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February 17, 2009

GenaThera, Inc. v. Troy & Gould, APC, (2009) 171 Cal.App.4th 901

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The Second District holds that claims based on the communication of a settlement offer to a co-defendant is subject to the anti-SLAPP statute and that the communication is covered by the litigation privilege.

 Shoemaker represented GenaThera and Linda Bryan, defendants in an action Troy & Gould filed against them on behalf of MAG (MAG action).  Troy & Gould wrote offering to dismiss the case against Bryan for a nominal sum on condition that she agree to be telephonically deposed, to be available to MAG for consultation, and to provide truthful testimony at trial.

In response GenaThera filed suit against Troy & Gould alleging the offer constituted an intentional interference with contractual relations and negligence.  GenaThera contended that the settlement offer was designed to raise a conflict of interest to prevent Shoemaker from representing any party, was unethical, and was a violation of the Rules of Professional Conduct.

The Court of Appeal affirmed the trial court’s grant of Troy & Gould’s motion to strike under California’s anti-Strategic Lawsuit Against Public Participation (anti-SLAPP) statute.  In ruling under the statute the court engages in a two-step process.  First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity.  The defendant must demonstrate that the acts were taken in furtherance of the right of petition or free speech in connection with a public issue.  If this burden is met the court determines whether the plaintiff has demonstrated a probability of prevailing on the claim.  The court considers the pleadings, and supporting and opposing affidavits.

Statements and writings made in connection with litigation are covered by the anti-SLAPP statute whether or not the litigated matter concerns a matter of public interest.  GenaThera’s claims were based on Troy & Gould’s communication of the settlement offer, a matter connected with issues under consideration or review by a judicial body.  An attorney’s communication with opposing counsel on behalf of a client regarding pending litigation directly implicates the right to petition.

To satisfy the burden of showing the probability of prevailing, a plaintiff must demonstrate that the complaint is both legally sufficient and supported by facts sufficient to sustain a favorable judgment.  GenaThera could not prevail on its claim because it was based on conduct subject to an absolute litigation privilege.

Civil Code § 47(b) has broad application to any communication and all torts other than malicious prosecution.  Its purpose is to afford litigants and witnesses the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions.  The litigation privilege also promotes the effectiveness of judicial proceedings by encouraging attorneys to zealously protect their clients’ interests.  The privilege is absolute so that attorneys do not have to be concerned with subsequent derivative actions.  It applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.

There is a strong public policy in favor of allowing publications in the course of judicial proceedings regardless of their perceived content.  The communication need not itself be accurate or truthful for the privilege to attach but simply within the category of communication permitted by law.

A settlement letter directed to counsel falls within the category of communications to which the privilege attaches.  This is so even if the communication violates the Rules of Professional Conduct, a matter the court did not consider.

Comment: Settlement negotiations are often heated and contentious.  Without the protection of the litigation privilege, derivative litigation would be widespread.



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