The SLAPP That Breaks the Camel's Back

Timothy Kowal, Esq.
October 30, 2020

You will get a sense of the First District's frustration over this SLAPP appeal just by its disposition. The case is Oakland Bulk and Oversized Terminal LLC v. City of Oakland (D1d2 Sept 17, 2020) A157330. The Court does not merely affirm the order denying, without prejudice, the City of Oakland's SLAPP motion. No, the Court reverses that order, and directs the trial court to deny the City's motion WITH prejudice.

And the Court has some words for the Legislature as well.

Here is what happened. Oakland entered an agreement with a developer to create a shipping terminal at the former Oakland Army Base. Activist groups learned coal would be shipped out of the terminal, and gave the city an earful over it. The city capitulated and passed an ordinance banning coal handling, directly contradicting its agreement with the developer. So the developer sued in federal court, and got an order enjoining enforcement of the ordinance.

But the city continued to stall and delay performance under the agreement. So developer filed a breach of contract claim in state court.

As one does when seeking to stall and delay, City filed an anti-SLAPP motion. The City "never expressly says what is" the basis of its motion. Its motion is filled mostly with "boilerplate." The trial judge, having simultaneously sustained a demurrer with leave to amend, denied the SLAPP motion without prejudice as premature, referencing the forthcoming amended complaint.

City appealed the order denying its SLAPP motion. As a result, the entire action was stayed.

The First District has little trouble agreeing the City's SLAPP motion was properly denied. The developer was not challenging any right of petition or free speech in opposition to coal handling. The developer just wanted the City to abide by its contract.

Here is what the First District had to say to the Legislature in its concluding section, titled "Some Closing Observations—and a Plea." The Court traces the history of "misuse and abuse" of the SLAPP statute, and how "ironic and sad" it is that litigants file "meritless anti-SLAPP motions as a litigation weapon."

The Court has a specific proposal in mind: to repeal the automatic right to appeal denials of SLAPP orders. Such orders should be left to review on a writ basis only, as they were prior to 1999. In 1998, two law professors had suggested making denial orders immediately appealable. But the Judicial Council, wisely, rejected that suggestion, stating that review by writ petition was sufficient.

Unfortunately, the Legislature sided with the law professors against the Judicial Council and enacted an immediate right to appeal orders either granting or denying SLAPP motions. Criticism of that amendment was swift and widespread, and was even noted by the Senate Judiciary Committee. But the Legislature chose to do nothing.

Delays were added to increased costs when the Supreme Court in Varian Medical Systems v. Delfino (2005) 35 Cal.4th 180 held the appeal of a denial of a SLAPP motion automatically stayed further trial court proceedings. ... This means that however unsound an anti-SLAPP motion may be, it will typically stop the entire lawsuit dead in its tracks until an appellate court completes its review.” (Id. at pp. 1184–1185.)

Why would a defendant pour tens and hundreds of thousands of dollars into a SLAPP motion and appeal? The First District asked defense counsel that question. His response: If the City wins, it will get its fees.

But, the Court wants to know, even if successful, "just how much does the City expect to be awarded for the successful striking of two lines in a 63-page complaint?" (Oh, you would be surprised – big-firms can command six-figure SLAPP fee awards, even before an appeal is taken.)

"Something," the First District concludes, "is wrong with this picture." And "the time has come for the Supreme Court to revisit the issue of an automatic stay." And for the Legislature to revisit the wisdom of vesting a right to appeal orders denying SLAPP motions.