondents conceded that Tourgeman did not seek any greater or different relief than that sought for the general public. Respondents claimed that Tourgeman failed to meet this requirement because he had a separate federal action seeking relief and damages for himself. The court squarely rejected this argument, however, holding that there is nothing in the statute or legislative history that makes plaintiff’s actions in separate lawsuits relevant to the public interest exemption. In fact, the plain language is to the contrary – the exemption applies to “any action” as to which certain conditions exist. The court held Tourgeman met the second criteria of the exemption.
Third, the court found that Tourgeman’s action, if successful, would enforce an important right affecting the public interest and would confer a significant benefit on the general public. Here, Tourgeman sought to enforce the fair debt collection law in the future by seeking injunctive relief which would require respondents to follow the law before the sending collection letters or filing lawsuits to collect on a debt. Respondents argued – to no avail – that Tourgeman failed to produce evidence that his action, if successful, would benefit the general public. This suggestion is unsupported by any authority. Whether Tourgeman’s action would benefit the public is, instead, determined by examining his complaint to determine whether his lawsuit is of the kind that seeks to vindicate public policy goals.
Finally, private enforcement was necessary and placed a disproportionate financial on Tourgeman in relation to his stake in the matter. It was necessary simply because the action was brought on behalf of the general public, and because neither the attorney general nor the insurance commissioner intervened to prosecute the action. As to the disproportionate financial burden element, the court noted: “It has been said about this element that `the less direct or concrete a personal interest someone has, the more likely he or she will satisfy the element. Courts first focus on what sort of financial stake the plaintiff had in the outcome, i.e. what the plaintiff hoped to gain financially from the litigation in comparison to what it cost. The relevant inquiry is whether the “cost of the plaintiff’s legal victory transcends their person interest. “Blanchard v. Direct TV, 123 Cal. App. 4th 903, 915-16 (2005). Here, the court found that Tourgeman did not seek any financial benefit from the lawsuit, and as the trial court noted, it is unlikely that Tourgeman would have benefitted from any potential injunctive relief, since it is doubtful that he will again be the subject of respondent’s collection efforts. This alone supports the conclusion that the financial burden on Tourgeman is disproportionate to his stake in the action.
The facts of Tourgeman are at the very epicenter of the public interest exemption. However, the statutory language and case law frame the disproportionate financial burden test in terms of a balancing test, rather than requiring a purely altruistic cause of action. That is, the public interest exemption of Section 425.17(b) does not apply to every class or representative action – it applies to any action brought solely in the public interest or on behalf of the general public so long as the action meets all three conditions set forth in the statute.
About the Author
James J. Moneer has been handling all aspects of anti-SLAPP motions and appeals for plaintiffs and defendants throughout California since 1994. He frequently testifies for both sides as an attorney fee and legal malpractice expert in SLAPP cases. He has been involved in six published anti-SLAPP decisions, including one before the CASC. He has been an anti-SLAPP panelist for The Rutter Group and Pincus Professional Education since 2003 and 2009, respectively. Mr. Moneer’s website is slapplaw.com.
Comprehensive SLAPP Seminar: From Basics to Cutting Edge Topics is available for CLE credit at Attorney Credits. The course is currently available for CLE credit in the following states: Alaska, Arizona, California, Connecticut, District of Columbia, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, South Dakota.