Metropolitan News-Enterprise


Thursday, January 3, 2019


Page 1


Court of Appeal:

Gathering Evidence for Use in Arbitration Not ‘Protected’

Opinion Affirms Denial of Anti-SLAPP Motion Brought by Defendant in Action Over His Secretly Recording Conversations With Business Associate


By a MetNews Staff Writer


The gathering of evidence to be used in in contractual arbitration is not protected activity for the purpose of the anti-SLAPP statute, Div. Seven of the Court of Appeal for this district held yesterday.

Justice John Segal wrote the opinion, which was not certified for publication. It affirms a Dec. 19, 2016 order by then-Los Angeles Superior Court Judge Rita Miller, now a private judge, denying a special motion to strike under Code of Civil Procedure §426.16.

The motion was brought by E. Patrick Jenevein III, who had surreptitiously recorded conversations with a business associate, Sherman Xuming Zhang, a resident of Los Angeles County. Through use of the recordings, the Dallas-based Tang Energy Group Ltd., of which Jenevein is CEO and founder, prevailed in contractually binding arbitration of its dispute with Aviation Industry Corporation of China, of which Zhang is president.

The two companies had planned to act in concert in building build wind farms across the United States

On Dec. 21, 2015, Tang garnered an arbitration award of about $70 million—though it had sought $7.5 billion—which was later affirmed by U.S. District Court for the Northern District of Texas. (The Chinese company’s appeal is pending before the Fifth U.S. Circuit Court of Appeals.)

Suit for Eavesdropping

Zhang and his company on Jan. 29, 2016, sued Jenevein in Los Angeles Superior Court for eavesdropping, citing Penal Code §632(a) which proscribes secret electronic recording of conversations, and §637.2(a), which provides:

“Any person who has been injured by a violation of this chapter may bring an action against the person who committed the violation for the greater of the following amounts:

“(1) Five thousand dollars ($5,000) per violation.

“(2) Three times the amount of actual damages, if any, sustained by the plaintiff.”

Jenevein brought his motion to strike, contending his gathering of evidence satisfies the first anti-SLAPP statute, an “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.” The statute specifies that such an act includes:

“(1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law....”

Segal Agrees

Segal agreed with Miller that the requisite of the statute was not met.

“Contractual arbitration is not a ‘judicial proceeding’; it is an alternative dispute resolution process that bypasses judicial proceedings,” the jurist wrote.

“Nor is contractual arbitration an ‘official proceeding authorized by law,’ ” he added.

The arbitration, he pointed out, “was contractual, not statutorily mandated.”

Jenevein asserted, on appeal:

“Conduct in connection with arbitration involves the exercise of the right of petition because it is closely related to actual or potential litigation in the courts.”

Power to Confirm

Segal responded:

“That a party to an arbitration agreement may resort to the courts to compel arbitration or confirm or enforce an arbitration award does not convert the arbitration proceeding into a judicial or official proceeding within the meaning of section 425.16.”

Jenevein also invoked the litigation privilege but, Segal noted, he “does not… argue in his opening or reply briefs that the causes of action against him arise from a statement or writing in connection with an issue under consideration by a judicial body,” so as to bring the privilege into play.

The case is Zhang v. Jenevein, B280047.


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