Appellant and its counsel filed a 32-page brief in response to our Order to Show Cause. [FN9] This brief asserted three major contentions: (1) the proceeding instituted by our Order to Show Cause violates their procedural due process rights because they were not afforded reasonable notice and an opportunity to be heard; (2) the appeal is not frivolous; and (3) even if the appeal on the libel claims is frivolous, the remaining six causes of action are meritorious and the appeal cannot be considered frivolous.
In Flaherty, our Supreme Court discussed the necessary due process requirements to be afforded a party prior to the imposition of sanctions. The court stated, "[d]ue process requires that certain basic procedural protections be afforded before the state deprives an individual of property. [Citations.] ... [P] ... Fundamental constitutional mandates require that the basic protections of due process be followed before an attorney is fined for prosecuting a frivolous appeal." (Flaherty, supra, 31 Cal.3d at pp. 651- 652, 183 Cal.Rptr. 508, 646 P.2d 179.)
"Due process, fundamental fairness and the integrity of our judicial system all require that counsel be permitted to pursue their clients' interests with the confidence that they will not be singled out at random for sanctions. In proper cases, the imposition of penalties for prosecuting a frivolous appeal may be fair and may serve the useful purpose of deterring similar conduct. However, such sanctions should be imposed rarely and only if the mandates of procedural due process are obeyed. [P] Due process is a flexible concept, and must be tailored to the requirements of each particular situation.... The appellate courts should exercise their statutory power to impose sanctions only after scrupulously observing the due process mandates set forth herein. Penalties for prosecuting frivolous appeals should not be imposed without giving fair warning, affording the attorney an opportunity to respond to the charge, and holding a hearing. Further, when imposing sanctions, the court should provide the attorney with a written statement of the reasons for the penalty." (Id., at p. 654, 183 Cal.Rptr. 508, 646 P.2d 179.)
Appellant's claims concerning the violation of its due process rights are specious. Appellant chose not to appear at oral argument to challenge the respondents' contentions and the request for sanctions. The request for sanctions had been made in respondent Okun's brief filed nearly six months prior to the scheduled date for oral argument. In order to comply with Flaherty, we issued an order to show cause re sanctions.
While appellant claims our Order to Show Cause lacked clarity and precision, its responses to our order and its arguments presented at the hearing belie this contention. An extensive brief and a supporting declaration as well as a reply to respondents' brief was filed. Appellant and its counsel appeared at the hearing with two additional counsel who were engaged to present
appellant's views. Appellant's counsel engaged in a vigorous and extensive debate with respondents' counsel before this court. The briefs submitted by appellant exhaustively cited the relevant statutory and decisional authorities on the subject of frivolous appeal; the briefs squarely addressed the subject matter of our Order to Show Cause. At the conclusion of the hearing, we offered appellant's counsel further opportunity to brief the subject of sanctions and they declined our invitation. [FN10]
C. The Appeal Concerning the Libel Claims Is Frivolous
Next, we must determine whether the appeal of the libel claims is frivolous. The standards for determining when an appeal is frivolous was extensively set forth in Flaherty, supra, 31 Cal.3d 637, 183 Cal.Rptr. 508, 646 P.2d 179. Because the language contained in that opinion is crucial to our determination, we quote from it at length.
"The objective standard looks at the merits of the appeal from a reasonable person's perspective. 'The problem involved in determining whether the appeal is or is not frivolous is not whether [the attorney] acted in the honest belief he had grounds for appeal, but whether any reasonable person would agree that the point is totally and completely devoid of merit, and, therefore, frivolous.' [Citations.] [P] The two standards are often used together, with one providing evidence of the other. Thus, the total lack of merit of an appeal is viewed as evidence that appellant must have intended it only for delay. [Citations.] [P] Both strands of this definition are relevant to the determination that an appeal is frivolous. An appeal taken for an improper motive represents a time-consuming and disruptive use of the judicial process. Similarly, an appeal taken despite the fact that no reasonable attorney could have thought it meritorious ties up judicial resources and diverts attention from the already burdensome volume of work at the appellate courts. Thus, an appeal should be held to be frivolous only when it is prosecuted for an improper motive -- to harass the respondent or delay the effect of an adverse judgment -- or when it indisputably has no merit -- when any reasonable attorney would agree that the appeal is totally and completely without merit. [Citation.]" (Id., at pp. 649-650, 183 Cal.Rptr. 508, 646 P.2d 179.) (Emphasis added.)
Facts concerning the criminal investigation were placed in the superior court record sometime in 1980 by appellant itself prior to the hearing on the first demurrer and were part of the record before the Supreme Court in the writ proceedings in Okun. Just because the Supreme Court did not mention this "criminal investigation" in Okun does not mean that the court failed to consider these facts and then reject them. It is a rare opinion indeed which covers all the points urged by the parties in their briefs or oral argument. Furthermore, after appellant's petition for rehearing in Okun on the basis of these "new facts" was denied, no reasonable person would dispute the fact that the libel claims were totally and completely without merit. [FN11]
D. Sanctions May Be Awarded When an Appeal Is Partially Frivolous
Appellant asserts that even if the libel claims were frivolous, the appeal was not frivolous because of the existence of other viable causes of action. [FN12] We disagree.
Appellant's reliance on Bank of America v. Superior Court (1942) 20 Cal.2d 697, 702-703, 128 P.2d 357, is misplaced. That case is distinguishable because the Supreme Court's decision did not preclude further amendment of the pleading despite the sustaining of the demurrer to the complaint without leave to amend. The Okun decision, however, leaves no doubt that no further amendments would be allowed.
The reference to Anders v. California (1967) 386 U.S. 738, 744, 87 S.Ct. 1396, 1400, 18 L.Ed.2d 493, 498, in Flaherty, supra, 31 Cal.3d at page 649, 183 Cal.Rptr. 508, 646 P.2d 179, is of no assistance to appellant. While it is true that Flaherty cited Anders for the proposition that "an appeal is not frivolous if 'any of the legal points [are] arguable on their merits'" (ibid.), the reference to Anders was used in the context of " 'whether any reasonable person would agree that the point is totally and completely devoid of merit, and, therefore, frivolous.' [Citations.]" (Ibid.) The use of the word "point" rather than the word "appeal" to describe whether the appeal is frivolous would support the proposition that an appeal may be partially frivolous if a point on appeal has no merit and therefore the proper subject of sanctions.
While the entire appeal is not totally frivolous because it challenges the merits of the trial court's dismissal of the slander and other causes, the appeal is partially frivolous insofar as it attempts to relitigate the libel claims which were conclusively decided in Okun.
Sanctions for an appeal which is partially frivolous are appropriate if the frivolous claims are a significant and material part of the appeal. Here the libel claims are not only significant and material but such claims are severable and distinct from the other causes of action.
In imposing sanctions, we are well aware of the strong public policy in favor of the peaceful resolution of disputes in our courts and that attorneys must not be deterred from pursuing their client's remedies for fear of sanctions against them and/or their clients. Nevertheless, "the practice of penalizing frivolous appeals reflects a fear that irresponsible litigants may abuse their right of access to the judicial system." (Flaherty, supra, 31 Cal.3d at p. 648, 183 Cal.Rptr. 508, 646 P.2d 179.)
E. The Amount of Sanctions
Counsel for respondents Harris and Ruden estimated that 50 percent of his time on this appeal or $9,500 is allocable to the libel causes of action. Counsel for respondent Okun also estimates that 50 percent of the 145 hours he devoted in defending this appeal on behalf of his clients were allocable to the libel claims. These estimates were submitted prior to the hearing on our order to show cause.
In determining the amount of sanctions, we have considered the following factors: the nature and extent of the libel claims on appeal and the conclusive holding in Okun (see Beckstead v. International Industries, Inc. (1982) 127 Cal.App.3d 927, 934, 179 Cal.Rptr. 767); the protracted length of this litigation and the delay in the resolution of the appeal (see Hersch v. Citizens Savings & Loan Assn. (1983) 146 Cal.App.3d 1002, 1012, 194 Cal.Rptr. 628 and Miller v. R.K.A. Management Corp. (1979) 99 Cal.App.3d 460, 469, 160 Cal.Rptr. 164; the chilling effect that appellant's actions have had on the respondents' first amendment rights and the electoral process, the relative costs of legal counsel for respondents in addressing the frivolous claims on appeal (see Wax v. Infante (1983) 145 Cal.App.3d 1029, 1031, 194 Cal.Rptr. 14); the undue burden on the legal system and consumption of this court's time (see Custom Craft Carpets, Inc. v. Miller, supra, 137 Cal.App.3d 120, 125, 187 Cal.Rptr. 78); and the need to deter this type of conduct in the future (see Kapelus v. Newport Equity Funds, Inc. (1983) 147 Cal.App.3d 1, 9, 194 Cal.Rptr. 893). After weighing all of these factors, we have determined that an appropriate sanction in the form of a penalty of $20,000 is suitable and appropriate in view of appellant's use of this court to relitigate a settled question.
The Opening Brief of Appellant and Levy & Norminton filed in response to our Order to Show Cause states that "If, Against All The Evidence, Appellant's Contentions Are Found To Be Frivolous, The Responsibility Is Solely That Of Appellant's Counsel. [P] The Order to Show Cause suggests that the Court is considering the imposition of sanctions against both Appellant and its counsel. Although we believe that sanctions cannot be justified in any case, the accompanying declarations make it clear that any sanctionable conduct was solely counsel's. Norminton Decl., P 15; Mahboubi Decl., PP 3-7. Appellant relied on its counsel's advice, and it should not be punished for having done so." (Emphasis in original.) We interpret this statement in said brief to suggest that Levy & Norminton should be sanctioned and not appellant. We shall therefore impose sanctions on counsel. This opinion is a written statement of our reasons for imposing sanctions as required by Flaherty.
Appellant finally urges that the trial court erred in sustaining the demurrers to all of the causes of action without leave to amend. We disagree.
The superior court was, of course, precluded from allowing an amendment to the causes of action based on libel by the authority of Okun, supra, 29 Cal.3d at p. 460, 175 Cal.Rptr. 157, 629 P.2d 1369.
As to the remaining causes of action, denial of leave to amend was appropriate. Although great liberality should be exercised in permitting a plaintiff to amend (LeMoge Electric v. County of San Mateo (1956) 46 Cal.2d 659, 664, 297 P.2d 638), an amendment should not be allowed where it would not serve any useful purpose. (Routh v. Quinn (1942) 20 Cal.2d 488, 493-494, 127 P.2d 1.)
As to the causes of action based on civil rights statutes and interference with economic advantage, there are no circumstances under which an amendment to the complaint could state a cause of action under the theories proffered in the absence of state action.
The question of whether appellant should have been allowed to amend the slander cause of action raises a closer question. Over the vigorous objection of three justices, the majority in Okun, supra, gave appellant the opportunity to amend its cause of action in slander after determining that the allegation that Councilman Stone entered into a "corrupt" relationship with appellant was not slanderous in context of a political debate. The court noted the "possibility" of an appropriate amendment.
The trial court determined, and we agree, that appellant's new attempt to amend the complaint did not result in a substantial change from the allegation which was held to be non-actionable in Okun, supra, 29 Cal.3d at pages 459-460, 175 Cal.Rptr. 157, 629 P.2d 1369.
Appellant then asked the trial court for leave to file a third amendment stating that it is prepared to allege that respondents "expressly charged that Maple 'bribed' Stone." The trial court denied the request for a new leave to amend.
While we might be disposed to grant an additional leave to amend in a usual tort case, we are mindful that the present case seeks to inhibit fundamental First Amendment rights. Where such precious rights are involved, "speedy resolution of cases ... is desirable" to avoid a chilling effect upon the exercise of free speech. (Good Government Group of Seal Beach, Inc. v. Superior Court (1978) 22 Cal.3d 672, 685, 150 Cal.Rptr. 258, 586 P.2d 572.)
This action is directed at citizens who were lawfully working through the political process. Respondents have been required to defend this case for nearly five years, presumably at private expense.
The wisdom of Justice Mosk's dissent in Okun, supra, 29 Cal.3d 442, 175 Cal.Rptr. 157, 629 P.2d 1369, seems particularly compelling in view of the passage of time in this case. "[T]here comes a time when the finality of litigation is almost as important as the decision therein. In the preservation of the free exercise of speech, writing and the political function, the early termination of this lawsuit is highly desirable. We should discourage attempts to recover through the judicial process what has been lost in the political process." (Id., at p. 461, 175 Cal.Rptr. 157, 629 P.2d 1369.)
At this late date, appellant has exploited the resources of the trial and appellate courts and the defendants sufficiently. The trial court did not abuse its discretion in denying appellant the opportunity to begin again.
The judgment of dismissal is affirmed. Respondents are awarded their costs on appeal. In addition, sanctions are imposed against appellant's counsel, Levy & Norminton, in the sum of $20,000, $10,000 each payable to respondent Okun and to respondents Harris and Ruden jointly.
DANIELSON and ARABIAN, JJ., concur.
Hearing denied; BIRD, C.J., and MOSK, J., dissenting.