Thursday, December 28, 2017
No Immediate Appeal of Anti-SLAPP Motion Denial in Public Interest Case
By a MetNews Staff Writer
A private company that runs a diversion program for writers of bad checks yesterday lost its bid in the Ninth U.S. Circuit Court of Appeals to have an action against it by recipients of letters threatening criminal prosecution if they did not enroll dismissed as a SLAPP.
The opinion, by Circuit Judge Mary M. Schroeder, dismisses the appeal from a denial of an anti-SLAPP motion and, in a consolidated case, affirms the denial of a motion to compel arbitration.
The defendant is Victim Services, Inc. (“VCI”). It contracts with district attorneys’ offices to provide the division services, for a cut of the fee, to persons facing prosecutions for writing bad checks with intent to defraud.
Five plaintiffs are persons who received letters—on district attorney office letterheads—warning of the probability of prosecution, carrying a potential sentence of one year in jail, but advising that this could be averted by successfully completing a program that was privately administered and making restitution. Each letter bore the signature of the district attorney for the particular county.
No Prosecutor Review
The plaintiffs sued under the federal Fair Debt Collection Practices Act as well as the California Unfair Competition Law, alleging that the letters created the false impression that they came from district attorney while, in truth, they were sent by VCI. In violation of the statute authorizing such diversion programs, they pled, no prosecutor had reviewed the evidence and ascertained that there was probable cause, with most referrals coming not from district attorney officers, but from merchants and others who had received dishonored checks.
Schroeder said the appeals court lacks jurisdiction to review the district court’s denial of the special motion to strike. She explained that while a grant or denial of an anti-SLAPP motion is generally immediately appealable, the California Legislature, “[r]ecognizing in 2003 that the statute may have gone too far,…”added an exception, so the statute now ‘does not apply to any action brought solely in the public interest or on behalf of the general public’.”
The jurist noted:
“This has come to be known as the statute’s ‘public-interest exception.’ ”
District Court Finding
She quoted California Code of Civil Procedure §425.17(e) as saying that there is no immediate appeal “[i]f any trial court denies a special motion to strike on the grounds that the action or cause of action is exempt” under the public-interest exception, noting that the district court made such a finding, thus stripping the Ninth Circuit of jurisdiction over the appeal.
In the single-plaintiff consolidated case, Narisha Bonakdar, who agreed to enroll in VCI’s program, contended that an arbitration agreement did not apply. Schroeder agreed.
An agreement to participate in a diversion program does not entail a private or commercial contract subject to the Federal Arbitration Act, she said, and declared:
“[I]t is apparent that Congress never contemplated that the FAA would apply to agreements between prosecutors and citizens resolving alleged violations of a state’s criminal law.”
Reliance must therefore be placed on state law she said, observing that the agreement was akin to a plea bargain which, under California’s view, is not in the nature of a private or commercial contract, and should not be examined in accordance with contract principles.
Schroeder said the district court found that compelling arbitration is such a context would be viewed by California courts as violative of public policy. She quoted a 1993 California Court of Appeal decision as saying that threats of criminal prosecution “to force individuals to give up their legal rights and to agree to binding arbitration implicates strong public policy considerations.”
The case is Breazeale v. Victim Services, 2017 S.O.S. 15-16549.
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