Opinion

Summary

This case involves the question whether a lawyer’s investigative acts in the course of prosecuting his clients’ arbitration claims against a securities broker were acts in furtherance of his free speech rights within the meaning of California’s anti-SLAPP (strategic lawsuit against public participation) statute.

We conclude the lawyer’s acts alleged in the broker’s subsequent lawsuit did not fall within the purview of the anti-SLAPP statute, because the acts alleged did not occur in connection with an issue under consideration or review in the arbitration. Accordingly, the lawyer’s special motion to strike the broker’s complaint against him as a meritless lawsuit brought primarily to chill the valid exercise of his constitutional rights should have been denied.

Factual and Procedural Background

Geoffrey Scott Paul, a securities broker, brought this lawsuit against 11 former brokerage clients and their lawyer, Michael E. Friedman. The lawsuit arose from acts that occurred prior to and during an arbitration in which[*857] Paul’s former clients sought $31 million in compensatory damages from Paul and his employer, CIBC Oppenheimer. In the arbitration, the claimants alleged Paul violated securities laws, committed fraud, breached his fiduciary duties, was negligent and made unsuitable investment recommendations. ^[1] The arbitration resulted in complete vindication for Paul and Oppenheimer, and in sanctions against Friedman and the claimants for $700,000 “for the filing of a frivolous claim for which there was no factual foundation, and that the claims were intended to harass” Paul and CIBC Oppenheimer. ^[2]

Paul then filed this lawsuit against Friedman and his clients, asserting causes of action for intentional infliction of emotional distress, libel and slander, ^[3] invasion of privacy, tortious interference with economic relationships, malicious prosecution, and breach of a confidentiality agreement. Paul also sought an injunction against further breaches of the confidentiality agreement. As relevant to this appeal, the complaint alleged that:

—Before and during the arbitration, Friedman, the claimants and/or their agents conducted an “investigation” of Paul that far exceeded the scope of permissible discovery or investigation in the arbitration and was unreasonably intrusive.

—In conducting the investigation, Friedman made public disclosures of embarrassing private facts about Paul to clients and prospective clients, including his financial affairs, spending habits, taxes and tax liabilities, relations with his clients, and close personal relationship with another individual (as well as the allegations made in the arbitration).

[*858] —Friedman or Ms agents intruded into private places and private affairs, including entry into property owned by Paul, covert surveillance of Paul, seeking private financial, credit, tax and occupational information, and questioning individuals with no possible knowledge of the claims made in the arbitration.

—Friedman procured a client list and other internal documents of CISC Oppenheimer containing trade secrets by improper means, used those documents to identify Paul’s clients, and made false accusations and/or embarrassing disclosures about Paul to those clients.

—After commencement of the arbitration and at the outset of an unsuccessful mediation of the dispute, Paul and Friedman entered into a written confidentiality agreement. In breach of that agreement, Friedman (a) sent a written communication to a legal periodical disclosing information and statements communicated to the mediator, and (b) filed written declarations in a civil proceeding describing statements and evaluations made by the mediator in the course of the mediation. ^[4]

Friedman filed a special motion to strike Paul’s first amended complaint under Code of Civil Procedure section 425.16, the anti-SLAPP statute. ^[5] Friedman’s motion claimed Paul’s complaint was based on Ms efforts as claimants’ counsel to diligently pursue their right to petition an adjudicatory body for redress of wrongs. Friedman’s affidavit in support of his motion explained that in the arbitration, Ms argument in support of the claims was that Paul’s judgment was impaired during the time he served as the claimants’ investment advisor. Therefore, issues about Paul’s financial condition and drag and alcohol use were relevant to prove whether he acted negligently or breached Ms fiduciary duties to the claimants. Friedman pointed to (a) Paul’s stipulation, in connection with a discovery dispute that, despite earning millions of dollars each year, Paul was under financial pressure and borrowed thousands of dollars to buy and renovate a house and an inn and to purchase antiques; and (b) the arbitrators’ admission of evidence of Paul’s guilty plea to a driving under the influence charge, and Paul’s and Ms companion’s drug and alcohol use, to prove that Paul had impaired judgment[*859] and was distracted from his duties. ^[6] Friedman declared he had no reason to believe the investigators he hired engaged in any unlawful conduct in their investigation of Paul.

Paul’s affidavits in opposition to the motion to strike asserted that Friedman’s investigation involved inquiry into facts and allegations unrelated to the claims made in the arbitration and unnecessary to achieve the objects of the arbitration. An affidavit from Neal Robb, Paul’s counsel in the arbitration, pointed out the arbitrators sustained objections to Friedman’s discovery requests for documents showing “treatment for alcohol, drug, substance abuse, psychological or psychiatric conditions,” “items owned by any foundation or partnership in which Paul has an ownership interest,” “expense reports” for business trips taken by Paul, and “any complaint of [any other] customer” of Paul or CIBC about MedPartners. The Robb affidavit also pointed out it was customary in private securities arbitrations for arbitrators to hear most evidence proffered, and it was clear the arbitrators had no interest in the questions or answers relating to personal relationships, drunk-driving arrests, real estate holdings, tax obligations, personal spending habits, antiques buying and alcohol or drug use, to which Paul’s counsel repeatedly lodged objections. Paul also presented affidavits to support his claim Friedman used deceptive and harassing tactics during his investigation of the arbitration case against Paul, ^[7] and asked an attorney for a subpoenaed witness in the arbitration to inquire of his client as to Paul’s alleged drug and alcohol abuse. Other affidavits described activities of Friedman’s investigators. An affidavit from Bernard Belonsky, one of Paul’s clients, asserts that[*860] an investigator hired by Friedman misrepresented himself to gain access to Belonsky, and told Belonsky that Paul was financially irresponsible, misappropriated client funds, and lost tens of millions of dollars for clients. The investigator also told Belonsky that other individuals reported Paul and Belonsky’s son were high on drugs at a party at Paul’s condominium and Paul sent Belonsky’s son out to buy drugs. The investigator told Belonsky Paul was impaired and not capable of doing his job because of drugs, had convictions for drunk driving, had been fired from Merrill Lynch and left under a cloud, had liens on his condominium and was financially out of control.

While Friedman’s special motion to strike was pending, Paul filed a motion to conduct specified discovery and to stay or continue the hearing on the motion to strike. ^[8] Paul argued that if the court believed the anti-SLAPP statute applied, he should be permitted to conduct limited discovery to develop sufficient evidence to demonstrate a probability he would prevail on his claims.

A hearing on the motions was conducted on June 15, 2000. Following argument, the trial court (a) denied Paul’s motion to conduct specified discovery; ^[9] (b) granted Friedman’s motion to strike the causes of action for intentional infliction of emotional distress, violation of the right to privacy, interference with economic advantage and malicious prosecution; (c) denied Friedman’s motion to strike the causes of action claiming breach of the confidentiality agreement and seeking injunctive relief; and (d) denied Friedman’s request for attorney fees and costs. The court concluded that the activity attributed to Friedman and his investigators “all seems to be related to investigating Mr. Paul with respect to these claims,” and therefore within the ambit of the anti-SLAPP statute, ^[10] “and then beyond that I don’t believe it’s shown that Mr. Friedman or the investigator did anything such that[*861] you’ve got a prima facie showing.” ^[11] An order reflecting those rulings was filed on July 5, 2000.

Paul appeals from the order insofar as it granted Friedman’s special motion to strike and denied his discovery request, and Friedman cross-appeals from the denial of his motion to strike the remaining causes of action and his request for attorney fees. ^[12]

Discussion

We conclude that Friedman’s special motion to strike Paul’s first amended complaint should have been denied as to Paul’s claims for intentional infliction of emotional distress, invasion of privacy, and tortious interference with economic relationships, because Friedman did not make a prima facie showing that those claims fell within the ambit of the anti-SLAPP statute. A lawsuit seeking redress for a harassing investigation of topics unrelated to those under consideration in an official proceeding is not the type of “abuse of the judicial process” that the Legislature sought to prevent when it enacted the anti-SLAPP statute. In reaching this conclusion, we express no opinion on the probable merits of any of Paul’s claims. We merely conclude that his lawsuit should proceed like any other, and is not subject to anti-SLAPP procedures clearly intended to expose and dismiss abusive lawsuits that chill free speech, but not actions seeking redress for improper investigation of frivolous claims.

We begin with a review of the anti-SLAPP statute and the reasons for its existence, and then proceed to an analysis of the inapplicability of the statute in the circumstances of this case.

The statute and its background.

The legal principles governing anti-SLAPP motions, and the reasons for the enactment of the anti-SLAPP statute, have been described in a number of cases, A SLAPP suit is a meritless lawsuit “filed primarily to chill the defendant’s exercise of First Amendment rights.” (Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 815, fn. 2 [33 Cal.Rptr.2d 446].) The Wilcox court explained: “The paradigm SLAPP is a suit filed by a large land developer against environmental activists or a neighborhood association[*862] intended to chill the defendants’ continued political or legal opposition to the developers’ plans.” (Wilcox v. Superior Court, supra, 27 Cal.App.4th at p. 815.) ^[13] “[W]hile SLAPP suits ‘masquerade as ordinary lawsuits’ the conceptual features which reveal them as SLAPP’s are that they are generally meritless suits brought by large private interests to deter common citizens from exercising their political or legal rights or to punish them for doing so.” (Wilcox v. Superior Court, supra, 27 Cal.App.4th at pp. 816-817, citing Pring, SLAPPs: Strategic Lawsuits Against Public Participation (1989) 7 Pace Envtl. L.Rev. 3, 5-6, 9.)

The Legislature responded to a “disturbing increase” in SLAPP suits by enacting section 425.16 of the Code of Civil Procedure. (Code Civ. Proc. § 425.16, subd. (a).) ^[14] The legislation explicitly declared that participation in matters of public significance “should not be chilled through abuse of the judicial process.” (§ 425.16, subd. (a).) ^[15] Section 425.16 is a procedural remedy designed to eliminate SLAPP’s in the early stages of litigation. It permits a special motion to strike 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 ... in connection with a public issue . . . .” (Id., subd. (b)(1).) ^[16] The statute defines an “act in furtherance of a person’s right of petition or free speech ... in connection with a public issue” to include four types of conduct:

Any written or oral statement or writing made before a legislative, executive, judicial or other official proceeding (§ 425.16, subd. (e)(1));

[*863] 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 other official proceeding (§ 425.16, subd. (e)(2));

Any written or oral statement or writing made in a public place in connection with an issue of public interest (§ 425.16, subd. (e)(3)); and

Any other conduct in furtherance of the exercise of the rights of petition or free speech “in connection with a public issue or an issue of public interest.” (§ 425.16, subd. (e)(4).) ^[17]

To succeed on a motion to strike, the moving defendant must make a prima facie showing that the plaintiff’s cause of action arises from an act in furtherance of the defendant’s First Amendment rights, that is, from any one of the four types of conduct listed above. (Wilcox v. Superior Court, supra, 27 Cal.App.4th at p. 820.) If the defendant does so, the motion to strike will be granted “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).)

Since the enactment of the anti-SLAPP statute in 1992, its scope has expanded beyond the type of lawsuit described in Wilcox’ s paradigm SLAPP. In response to cases narrowly construing the statute, section 425.16 was amended in 1997 to clarify the Legislature’s intent that its provisions be construed broadly. ^[18] In 1999, the Supreme Court resolved conflicts among the courts of appeal by holding that any statement or writing “made in, or in connection with an issue under consideration or review by, an official[*864] proceeding or body” is protected by section 425.16, whether or not it involves a public issue. (Briggs v. Eden Council for Hope & Opportunity, supra, 19 Cal.4th 1106, 1113.)

Since Briggs, courts have applied the anti-SLAPP statute in a number of different factual contexts. (See, e.g., Sipple v. Foundation for Nat. Progress (1999) 71 Cal.App.4th 226, 240 [83 Cal.Rptr.2d 677] [media defendants in libel actions are among the prime beneficiaries of § 425.16; the anti-SLAPP statute is not limited to suits by the powerful and wealthy against the impecunious, citing Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 37 Cal.App.4th 855, 863 [44 Cal.Rptr.2d 46]]; DuPont Merck Pharmaceutical Co. v. Superior Court (2000) 78 Cal.App.4th 562, 568-569 [92 Cal.Rptr.2d 755] [class action claims brought against a drug company for alleged false statements before a regulatory agency were subject to special motion to strike; case remanded for determination whether plaintiffs could establish probability of prevailing on their claims].) The scope of the statute is not without limits, as demonstrated in other cases finding lawsuits were not within its protection. (Paul for Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1365 [102 Cal.Rptr.2d 864] [suit alleging interference with a councilman’s candidacy by admittedly illegal campaign contributions was not subject to a motion to strike because campaign money laundering “was not a valid activity undertaken by defendants in furtherance of’ their free speech rights]; People ex rel. 20th Century Ins. Co. v. Building Permit Consultants, Inc. (2000) 86 Cal.App.4th 280, 284 [103 Cal.Rptr.2d 71] [defendants failed to make a prima facie showing that a lawsuit was brought to chill their First Amendment rights].) ^[19]

Application of the statute to this case.

In his motion to strike and on appeal, Friedman’s position is that all the acts alleged in Paul’s complaint arose “in connection with the investigation or prosecution of the underlying arbitration,” and therefore fell within the ambit of the anti-SLAPP statute. We conclude Friedman misreads the statute. While we are required to construe the statute broadly, we must also adhere to its express words and remain mindful of its purpose. ^[20]

Friedman was required to make a prima facie showing that Paul’s lawsuit arose from acts implicating Friedman’s First Amendment speech[*865] or petition rights as described in one of the four categories stated in the statute. ^[21] (§ 425.16, subd. (e)(l)-(4); Dowling v. Zimmerman (2001) 85 Cal.App.4th 1400, 1418 [103 Cal.Rptr.2d 174].) None of those categories encompasses, as Friedman asserts, any and all conduct “in connection with [the] securities arbitration proceeding.” So far as private arbitration proceedings are concerned, the statute covers, as the Supreme Court observed in Briggs, any statement or writing “made in, or in connection with an issue under consideration or review by, an official proceeding or body.” (Briggs v. Eden Council for Hope & Opportunity, supra, 19 Cal.4th at p. 1113.) Paul’s tort causes of action plainly did not seek redress for any statements of Friedman’s “made in” the arbitration or “before” the arbitrators ^[22] (§ 425.16, subd. (e)(1).) Paul sought redress for a harassing investigation and disclosures made outside the arbitration. Thus, since the suit does not arise from statements “made before” the arbitral body, Friedman had to show the suit arose from oral statements or writings “made in connection with an issue under consideration or review” in the arbitration. (Id., subd. (e)(2).) A review of Paul’s complaint and Friedman’s motion to strike makes it clear that Friedman made no such showing ^[23]

[*866] In essence, Paul’s lawsuit alleged Friedman conducted a harassing investigation that extended far beyond the scope of the issues subject to arbitration. The investigation was allegedly directed to personal matters bearing no relationship to the claims asserted in the arbitration. In the course of the investigation, Friedman or his agents allegedly made disclosures to clients and others about Paul’s personal life that likewise had nothing to do with the claims under consideration in the arbitration. Fairly read, the complaint alleges Paul was injured by acts of Friedman’s that had no connection to the issues under review in the arbitration. ^[24]

Friedman’s motion to strike, however, rested principally on the ground that any conduct in connection with an official proceeding is protected by the statute. As we have already observed, that view is erroneous. The statute does not accord anti-SLAPP protection to suits arising from any act having any connection, however remote, with an official proceeding. The statements or writings in question must occur in connection with “an issue under consideration or review” in the proceeding. The necessity of a connection to an issue under review in a proceeding, and not merely to a proceeding, is illustrated in People ex rel. 20th Century Ins. Co. v. Building Permit Consultants, Inc., supra, 86 Cal.App.4th 280.

In 20th Century Insurance, an insurance company’s lawsuit alleged a defendant prepared and used false and fraudulent damage reports and repair estimates for clients submitting claims to the insurer for earthquake damage. Defendant moved to strike the suit, arguing those allegations implicated its right to petition. The defendant’s declaration in support of the motion stated the reports were prepared for submission to clients and their legal counsel, the majority of them were prepared in anticipation of litigation, and they often became the subject of discovery requests in pending lawsuits. The court concluded the defendant failed to make a prima facie showing the lawsuit was brought to chill their First Amendment rights, even though “some of the reports eventually were used in official proceedings or litigation,” because they were not created in connection with an issue then under consideration or review in an official proceeding. (86 Cal.App.4th at pp. 284-285.) The court said: “[T]he damage reports were sent to 20th Century Insurance to demand performance on the insurance contract. At the time defendants created and submitted their reports and claims, there was no ‘issue under consideration’ pending before any official proceeding. If we[*867] protect the reports and claims under section 425.16 because they eventually could be used in connection with an official proceeding, we would effectively be providing immunity for any kind of criminal fraud so long as the defrauding party was willing to take its cause to court. Defendants have cited nothing to us that demonstrates the anti-SLAPP law embraces such actions.” (Id. at p. 285.)

The circumstances in this case are analogous. The reports in 20th Century Insurance were avowedly prepared in anticipation of litigation, and indeed in some cases were actually used in litigation. ^[25] The litigation nexus alone, however, was not sufficient to establish that the reports were “in connection with an issue under consideration” in an official proceeding. In 20th Century Insurance, an issue actually addressed by the reports was not, at the time, under consideration in an official proceeding. In this case, the intrusive prehearing investigation of and disclosures concerning Paul’s personal life— the subject of the lawsuit—were unrelated to any issue under consideration in the arbitration. In short, it is insufficient to assert that the acts alleged were “in connection with” an official proceeding. There must be a connection with an issue under review in that proceeding. In 20th Century Insurance, there was a connection to an issue but no pending proceeding; here, there is a pending proceeding, but no connection to an issue before the tribunal. ^[26]

Friedman contends that during the arbitration (a) he argued that Paul’s judgment was impaired, and (b) the panel permitted testimony about Paul’s conviction for driving under the influence and other “distractions” in Paul’s personal life. ^[27] However, a lawyer’s attempt to inject an issue into a proceeding does not render the issue relevant, nor can the attempted injection of[*868] an irrelevant matter transform it into an issue “under consideration or review” in the proceeding. By definition, irrelevant matters have no tendency in reason to prove or disprove any disputed fact of consequence to the determination of a matter, and are specifically excluded from consideration. ^[28] Irrelevant matters thus are not “under consideration or review” in an official proceeding. Nor does the arbitration panel’s willingness to listen to irrelevant matters bear on whether those matters were “under consideration or review” by the arbitrators. The arbitrators were not bound by the rules of evidence.

Accordingly, we conclude the evidence Friedman presented with his motion to strike did not amount to a prima facie showing that his allegedly harassing investigation and related personal disclosures were in connection with or related to “an issue under consideration or review” by the arbitrators. Indeed, all the evidence was to the contrary. The issues actually under review by the arbitrators bore no relationship to the allegations in Paul’s lawsuit. The statement of claim in the arbitration makes no allegations of “impaired judgment” or “distractions” causing damage to the claimants. ^[29] The arbitral decision is likewise barren of any mention of any such claims or arguments, either in the statement of “issues for resolution” or elsewhere. Indeed, the decision explicitly determined that even the claims under consideration were “frivolous,” had “no factual foundation,” and “were intended to harass” Paul and CIBC Oppenheimer.

It would be ironic indeed if activity remotely connected to a frivolous arbitration proceeding were protected by a statute specifically enacted to prevent the chilling of First Amendment rights through abuses of the judicial process. (§ 425.16, subd. (a).) Fortunately, there is no such irony in this case, because Friedman did not make the necessary prima facie showing his activity came within the protection of the statute. That being so, it is[*869] unnecessary to determine whether Paul established the probable validity of his claims. ^[30]

Friedman’s cross-appeal.

Friedman cross-appeals from the trial court’s order denying his motion to strike Paul’s causes of action for breach of the confidentiality agreement and injunctive relief. We find no error.

In the proceeding Paul brought to confirm the arbitration award, Friedman filed opposing declarations. Those declarations breached a confidentiality agreement by revealing a mediator’s evaluation of the arbitration claims. Friedman does not contend an absence of a breach. Instead, he argues the statements made in the declarations he submitted were covered by the litigation privilege. They were not. (ITT Telecom Products Corp. v. Dooley (1989) 214 Cal.App.3d 307, 320, 319 [262 Cal.Rptr. 773] [defendant was not privileged under Civ. Code, § 47, former subd. 2, to voluntarily breach an express confidentiality agreement; also observing “it is possible to waive even First Amendment free speech rights by contract”].) Nor are there any exceptions to the confidentiality of mediation communications or to the statutory limits on the content of mediators’ reports. (Foxgate Homeowners’ Assn., Inc. v. Bramalea California, Inc. (2001) 26 Cal.4th 1, 4 [108 Cal.Rptr.2d 642, 25 P.3d 1117].) Paul has clearly established a probability he will prevail on the claim, regardless of whether it was otherwise subject to a special motion to strike. ^[31]

Disposition

The order is reversed insofar as it granted Friedman’s motion to strike the causes of action for intentional infliction of emotional distress, violation of the right to privacy, and interference with economic advantage. The order is affirmed insofar as it denied Friedman’s motion to strike the causes of action for breach of the confidentiality agreement and injunctive relief and denied Friedman’s request for attorney fees. The cause is remanded for further proceedings. Paul is to recover his costs on appeal.

Johnson, Acting P. J., and Woods, J., concurred.

A petition for a rehearing was denied February 26, 2002, and the petition of appellant Michael E. Friedman for review by the Supreme Court was denied May 15, 2002.