C. Probability of Prevailing
As we have determined that the Internet postings and SEC complaint fell within section
425.16, ComputerXpress's fourth and sixth through ninth causes of action based on that
conduct were subject to a motion to strike unless ComputerXpress showed a probability of
prevailing on those claims. (Code of Civil Proc. § 425.16, subd. (b)(1).) To show a
probability of prevailing for purposes of section 425.166, a plaintiff must "'"make a prima
facie showing of facts which would, if proved at trial, support a judgment in plaintiff's
favor."'" (Kyle v. Carmon, supra, 71 Cal. App. 4th 901, 907.) This standard is "similar to
the standard used in determining motions for nonsuit, directed verdict, or summary
judgment," in that the court cannot weigh the evidence. (Id., at p. 907; accord, Wilcox v.
Superior Court (1994) 27 Cal. App. 4th 809, 827.) However, the plaintiff "cannot simply
rely on the allegations in the complaint" (Paul for Council v. Hanyecz (2001) 85 Cal. App.
4th 1356, 1364, fn. 5), but "must provide the court with sufficient evidence to permit the
court to determine whether 'there is a probability that the plaintiff will prevail on the
claim.'" (DuPont Merck Pharmaceutical Co. v. Superior Court (2000) 78 Cal. App. 4th 562,
568, italics added.) We must determine whether the evidence submitted by ComputerXpress
satisfied that standard. [FN 3]
1. Fourth cause of action -- trade libel
Trade libel is the publication of matter disparaging the quality of another's property, which the publisher should recognize is likely to cause pecuniary loss to the owner. (Leonardini v. Shell Oil Co. (1989) 216 Cal. App. 3d 547, 572, 264 Cal. Rptr. 883.) The tort encompasses "all false statements concerning the quality of services or product of a business which are intended to cause that business financial harm and in fact do so." (Ibid.)
To constitute trade libel, a statement must be false. (Leonardini v. Shell Oil Co., supra, 216 Cal. App. 3d 547, 572.) Since mere opinions cannot by definition be false statements of fact, opinions will not support a cause of action for trade libel. (Hofmann Co. v. E. I. Du Pont De Nemours & Co. (1988) 202 Cal. App. 3d 390, 397, 248 Cal. Rptr. 384.)
In most cases, whether a statement is fact or opinion is a question of law. (Hofmann Co. v. E. I. Du Pont de Nemours & Co., supra, 202 Cal. App. 3d 390, 397.) To decide whether a statement is fact or opinion, a court must put itself in the place of an average reader and determine the natural and probable effect of the statement, considering both the language and the context. (Id., at p. 398.) However, where a statement is ambiguous or susceptible of an innocent meaning, it is incumbent upon the plaintiff to plead the facts showing its defamatory meaning. (Nichols v. Great American Ins. Companies (1985) 169 Cal. App. 3d 766, 774, 215 Cal. Rptr. 416.)
ComputerXpress failed to demonstrate how defendants' Internet postings, on which the fourth cause of action is based, were false or defamatory. In fact, it has not even identified which of the numerous postings included in the record it contends were actionable. Instead, ComputerXpress simply refers this court to the 131 pages of Internet postings contained in the record, apparently assuming it is the court's obligation to determine how they support ComputerXpress's position.
This is a wholly unacceptable method of appellate advocacy. Rule 15(a) of the California Rules of Court provides: "The statement of any matter in the record shall be supported by appropriate reference to the record." It is not the duty of a reviewing court to search the record for evidence on a point raised by a party whose brief makes no reference to the pages where the evidence can be found. (Downey Savings & Loan Assn. v. Ohio Casualty Ins. Co. (1987) 189 Cal. App. 3d 1072, 1093, 234 Cal. Rptr. 835; Metzenbaum v. Metzenbaum (1950) 96 Cal. App. 2d 197, 199, 214 P.2d 603.)
Moreover, having reviewed them, we find nothing in the Internet postings which would satisfy the requirements for trade libel as discussed ante. The court in Global Telemedia, supra, 132 F. Supp. 2d 1261 granted a motion to strike a trade libel claim pursuant to section 425.16 under closely analogous circumstances. The defendants posted allegedly libelous statements about the plaintiff, a publicly traded company, on the Raging Bull message boards. The court concluded the company had not shown a probability of prevailing, because "the general tenor, the setting and the format" of the postings strongly suggested they were opinion. The postings "were part of an on-going, free-wheeling and highly animated exchange" about the company and were "full of hyperbole, invective, short-hand phrases and language not generally found in fact-based documents, such as corporate press releases or SEC filings." Therefore, they lacked "the formality and polish typically found in documents in which a reader would expect to find facts." (Id., at p. 5.)
Among the postings the Global Telemedia court found not actionable were statements that: the company's public relations documents gave it the appearance of being "'high tech,'" but its products were "'slow or non-existent'"; the company was steering a "'sinking ship'"; investors were "'being manipulated by the company so that they can fly the coop again'"; shareholders had been "'screwed out of your hard earned money'" and it was "'time to talk about a lawsuit'"; and the principals of the company were guilty of "'blatant mismanagement'" and would hold shareholders' money and "'dictate after they lie how it will be used.'" (Global Telemedia, supra, 132 F. Supp. 2d at pp. 1268-1269.) The court found these statements would be seen by a reasonable reader as mere invective of a disgruntled shareholder, "probably not written by someone with authority or firm factual foundations for his beliefs." (Id., at p. 7.) Therefore, the statements could not have had the alleged defamatory effect of causing the company's stock to lose value.
The Internet postings in this case were comparable in tone and substance to those in Global Telemedia. Without citing any specific postings, the complaint alleged four defamatory statements: "that the computer product featured on Plaintiff's own website was of inferior quality, that Plaintiff was merely a stock 'scam' certain to be out of business within thirty days, that the officers and directors of Plaintiff were illegally conspiring with marketmakers for the company's stock to manipulate its value, that one of Plaintiff's officers or directors had filed bankruptcy, etc." Our own review of the postings indicates the following disparaging statements:
ComputerXpress's stock fluctuated dramatically because "they never have real substance behind their news, IMO," [FN 4] so that "the suckers jump in before verifying anything" and then "jump out when they see it was more BS than PR."
Investors were "either swallowing complete bull" or "participating in what I think is a fraud" and should not be surprised if the ComputerXpress promoters "try to continue this for another 30 days (the time they have to comply or revert to pink sheets) to suck out as much as they can . . . ."
The ComputerXpress promoters acted as they did because "greed set in; and a belief that they could 'operate under the radar' and get away with whatever they wanted to because there was not enough official care to be concerned about. I firmly believe that they care nothing about generating a genuine business, and everything about selling the stock . . . ."
When ComputerXpress announced the intended merger with defendants' businesses to the public, it had already filed a letter with the SEC promoting a different type of affiliate program not mentioned to the public until months later. "Is that fraud?"
"You guys really seem to think you can sucker a lot of people all the time!"
"When the people who have . . . been duped into this stock realize the scam they were coaxed into, my guess is there will be hell to pay."
"Will someone please tell me why ANYONE would believe ANYTHING these guys and their pump and dump supporters say?"
As is apparent from this recitation, while the postings certainly could be considered disparaging, their tone and content identified them as statements of opinion and not fact. Like the postings in Global Telemedia, they were hyperbolic, informal, and lacked the characteristics of typical fact-based documents. Moreover, they were replete with explicit statements of opinion, such as "IMO [in my opinion]," "what I think is a fraud," "I firmly believe," "is that fraud?" and "my guess is."
Other statements, such as the asserted inconsistency between ComputerXpress's public relations releases and its actual operations, or the assertion that its promoters only cared about selling stock and not about generating a genuine business, were too vague to be taken as fact by a reasonable reader. In the few instances in which the postings did contain apparent statements of facts -- such as the statement that a company owned by the former president had filed for bankruptcy, or that ComputerXpress had 30 days "to comply or revert to pink sheets" -- ComputerXpress failed to present evidence that the statements were false.
This court has observed that, because section 425.16's requirement that a plaintiff establish a probability of prevailing "is intended to 'provide a fast and inexpensive unmasking and dismissal of SLAPP's,'" a more lenient standard would not be appropriate. (Ludwig v. Superior Court (1995) 37 Cal. App. 4th 8, 16.) Although ComputerXpress's displeasure at the Internet postings involved here is understandable, despite two opportunities to demonstrate that the postings constituted false and defamatory statements of fact, ComputerXpress failed to do so. ComputerXpress therefore failed to establish a probability of prevailing on its cause of action for trade libel.
2. Sixth cause of action -- interference with prospective economic advantage
ComputerXpress's claim for interference with prospective economic advantage, like its claim for trade libel, was based on defendants' Internet postings. Like the tort of trade libel, interference with prospective economic advantage requires false statements of fact. "A person cannot incur liability for interfering with contractual or economic relations by giving truthful information to a third party." (Savage v. Pacific Gas & Electric Co. (1993) 21 Cal. App. 4th 434, 449-450.) Further, a plaintiff cannot state a cause of action for interference with prospective economic advantage based on "'loose, figurative, or hyperbolic language'" (Morningstar, Inc. v. Superior Court (1994) 23 Cal. App. 4th 676, 697) or mere opinions, unless shown to be not genuinely held and advanced for the sole purpose of harming the plaintiff. (Hofmann Co. v. E. I. Du Pont de Nemours & Co., supra, 202 Cal. App. 3d 390, 403.)
As we have concluded in part II.C.1., ante, that the Internet postings were not actionable trade libel, they also could not support a claim for interference with prospective economic advantage. ComputerXpress failed to establish a probability of prevailing on its sixth cause of action.
3. Seventh cause of action -- abuse of process
Abuse of process consists of "the use of the machinery of the legal system for an ulterior motive . . . ." (Trear v. Sills (1999) 69 Cal. App. 4th 1341, 1359, italics added.) Because the purpose of the tort is "to preserve the integrity of the court," it "requires misuse of a judicial process . . . ." (Stolz v. Wong Communications Limited Partnership (1994) 25 Cal. App. 4th 1811, 1822-1823.) The tort therefore does not extend to misuse of administrative proceedings, even those involving agencies with "'quasi-judicial' powers . . . ." (Id., at p. 1823 [misuse of administrative process of Federal Communications Commission not abuse of process].)
ComputerXpress's seventh cause of action alleged defendants misused the legal process by posting the SEC complaint on the Internet. There was no allegation of any misuse of the judicial process. ComputerXpress failed to establish a probability of prevailing on its claim for abuse of process.
4. Eighth cause of action -- conspiracy
"'A conspiracy cannot be alleged as a tort separate from the underlying wrong it is organized to achieve.'" (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal. 4th 503, 513, 869 P.2d 454.) Therefore, "conspiracy to commit a tort is not a separate cause of action from the tort itself . . . ." (Saunders v. Superior Court (1994) 27 Cal. App. 4th 832, 845.)
ComputerXpress's conspiracy claim was based on the Internet postings and the filing of the SEC complaint. We have previously determined that the postings were not actionable under any tort theory pled in ComputerXpress's complaint. The filing of the SEC complaint clearly was absolutely privileged under Civil Code section 47, subdivision (b), which as stated ante protects "'communication to an official administrative agency . . . designed to prompt action by that agency . . . .'" (Kim v. Walker, supra, 208 Cal. App. 3d 375, 383; accord, Slaughter v. Friedman, supra, 32 Cal. 3d 149, 156; Edwards v. Centex Real Estate Corp., supra, 53 Cal. App. 4th 15, 30.) It follows that ComputerXpress failed to establish a probability of prevailing on its conspiracy cause of action.
5. Ninth cause of action -- injunction
As ComputerXpress points out, injunctive relief is sometimes available as a remedy for trade libel. (Leonardini v. Shell Oil Co., supra, 216 Cal. App. 3d 547, 579.) However, while such relief is available "in the ordinary case involving private disputes," it is not available to restrain debate about public issues, even where false statements are involved. (Id., at pp. 578-579.) "'The concept that a statement on a public issue may be suppressed because it is believed by a court to be untrue is entirely inconsistent with constitutional guarantees and raises the spectre of censorship in a most pernicious form.'" (Id., at p. 578, quoting Wilson v. Superior Court (1975) 13 Cal. 3d 652, 658-659, 119 Cal. Rptr. 468, 532 P.2d 116.)
We have previously determined that the statements ComputerXpress sought to enjoin concerned a public issue, not a mere private dispute. Even if that were not the case, as discussed ante, the statements were not actionable as trade libel. Accordingly, ComputerXpress failed to establish a probability of prevailing on its injunction cause of action.
D. Attorney Fees and Costs
The remaining question is whether defendants are entitled to attorney fees and costs pursuant to Code of Civil Proc. section 425.16, subdivision (c). That provision states in relevant part that "a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney's fees and costs." Defendants contend this language mandates an award of fees and costs to the defendant any time a SLAPP motion is granted, even in part. ComputerXpress, on the other hand, contends that, because we have concluded defendants' SLAPP motion properly was denied as to four out of the nine causes of action of the complaint, defendants should not be considered to have prevailed on the motion for purposes of section 425.16.
Section 425.16, subdivision (c) does not define the term "prevailing defendant." In particular, it does not state whether a defendant is deemed to have prevailed if its SLAPP motion is granted as to some claims and denied as to others. Recently, the court in Shekhter v. Financial Indemnity Company, supra, 89 Cal. App. 4th 141 held that, where the defendants successfully argued on appeal that their motion to strike one cause of action as a SLAPP claim should have been granted, they were entitled to attorney fees even though another cause of action remained pending. (Id., at p. 154.) However, the court did not specifically discuss the issue whether the defendants could be considered the prevailing parties under the circumstances.
In the context of contractual fee awards under Civil Code section 1717, the rule is that in cases of "mixed" results, where a party "'receives only a part of the relief sought,'" the court may determine there is no prevailing party. (Hsu v. Abbara (1995) 9 Cal. 4th 863, 875, 891 P.2d 804; accord, Scott Co. v. Blount, Inc. (1999) 20 Cal. 4th 1103, 1109, 979 P.2d 974; see also Hilltop Investment Associates v. Leon (1994) 28 Cal. App. 4th 462, 468 [fees properly denied where result is "'good news and bad news to each of the parties'"].) In deciding whether there is a prevailing party, the court is to "compare the relief awarded on the contract claim or claims with the parties' demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources." (Hsu, supra, at p. 876.) The court has discretion to find there is no prevailing party even though Civil Code section 1717, subdivision (a) states that the prevailing party "shall" be entitled to recover fees.
Civil Code section 1717, unlike section 425.16, expressly provides that the court may determine there is no prevailing party. (Civ. Code, § 1717, subd. (b)(1).) However, courts in cases involving other statutes which provide that the prevailing party "shall" recover attorney fees also have concluded that a court has the discretion to find there is no prevailing party, even though the statute does not expressly say so. (See, e.g., Heather Farms Homeowners Assn. v. Robinson (1994) 21 Cal. App. 4th 1568, 1574 (Heather Farms) [Civ. Code, § 1354, subd. (f)]; Gilbert v. National Enquirer, Inc. (1997) 55 Cal. App. 4th 1273, 1277-1278 (Gilbert) [Civ. Code, § 3344, subd. (a)]; Damian v. Tamondong (1998) 65 Cal. App. 4th 1115, 1128-1130 (Damian) [Civ. Code, § 2983.4].) The determination of whether there is a prevailing party is to be made "on a practical level" after considering what each party accomplished via the litigation. (Heather Farms, supra, at p. 1574; Gilbert, supra, at p. 1277.) In Coltrain v. Shewalter (1998) 66 Cal. App. 4th 94 (Coltrain), this court adopted the discretionary approach set forth in Heather Farms, Gilbert, and Damian for purposes of awarding attorney fees under the SLAPP statute, concluding that the critical issue in determining which party has prevailed is "which party realized its objectives in the litigation." (Id., at p. at p. 107.)
These decisions, however, are of limited assistance in considering the proper application of Code of Civil Proc. section 425.16, subdivision (c) in this case. In each of the decisions cited above, the litigation terminated without a court determination of the merits of the suit. In Heather Farms, Gilbert, Damian, the actions were dismissed without prejudice prior to trial. (Heather Farms, supra, 21 Cal. App. 4th 1568, 1570-1571; Gilbert, supra, 55 Cal. App. 4th 1273, 1275; Damian, supra, 65 Cal. App. 4th 1115, 1118.) In Coltrain, similarly, the plaintiffs voluntarily dismissed their complaint without prejudice before any ruling on the defendants' SLAPP motion. (Coltrain, supra, 66 Cal. App. 4th 94, 100.) Absent a determination of the merits, it may be difficult or impossible to decide which party has prevailed as a practical matter, and the court may appropriately find there is no prevailing party.
Here, in contrast, we have determined the SLAPP motion was meritorious as to five out of the nine causes of action to which it was directed. As to those five causes of action, at least, defendants clearly prevailed.
The decisions applying Civil Code section 1717 also are of limited assistance in this case. The purpose of section 1717 is "to establish mutuality of remedy when a contract makes recovery of attorney fees available only for one party and to prevent the oppressive use of one-sided attorney fees provisions. [Citation.]" (PLCM Group, Inc. v. Drexler (2000) 22 Cal. 4th 1084, 1090-1091, 997 P.2d 511.) The intent of the Legislature, therefore, was to make attorney fees equally available to both sides where they would not have been equally available under the literal terms of the agreement.
Section 425.16, subdivision (c), however, evidences a legislative intent to do more than make fees and costs equally available to both sides. Instead, the statute reflects a[*48] clear preference for awarding fees and costs to prevailing defendants. Section 425.16, subdivision (c) provides that a prevailing defendant on a SLAPP motion to strike "shall be entitled to recover his or her attorney's fees and costs." A prevailing plaintiff, however, can only recover fees and costs "if the court finds that a special motion to strike is frivolous or is solely intended to cause unnecessary delay . . . ."
This differential standard for awarding fees and costs is in keeping with the statement of legislative purpose in section 425.16, subdivision (a). The Legislature in that provision found "a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances." Accordingly, "it is in the public interest to encourage continued participation in matters of public significance," and to insure "that this participation [] not be chilled through abuse of the judicial process."
Section 425.16, subdivision (c)'s preference for awarding fees and costs to defendants is analogous to the rule followed in cases arising under the federal civil rights statutes. Title 42 United States Code section 1988 (section 1988) provides that in such cases, "the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs . . . ." Despite its seeming neutral language, cases applying section 1988 hold that "[a] prevailing defendant may recover an attorney's fee only where the suit was vexatious, frivolous, or brought to harass or embarrass the defendant." (Hensley v. Eckerhart (1983) 461 U.S. 424, 429, fn. 2 103 S. Ct. 1933, 76 L. Ed. 2d 40 (Hensley); see also Hughes v. Rowe (1980) 449 U.S. 5, 14-15 101 S. Ct. 173, 66 L. Ed. 2d 163.) In contrast, "a prevailing plaintiff "should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust." (Hensley, supra, at p. 429.)
A defendant making a SLAPP motion and a plaintiff in a civil rights action thus enjoy the same preference for attorney fees if they are successful. Given this similarity in approach between section 425.16, subdivision (c) and section 1988, authority under section 1988 is particularly helpful in applying section 425.16, subdivision (c).
In Hensley the United States Supreme Court considered the proper application of section 1988 where the plaintiff prevails on some but not all of his or her claims. The court stated that, for purposes of the threshold determination of whether the plaintiff has prevailed at all, "plaintiffs may be considered "prevailing parties" for attorney's fees purposes if they succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit.'" (Hensley, supra, 461 U.S. at p. 433.) However, where the plaintiff in one lawsuit presents "distinctly different claims for relief that are based on different facts and legal theories," he or she cannot recover fees incurred in pursuing an unsuccessful claim. (Id., at pp. 434-435.) On the other hand, if the plaintiff's successful and unsuccessful claims involve a common core of facts or related legal theories, the court should determine "the significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation." (Id., at p. 435.) "A reduced fee award is appropriate if the relief, however significant, is limited in comparison to the scope of the litigation as a whole." (Id., at p. 440.)
California courts applying the private attorney general statute, Code of Civil Procedure section 1021.5, have adopted the same approach. Thus, in cases under section 1021.5, the courts hold that "a party need not prevail on every claim presented in an action in order to be considered a successful party within the meaning of the section. [Citations.]" (Wallace v. Consumers Cooperative of Berkeley, Inc. (1985) 170 Cal. App. 3d 836, 846, 216 Cal. Rptr. 649.) Rather, "when a plaintiff is successful within the meaning of the section, the fact that he or she has prevailed on some claims but not on others is a factor to be considered in determining the amount of the fee awarded." (Id., at pp. 846-847, citing Hensley, supra, 461 U.S. 424.)
Earlier this year, the court in Los Angeles Times v. Alameda Corridor Transportation Authority (2001) 88 Cal. App. 4th 1381 (Los Angeles Times) applied a similar approach in construing the California Public Records Act. (Gov. Code, § 6250 et seq.) Gov. Code Section 6259, subdivision (d) of that act, which provides for attorney fees and costs, is closely analogous to section 425.16, subdivision (c). Government Code section 6259, subdivision (d) provides that the court "shall award court costs and reasonable attorney fees to the plaintiff should the plaintiff prevail in litigation" seeking disclosure of records from a public agency. However, the court shall award fees and costs to the public agency only if it finds "that the plaintiff's case is clearly frivolous . . . ." (Ibid.)
The court in Los Angeles Times held that a plaintiff who sued to obtain disclosure of two documents, but succeeded in obtaining only one, nonetheless was a prevailing party entitled to attorney fees and costs under the statute. The court acknowledged the possibility that in some cases a plaintiff might obtain documents that are so minimal or insignificant as to justify a finding that it did not prevail. It concluded, however, that absent such circumstances, fees and costs should be awarded. To do otherwise would be inconsistent with the express purpose of the statute, "to broaden public access to public records," and "would chill efforts to enforce the public right to information." (Los Angeles Times, supra, 88 Cal. App. 4th at p. 1392.) These authorities support the conclusion that defendants in this case should be considered prevailing parties, and therefore should recover attorney fees and costs, notwithstanding their partial success on their SLAPP motion. As with the federal civil rights statutes and the California Public Records Act, the differential standard for awarding fees reflects a preference for compensating parties who further the public policies underlying the SLAPP statute through their litigation efforts. The approach adopted in the cases applying those analogous statutes, under which partial success reduces but does not eliminate the entitlement to attorney fees, therefore should be applied here.
As discussed previously, the causes of action we have concluded are not subject to being stricken are based on different conduct than the remaining causes of action. Therefore, the problems alluded to in Hensley that may arise where the successful and unsuccessful claims are legally or factually related are not present. Defendants consequently are entitled to recover attorney fees and costs incurred in moving to strike the claims on which they prevailed, but not fees and costs incurred in moving to strike the remaining claims. The trial court may determine the appropriate amount of fees and costs, upon a proper application by defendants. (See Coltrain, supra, 66 Cal. App. 4th 94, 108.)
For the guidance of the trial court, we note in closing that, as the parties seeking fees and costs, defendants "bear[] the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates." (Hensley, supra, 461 U.S. at p. 437.) To that end, the court may require defendants to produce records sufficient to provide "'a proper basis for determining how much time was spent on particular claims.'" (Id., at p. 437, fn. 12.) The court also may properly reduce compensation on account of any failure to maintain appropriate time records. (Id., at p. 438, fn. 13.)
The order denying the motion to strike is affirmed with respect to the first, second, third, and fifth causes of action and reversed as to the remaining causes of action. Upon an appropriate motion and factual showing, defendants may recover attorney fees and costs in connection with their SLAPP motion and on appeal, under section 425.16, subdivision (c), in an amount to be determined by the trial court.
RICHLI, J.
We concur:
RAMIREZ, P.J.
HOLLENHORST, J.