Mann v. Quality Old Time Service, Inc. (“Mann II”)

APPEAL from an order of the Superior Court of SanDiego County, Linda B. Quinn, Judge. Affirmed asmodified.

Carl M. Hancock for Plaintiffs and Appellants.

Ross, Dixon & Bell, James J. Dalessio and Lindsay J.Reese for Defendants and Respondents.

HALLER, Acting P.J.

*1 Water Systems Support, Inc. and its president(collectively WSSI) brought an action against twoformer independent contractors and their business entity(collectively defendants), alleging defendants violatedtheir confidentiality agreement and made falsestatements about WSSI to WSSI’s customers andgovernmental agencies. Defendants unsuccessfullymoved to strike four of the 13 causes of action underCalifornia’s anti-SLAPP statute. (Code Civ. Proc., FN1§ 425.16.) Defendants appealed, and this court held thetrial court correctly denied the motion on three of thecauses of action, but the court erred in denying themotion as to one cause of action. (Mann v. Quality OldTime Service, Inc. (2004) 120 Cal.App.4th 90, 15Cal.Rptr.3d 215 (Mann ).)

FN1 Further statutory references are to theCode of Civil Procedure unless otherwisespecified.

On remand, defendants sought attorney fees of $64,065under section 425.16, subdivision (c), which states adefendant prevailing on an anti-SLAPP motion “shallbe entitled to recover his or her attorney’s fees andcosts.” WSSI opposed the motion on several grounds,including that defendants were not prevailing partiesbecause they were unsuccessful in striking three of thefour challenged causes of action. After a hearing, thecourt found defendants were prevailing parties withinthe meaning of section 425 .16, subdivision (c) andawarded defendants $57,000 in attorney fees plus$1,906 in costs.

WSSI challenges the attorney fees award on appeal. Weconclude the court did not abuse its discretion indetermining defendants were prevailing parties on theanti-SLAPP motion. We determine, however, the courterred in failing to reduce the fees to reflect thatdefendants were only partially successful on the motion.Because of this court’s familiarity with this case and thefact the underlying case has settled except for theattorney fees issue, we modify the order rather thanremanding the matter to the trial court. We concludedefendants are entitled to $32,032.50, which is 50percent of their claimed fees incurred in bringing theanti-SLAPP motion.

FACTUAL AND PROCEDURAL SUMMARY

Background Information

WSSI’s complaint alleges the following. FN2 WSSI, acompany that maintains industrial water systems, hiredKent Radford and Robert Caslava as independentcontractors. Radford and Caslava agreed to keepconfidential WSSI’s customer information and workguidelines. Several years later, Radford and Caslavaformed a competing company, and then solicitedWSSI’s customers by using the confidential informationand making fraudulent and disparaging statementsabout WSSI, including that it used illegal andcarcinogenic chemicals in its cleaning process.Defendants also allegedly engaged in numerous acts ofharassment, including reporting WSSI to the NationalResponse Center and the National Terrorist Hotline,falsely claiming that WSSI was “ ‘pouring illegalcarcinogenic chemicals into public drainage systemsthroughout Southern California.’ “ (Mann, supra, 120Cal.App.4th at p. 101, 15 Cal.Rptr.3d 215.)

Based on these and additional facts, WSSI filed acomplaint asserting 13 causes of action against Radfordand Caslava, and their business entity. Defendants filedan anti-SLAPP motion on four of those claims:interference with contractual relationship, intentionalinterference with prospective economic advantage,defamation, and trade libel. Defendants argued theclaims were subject to the anti-SLAPP statute because(1) defendants’ reports to the government agencies werein furtherance of their constitutional right to petition thegovernment; and (2) defendants’ statements were madein connection with a “public issue.” (§ 425.16,subds.(e)(2), (e)(4).)

FN2 Because the parties have not provided usa complete record of the underlying action, wederive the allegations of the complaint fromthis court’s prior decision. (Mann, supra, 120Cal.App.4th at pp. 100-102, 15 Cal.Rptr.3d215.)

*2 In opposition to the motion, WSSI filed itspresident’s declaration, stating that defendants madefalse reports about WSSI to the National ResponseCenter and the National Terrorist Hotline, anddefendants had made false statements to WSSI’scustomers. WSSI’s president denied that WSSI usedillegal chemicals or poured them into city or stormdrains. WSSI also filed a declaration from a WSSIclient, stating that Caslava and Radford informed himthat WSSI was using an illegal chemical and illegallydumping the sanitizing solution down storm drains.

The trial court denied the motion to strike, finding thechallenged claims did not “ ‘arise from’ “ an act infurtherance of defendants’ right of petition or freespeech. On appeal, we affirmed the order denying themotion on all causes of action, except that we reversedon the trade libel cause of action. (Mann, supra, 120Cal.App.4th at pp. 103-112, 15 Cal.Rptr.3d 215.) In sodoing, we applied well-settled law that requires a partymoving to strike under the anti-SLAPP statute to showthe challenged cause of action arose from a specifiedprotected activity, and if this burden is met the plaintiffmust show a probability of prevailing on the claim. (Id. at p. 102, 15 Cal.Rptr.3d 215.) We further followedprecedent holding that the anti-SLAPP statute appliesif a cause of action alleges both protected andunprotected activity unless the protected conduct ismerely incidental to the unprotected conduct. (Id. at p.103, 15 Cal.Rptr.3d 215.) Rejecting defendants’arguments, we clarified that an anti-SLAPP motionmust be denied if the plaintiff shows a probability ofprevailing on any theory underlying the “mixed” causeof action. (Id. at pp. 105-106, 15 Cal.Rptr.3d 215.)

Under these legal principles, we held WSSI’sdefamation and trade libel claims were mixed causes ofaction, subject to the anti-SLAPP statute because theywere based, in part, on defendants’ act of reporting asuspected crime to interested governmental agenciesand seeking a governmental investigation. (Mann,supra, 120 Cal.App.4th at p. 104, 15 Cal.Rptr.3d 215;see § 425.16, subd. (e)(2).) As to the reports togovernment agencies, we recognized they wereabsolutely privileged (Civ.Code, § 47, subd. (b)), thuseliminating any actionable theory arising fromdefendants’ alleged false reports to the government. Asto the statements to customers, we determined thatWSSI met its burden to show a probability of prevailingon its defamation claim, rejecting defendants’evidentiary objections and contentions that their allegedwrongful communications with WSSI’s customers wereprivileged. (Mann, supra, at pp. 106-109, 15Cal.Rptr.3d 215.) On the trade libel claim, we heldWSSI did not show a probability of prevailing becauseWSSI did not present any evidence showing it hadsuffered a specific pecuniary loss as a result of thedefendants’ communications with WSSI customers. (Id.at p. 109, 15 Cal.Rptr.3d 215; see Ehrich v. Etner(1964) 224 Cal.App.2d 69, 73, 36 Cal.Rptr. 256 [unlikedefamation, trade libel requires evidence of specificpecuniary loss].)

*3 On WSSI’s interference claims, we held these claimswere not subject to the anti-SLAPP statute because theyarose from defendants’ communications with WSSI’scustomers, and not from statements made togovernmental agencies. (Mann, supra, 120Cal.App.4th at p. 110, 15 Cal.Rptr.3d 215.) Werejected defendants’ alternate contention that theinterference causes of action were subject to theanti-SLAPP statute because they were based onprotected speech in connection with an issue of publicinterest. (Id. at pp. 110-111, 15 Cal.Rptr.3d 215Wereasoned that that “[a]lthough pollution … is a matter ofgeneral public interest, the focus of the anti-SLAPPstatute must be on the specific nature of the speechrather than on generalities that might be abstracted fromit…. [¶][D]efendants’ alleged statements were not aboutpollution or potential public health and safety issues ingeneral, but about WSSI’s specific business practices.”(Id. at p. 111, 15 Cal.Rptr.3d 215.)

We thus affirmed the court’s order to the extent itdenied defendants’ motion to strike the two interferenceclaims and the defamation claim, and reversed the orderto the extent it denied the motion on the trade libelclaim. (Mann, supra, 120 Cal.App.4th at p. 112, 15Cal.Rptr.3d 215.) We awarded defendants costs onappeal. (Id. at p. 113, 15 Cal.Rptr.3d 215.)

Attorney Fees Proceedings

Shortly after we remanded the case and before theparties began discovery on the merits of the remaining12 causes of action against defendants, defendantsmoved in the superior court for attorney fees pursuantto section 425.16, subdivision (c), which states “aprevailing defendant on a special motion to strike shallbe entitled to recover his or her attorney’s fees andcosts.” In support, defendants’ counsel submitted abilling summary showing defendants incurred attorneyfees of $25,120 for time spent on the anti-SLAPPmotion in the trial court, and $33,245 for time spent onthe appeal. Defendants also stated they incurred $5,700in fees for time spent in bringing the attorney feesmotion. Thus, defendants sought a total of $64,065 as“prevailing parties” in the proceedings.

In a supporting declaration, defense counsel confirmedthe accuracy of the time records, and stated that counselwas required to conduct “extensive research” on theissue of whether a “mixed” cause of action is subject tothe anti-SLAPP statute and that each of the challengedcauses of action concerned similar legal issuespertaining to the applicability of the anti-SLAPPstatute. Counsel asserted that the time spent wasreasonable given numerous unsettled issues in SLAPPlaw at the time the case was brought and consideringthe “difficulty of the litigation, the skill required, theattention given to the matter, and the success ofDefendants’ attorneys’ efforts.” Counsel further stated:“[w]e worked efficiently, but at the same time we tookthe necessary steps to prepare our briefing and for theoral argument before the reviewing court.”

In opposing the attorney fees request, WSSI argued: (1)defendants were not the prevailing parties because theCourt of Appeal affirmed the trial court’s order refusingto strike three of the four challenged causes of action;and (2) even assuming defendants were “prevailingparties,” the attorney fees award should be limited toreflect that defendants prevailed on only one cause ofaction and that they did not achieve “any level ofsuccess relative to the entire litigation.”

*4 In reply, defendants argued that the court need notdecide the “prevailing party” issue because “the Courtof Appeal already has decided it” by awardingdefendants their costs on appeal. Defendants thusasserted that “all that remains for this Court to do is tofix the amount of the attorneys’ fees and costs to beawarded….”

After oral argument, the court FN3 permitted the partiesto file additional briefing on the apportionment issue,i.e., whether the court should award attorney fees onlywith respect to work performed on the successfulportions of the motion. The court thereafter granteddefendants’ motion, awarding defendants $57,000 inattorney fees and $1,906 in costs. The court explainedits ruling as follows: “Defendants ultimately prevailedon [the motion to strike] plaintiffs’ trade libel cause ofaction. Moreover, the Court of Appeal determined thatdefendants are the prevailing party given the Court ofAppeal found that defendants are entitled to costs onappeal. As the prevailing party, defendants are entitledto an award of reasonable attorney fees and costspursuant to [section] 425.16…. [¶] … [¶] Apportionmentof attorney fees is improper given that the same facts,law, and damages were involved in all causes of actionchallenged in the [anti-SLAPP motion]. The Court inthis ruling, however, awards a lesser sum of attorneyfees to defendants. That lesser sum is reasonable andappropriate under the circumstances of this action.”

FN3 The superior court judge (Judge LindaQuinn) considering the motion was not thesame superior court judge (Judge WilliamPate) who had ruled on the merits of theanti-SLAPP motion.

DISCUSSION

WSSI contends the court erred in finding thatdefendants were prevailing parties on the anti-SLAPPmotion, and alternatively, in failing to reduce theattorney fees to reflect defendants’ limited success onthe motion.

I. Prevailing Party

[1] Section 425.16, subdivision (c) provides that “aprevailing defendant on a special motion to strike shallbe entitled to recover his or her attorney’s fees andcosts.” FN4 Under this provision, “any SLAPPdefendant who brings a successful motion to strike isentitled to mandatory attorney fees.” (Ketchum v. Moses(2001) 24 Cal.4th 1122, 1131, 104 Cal.Rptr.2d 377, 17P.3d 735 (Ketchum ).)

FN4. Section 425.16, subdivision (c) states infull: “In any action subject to subdivision (b),a prevailing defendant on a special motion tostrike shall be entitled to recover his or herattorney’s fees and costs. If the court finds thata special motion to strike is frivolous or issolely intended to cause unnecessary delay,the court shall award costs and reasonableattorney’s fees to a plaintiff prevailing on themotion, pursuant to Section 128.5.”

In ComputerXpress, Inc. v. Jackson (2001) 93Cal.App.4th 993, 113 Cal.Rptr.2d 625(ComputerXpress), the court considered the issue ofwhether a defendant who partially prevails on ananti-SLAPP motion (where the court strikes some butnot all of the challenged causes of action) is a“prevailing” defendant under section 425.16,subdivision (c). (ComputerXpress, at pp. 1016-1020,113 Cal.Rptr.2d 625.) In examining this question, thecourt rejected the plaintiffs’ reliance on Civil Codesection 1717 and instead focused on the statutorydistinction between prevailing defendants andprevailing plaintiffs. (ComputerXpress, at pp.1016-1018, 113 Cal.Rptr.2d 625.) Unlike a prevailingdefendant who is entitled as a matter of right to attorneyfees, a prevailing plaintiff is entitled to attorney feesonly if the anti-SLAPP motion was “frivolous or issolely intended to cause unnecessary delay.” (§ 425.16,subd. (c).) Finding this distinction reflected theLegislature’s strong preference for awarding attorneyfees to successful defendants, the court stated the phrase“prevailing party” should be interpreted broadly tofavor an award of attorney fees to a partially successfuldefendant. (ComputerXpress, supra, at p. 1018, 113Cal.Rptr.2d 625.) The ComputerXpress courtadditionally relied on similar judicial interpretations ofstatutory schemes that likewise distinguish betweenprevailing plaintiffs and defendants in the fee-shiftinganalysis. (Id. at pp. 1018-1020, 113 Cal.Rptr.2d 625;see Hensley v. Eckerhart (1983) 461 U.S. 424, 429,103 S.Ct. 1933, 76 L.Ed.2d 40 (Hensley ) [42 U.S.C. §1988]; Los Angeles Times v. Alameda CorridorTransportation Authority (2001) 88 Cal.App.4th 1381,1390-1392, 107 Cal.Rptr.2d 29 [Gov.Code, § 6259,subd. (d) ]; see also Wallace v. Consumers Cooperativeof Berkeley, Inc. (1985) 170 Cal.App.3d 836, 846, 216Cal.Rptr. 649 [§ 1021.5].)

*5 Based on these authorities, the ComputerXpresscourt held the defendants were prevailing partiesbecause they were successful in striking five of the ninechallenged causes of action alleged in the complaint. (ComputerXpress, supra, 93 Cal.App.4th at p. 1020,113 Cal.Rptr.2d 625.) The court stated the defendants’lack of success on a portion of the motion was relevantto the amount of fees awarded, and not on the issue ofwhether they were prevailing parties. FN5 (Id. at p.1019, 113 Cal.Rptr.2d 625.) The court thus remandedfor the trial court to determine the attorney fees incurredfor bringing the anti-SLAPP motion challenging thecauses of action stricken from the complaint. (Id . at pp.1020-1021, 113 Cal.Rptr.2d 625.)

FN5. Unlike here, the court found the attorneywork on the successful and unsuccessfulclaims involved discrete factual and legaltheories, and therefore “the problems … thatmay arise when the successful andunsuccessful claims are legally or factuallyrelated are not present.” (ComputerXpress,supra, 93 Cal.App.4th at p. 1020, 113Cal.Rptr.2d 625.)

Distinguishing ComputerXpress, a Court of Appealrecently held the defendants who were successful instriking only one cause of action were not “prevailing”parties under the anti-SLAPP statute. (Endres v. Moran(2006) 135 Cal.App.4th 952, 955-956, 37 Cal.Rptr.3d786.) In Endres, the plaintiffs alleged the defendantshad committed numerous torts and engaged in aconspiracy as a part of a wrongful attempt to control achurch. The defendants moved to strike the entirecomplaint under section 425.16, but were successfulonly as to the conspiracy cause of action. (Endres, at p.954, 37 Cal.Rptr.3d 786.) The trial court declined toaward attorney fees to the defendants, finding that therelief granted was minimal compared to the objectivesof their motion. (Ibid.) The appellate court affirmed,emphasizing that defendants “accomplished nothing” bybringing the motion: “The possible recovery againstdefendants did not change. The factual allegationswhich defendants had to defend did not change. Thework involved in trying the case did not change.Defendants’ burden concerning their jurisdictionaldefense did not change. The case was essentially thesame after the ruling on the special motion to strike asit was before. The results of the motion were minimaland insignificant, fully justifying the court’s finding thatdefendants should not recover fees.” (Id. at p. 955, 37Cal.Rptr.3d 786.)

We agree with the legal analysis and results reached byboth the ComputerXpress and Endres courts. Given theexpress legislative preference for awarding fees tosuccessful anti-SLAPP defendants, a party need notsucceed in striking every challenged claim to beconsidered a prevailing party within the meaning ofsection 425.16. A contrary conclusion would require apartially prevailing defendant to bear the entire cost ofthe anti-SLAPP litigation at the outset of the case. Thiswould create a strong disincentive for a defendant tobring the motion, undermining the legislative intent toencourage defendants to utilize the anti-SLAPPprocedure to eliminate SLAPP claims and to discourageplaintiffs from bringing meritless SLAPP claims. (SeeKetchum, supra, 24 Cal.4th at p. 1131, 104 Cal.Rptr.2d377, 17 P.3d 735.) On the other hand, there is no reasonto encourage a defendant to bring an anti-SLAPPmotion where the factual and legal grounds for theclaims against the defendant remain the same after theresolution of the anti-SLAPP motion. (Endres v.Moran, supra, 135 Cal.App.4th at pp. 955-956, 37Cal.Rptr.3d 786.) Where the results of the motion are “‘minimal’ “ or “insignificant” a court does not abuse itsdiscretion in finding the defendant was not a prevailingparty. (Id. at p. 556, 37 Cal.Rptr.3d 786 (conc. opn. ofMosk, J.); see Los Angeles Times v. Alameda CorridorTransportation Authority, supra, 88 Cal.App.4th at pp.1391-1392, 107 Cal.Rptr.2d 29.)

*6 [2][3][4] We thus hold that a party who partiallyprevails on an anti-SLAPP motion must generally beconsidered a prevailing party unless the results of themotion were so insignificant that the party did notachieve any practical benefit from bringing the motion.The determination whether a party prevailed on ananti-SLAPP motion lies within the broad discretion ofa trial court. (See Jackson v. Homeowners Assn. MonteVista Estates-East (2001) 93 Cal.App.4th 773, 789, 113Cal.Rptr.2d 363.) We review this determination on anabuse of discretion standard.

[5][6] Applying these principles, we conclude the trialcourt did not abuse its discretion in determiningdefendants were prevailing parties in the underlyinglitigation. Defendants successfully eliminated the tradelibel cause of action. Although trade libel bearssimilarity to the defamation claim that remained in thelitigation, the two causes of action are not identical.Whereas defamation concerns injury to the reputationof a person or business, trade libel involves falsedisparagement of the quality of goods or services. (Guess, Inc. v. Superior Court (1986) 176 Cal.App.3d473, 479, 222 Cal.Rptr. 79; Erlich v. Etner, supra, 224Cal.App.2d at pp. 73-74, 36 Cal.Rptr. 256.) Theelimination of the trade libel cause of action thus hadthe potential to narrow the litigation with respect to thedamage issues and the focus of the claimed falsestatements. Additionally, the Mann court’sacknowledgment that an absolute privilege applies todefendants’ reports of WSSI’s activities to governmententities precluded WSSI from thereafter pursuing anyrecovery based on defendants’ communications withgovernment agencies. (Mann, supra, 120 Cal.App.4that p. 108, 15 Cal.Rptr.3d 215.) By bringing theanti-SLAPP motion, defendants thus successfullynarrowed the scope of the lawsuit, limiting discovery,reducing potential recoverable damages, and alteringthe settlement posture of the case.

[7] In its reply brief, WSSI contends that even assumingthere was a factual basis for the trial court to have founddefendants were prevailing parties, the order must bereversed because the trial court did not exercise itsdiscretion on this issue. WSSI argues that the trial courterroneously based its prevailing party finding on thiscourt’s award of appellate costs to defendants in theprior appeal. (Mann, supra, 120 Cal.App.4th at p. 113,15 Cal.Rptr.3d 215.) We agree that the trial court’sreliance on the appellate cost award in Mann wasimproper. A “prevailing party” with respect to anappellate cost award is not necessarily the same as a“prevailing party” under the anti-SLAPP statute.(Compare § 425.16, subd. (c) with Cal. Rules of Court,rule 27.) Moreover, although a prevailing party isgenerally entitled to costs on appeal, appellate courtshave the discretion to deviate from the general“prevailing party” rule in “the interests of justice,” andmake any award or apportionment of costs that itdetermines is appropriate. (Cal. Rules of Court, rule27(a)(4); see Eisenberg et al., Cal. Practice Guide: CivilAppeals & Writs (The Rutter Group 2004) ¶ 14:61, p.14-12; see Dobbins v. Hardister (1966) 242 Cal.App.2d787, 798, 51 Cal.Rptr. 866; Stuckey v. Stuckey (1964)231 Cal.App.2d 382, 387, 41 Cal.Rptr. 792.) Becausethe Mann decision was silent on the reason for the costaward, the trial court erred in inferring the awardreflected a determination that defendants were theprevailing parties for purposes of the anti-SLAPPproceedings.

*7 [8] The court’s reliance on the appellate cost award,however, was not prejudicial because it was merely analternate basis for the trial court’s conclusion on theprevailing party issue. In its written order, the courtstated it found defendants were the prevailing partiesbased on their success in striking the trade libel cause ofaction. Absent a contrary indication, we presume thisfinding constituted an independent ground for theprevailing party finding. An order is presumed correct;all inferences are drawn in favor of the order and errormust be affirmatively shown. (See Howard v. ThriftyDrug & Discount Stores (1995) 10 Cal.4th 424, 443, 41Cal.Rptr.2d 362, 895 P.2d 469; Corenevsky v. SuperiorCourt (1984) 36 Cal.3d 307, 321, 204 Cal.Rptr. 165,682 P.2d 360; Denham v. Superior Court (1970) 2Cal.3d 557, 564, 86 Cal.Rptr. 65, 468 P.2d 193.)

II. Amount of Attorney Fees

[9] WSSI alternatively contends the court erred inrefusing to reduce the claimed attorney fees to reflectthat defendants were unsuccessful on three of thechallenged causes of action and that these causes ofaction remained in the litigation after the anti-SLAPPmotion was resolved.

[10] The trial court awarded defendants $57,000, whichconstituted its claimed fees of $64,065 minus $7,065.The court did not explain the basis for this amount orthe reduction, except to state that it found the $57,000was “reasonable and appropriate under thecircumstances.” FN6 The court also expressly declinedto apportion the fees between the successful andunsuccessful causes of action because it found the samelegal and factual theories were involved on each of theclaims.

FN6. Although a more detailed explanationwould certainly have been helpful, a trial courtis not required to issue a statement of decisionwith regard to a fee award, unless a partytimely requests one. (See Ketchum, supra, 24Cal.4th at p. 1140, 104 Cal.Rptr.2d 377, 17P.3d 735.)

[11][12] The California Supreme Court has upheld thelodestar method for determining the appropriate amountof attorney fees for a prevailing defendant on ananti-SLAPP motion. (Ketchum, supra, 24 Cal.4th at p.1136, 104 Cal.Rptr.2d 377, 17 P.3d 735.) Under thismethod, a court assesses attorney fees by firstdetermining the time spent and the reasonable hourlycompensation of each attorney. (Id. at pp. 1131-1132,104 Cal.Rptr.2d 377, 17 P.3d 735.) The court nextdetermines whether that lodestar figure should beadjusted based on various relevant factors (id. at p.1132, 104 Cal.Rptr.2d 377, 17 P.3d 735), including aplaintiff’s limited success in the litigation (Sokolow v.County of San Mateo (1989) 213 Cal.App.3d 231, 249,261 Cal.Rptr. 520; Californians for Responsible ToxicsManagement v. Kizer (1989) 211 Cal.App.3d 961,973-975, 259 Cal.Rptr. 599; see also Feminist Women’sHealth Center v. Blythe (1995) 32 Cal.App.4th 1641,1674, 39 Cal.Rptr.2d 189). In determining the lodestaramount, a prevailing party generally may not recoverfor work on causes of action on which the party wasunsuccessful. (See ComputerXpress, supra, 93Cal.App.4th at p. 1020, 113 Cal.Rptr.2d 625.)

Defendants do not dispute these general principles, butcontend a reduction was inappropriate in this casebecause the facts and law were essentially the same onthe cause of action for which they were successful (thetrade libel claim) and the causes of action on which theydid not prevail (the defamation and interferenceclaims). They argued below, and the court agreed, thatbecause the legal work on each of the causes of actionwas overlapping, apportionment was improper becauseit was not possible to separate the claims. They rely onjudicial interpretations of various fee-shifting statutes,in which the courts have held that attorney fees need notbe reduced for work on unsuccessful claims if theclaims “are so intertwined that it would beimpracticable, if not impossible, to separate theattorney’s time into compensable and noncompensableunits.” (Bell v. Vista Unified School Dist. (2000) 82Cal.App.4th 672, 687, 98 Cal.Rptr.2d 263; see, e.g.,Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124,129-130, 158 Cal.Rptr. 1, 599 P.2d 83 [Civ.Code, §1717]; Akins v. Enterprise Rent-A-Car Co. (2000) 79Cal.App.4th 1127, 1133, 94 Cal.Rptr.2d 448[Civ.Code, § 1788.30].)

*8 [13] Although we recognize that courts havefrequently adhered to the general rule ofnonapportionment if claims are overlapping, we are notbound by these decisions because they concern differentattorney fee statutes. The issue of the proper amount offees to be awarded when an attorney’s time isattributable to recoverable and nonrecoverable claimsdepends on the legislative intent and policies underlyingthe specific fee-shifting scheme at issue. (See Carver v.Chevron U.S.A., Inc. (2004) 119 Cal.App.4th 498,504-505, 14 Cal.Rptr.3d 467 [interpreting CartwrightAct to hold that fees on common issues should not beawarded to defendant on contract claims because theaward would undermine legislative intent underlyingthe Cartwright Act]; Cassim v. Allstate Ins. Co. (2004)33 Cal.4th 780, 811, 16 Cal.Rptr.3d 374, 94 P.3d 513[Brandt fees may not be obtained for all attorneyservices even if claims are overlapping]; Hensley,supra, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40[court should reduce for partial success even wherework on claims was overlapping].) In examining thisissue in the context of section 425.16, subdivision (c),we find instructive the United States Supreme Court’sdecision in Hensley, supra, 461 U.S. 424, 103 S.Ct.1933, 76 L.Ed.2d 40.

The Hensley court considered an attorney fees award tothe prevailing plaintiffs in a federal civil rights actionunder which a prevailing plaintiff is presumptivelyentitled to fees. (Hensley, supra, 461 U.S. at p. 429; see42 U.S.C. § 1988.) Although the plaintiffs prevailed onsome claims but not others, the district court awardedthe plaintiffs their fees attributable to all claims becausethe court found overlapping factual and legal issuesinvolved in those claims and a reduction would fail to“consider” several relevant factors, including “ ‘therelative importance of various issues’ “ and “ ‘the extentto which plaintiffs prevailed on the issues.’ “ (Id. at p.438.) The Supreme Court held that because of “theinterrelated nature of the facts and legal theories,” thedistrict court “did not err in refusing to apportion thefee award mechanically on the basis of respondents’success or failure on particular issues.” (Ibid.) Thecourt, however, remanded the case for the court toexercise its discretion as to whether the attorney feeaward should be reduced to account for the plaintiffs’lack of success on several claims. The court explainedthat “[w]here the plaintiff has failed to prevail on aclaim that is distinct in all respects from his successfulclaims, the hours spent on the unsuccessful claimshould be excluded in considering the amount of areasonable fee. Where a lawsuit consists of relatedclaims, a plaintiff who has won substantial relief shouldnot have his attorney’s fee reduced simply because thedistrict court did not adopt each contention raised. Butwhere the plaintiff achieved only limited success, thedistrict court should award only that amount of feesthat is reasonable in relation to the results obtained.”(Id. at p. 440, italics added.) In conducting this analysis,a court “may attempt to identify specific hours thatshould be eliminated, or it may simply reduce theaward to account for the limited success.” (Id. at pp.436-437, italics added.)

*9 Accordingly, under Hensley, a partially prevailingparty is not necessarily entitled to all incurred fees evenwhere the work on the successful and unsuccessfulclaims was overlapping. (Hensley, supra, 461 U.S. at p.440; see Harman v. City and County of San Francisco(2006) 136 Cal.App.4th 1279, 1312, 39 Cal.Rptr.3d589.) Instead, the court must consider the significanceof the overall relief obtained by the prevailing party inrelation to the hours reasonably expended on thelitigation and whether the expenditure of counsel’s timewas reasonable in relation to the success achieved. (Ibid.)

[14] Although Hensley interpreted the federal civilrights statute, the court’s approach is consistent with thepolicies underlying the anti-SLAPP statute. Thefee-shifting provisions of section 425.16, subdivision(c) were enacted to impose litigation costs on those whoassert meritless claims burdening the exercise of thedefendant’s constitutional free speech and petitionrights. (Ketchum, supra, 24 Cal.4th at p. 1131, 104Cal.Rptr.2d 377, 17 P.3d 735.) The Legislature alsosought to encourage private representation fordefendants who might not otherwise have the financialresources to retain an attorney. (Ibid.) However, whena defendant is only partially successful in challengingportions of the complaint, these policies to ensureprompt and meaningful redress for defendants subjectto SLAPP suits must be balanced with the plaintiff’sconstitutional right to petition for redress of his or herclaims. If, after a court rules on an anti-SLAPP motion,a partially successful plaintiff is required to bear theentire cost of the anti-SLAPP litigation even though thedefendant achieved only a relatively minor benefit andthe essential thrust of the plaintiff’s complaint remainsviable, this could impose a potential financial barrier tothe plaintiff continuing with the lawsuit, burdening theplaintiff’s right to exercise his or her right to petition forthe redress of grievances. The Legislature recentlydeclared that “there has been a disturbing abuse ofSection 425.16 … which has undermined the exercise ofthe constitutional rights of freedom of speech andpetition for the redresses of grievances,” and that it is“contrary to the purpose and intent of Section 425.16”to “chill[ ]” a plaintiff’s petitioning rights through theuse of the anti-SLAPP procedure. (§ 425.17.)

[15] An award of attorney fees to a partially prevailingdefendant under section 425.16, subdivision (c) thusinvolves competing public policies: (1) the publicpolicy to discourage meritless SLAPP claims bycompelling a SLAPP plaintiff to bear a defendant’slitigation costs incurred to eliminate the claim from thelawsuit; and (2) the public policy to provide a plaintiffwho has facially valid claims to exercise his or herconstitutional petition rights by filing a complaint andlitigating those claims in court. (§§ 425.16, 425.17; seeKetchum, supra, 24 Cal.4th at p. 1131, 104 Cal.Rptr.2d377, 17 P.3d 735.) In balancing these policies, weconclude a defendant should not be entitled to obtain asa matter of right his or her entire attorney fees incurredon successful and unsuccessful claims merely becausethe attorney work on those claims was overlapping.Instead, the court should first determine the lodestaramount for the hours expended on the successfulclaims, and, if the work on the successful andunsuccessful causes of action was overlapping, thecourt should then consider the defendant’s relativesuccess on the motion in achieving his or her objective,and reduce the amount if appropriate.

*10 This analysis includes factors such as the extent towhich the defendant’s litigation posture was advancedby the motion, whether the same factual allegationsremain to be litigated, whether discovery and motionpractice have been narrowed, and the extent to whichfuture litigation expenses and strategy were impacted bythe motion. The fees awarded to a defendant who wasonly partially successful on an anti-SLAPP motionshould be commensurate with the extent to which themotion changed the nature and character of the lawsuitin a practical way. The court should also consider anyother applicable relevant factors, such as the experienceand abilities of the attorney and the novelty anddifficulty of the issues, to adjust the lodestar amount asappropriate. (See Ketchum, supra, 24 Cal.4th at p.1132, 104 Cal.Rptr.2d 377, 17 P.3d 735.)

Applying these principles, we conclude the court erredin failing to reduce the attorney fees award for feesattributable to the causes of action that remained in thelitigation. Although the amount to be awarded could notbe calculated through a purely mechanical approach byallocating particular hours to particular claims, the courtshould have considered the significance of the overallrelief obtained by defendants in relation to the hoursreasonably expended on the litigation and whether theexpenditure of counsel’s time was reasonable in relationto the success achieved. We are required to presume allfacts to support the court order (see Ketchum, supra, 24Cal.4th at p. 1140, 104 Cal.Rptr.2d 377, 17 P.3d 735),but the trial court’s statement declining to apportion thefees necessarily reflects that the court did not considerdefendants’ relative lack of success in determining theappropriate amount of fees. Moreover, a reduction ofapproximately $7,000 to account for defendants’ lack ofcomplete success was clearly insufficient.

In this regard, we are unpersuaded by defendants’argument that they are entitled to all of their attorneyfees because their efforts established new law inCalifornia. The issue of first impression inMann-whether a court should deny an anti-SLAPPmotion if the plaintiff proves a probability of prevailingon only a portion of the SLAPP claim-resulted in aholding rejecting defendants’ legal arguments. (Mann,supra, 120 Cal.App.4th at p. 106, 15 Cal.Rptr.3d 215.)On this issue, we held a plaintiff meets its burden tooppose an anti-SLAPP motion if the plaintiff proves aprobability of prevailing on any one theory underlyingthe claim. (Ibid.)

[16] Although normally we would remand for the courtto exercise its discretion on the issue of the properamount of attorney fees, we conclude that under theparticular circumstances of this case it is appropriatethat we perform the analysis here. The basis of thebroad discretion afforded to the trial judge in ruling onan attorney fee motion is the judge’s familiarity with theproceedings and the work performed by the attorneys.(See PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th1084, 1095, 95 Cal.Rptr.2d 198, 997 P.2d 511.) Here,the trial judge did not preside over the underlyinglitigation, and the court did not have first handknowledge of the work because defendants did notsubmit the underlying trial or appellate court briefs tosupport their attorney fees request. In contrast, thiscourt is familiar with the case and the attorneys’ workbased on our prior appellate review and the record issufficiently explicit that we can properly perform thenecessary calculations. Additionally, counsel haveadvised this court that the matter has settled, except forthe attorney fees issue. Under these circumstances, itwould be wasteful to remand and invite a new round oflitigation. (See Hensley, supra, 461 U.S. at p. 437[warning courts against turning fee applications intomajor collateral litigation].)

*11 After conducting the analysis, we concludedefendants are entitled to recover $32,032.50 (50percent of the claimed fees). This amount fairlycompensates defendants for the results achieved inpursuing the anti-SLAPP motion and avoidsreimbursing them for the objectives that were notattained. Militating against compensation, defendantshad only limited success, and WSSI was compelled todefend the anti-SLAPP motion notwithstanding that twoof the challenged causes of action were not evengoverned by the anti-SLAPP statute and there werefacts showing a probability of prevailing on thedefamation cause of action subject to the statute.Further, defendants did not achieve one of theiranti-SLAPP objectives-to strike all claims based ondefendants’ alleged false statements to WSSI’scustomers.

On the other hand, the practical impact of the motionwas far more significant than the mere dismissal of thetrade libel cause of action. In Mann, we recognizeddefendants’ reports to government agencies wereabsolutely privileged (Civ.Code, § 47, subd .(b)), thuseliminating any actionable theory arising from thealleged false statements to these agencies. Byestablishing this legal principle, defendants effectivelyrestricted the factual allegations, reduced viabletheories of recovery, limited discovery, lessened thework involved, and permitted both sides to morerealistically evaluate liability, damages and future legalexpenses. An award of $32,032.50 reflects the fact thatdefendants prevailed on important issues that materiallychanged the litigation, but does not reward them forlegal efforts that were meritless.

In our view, allowing partially successful defendants torecover virtually all of their fees because the facts andlegal theories are so “intertwined” that they “cannot” besegregated underestimates the ability of attorneys andexperienced trial judges to evaluate the value of legalservices associated with limited success. By contrast, anapproach that concentrates on the practical impact of apartially successful motion on the overall litigationadvances the objectives of the anti-SLAPP statute andminimizes abuses.

DISPOSITION

We affirm the order to the extent it finds defendantswere the prevailing parties on the anti-SLAPP motion,but strike the $57,000 amount awarded and modify theorder to award defendants $32,032.50. As so modified,we affirm. Each party to bear its own costs on appeal.No party is entitled to recover attorney fees incurred onthis appeal.

WE CONCUR: McDONALD and McINTYRE, JJ.

Cal.App. 4 Dist.,2006.

Mann v. Quality Old Time Service, Inc.

— Cal.Rptr.3d —-, 2006 WL 1229686 (Cal.App. 4Dist.)

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