Cases...
Commonwealth
Energy Corp. v. Investor Data Exchange, Inc. (2003)
[ 110 Cal.App.4th 26 ]
__ Cal.Rptr.2d __
COMMONWEALTH ENERGY CORPORATION, Plaintiff and Respondent,
v.
INVESTOR DATA EXCHANGE, INC. et al., Defendants and
Appellants.
G030377 California Court of Appeal, Fourth District,
Third Division.
June 30, 2003
Appeal from an order of the Superior Court of Orange
County, David R. Chaffee, Judge. Affirmed. Super Ct.
No. 01CC11867
{Page 110 Cal.App.4th 27}
[Copyrighted Material Omitted]
{Page 110 Cal.App.4th 28}
COUNSEL
Law Office of James Swiderski, James Swiderski; Law
Office of James J. Moneer and James J. Moneer for Defendant
and Appellant Investor Data Exchange.
Henry Gomez, in pro. per. for Defendant and Appellant.
Rus, Miliband & Smith, Ronald Rus, Randall A. Smith,
Leo J. Presiado and Jay B. Wallace for Plaintiff and
Respondent.
OPINION
SILLS, P.J.
I In this case we affirm the denial of defendant Investor
Data Exchange's anti-SLAPP suit motion. Just because
a telemarketing pitch is made on behalf of a firm that
sells information does not mean that the pitch is being
made in connection with a public issue or an issue of
public interest.
II During his tenure as CEO of plaintiff Commonwealth
Energy Corporation, Fred Bloom gave Henry Gomez, an
employee of Investor Data, a list of Commonwealth's
shareholders. Investor Data then used the list to "contact”
the shareholders on the phone and offer them Investor
Data's services, including a free one-year membership.
The contact just mentioned can most accurately be described
as "telemarketing,” with most of the pejorative
connotations which the word has come to bear in the
early 21st Century. (E.g., Steven R. Probst, Telemarketing,
Commercial {Page 110 Cal.App.4th 29}Speech, and Central
Hudson: Potential First Amendment Problems for Indiana
Code Section 24-4.7 and Other "Do-Not-Call”
Legislation (2002) 37 Val. U. L.Rev. 347, 347 ["Which
do Americans hate more: Osama Bin Laden or telemarketers?”].)
As acknowledged in the appellant's opening brief, the
callers were instructed to follow a "carefully
drafted information sheet in all of their calls,”
that is, follow a prepared script. (App. Op. br. at
p. 9.) (Cf. In re Providian Credit Card Cases (2002)
96 Cal.App.4th 292, 303 [116 Cal.Rptr.2d 833] ["a
series of questions and answers familiar to all who
have had the peace of their evening meal disturbed by
a call from a telemarketer”].)
The script was not a disquisition on the role of information
in the investment market or the general need to be wary
about investment scams. It was not even a warning to
the shareholders about the soundness of their investment
in Commonwealth. Rather, it focused exclusively on pitching
Investor Data's investigatory services. Ironically,
part of the spiel was that by signing up with Investor
Data the investors could somehow short-circuit the need
to check out telemarketers.[1]
We reproduce the "carefully drafted information
sheet” here, verbatim from the record:
"Is this Mr. (Mrs.) . . . . . . . . . . . . .
. .?
"My name is . . . . . . . . . with Investor Data
Exchange. I understand you're a Commonwealth shareholder.
Is that correct?
"We've told by a Commonwealth stockholder that
the list of stockholders has been taken by some of the
salesmen who worked there, and they've sold your name
to firms selling investments, so you may start getting
a lot of telemarketing calls, if you're not already.
"IDE was started by investors like you who got
tired of being swamped with telemarketing call, [sic]
and realized [they] couldn't afford to check them out
properly. So they set up a club to investigate them
together, and exchange information on what they discovered.
"The members [sic] who's a Commonwealth stockholder
convinced us to offer you a free one year trial membership.
As a club member,
"1) You can refer the sales call to IDE.
{Page 110 Cal.App.4th 30}
"2) Or send the investment information to us under
a limited power of attorney.
"3) Either way we compare the investment to a model
based on the actual results of thousands of similar
investments.
"4) Then we report the results to you . . . . and
the company who sent it to you.
"5) If everything checks out IDE members visit
the company for onsite verification.
"6) Then we let all the club members know about
the ones that completely check out. So you get access
to everything that every other club member has been
approached on too.
"You also get monthly newsletters with scam alerts,
as well as educational articles and other useful information.
Normally all this call costs [sic probably should be
"all costs”] $295 a year, which would start
in your second year, but there is no obligation to renew
it if you don't want to.
"Should I send you an package [sic] about your
membership?
"NO Okay, but would you want to write down our
toll free number in case you change [your mind and]
you need us in the future?
"YES Great. We'll send it out to you, it's about
eight pages of examples of how IDE works. Do you want
to receive it by mail, email or fax?”
The calls prompted Commonwealth to file suit against
Investor Data and Henry Gomez for a variety of business-related
causes of action. The three most substantive were misappropriation
of trade secrets, unfair business practices, and false
advertising. The key charging allegation is that telemarketers
for Investor Data "have been recently and repeatedly
contacting {Page 110 Cal.App.4th 31}Commonwealth stockholders
to solicit memberships in” Investor Data. Investor
Data made an unsuccessful motion to dismiss the case
under the anti-SLAPP statute (Code Civ. Proc., §
425.16).[2]Investor Data and Gomez now appeal from the
denial order.[3]
III
A The consideration of anti-SLAPP motions is a two-step
process. (Navellier v. Sletten (2002) 29 Cal.4th 82,
88 [124 Cal.Rptr.2d 530].) The first step is to determine
whether "the defendant has made a threshold showing
that the challenged cause of action is one arising from
protected activity.” (Ibid.) Only if such a showing
is made should the court proceed on to the second step,
which is to determine whether the plaintiff has demonstrated
a probability of prevailing on the claim. (Ibid.; Equilon
Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th
53, 67 [124 Cal.Rptr.2d 507].)
Here, the parties devote considerable briefing to the
effects of a prior, unpublished decision of this court,
Commonwealth Energy Corporation v. Chappell (Jan. 15,
2002, G026344) [nonpub. opn.], which is relevant to
the second step.[4] If we were to spend substantial
time with that problem without first ascertaining that
Investor Data made the requisite threshold showing,
we {Page 110 Cal.App.4th 32}would, in effect, turn the
anti-SLAPP statute into a cheap substitute for summary
judgment. (See Lam v. Ngo (2001) 91 Cal.App.4th 832,
851, fn. 12 [111 Cal.Rptr.2d 582] ["An anti-SLAPP
suit motion is not a substitute for a demurrer or summary
judgment motion.”].) The point is, if the moving
defendant cannot meet the threshold showing, then the
fact that he or she might be able to otherwise prevail
on the merits under the "probability” step
is irrelevant.
B The threshold showing, i.e., step one in the Navellier
court's metaphor, can be taken in two different ways.
Prior to Briggs v. Eden Council for Hope & Opportunity
(1999) 19 Cal.4th 1106 [81 Cal.Rptr.2d 471], there had
been some confusion as to whether there was always a
need for the free speech or petition rights asserted
by the defendant to have been exercised in connection
with a "public issue” or an "issue of
public interest.” Briggs cleared that up. The
rule is now that if the speech was made or the activity
was conducted in an official proceeding authorized by
law, there is no need that it be connected to a public
issue. But if made or conducted apart from an official
proceeding, then there is a public issue requirement.
(Id. at p. 1117 [differentiating Code Civ. Proc., §
425.16, subdivision (e), clauses (1) and (2) from same
section and subdivision, clauses (3) and (4)].)[5] {Page
110 Cal.App.4th 33}In the present case, there is clearly
no official proceeding, so the threshold showing depends
entirely on whether Investor Data's statements were
made in connection with a public issue. Up to Rivero
v. American Federation of State, County and Municipal
Employees, AFL-CIO (2003) 105 Cal.App.4th 913 [130 Cal.Rptr.2d
81], relatively few cases had dealt with the meaning
of the public issue-public interest aspect of the anti-SLAPP
statute (see id. at p. 919) and none systematically.
In Rivero, however, Justice Haerle ascertained three
general categories of cases fitting the prong:
(1) The subject of the statement or activity precipitating
the claim was a person or entity in the public eye.
(Rivero v. American Federation of State, County and
Municipal Employees, AFL-CIO, supra, 105 Cal.App.4th
at p. 924, citing, inter alia, Sipple v. Foundation
for Nat. Progress (1999) 71 Cal.App.4th 226, 239 [83
Cal.Rptr.2d 677] [Mother Jones' article on nationally-known
political consultant].)
(2) The statement or activity precipitating the claim
involved conduct that could affect large numbers of
people beyond the direct participants. (Rivero v. American
Federation of State, County and Municipal Employees,
AFL-CIO, supra, 105 Cal.App.4th at p. 924, citing, inter
alia, Damon v. Ocean Hills Journalism Club (2000) 85
Cal.App.4th 468 [102 Cal.Rptr.2d 205] [statements in
unofficial community paper about general manager of
large senior citizen community].)
(3) The statement or activity precipitating the claim
involved a topic of widespread, public interest. (Rivero
v. American Federation of State, County and Municipal
Employees, AFL-CIO, supra, 105 Cal.App.4th at p. 924,
citing M. G. v. Time Warner, Inc. (2001) 89 Cal.App.4th
623, 629 [107 Cal.Rptr.2d 504] [Sports Illustrated article
on child molestation in youth sports].)
Applying these categories, the Rivero court held that
union fliers defaming a janitorial supervisor over a
staff of eight custodians at a residential house on
{Page 110 Cal.App.4th 34}the U.C. Berkeley campus did
not concern a public issue or an issue of public interest.
To extrapolate a series of personal incidents into a
public policy debate would mean that every workplace
dispute would qualify as a matter of public interest.
(Rivero v. American Federation of State, County and
Municipal Employees, AFL-CIO, supra, 105 Cal.App.4th
at p. 924.)
The theme of a need to go beyond the parochial particulars
of the given parties was most recently articulated in
Consumer Justice Center v. Trimedica International,
Inc. (2003) 107 Cal.App.4th 595 [132 Cal.Rptr.2d 191].
There, another panel of this court held that advertising
claims made on behalf of an herbal supplement promising
breast enlargement did not invoke a public issue or
an issue of public interest. (See id. at pp. 600-603.)
The key to the opinion was its examination of the specific
nature of the speech rather than the generalities that
might be abstracted from it. (See id. at p. 601.) The
claims were not about "herbal supplements in general.”
Rather, the speech concerned "the specific properties
and efficacy of a particular product.” (Ibid.)
Trimedica and Rivero effectively stand for the rejection
of what might be called the synecdoche theory of public
issue in the anti-SLAPP statute. The part is not synonymous
with the greater whole. Selling an herbal breast enlargement
product is not a disquisition on alternative medicine.
Lying about the supervisor of eight union workers is
not singing one of those old Pete Seeger union songs
(e.g., "There Once Was a Union Maid”). And,
in the case before us, hawking an investigatory service
is not an economics lecture on the importance of information
for efficient markets.
The speech here fits none of the Rivero categories.
The telemarketing statements were about Investor Data,
not about Commonwealth qua post-deregulation energy
company, and Investor Data is not an entity in the public
eye. While investment scams generally might affect large
numbers of people, the specific speech here was a telemarketing
pitch for a particular service marketed to a very few
number of people. Nor can it be said that the telemarketing
statements were about an issue of widespread public
interest. The speech was about Investor Data's services,
not about investment scams in general.
By the same token, the general importance of consumer
information (e.g., Paradise Hills Associates v. Procel
(1991) 235 Cal.App.3d 1528, 1544 [1 Cal.Rptr.2d 514])
does nothing to make the sales pitch here implicate
an issue of public interest. Just because you are selling
something that is intrinsically important does not mean
that the public is interested in the fact that you are
selling it. Unlike a disgruntled homebuyer in Paradise
Hills who actually said something about the product
she was protesting (see id. at p. 1535), the message
the telemarketers used here was solely about Investor
Data's services. {Page 110 Cal.App.4th 35} DuPont Merck
Pharmaceutical Co. v. Superior Court (2000) 78 Cal.App.4th
562 [92 Cal.Rptr.2d 755], which probably offers the
best support for Investor Data, is distinguishable,
as it was in Trimedica, based both on numbers affected
and the nature of the speech. DuPont Merck involved
allegedly false statements about Coumadin, which is
a rat poison used on humans as a blood thinner. More
than 1.8 million Americans take it for the prevention
and treatment of blood clots. (See Trimedica, supra,
107 Cal.App.4th at p. 602.) The case before us involves
merely a commercial service (though, as we said, an
important one) offered to a relatively small group of
presumably sophisticated investors who had, by definition,
already invested in one specific firm. And, unlike DuPont
Merck, it did not concern the plaintiff's product, but
the defendant's product.
IV The order is affirmed. Respondent shall recover its
costs.
WE CONCUR: RYLAARSDAM, J., O'LEARY, J.
---------------
Notes:
[1] The option of hanging up on all telemarketers was
not mentioned.
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