Friday, May 22, 2020
Court of Appeal:
‘Safe Harbor’ Provision Doesn’t Apply to Anti-SLAPP Fees
Opinion, Vacated a Day After Filing, Brings Current Version of CCP §128.5 Into Focus; Decision Comes In Civil Action Against Husband Wife Who Are Fugitives From China, Which Seeks Their Return
By a MetNews Staff Writer
The 21-day “safe harbor” provision that’s been added to Code of Civil Procedure §128.5 does not apply where attorney fees are sought in opposition to an anti-SLAPP motion, Div. Two of the Fourth District Court of Appeal held in an opinion filed Wednesday and vacated, without explanation, yesterday afternoon.
The docket reflects:
“On the court’s own mtn, the opinion filed May 20, 2020 is vacated. The matter remains submitted.”
Alhambra attorney Thomas Ogden, who represents the appellants—whose arrest and extradition is being sought by China—said that reference to him as having been “appointed” by the Court of Appeal, which would be an oddity in a civil case, was “a typo,” and speculated that “maybe that’s why the opinion got vacated to correct that part.”
Corrections of that sort are normally accomplished merely by an order for a modification.
The opinion clarified the present nature of §128.5. That section—both before and since the period from 1994 to 2015 when it was in hiatus—has been regarded as a sanctions statute.
However, Justice Douglas P. Miller, in the now-vacated opinion, pointed to its discrete functions, as currently worded, as statute authorizing “sanctions” for bad-faith tactics and one under which “expenses,” including attorney fees, may be recouped based on such conduct.
The opinion affirmed San Bernardino Superior Court Judge Donna G. Garza’s $61,915 award in favor of plaintiff Changsha Metro Group Co., Ltd., a company owned by the government of China. Changsha defeated an anti-SLAPP motion by defendants Peng Xufeng and Jia Siyu, a husband and wife who reside in San Bernardino and are accused by Chinese authorities of complicity in a scheme involving $34 million in bribes.
The defendants contended that Garza erred because the safe-harbor requirement was not met and fees were sought, improperly they contended, in opposition papers, not in a separate document.
They pointed to the provision in the anti-SLAPP statute—Code of Civil Procedure §425.16—that “[i]f the court finds that a special motion to strike is frivolous or is solely intended to cause unnecessary delay, the court shall award costs and reasonable attorney’s fees to a plaintiff prevailing on the motion, pursuant to Section 128.5.”
Sec. 128.5, in turn, declares that a sanction may be imposed based on a frivolous motion “unless, within 21 days of service of the order to show cause, the challenged action or tactic is withdrawn or appropriately corrected.” It also specifies that a motion for sanctions “shall be made separately from other motions or requests.”
The statute does, in subd. (f), say that, Miller agreed. However, he pointed out, an award may be made under subd. (a) of “reasonable expenses, including attorney’s fees” and, under subd. (c), notice of seeking those expenses may be given “in a party’s moving or responding papers” and awarded after an “opportunity to be heard.”
Miller elaborated that “Section 128.5 discusses attorneys’ fees and costs in two separate areas, with two separate procedures,” the first being “expenses,” awardable under subds. (a) and (c) and the second being sanctions, authorized under subd. (f).
“In the instant case the procedure that has to apply is the first procedure, set forth in subdivisions (a) and (c). That procedure has to apply because the subdivision (f) procedure is only allowed after ‘the court issues an order pursuant to subdivision (a).’…The trial court in this case had not issued an order under subdivision (a), so it could not utilize the subdivision (f) procedure.”
The jurist commented that seeking expenses, under §128.5, rather than sanctions, “is the only practical procedure to apply in the anti-SLAPP context.”
To expeditiously boot SLAPPs (strategic lawsuits against public participation) from the court system, Miller said, is the purpose of §425.16. He recited that under the statute, a special motion to strike must be filed “within 60 days of the service of the complaint,” that a hearing on such a motion “shall be scheduled...not more than 30 days after the service of the motion,” and that opposition is due “at least nine court days...before the hearing.”
This analysis was provided by him:
“In order to comply with the 21-day safe harbor notice, a plaintiff would need to draft its sanctions motion almost immediately after receiving the anti-SLAPP motion due to the 30-day clock that is running for the hearing date. Then, the plaintiff would need to draft its opposition to the anti-SLAPP motion while risking that the defendant will withdraw or correct its anti-SLAPP motion during the 21-day safe harbor period….If the plaintiff does not want to risk the cost of drafting its opposition while the defendant has the 21-day option to withdraw or correct its motion, then the plaintiff might apply to continue the anti-SLAPP hearing until after the 21-day safe harbor period has elapsed, but that would contradict the express purpose of the anti-SLAPP statute….”
Thwarting Statutory Aim
“Forcing a plaintiff to choose between (1) lengthening the anti-SLAPP process by obtaining a continuance for the anti-SLAPP hearing; or (2) risking needless expense by drafting an opposition during the safe harbor period, contradicts the anti-SLAPP goals of ending SLAPP cases quickly and with minimal expense.”
Sec. 128.5 was enacted in 1981, but placed on hold in 1994 with its application being limited to cases filed on or before Dec. 31 of that year; it was supplanted by §128.7, patterned after a federal statute, which included a “safe harbor” provision. When resurrected in 2015, §128.5 contained no such provision, but one was added by legislation in 2017.
The case is Changsha Metro Group Co., Ltd. v. Xuefeng, published yesterday at 2020 S.O.S. 2411. (Although “Xuefeng” appears in the caption, the name is spelled “Xufeng” throughout the proceedings in the various courts, as well as in the text of the opinion.)
Jack P. Dicanio, Lance A. Etcheverry, Caroline Van Ness and Julia M. Nahigian of Skadden, Arps, Slate, Meagher & Flom represented the Chinese government.
Although there are apparently no criminal proceedings pending against the defendants in the United States, a court in China has ordered confiscation of their property and law enforcement authorities worldwide have been asked by China to arrest them as fugitives.
The civil action giving rise to Wednesday’s Court of Appeal opinion was filed in San Bernardino Superior Court on Sept. 7, 2018. The defendants promptly removed it to the U.S. District Court for the Central District of California, and the plaintiff sought a remand to the state court.
District Court Judge Stephen V. Wilson on Dec. 11, 2018, ruled that no federal question was presented. He held that even if, as alleged by the defendants, the true plaintiff is a sovereign nation—China—that nation would have the right to have the case heard in the District Court even in the absence of s federal question, but parties sued by it would not.
In the course of his order, he explained the underlying controversy, saying:
“Plaintiff alleges that Defendant Peng, assisted by his wife, Defendant Jia, committed numerous acts of bribery, money laundering, and other abuses of power regarding transportation infrastructure and urban construction for Defendant Peng’s personal benefit through his position as Chairman of Plaintiff, the entity responsible for infrastructure projects in the city of Changsha….Plaintiff asserts causes of action under California law against Defendants for breach of fiduciary duty, constructive fraud, aiding and abetting, unjust enrichment, and constructive trust.”
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