People v. McGraw-Hill Co.

Opinion

The People, by and through the Attorney General, brought this action against McGraw-Hill Companies, Inc., and Standard & Poor’s Financial Services LLC (defendants) for statutory violations arising out of defendants’ alleged business practice of inflating their credit ratings of various structured finance securities. The complaint alleged four causes of action, including two for violations of California’s False Claims Act (Gov. Code, § 12650 et seq.; CFCA). Defendants filed a special motion to strike the CFCA causes of action pursuant to section 425.16, subdivision (b) of the Code

The People contend that this appeal must be dismissed because the express language of subdivision (d) exempts this action from the direct appeal procedure set forth in subdivision (i). According to the People, the phrase “this section shall not apply” in subdivision (d) means what it says: that all of section 425.16, including subdivision (i), does not apply to a prosecutor’s enforcement action. The People also contend that the Legislature never intended for subdivision (d) findings to be subject to immediate appellate review.

Defendants contend the trial court’s subdivision (d) order is made appeal-able by subdivision (i). They argue that there is nothing unclear or ambiguous about subdivision (i)’s statutory language which explicitly authorizes their appeal from the order denying their special motion to strike. Defendants also argue that the history of the anti-SLAPP statute reflects a legislative intent to create a right to immediately appeal any order granting or denying a special motion to strike.

DISCUSSION

Although each party invokes a different provision of the anti-SLAPP statute, their respective interpretations are mutually exclusive. To resolve this conflict, we apply settled rules of statutory construction.

“ ‘When interpreting a statute our primary task is to determine the Legislature’s intent. [Citation.] In doing so we turn first to the statutory language, since the words the Legislature chose are the best indicators of its intent.’ [Citations.] The Supreme Court has emphasized that the words in a statute selected by the Legislature must be given a ‘commonsense’ meaning when it noted: ‘ “Our first step [in determining the Legislature’s intent] is to scrutinize the actual words of the statute, giving them a plain and commonsense meaning. [Citations.]” [Citation.]’ [Citation.] Further, our Supreme Court has noted, ‘ “ ‘If the language is clear and unambiguous there is no need for construction, nor is it necessary to resort to indicia of the intent of the Legislature (in the case of a statute) ....’”’ [Citations.]” (Goldstein v. Ralphs Grocery Co. (2004) 122 Cal.App.4th 229 , 233 [ 19 Cal.Rptr.3d 292 ] (Goldstein).)

Because this case requires us to interpret language from two subdivisions of the anti-SLAPP statute, we are particularly guided by the rule requiring us to “consider portions of a statute in the context of the entire statute and the statutory scheme of which it is a part, giving significance to every word, phrase, sentence, and part of an act in pursuance of the

Applying these rules leads to several conclusions.

First, subdivision (b) is the linchpin of the anti-SLAPP statute: it authorizes the motion to strike procedure established by the Legislature in order to protect acts in furtherance of the constitutional rights to free speech and petition.

Second, subdivision (d) completely exempts public enforcement actions from the subdivision (b) motion to strike procedure. Thus, for example, a subdivision (d) order does not require any judicial assessment of the nature of the defendant’s conduct or substantive evaluation of the merits of the plaintiff’s lawsuit. Rather, as stated by our colleagues in Division Five, the “anti-SLAPP remedy is unavailable” to a defendant in an action brought by a public prosecutor. (Health Labs, supra, 87 Cal.App.4th at p. 448.)

Third, the direct appeal right created by subdivision (i) unequivocally applies to an order granting or denying a special motion to strike pursuant to the procedures promulgated to implement subdivision (b).

Finally, the direct appeal provision in section 425.16, subdivision (i), cannot be stretched to apply to a trial court determination that an action is exempt from the anti-SLAPP statute under subdivision (d). Subdivision (i) authorizes a direct appeal from a ruling on the merits of a subdivision (b) special motion to strike. A subdivision (d) order is not a ruling on the merits of a special motion to strike, but rather a determination that the entire anti-SLAPP procedure does not apply to the case.

Defendants contend that the broad language of subdivision (i) manifests the Legislature’s “unambiguous intent that an immediate appeal should be available from any order granting or denying a motion to dismiss under section 425.16.” However, interpreting subdivision (i) as authorizing an immediate appeal from a subdivision (d) finding would undermine the very function of the subdivision (d) exemption, subjecting the public prosecutor’s action to a specific type of judicial scrutiny that the exemption expressly prohibits. Moreover, defendants’ overbroad construction of subdivision (i) not only fails to account for the language in subdivision (d), it would render that exemption meaningless, something a reasonable Legislature would not have intended.

Defendants argue that the timing of the adoption of the two subdivisions reflects a legislative intent to authorize an immediate appeal from a subdivision (d) order. As noted above, subdivision (d) was part of the original

Furthermore, defendants overlook Doe, supra, 145 Cal.App.4th 139 , a case holding that the denial of a motion for attorney fees pursuant to subdivision (c) of section 425.16 is not immediately appealable under subdivision (i). There, the defendant argued that the order was appealable because other appellate courts had entertained interlocutory appeals from subdivision (c) orders. (145 Cal.App.4th at p. 150.) Rejecting the argument, the court concluded, among other things, that a judicial opinion addressing the merits of an appeal which “does not suggest either that the parties raised the jurisdictional issue or that the court considered it” is not authority for the proposition that the order is actually appealable. (Ibid.)

As noted at the outset of our analysis, both parties claim support for their respective theories in the legislative history of the anti-SLAPP statute. We question the need to resort to arguments about what the Legislature may have intended. (See Goldstein, supra, 122 Cal.App.4th at p. 233 [if statutory language is clear, no need to resort the legislative history].) Section 425.16 is not ambiguous when its subdivisions are considered together rather than at odds with each other.

But were it relevant to this discussion, the legislative history of section 425.16 reinforces our conclusion that decisions against defendants under subdivision (d) are not immediately appealable. “The legislative history of section 425.16 plainly implies” that its purpose was to prevent the harm caused by SLAPP plaintiffs, litigants who “do not care so much about winning their lawsuits as they care about delaying and distracting the defendant from his or her objective, which is generally economically adverse to those of the SLAPP plaintiff. SLAPP plaintiffs achieve their goal if their suits deplete the defendant’s resources and energy. [Citations.]” (Health Labs, supra, 87 Cal.App.4th at p. 450; see City of Long Beach, supra, 111 Cal.App.4th at pp. 308-309.)

But by their very definition public prosecutor enforcement actions are not SLAPP cases. “[A] public prosecutor’s enforcement action is not motivated

To the contrary, the legislative history shows that the subdivision (d) exemption was enacted in order to preclude defendants from using the anti-SLAPP statute to impair the ability of state and local agencies to enforce consumer protection laws. (Health Labs, supra, 87 Cal.App.4th at pp. 446-447; City of Long Beach, supra, 111 Cal.App.4th at pp. 307-308.) Subjecting public prosecutors to the direct appeal process authorized by subdivision (i) would undermine legislative intent, because it would impede the public prosecutor’s efforts to protect the health and safety of the citizenry, delaying the enforcement action while the defendant pursues an appeal of the subdivision (d) determination.

Defendants contend that the legislative history leading to subdivision (i) reflects an intent that every ruling on a special motion to strike would be subject to immediate appellate review. Specifically, they rely on evidence that proponents of the immediate appeal provision expressed concern that without the ability to directly appeal a section 425.16 order, a defendant in an actual SLAPP suit might have to incur the cost of a lawsuit before having his or her right to free speech vindicated. (See Brar, supra, 115 Cal.App.4th at pp. 1317-1318; Doe, supra, 145 Cal.App.4th at p. 147.)

As we recognized in a case that did not involve the subdivision (d) exemption, the right to appeal can be important to the extent it protects defendants from the consequences of an erroneous denial of a meritorious anti-SLAPP motion. (Grewal v. Jammu (2011) 191 Cal.App.4th 977 , 1000 [ 119 Cal.Rptr.3d 835 ].) That said, we went on in Grewal, in a section entitled “A Losing Defendant’s Right to Appeal Is the Aspect of the Anti-SLAPP Statute Most Subject to Abuse” (id. at p. 1000-1003), to discuss Supreme Court and Court of Appeal opinions reflecting on the possibility for abuse, including quoting this observation by the Supreme Court in Vanan, supra, 35 Cal.4th at page 195: “In light of our holding today, some anti-SLAPP appeals will undoubtedly delay litigation even though the appeal is frivolous or insubstantial. As the Court of Appeal observed and plaintiffs contend, such a result may encourage defendants to ‘misuse the [anti-SLAPP] motions to delay meritorious litigation or for other purely strategic purposes.’ ” These concerns are a fortiori applicable here — an enforcement action by a public prosecutor.