The Ninth Circuit holds that as long as a defendant has sufficient objectively reasonable evidence to suspect a crime, a plaintiff cannot establish lack of probable cause to support a malicious prosecution claim. This is true even if a defendant has also provided false or exaggerated evidence to prosecutors.
Kent Roberts, general counsel for McAfee, Inc. allowed Terry Davis, McAfee’s Controller and Senior Vice President, to backdate stock options that the company had issued to Roberts as a reward for a promotion. Roberts also participated in backdating for other employees. Davis later pled guilty to accounting fraud based on an investigation Roberts spearheaded. When McAfee became part of a nationwide probe into backdating practices these grants came under scrutiny. Roberts contended that the backdating of his options was approved by Davis and also argued that the grants to the other employees were authorized by other officers of the company.
Roberts was fired and the company reported it was due to an improper incident related to stock options. This led to a criminal indictment and civil proceedings by the SEC. During the criminal case evidence in Roberts’ favor was uncovered that had previously been withheld by McAfee. Despite some lingering questions, the jury acquitted Roberts of two fraud charges, and was unable to reach a verdict as to other charges. Subsequently all criminal and civil charges against Roberts were dropped.
Roberts sued McAfee for malicious prosecution, defamation, and false light invasion of privacy. The district court, in ruling on McAfee’s motion to strike under the California’s anti-Strategic Lawsuit Against Public Participation (anti-SLAPP) statute, denied the motion to strike Roberts’ malicious prosecution claims, but granted the motion to strike his defamation and false light claims as time-barred.
The anti-SLAPP statute requires a two-part analysis: (1) the defendant must make a prima facie showing that the suit arises from an act in furtherance of the defendant’s rights of petition or free speech; and, (2) once the defendant makes this showing, the burden shifts to the plaintiff to demonstrate a probability of prevailing on the challenged claims. Roberts did not dispute that McAfee’s conduct arose from protected activity; the sole question was whether Roberts demonstrated a probability of prevailing on his claims.
In the anti-SLAPP context, “probability” is a low bar. The plaintiff must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited. The trial court considers the pleadings and evidentiary submissions of both the plaintiff and the defendant; but does not weigh the credibility or comparative probative strength of competing evidence. It should grant the motion if the defendant’s evidence supporting the motion defeats the plaintiff’s attempt to establish evidentiary support for the claim.
To establish a malicious prosecution claim a plaintiff must prove that the prior action: (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in Plaintiff’s favor; (2) was brought without probable cause; and (3) was initiated with malice. Probable cause for the initiation of a criminal prosecution exists where it is objectively reasonable for the defendant to suspect the plaintiff had committed a crime. Whether probable cause existed on the facts known to the defendant is a question of law for the court. If the extent of defendant’s knowledge is disputed, the jury resolves the issue of fact.
Several key undisputed facts established that McAfee had probable cause to accuse Roberts of participating in illegal backdating, regardless of whether it misrepresented evidence to government investigators. Although Roberts claims that McAfee falsified and withheld evidence to exaggerate the degree of suspicion, under California law lying about the facts is not enough to destroy probable cause. So long as the evidence known to the defendant could support an objectively reasonable suspicion, regardless of whether the defendant actually possessed such a suspicion, the defendant is not liable for malicious prosecution. Thus, a defendant who fabricates evidence still acts with probable cause if the defendant is aware of other evidence which would make it objectively reasonable to suspect the plaintiff’s guilt. McAfee would lack probable cause had it fabricated the entire predicate for its claim because, in such a case, the defendant would know of no facts that could provide reason to suspect the plaintiff of wrongdoing.
Furthermore under California law, the indictment itself created a prima facie presumption that probable cause existed for the underlying prosecution. Although the presumption may be rebutted if the indictment was based on false evidence, Roberts never suggested that occurred. Prosecutors made an independent decision to charge Roberts, which Roberts did not rebut. The motion to strike the malicious prosecution claim should have been granted.
The Court agreed with the District Court that the defamation and false light claims based on the press release about Roberts’ termination McAfee posted on its website were precluded by the statute of limitations.
Comment: The tort of Malicious Prosecution has never been eliminated, but continues to be difficult to establish. Here, the court found probable cause accepting as true Plaintiff’s assertion that some evidence provided to the prosecution by defendant was fabricated and exaggerated.