Los Angeles County Superior Court

Case Number: KC067790    Hearing Date: April 25, 2016    Dept: J

Re: Langer Juice Company, Inc. v. VTG-Mart, Inc., et al. (KC067790)

(1) SPECIAL MOTION TO STRIKE COMPLAINT; (2) DEMURRER TO COMPLAINT; (3) MOTION TO STRIKE PORTIONS OF COMPLAINT

Moving Parties: Defendants VTG-Mart, Inc., Jackson Chang and Grace Leung

Respondent: Plaintiff Langer Juice Company, Inc.

POS: OK – Matter continued from 3/9/16

The Complaint herein alleges that Plaintiff Langer Juice Company, Inc. purchased 15 pallets of citric acid anhydrous from VTG-Mart, Inc., but that the Defendant delivered 10 pallets only; and that when Plaintiff refused to pay for the pallets that were not delivered, Defendants responded by tortiously trespassing on Plaintiffs’ property, blocking entrances to Plaintiff’s property, filing a false police accusing Plaintiff of theft, and making false adulterated product claims to Plaintiff’s customers, falsely claiming that the FDA had found fault with Plaintiff’s products. The Complaint, filed on 7/22/15, asserts causes of action for:

1. Unfair Business Practices
2. Interference with Prospective Economic Advantage
3. Trespass
4. Defamation

The Case Management Conference is set for 4/25/16.

(1) SPECIAL MOTION TO STRIKE COMPLAINT:

Defendants VTG-Mart, Inc. (“VTG”), Jackson Chang (“Chang”) and Grace Leung (“Leung”) (collectively “Defendants”) move under CCP § 425.16 to strike Plaintiff’s Complaint, and each of the four causes of action therein, on the grounds that: (1) they are not actionable against Defendants because the claims are based on privilege publications, communications and conduct in furtherance of Defendants’ rights of free speech under the United States and California Constitutions; and (2) Plaintiff cannot establish, by the statutorily required evidentiary showing, that there is a probability that Plaintiff will prevail on the merits.

Defendants’ Evidentiary Objections to the Declaration of David Langer:

1. Overruled
2-4. Sustained
5-7. Overruled
8-10. Sustained
11-12. Overruled

In ruling on a defendant’s special motion to strike, the trial court uses a “summary-judgment-like procedure at an early stage of the litigation.” (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 192.) This is a two-step process. First, the defendant must show that the act or acts of which the plaintiff complains were taken “in furtherance of the [defendant]’s right of petition or free speech under the United States or California Constitution in connection with a public issue.” (CCP §425.16(b)(1).) Second, if the defendant carries that burden, the burden shifts to the plaintiff to demonstrate a probability of prevailing on the claim. (CCP §425.16(b)(3).) The defendant has the burden on the first issue and the plaintiff on the second. (Kajima Engineering & Construction, Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921, 928.)

PROTECTED ACTIVITY:

The anti-SLAPP statute applies to causes of action “arising from any act . . . in furtherance of [a] person’s right of petition or free speech under the United States or California Constitution in connection with a public issue.” (CCP § 425.16(b)(1) (brackets added).)

Lawsuits predicated on pre-litigation statements or writings may be subject to an anti-SLAPP motion. (CKE Restaurants, Inc. v. Moore (2008) 159 Cal.App.4th 262, 271 — statements made in Proposition 65 intent-to-sue notice is within the protection of the statute; Digerati Holdings, LLC v. Young Money Entertainment LLC (2011) 194 Cal.App.4th 873, 887 — statements made by subject of film to film producers protesting film’s exhibition, and to film distributors stating that film was unauthorized and threatening them with suit, were “statements made in anticipation of a court action or other official proceeding” and entitled to protection under the statute; Aber v. Comstock (2012) 212 Cal.App.4th 931, 944-945 — sexual harassment plaintiff’s pre-litigation complaints to employer’s human resources manager, made to address the potential affirmative defense that plaintiff failed to take advantage of the employer’s internal remedial procedures, were protected as statements prior to litigation or other official proceedings.) To be protected, the statement must relate to litigation that is contemplated in good faith and under serious consideration. (Action Apt. Ass’n, Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1251.)

Reporting another person’s unlawful conduct to the police, with the intention of prompting that person’s arrest may constitute a protected “petition” to an official body. (See Wang v. Hartunian (2003) 111 Cal.App.4th 744, 749; Chabak v. Monroy (2007) 154 Cal.App.4th 1502, 1512 — child abuse victim’s report to police, and repetition to parents at urging of investigating officer, were protected activities under CCP § 425.16; compare Lefebvre v. Lefebvre (2011) 199 Cal.App.4th 696, 703 — filing a false police report is not protected activity.)

The Complaint alleges, in pertinent part, as follows:

Plaintiff manufactures and distributes juice and juice cocktails. In or about May 2014, Plaintiff purchased citric acid anhydrous from VTG to use in its manufacturing process. (Complaint, ¶ 11.)

Plaintiff ordered 15 pallets of the citric acid, but only 10 pallets were delivered. The last 5 pallets were never delivered, although Defendants claim to have delivered them. (Id., ¶12.)

Plaintiff paid for the 10 delivered pallets but refused to pay for the pallets that were not delivered. (Id., ¶ 13.)

Defendants reacted to Plaintiff’s refusal to pay with conduct that was unreasonable and tortious, including trespassing on its property, blocking entrances to Plaintiff’s property, filing a false police report accusing Plaintiff of theft, and making false adulterated product claims to Plaintiff’s customers falsely claiming that the FDA had found some fault with Plaintiff’s products. (Id., ¶ 14.)

Defendants continually called and emailed Plaintiff dozens of times making threats and false claims in a misguided effort to collect money that was not due. (Id., ¶ 15.)

The first cause of action for unfair business practices is based on partly on Defendants’ unreasonable phone calls and emails to Plaintiff in an effort to intimate them and to utilize their time in such a way as to force them to pay money that was not due (Id., ¶ 17); and a formal police report filed by Defendants falsely accusing Plaintiffs of a felony at a time when they knew there was no basis for such report in an effort to intimidate Plaintiff into paying money that was not due (Id., ¶ 18).

The second cause of action for interference with a prospective economic advantage incorporates the prior paragraphs, and alleges that Defendants intended to discourage Plaintiff’s future customers by contacting them and providing them with false information regarding Plaintiff including the purported adulteration of its products, and by trespassing on Plaintiff’s property to intimate customers and others from utilizing their products. (Id., ¶¶ 25-27.)

The third cause of action for trespass also incorporates the prior paragraphs, and alleges that Defendants entered Plaintiff’s property without permission and blocked access to tis premises and intimated employees and others on the property. (Id., ¶¶ 29-33.)

The fourth cause of action for defamation also incorporates the prior paragraphs, and alleges that Defendants made false and malicious comments about Plaintiff accusing Plaintiff of felonies and of violating state and federal laws, filed a false report with the police claiming that Plaintiff had committed grand theft, and made statements to Plaintiff’s customers that its merchandise was adulterated and Plaintiff was being investigated by the Food and Drug Administration of the United State Government. (Id., ¶¶ 35-42.)

Defendants contend that Plaintiff’s Complaint arises out of their privileged publication and constitutionally protected activity. Specifically, Defendants contend that it arises in part from: (1) the pre-litigation demands of “phone calls and emails to plaintiffs in an effort to intimidate them and to utilize their time in such a way as to force them to pay money” (Complaint, ¶ 17); and (2) filing a formal police report (Id., ¶ 18).

It appears that the first cause of action is based partly on activities protected by the anti-SLAPP statute, i.e., pre-litigation demands for payment before litigation. (See Complaint, ¶ 17.) When a single cause of action alleges both acts protected under the statute and non-protected acts, the entire cause of action may be stricken under § 425.16. (See Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294, 308 – Plaintiffs “cannot frustrate the purposes of the SLAPP statute through a pleading tactic of combining allegations of protected and non-protected activity under the label of one cause of action.”)

As to Plaintiff’s fourth cause of action for defamation, it appears to be based primarily upon the allegations that Defendants made a false report to the police that Plaintiff had committed grand theft. (See Complaint, ¶ 37.) Publications in official proceedings and reports in public official proceedings are privileged. (CC § 47(b) and (d).) The litigation privilege protects reports made to law enforcement of suspected criminal activity where the intent is to instigate an official governmental [police] investigation. (See Hagberg v. California Fed’l Bank FSB (2004) 32 Cal.4th 350, 364.) The privilege is absolute, and an unfounded or intentionally false communication may be remedied only by an action for malicious prosecution (or by prosecution under Pen C § 148.5, which criminalizes the giving of a knowingly false report to a law enforcement officer or district attorney). (Id., at 364-371; see Kenne v. Stennis (2014) 230 Cal.App.4th 953, 971; Brown v. Department of Corrections (2005) 132 Cal.App.4th 520, 525-530 — § 47(b) protected government supervisors’ complaint to police that employee had threatened them and hence barred employee’s subsequent action alleging supervisors fabricated complaint in retaliation for employee’s whistleblowing.)

Plaintiff has not brought an action for malicious prosecution. Therefore, the fourth cause of action for defamation is also subject to the special motion to strike.

However, it appears Plaintiff’s second cause of action for interference with prospective economic advantage (based on allegations of false information given to Plaintiff’s customers) and third cause of action for trespass are not based on any protected activities. Thus, the motion is denied as to the second and third causes of action.

PROBABILITY OF SUCCESS:

Plaintiff now has the burden of proof to establish a probability that the plaintiff will prevail on the claims are asserted against the defendant in the first and fourth causes of action. (CCP § 425.16(b).) 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. (Premier Med. Mgmt. Systems, Inc. v. California Ins. Guar. Ass’n (2006) 136 Cal.App.4th 4464, 476.) The burden is on plaintiff to produce evidence that would be admissible at trial — i.e., to proffer a prima facie showing of facts supporting a judgment in plaintiff’s favor. (Chavez v. Mendoza (2001) 94 Cal.App.4th 1083, 1087.)

Plaintiff fails to demonstrate a probability of success as to its claim based on Defendants’ pre-litigation demands and the allegedly false police report. Thus, the motion is granted as to the first and fourth causes of action only.

(2) DEMURRER TO COMPLAINT:

Defendants also demurrer to the Complaint, and each of the four causes of action asserted therein, on the grounds that they fail to state facts sufficient to state a cause of action and that they are uncertain.

COMPLAINT AGAINST CHANG AND LEUNG:

“Every person is bound, without contract, to abstain from injuring the person or property of another, or infringing upon any of his or her rights.” (CC §1708.) “‘Directors and officers of a corporation are not rendered personally liable for its torts merely because of their official positions, but may become liable if they directly ordered, authorized or participated in the tortious conduct.’” (Filet Menu v. C.C.L. & G., Inc. (2000) 79 Cal. App.4th 852, 866.) “‘A corporate director or officer’s participation in tortious conduct may be shown not solely by direct action but also by knowing consent to or approval of unlawful acts.’ ” (Balsam v. Trancos, Inc. (2012) 203 Cal. App. 4th 1083, 1109.)

“[T]he existence of an agency relationship is the ‘essential fact,’ and where alleged must be accepted as true.” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 886.) “Complaints in actions against multiple defendants commonly include conclusory allegations that all of the defendants were each other’s agents or employees and were acting within the scope of their agency or employment.” (Barsegian v. Kessler & Kessler (2013) 215 Cal.App.4th 446, 451.) Ratification, like agency, may be generally pled. (C.R. v. Tenet Healthcare Corp. (2009) 169 Cal.App.4th 1094, 1112.)

Defendants contend that the Complaint fails to state facts sufficient to constitute a cause of action against Chang and Leung on any grounds because all of their acts occurred or were taken within the course and scope of their services as employees of VTG (Complaint, page 1, line 25 – page 2, line 6), and thus they are not liable as agents. Defendants also contend that the Complaint also alleges no facts showing anything Chang or Leung did constituted a wrongful act in its own nature independent of their capacity as agents of VTG.

However, the Complaint alleges that Defendants were the agents, employees and representatives of each other and in doing the things alleged in the Complaint were acting in the course and scope of such agency, service and employment and directed, aided and abetted, authorized or ratified each and every act alleged. (Complaint, ¶ 6.) The Complaint alleges adequate facts against Defendants Chang and Leung to overcome the demurrer. Thus, the demurrer based on this ground is overruled.

FIRST AND FOURTH CAUSES OF ACTION:

Based on the court’s tentative decision above to grant Defendants’ special motion to strike as to the first and fourth causes of action, the demurrer to those causes of action is deemed moot.

SECOND CAUSE OF ACTION FOR INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE:

To state a claim for intentional interference with prospective economic advantage, plaintiff must show: (1) an economic relationship between plaintiff and some third party, with the probability of future economic benefit to plaintiff; (2) defendant’s knowledge of the relationship; (3) intentional acts on defendant’s part designed to disrupt the relationship; (3) actual disruption of the relationship; (4) economic harm to plaintiff proximately caused by defendant’s acts; and (5) defendant’s acts were “wrongful by some legal measure other than the fact of interference itself.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153–1154.) An act is independently “wrongful” if it is unlawful — i.e., if it is “proscribed by some constitutional, statutory, common law, or other determinable standard.” (Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1152.)

The Complaint alleges that Defendants contacted customers and provided them with false information regarding Plaintiff, including the purported adulteration of its products (Complaint, ¶ 26); Defendants also trespassed on Plaintiff’s property to intimate customers and others from utilizing their products (Ibid.); Defendants intended to discourage Plaintiff’s future customers from purchasing Plaintiff’s products by making these false claims (Id., ¶ 27); and that as a result, Plaintiff has incurred damages in future loss sales and profits (Id., ¶ 28). The Complaint adequately alleges a cause of action for interference with a prospective economic advantage. The demurrer to the second cause of action is overruled.

THIRD CAUSE OF ACTION FOR TRESPASS:

The elements of a cause of action for trespass are: (1) plaintiff’s lawful possession or right to possession of real property; (2) defendant’s wrongful, intentional, reckless or negligent act of trespass on the property; (3) plaintiff did not give permission for the entry or scope of permission was exceeded; and (4) damage to plaintiff caused by the trespass. (5 Witkin Cal. Pro. (5th ed. 2008) Pleading §631; CACI 2000.)

The Complaint alleges that Defendants entered upon Plaintiff’s property without permission, and while on Plaintiff’s property, without permission, blocked access to its premises and intimidated employees and others on the property (Complaint, ¶¶ 30-31); each defendant either personally trespassed on Plaintiff’s property or instructed others to do so, or ratified the conduct of others in doing so all with the intent to harm Plaintiffs (Id., ¶ 32); and that as a result, Plaintiff was damaged (Id., ¶ 33). The Complaint adequately alleges a cause of action for trespass. Thus, the demurrer to the third cause of action is overruled.

(3) MOTION TO STRIKE PORTIONS OF COMPLAINT:

Defendants also move to strike the first, second, third and fourth causes of action, the allegations regarding privileged acts, allegations of malice, fraud and oppression, the request for punitive damages and attorney’s fees, and allegations against the individual defendants.

FIRST AND FOURTH CAUSES OF ACTION:

Based on the foregoing tentative decision to grant the special motion to strike in part, the motion as it concerns the allegations contained in the first and fourth causes of action is deemed moot.

SECOND AND THIRD CAUSES OF ACTION:

The motion to strike the second and third causes of action is denied. The allegations are proper to support the causes of action alleged.

PUNITIVE DAMAGES:

In order to plead punitive damages, a plaintiff must plead allegations of fraud, malice, or oppression with sufficient particularity. (Hilliard v. AH Robbins Co. (1983) 148 Cal.App.3d 374, 392.) Punitive damages can be imposed against an employer for wrongful acts committed by employees, only if the employer either authorized or ratified the employee’s wrongful acts; knew in advance that the employee was likely to commit such acts, and employed him or her “with conscious disregard of the rights or safety of others”; or was itself guilty of “oppression, fraud or malice.” (CC § 3294(b); see United Western Med. Ctrs. v. Sup.Ct. (Michelle Marie H.) (1996) 42 Cal.App.4th 500.) In addition, if the employer is a corporation, it must be shown that the authorization, ratification, advance knowledge, malice, etc., was on the part of an officer, director or managing agent of the corporation. (CC § 3294(b).)

No claim for punitive damages shall state the amount or amounts of damages sought. (CC § 3295(e).)

The Complaint adequately alleges facts demonstrating fraud, malice or oppression with sufficient particularity in the third cause of action for trespass. However, the prayer of the Complaint improperly states the amount of punitive damages sought. Thus, the motion to strike the prayer of the Complaint seeking a specific amount of punitive damages is granted.

ATTORNEY FEES:

Attorney’s fees are allowable only when authorized by contract, statute, or law. (CCP § 1033.5(a)(10).) The Complaint fails to allege a contract, statute or law in support of Plaintiff’s request for attorney fees. Thus, the motion to strike the portions of the Complaint seeking attorney fees is granted.

ALLEGATIONS AGAINST INDIVIDUAL DEFENDANTS:

Defendants’ request to strike every cause of action against Chang and Leung are denied for the reasons discussed in the demurrer.

The court will hear from counsel for Plaintiff as to whether leave to amend is sought. Otherwise, Defendants have 10 days to answer the second and third causes of action.