Integrated Healthcare Holdings, Inc. v. Fitzgibbons

Under the heading, “Consideration,” the agreement provided: “The Parties further agree that this Agreement will be submitted to [the Department of Health Services] as part of the Hospital’s license application process. In consideration for the binding and enforceable commitments of IHHI, and in reliance upon these commitments, the Medical Staff of Western Medical Center—Santa Ana will express public support for the acquisition and operation of IHHI of, and issuance of hospital licenses to IHHI for, the Hospitals, in accordance with the commitments made herein, including being represented at any public hearings on this proposed acquisition and delivering to DHS (Mark Helmar) a letter supporting IHHI’s acquisition and licensure of the Hospitals.”

IHHI’s acquisition and licensing of the hospitals was completed in March 2005. On May 9, 2005, the lender on IHHI’s $50 million acquisition loan, and a $30 million nonrevolving working capital line of credit, served IHHI with a notice of default. The default was disclosed in IHHI’s filing with the Securities Exchange Commission (SEC), and reported in an article in the May 17, 2005, Orange County Register, which cited an analyst’s warning that IHHI needed to “find another investment partner ‘really quickly’ or the whole thing could be headed for bankruptcy court.”

Two days after the article appeared, Fitzgibbons sent an e-mail message to medical executive committee members and other individuals Fitzgibbons believed might offer financial assistance to the hospital, expressing concern IHHI could be headed for bankruptcy. The e-mail stated: “By the way, the hospital appears to be underwater and I don’t think IHHI can get an investor to pony up the $20 million, for the 60-70 million shares of stock which they are selling. Admissions are down 20%. They got a reduction of costs by dumping Tenet by 13%, and increased insurance payment of 7% (but that is neutralized by the factoring). Then their nursing salaries went up 8%—so they’re in the red. No way to get out. That is ominous. What would the buyer get buying IHHI stock? Control of IHHI, but not the land? Sounds like its going BK. Get ready, [f] Now, if the doctors had been in the deal. . . interest rates would have been better say 9%??, would have had our capital say $10

On June 23, 2005, IHHI filed a complaint against Fitzgibbons based on his May 19 e-mail message, seeking damages for (1) defamation; (2) intentional interference with a contractual relationship; (3) negligent interference with a contractual relationship; (4) breach of contract; (5) breach of the duty of good faith and fair dealing; and (6) violation of Business and Professions Code section 17200 et seq. The complaint alleges Fitzgibbons’s e-mail message was forwarded to Blue CrossAVellpoint, Inc., (Blue Cross), which had been negotiating with IHHI for higher insurance payments, and the e-mail message provoked concern on the part of Blue Cross, stalling negotiations. IHHI alleges this delay has cost it over $500,000.

Fitzgibbons filed a special motion to strike under the anti-SLAPP statute, which the trial court denied. Fitzgibbons now appeals.

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Standard of Review

An order denying an anti-SLAPP special motion to strike is appealable under sections 425.16, subdivision (i), and 904.1. We review the order de novo. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993 , 999 [ 13 Cal.Rptr.2d 625 ].)

Ill

Discussion

A. Fitzgibbons Has Met His Burden of Demonstrating the May 19 E-Mail Message Concerned “an Issue of Public Interest”

The anti-SLAPP statute provides: “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (§ 425.16, subd. (b)(1).) An act in furtherance of the right of free speech

The anti-SLAPP statute arose from the Legislature’s recognition that SLAPP suit plaintiffs are not seeking to succeed on the merits, but to use the legal system to chill the defendant’s first amendment right of free speech. (Liu v. Moore (1999) 69 Cal.App.4th 745 [ 1 Cal.Rptr.2d 807 ].) Thus, the statute notes: “The Legislature finds and declares that there has been a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process. To this end, this section shall be construed broadly.” (§425.16, subd. (a).)

To prevail on an anti-SLAPP motion, the movant must first make “ ‘a threshold showing that the challenged cause of action’ arises from an act in furtherance of the right of petition or free speech in connection with a public issue.” (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180 , 192 [ 5 Cal.Rptr.3d 298 , 106 P.3d 958 ].) Once the movant meets this burden, the plaintiff must demonstrate “ ‘a probability of prevailing on the claim.’ ” (Ibid) If the plaintiff cannot meet this burden, the trial court must strike the cause of action. (Ibid)

Section 425.16, subdivision (e), clarifies what speech is covered by the statute: “As used in this section, ‘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’ 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; (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.” Fitzgibbons contends his e-mail message falls within both clauses (2) and (4) of section 425.16, subdivision (e).

Citing Zhao v. Wong (1996) 48 Cal.App.4th 1114 [ 55 Cal.Rptr.2d 909 ], IHHI contends the e-mail did not concern a public issue because it did not relate to “the exercise of democratic self-government.” (Id. at p. 1122.) IHHI’s reliance on Zhao is misplaced, however, because its discussion of the anti-SLAPP statute’s scope has been superseded by the 1997 amendments to section 425.16. (See Sipple v. Foundation for Nat. Progress (1999) 71 Cal.App.4th 226 , 236 [ 83 Cal.Rptr.2d 677 ] [“the Senate Judiciary Committee expressly amended section 425.16 to mandate a broad interpretation of the statute in reaction to the over-narrow interpretation of Zhao v. Wong”].) Indeed, the California Supreme Court expressly disapproved Zhao on the very point for which IHHI cites it. (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106 , 1116 [ 81 Cal.Rptr.2d 471 , 969 P.2d 564 ] [“We agree . . . that lZhao is incorrect in its assertion that the only activities qualifying for statutory protection are those which meet the lofty standard of pertaining to the heart of self-government’ ”].)

“The definition of ‘public interest’ within the meaning of the antiSLAPP statute has been broadly construed to include not only governmental matters, but also private conduct that impacts a broad segment of society and/or that affects a community in a manner similar to that of a governmental entity. [Citations.] ‘ “[M]atters of public interest . . . include activities that involve private persons and entities, especially when a large, powerful organization may impact the lives of many individuals.” ’ ” (Damon v. Ocean Hills Journalism Club (2000) 85 Cal.App.4th 468 , 479 [ 102 Cal.Rptr.2d 205 ].) Although IHHI asserts it is “a small corporate entity” that is “heavily debt leveraged,” its ownership and operation of four Orange County hospitals makes it large and powerful enough to impact the healthcare needs of the county’s residents.

IHHI also notes the public hearings on IHHI’s acquisition and operation of the four hospitals had ended months before Fitzgibbons sent the e-mail, making the issues involved in the hearings “moot.” IHHI asserts its SEC filing and newspaper article reporting on the lender’s default notice did not create a new public issue.

Further, to the extent Fitzgibbons’s activities with WMCA prior to IHHI’s purchase of the hospitals made him IHHI’s competitor, this competition ended when Tenet accepted IHHI’s offer, months before Fitzgibbons sent the e-mail. Moreover, Fitzgibbons’s membership in the medical staff’s medical executive committee at WMC does not make him a “competitor” of IHHI. (See Redding v. St. Francis Medical Center (1989) 208 Cal.App.3d 98 , 107 [ 255 Cal.Rptr. 806 ] [hospitals and doctors are not in competition with each other].)

Because we conclude the challenged e-mail manifestly concerned a public issue, we need not decide whether it concerned an issue under consideration or review by a legislative, executive, or judicial body, under section 425.16, subdivision (e)(2).

B. IHHI Has Not Established a Probability of Prevailing on Any of Its Claims

Having determined Fitzgibbons met his burden of demonstrating his e-mail message fell within the anti-SLAPP statute, the burden now shifts to IHHI to demonstrate a probability of prevailing on its claims.

1. Defamation

Civil Code section 45 provides: “Libel is a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation.” Fitzgibbons contends his May 19 e-mail message is not actionable because it consists of only his opinion, and not factual assertions. IHHI, on the other hand, asserts that opinions and criticism may be actionable even though they are based on true statements of fact. Neither paints an accurate picture of the law.

In determining whether disparaging remarks are actionable defamation, “ ‘the question is not strictly whether the published statement is fact or opinion . . . [r]ather, the dispositive question is whether a reasonable fact finder could conclude the published statement declares or implies a provably false assertion of fact.’ [Citation.]” (Ruiz, supra, 134 Cal.App.4th at p. 1471.) In other words, an opinion or legal conclusion is actionable only “ ‘ “if it could reasonably be understood as declaring or implying actual facts capable of being proved true or false.” ’ [Citation.] Thus, an opinion based on implied, undisclosed facts is actionable if the speaker has no factual basis for the opinion. [Citation.] An opinion is not actionable if it discloses all the statements of fact on which the opinion is based and those statements are true. [Citation.] An opinion is actionable if it discloses all the statements of fact on which the opinion is based and those statements are false. [Citation.]” (Ibid.)

An expression of opinion based on express facts would be: “ ‘ “[Jones] moved in six months ago. He works downtown, and I have seen him during that time only twice, in his backyard around 5:30 seated in a deck chair . . . with a drink in his hand. I think he must be an alcoholic.” [Citation.]’ [Citation.] This opinion disclosed all the facts on which it was based and did not imply there are other, unstated facts supporting the belief Jones is an alcoholic. The opinion that Jones ‘ “must be an alcoholic” ’ is actionable only if the disclosed facts are false and defamatory. ‘A statement of opinion based on fully disclosed facts can be punished only if the stated facts are themselves false and demeaning.’ [Citation.] The rationale for this rule is that ‘[w]hen the facts underlying a statement of opinion are disclosed, readers will understand they are getting the author’s interpretation of the facts presented; they are therefore unlikely to construe the statement as insinuating the existence of additional, undisclosed facts.’ [Citation.] When the facts supporting an opinion are disclosed, ‘readers are free to accept or reject the author’s opinion based on their own independent evaluation of the facts.’ [Citations.]” (Franklin, supra, 116 Cal.App.4th at p. 387.)

When determining whether a statement of opinion is actionable “we examine the totality of the circumstances, starting with the language of the allegedly defamatory statement itself.” (Ruiz, supra, 134 Cal.App.4th at p. 1471.) The first paragraph of Fitzgibbons’s e-mail message reads: “By the way, the hospital appears to be underwater and I don’t think IHHI can get an investor to pony up the $20 million, for the 60-70 million shares of stock which they are selling. Admissions are down 20%. They got a reduction of costs by dumping Tenet by 13%, and increased insurance payment of 7% (but that is neutralized by the factoring). Then their nursing salaries went up 8%—so they’re in the red. No way to get out. That is ominous. What would the buyer get buying IHHI stock? Control of IHHI, but not the land? Sounds like its going BK. Get ready.”

In its brief, IHHI argues that Fitzgibbons bears the burden of proving the truth of the statements in his e-mail message, and that “[t]his burden is shifted to the plaintiff only if the plaintiff is a public figure, which in this case, IHHI is not.” For this proposition, IHHI cites Philadelphia Newspapers, Inc. v. Hepps (1986) 475 U.S. 767 [ 89 L.Ed.2d 783 , 106 S.Ct. 1558 ] (Hepps). IHHI apparently did not read Hepps closely because the Supreme Court in Hepps held that the burden to prove falsity shifts to the plaintiff when the statement relates to an issue of public concern, even when the plaintiff is not a public figure. (Id. at p. 777.) True, Hepps applied the burdenshifting to a situation involving a media defendant. But California has since applied Hepps to cases involving nonmedia defendants. (Nizam-Aldine v. City of Oakland (1996) 47 Cal.App.4th 364 , 377 [ 54 Cal.Rptr.2d 781 ]; see also Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711 , 747 [ 257 Cal.Rptr. 708 , 771 P.2d 406 ] [“When the speech involves a matter of public concern, a private-figure plaintiff has the burden of proving the falsity of the defamation”].) Because we have determined the e-mail at issue related to an issue of public concern, IHHI bears the burden of demonstrating the challenged statements are false.

In challenging the e-mail’s assertion that “[a]dmissions are down 20%,” IHHI cites two one-page reports covering, respectively, April and May of 2005. These reports purport to show the number of inpatient and outpatient surgeries performed, and the revenues generated from them. IHHI asserts these reports show WMC to be above budget for these two months. This evidence fails to establish the challenged statement is false.

Specifically, IHHI provides no evidence of how the budget was created or its relation to past events. Indeed, IHHI may have adjusted its budget prior to the reports to take into account a 20 percent drop in admissions. Moreover, the reports relate only to revenues received from surgeries; unless all patient

2. Breach of Contract/Breach of Covenant of Good Faith and Fair Dealing

IHHI contends Fitzgibbons waived his right to complain about IHHI’s operation of WMC when he executed the agreement between the medical staff and IHHI, and that his e-mail message therefore breached the contract. We disagree.

“ ‘ “A waiver of First Amendment rights may only be made by a ‘clear and compelling’ relinquishment of them. . . .” [Citation.] “Moreover, it is well established that courts closely scrutinize waivers of constitutional rights, and indulge every reasonable presumption against a waiver.’ [Citations.]” ’ ” (People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516 , 532 [ 132 Cal.Rptr.2d 151 ].)

The clause IHHI relies upon reads: “[T]he Medical Staff of Western Medical Center—Santa Ana will express public support for the acquisition and operation of IHHI of, and issuance of hospital licenses to IHHI for, the Hospitals, in accordance with the commitments made herein, including being represented at any public hearings on this proposed acquisition and delivering to DHS (Mark Helmar) a letter supporting IHHI’s acquisition and licensure of the Hospitals.” (Italics added.) IHHI provides no evidence demonstrating the medical staff did not fulfill their requirements to express support at the hearings on IHHI’s acquisition of the hospitals, or send a letter to the Department of Health Services supporting IHHI. Rather, IHHI contends the legal staff’s promise to “express public support for the acquisition and operation of IHHI” prohibited Fitzgibbons from making any negative comments during the three-year term of the agreement.

As an initial matter, we note that Fitzgibbons did not send out his e-mail message publicly, but only to a limited number of recipients. Accordingly, the e-mail did not violate the express provisions of the agreement. More importantly, however, the phrase “express public support for the acquisition and

Indulging every reasonable presumption against a waiver of First Amendment rights, we conclude IHHI failed to demonstrate a reasonable probability of prevailing on its breach of contract cause of action. Similarly, because courts will not imply a waiver of free speech rights, IHHI’s cause of action for breach of the implied covenant of good faith and fair dealing must also be stricken.

3. Interference With Contract

IHHI alleges Fitzgibbons’s e-mail was forwarded to Blue Cross during the time IHHI was attempting to renegotiate an increase in rates with Blue Cross. IHHI provided evidence that Blue Cross expressed concern about IHHI’s financial condition after receiving the e-mail, and due to that concern delayed executing a contract for higher rates. IHHI contends this delay has resulted in damages exceeding $500,000.

Establishing a prima facie case of intentional interference with contractual relations requires proof of “(1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118 , 1126 [ 270 Cal.Rptr. 1 , 791 P.2d 587 ].) IHHI contends it has provided evidence sufficient to establish each of these elements. We disagree.

In support of this claim, IHHI cites the declaration of Mario Rodriguez, a business consultant negotiating with Blue Cross on IHHI’s behalf for higher rates. The declaration does not state who forwarded Fitzgibbons’s e-mail message to Blue Cross, and IHHI presented no evidence demonstrating Fitzgibbons intended to send, either personally or through an agent, the e-mail to Blue Cross. The only evidence IHHI cited concerning intent are the disparaging remarks Fitzgibbons made in his e-mail and Fitzgibbons’s mem

We recognize the evidence may support an inference of “ ‘culpable intent from conduct “substantially certain” to interfere with the contract [or prospective economic relationship].’ ” (Savage v. Pacific Gas & Electric Co. (1993) 21 Cal.App.4th 434 , 449 [ 26 Cal.Rptr.2d 305 ].) IHHI has failed to provide any evidence demonstrating a substantial certainty that Fitzgibbons’s e-mail message would reach Blue Cross. Indeed, the copy of the message received by Blue Cross indicates it was sent to them from an e-mail address that was not one of the original recipients.

In addition to protection against acts intentionally designed to interfere with contractual relations, the law also protects against injury caused by negligence. (J’Aire Corp. v. Gregory (1979) 24 Cal.3d 799 , 803 [ 157 Cal.Rptr. 407 , 598 P.2d 60 ].) IHHI, however, cites no evidence demonstrating negligence by Fitzgibbons in sending his e-mail message. As noted above, we do not construe the agreement between IHHI and the medical staff as imposing a duty on Fitzgibbons to refrain from criticizing IHHI, and nothing indicates he intended to forward the message to Blue Cross.

Finally, we note IHHI’s interference with contract claims also fail because it presented no evidence demonstrating any breach or disruption of its existing contract with Blue Cross. Instead, IHHI demonstrated interference with its negotiations for a new Blue Cross contract. Thus, the wrong of which IHHI complains is interference with prospective economic advantage, a tort not pleaded in its complaint. Even if it had been pleaded, however, IHHI failed to establish the interference was wrongful apart from the interference itself, a required element of that tort. (Reeves v. Hanlon (2004) 33 Cal.4th 1140 , 1152 [ 17 Cal.Rptr.3d 289 , 95 P.3d 513 ].)

4. Unfair Business Practices Act, Business and Professions Code Section 17200

IHHI seeks injunctive relief under the Unfair Business Practices Act, Business and Professions Code section 17200. This cause of action arises out of Fitzgibbons’s alleged defamation of IHHI in his e-mail message. Because we conclude the message did not constitute actionable defamation, IHHI’s action for violation of the Unfair Business Practices Act also fails for this reason.

The order denying Fitzgibbons’s special motion to strike is reversed, and the trial court is directed to enter a new order granting the motion in its entirety. Fitzgibbons is entitled to his costs on appeal.

Rylaarsdam, Acting R J., and Fybel, J., concurred.