FYBEL, J.
Alchemie Productive, LLC (Alchemie) sued International Kickboxing Muay Thai Federation California (IKF) and its president, Steve Fossum, for defamation and other related torts, arising out of IKF's public statements that Alchemie's product was neither safe nor sanitary. IKF and Fossum filed a special motion to strike Alchemie's complaint under Code of Civil Procedure section 425.16, commonly referred to as the anti-SLAPP (strategic lawsuit against public participation) statute. (All further statutory references are to the Code of Civil Procedure, unless otherwise noted.)
The trial court granted the special motion to strike in part and denied it in part. The court found that the third cause of action, for interference with existing business relationships, did not arise from protected activity, and denied the motion as to the third cause of action. With respect to the remaining causes of action, the court found they all arose from protected activity. The court then found that Alchemie had established a probability of prevailing on the merits of those claims against IKF, but not against Fossum. Therefore, on causes of action 1, 2, 4, and 5, the court granted the motion as to Fossum and denied the motion as to IKF. IKF and Fossum filed a notice of appeal from the portion of the trial court's order denying the special motion to strike; Alchemie did not appeal from the portion of the order granting the special motion to strike.
We first hold the trial court erred by finding that the cause of action for interference with existing business relationships did not arise from protected activity. However, Alchemie made a prima facie case of prevailing on the merits of the cause of action against both IKF and Fossum. We affirm the trial court's denial of the anti-SLAPP motion with respect to the third cause of action against both IKF and Fossum, albeit on different grounds than those on which the trial court relied.
As to the remaining causes of action, we hold that the trial court correctly found that Alchemie made a prima facie case of prevailing on the merits of each cause of action as to IKF. We therefore affirm the trial court's order.
IKF is the regulating entity for amateur kickboxing, Muay Thai and San Shou in California, pursuant to a delegation by the California State Athletic Commission (CSAC). In this role, "IKF is required to monitor and enforce rules and requirements that meet or exceed the safety and fairness standards of the CSAC in order to ensure safety of competitors in Amateur kickboxing within California." Fossum is the president and chief executive officer of IKF.
Amateur Muay Thai fighters traditionally use topical liniments known as Thai liniments on their bodies before fights to warm muscles, relieve tension, and reduce pain and soreness. CSAC rules only permit the use of Thai liniment oils that are "clean and sanitary" and have been registered with the Food and Drug Administration.
Alchemie manufactures a Thai liniment marketed under the name Three Leopard Liniment.
IKF sanctioned a Muay Thai event held in Anaheim, California on July 16, 2016, referred to as International Fight Showdown 22 (IFS 22). IKF announced publically that the only Thai liniment that could be used at the event was Athlon Rub, and that fighters using nonapproved liniments would be subject to fines, suspensions, or other disciplinary actions.
Alchemie had a vendor booth at the IFS 22. At public meetings at IFS 22, an IKF representative stated: "Three Leopard Liniment is banned from IFS 22 and all future IKF events." The representative also stated: "Three Leopard Liniment is unsanitary. It's a health hazard to the fighters and cannot be used." The representative also said IKF had run its own tests on Three Leopard Liniment.
Immediately upon learning of these statements, Aaron Malaszewski of Alchemie spoke to Dan Stell of IKF, while still at the IFS 22 event. Stell confirmed that he had publically said, "Three Leopard Liniment is unsanitary. It's a health hazard to the fighters and cannot be used" and "IKF and the State tested Three Leopard Liniment and found it unsanitary." Stell provided no further information to Malaszewski, but said he would "have to take it up with Steve Fossum."
In response to various questions and comments on Facebook about IKF's regulation of Thai liniments, and specifically about Three Leopard Liniment, Fossum posted a link to the IKF website in a comment to a public Facebook post. The IKF website included a few references to Three Leopard Liniment. One apparent Three Leopard Liniment customer wrote: "After their lousy speech I immediately went to Three Leopard Liniment booth and bought a bottle to support local small business. IKF should have no hand in deciding what liniment should be used. What next they're going to decide what deodorants can be worn prior to fight?!!"
IKF replied: "If you have something you wish to get approved, such as another Thai Liniment, do as Anthon [sic] Rub did. Get your product tested and approved. We have NO IDEA who `Three Leopard Liniment' is and had NEVER heard of them prior to this past weekend. Three Leopard Liniment made NO attempt to reach out to the IKF for approval of their product. Something the IKF is required to do for any and all equipment used under IKF California Rules and Regulations. No one, not even you, can honestly expect us to know EVERY company of every product that may seek approval in California under the IKF California regulation. If someone wants something approved, all they have to do to begin the process is ASK. [W]hich Three Leopard Liniment never did."
Straun Phillips, one of the founders of Alchemie, submitted a declaration in opposition to the special motion to strike addressing the damages suffered by Alchemie: "The damages caused by IKF's false statements have been significant. I was present at IFS 22 and eager to talk to our customers and potential customers about Three Leopard Liniment. Following IKF's statements that day, multiple people approached our booth expressing an interest in our product just to walk away saying, `I heard it is not safe and is banned.' IKF's statements drastically reduced the number of sales made that day. At a typical event, product sales total approximately $1,000 per day. Due to IKF's statements, we only sold approximately $200 worth of product." Phillips also explained why IKF's statements were damaging to Alchemie, even if IKF could properly refuse to allow the use of Three Leopard Liniment by fighters during competitions. "Prohibiting Three Leopard from having a vendor booth at events made no sense. Regardless if fighters are not allowed to use our product in the ring, private training and home/gym use is our largest market. There are dozens of products hawked at events that are not permitted in the ring (training equipment, shin pads, headgear, clothing, etc.)."
Phillips's declaration also included the following regarding the loss of business relationships with event promoters as a result of IKF's statements: "In the weeks following IFS 22, I attempted to carry on business as usual. I had secured a vendor booth at two additional events, including Muay Thai Global 10 scheduled for August 27, 2016 and International Fight Showdown 23 scheduled for September 24, 2016. After agreements for the booths were finalized, the promoters began including the Three Leopard name and logo in advertisements and promotional material for the events. Shortly thereafter each of the promoters reached out to me to say that Steve Fossum had contacted them. They were told by Steve Fossum that Three Leopard Liniment is not an approved product and is not even allowed to be sold at events. They were also told that if they allow Three Leopard to attend, the promot[e]rs would have difficulty renewing their licenses the follow[ing] year. Both of my booths were cancelled."
In October 2016, Alchemie sued IKF and Fossum for (1) defamation, (2) commercial disparagement, (3) interference with existing business relationships, (4) interference with prospective economic advantage, and (5) violation of Business and Professions Code section 17200 et seq. IKF and Fossum filed a special motion to strike all causes of action, pursuant to section 425.16.
Following briefing and a hearing, the trial court granted the special motion to strike in part and denied it in part. Specifically, the trial court ruled as follows:
IKF and Fossum filed a notice of appeal, pursuant to section 904.1, subdivision (a)(13).
Section 425.16 provides for 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 under the United States Constitution or the California Constitution in connection with a public issue." (Id., subd. (b)(1).) "Section 425.16, subdivision (b)(1) requires the court to engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. The moving defendant's burden is to demonstrate that the act or acts of which the plaintiff complains were taken `in furtherance of the [defendant]'s right of petition or free speech under the United States or California Constitution in connection with a public issue,' as defined in the statute. [Citation.] If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. Under section 425.16, subdivision (b)(2), the trial court in making these determinations considers `the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.'" (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) "Initially, the moving defendant bears the burden of establishing that the challenged allegations or claims `aris[e] from' protected activity in which the defendant has engaged. [Citations.] If the defendant carries its burden, the plaintiff must then demonstrate its claims have at least `minimal merit.'" (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1061.) To establish a probability of prevailing on a claim, "`the plaintiff "must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited."'" (Navellier v. Sletten (2002) 29 Cal.4th 82, 88-89.)
We review the trial court's order denying an anti-SLAPP motion de novo. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325.) "`We consider "the pleadings, and supporting and opposing affidavits . . . upon which the liability or defense is based." [Citation.] However, we neither "weigh credibility [nor] compare the weight of the evidence. Rather, [we] accept as true the evidence favorable to the plaintiff [citation] and evaluate the defendant's evidence only to determine if it has defeated that submitted by the plaintiff as a matter of law."'" (Id. at p. 326.) The anti-SLAPP statute is to be broadly construed. (§ 425.16, subd. (a).)
A defendant can meet his or her burden of making a threshold showing that a cause of action is one arising from protected activity by demonstrating the acts underlying the plaintiff's cause of action fall within one of the categories of section 425.16, subdivision (e). (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78.) Section 425.16 provides in relevant part: "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: . . . (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, or (4) 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." (Id., subd. (e)(2)-(4).)
The third cause of action was for tortious interference with existing business relationships. The trial court found that the claims of the third cause of action did not arise from protected activity.
Alchemie alleged that IKF interfered with its existing business relationships in two ways: (1) by causing the loss of existing orders for its products and (2) by causing the loss of existing agreements for promotion and sponsorship of events.
IKF contends that the statements made to the promoters are protected conduct under section 425.16, subdivision (e)(2) because they were made "in connection with license renewal proceedings, which are official proceedings that are authorized by law."
CSAC has the authority to license promoters of Muay Thai events. The Business and Professions Code states: "The commission has the sole direction, management, control of, and jurisdiction over all professional and amateur boxing, professional and amateur kickboxing, all forms and combinations of forms of full contact martial arts contests, including mixed martial arts, and matches or exhibitions conducted, held, or given within this state. No event shall take place without the prior approval of the commission. No person shall engage in the promotion of, or participate in, a boxing or martial arts contest, match, or exhibition without a license, and except in accordance with this chapter and the rules adopted hereunder." (Id., § 18640.) "The commission may license clubs to conduct, hold, or give . . . professional or amateur boxing contests, sparring matches, or exhibitions. [¶] No club may conduct, hold, or give . . . those boxing contests, sparring matches, or exhibitions unless the club or person has been licensed for that purpose by the commission." (Id., § 18641.)
CSAC authorized IKF to exercise its authority regarding licensing Muay Thai event promoters, pursuant to Business and Professions Code section 18646: "The commission may, however, authorize one or more nonprofit boxing, wrestling, or martial arts clubs, organizations, or sanctioning bodies, upon approval of its bylaws, to administer its rules for amateur boxing, wrestling, and full contact martial arts contests, and may, therefore, waive direct commission application of laws and rules, including licensure, subject to the commission's affirmative finding that the standards and enforcement of similar rules by a club, organization, or sanctioning body meet or exceed the safety and fairness standards of the commission. The commission shall review the performance of any such club, organization, or sanctioning body annually." (Id., § 18646.)
Statements made verbally to event promoters who are subject to licensing by IKF to the effect that their licensing would be threatened if they permitted Alchemie to appear at and offer for sale Three Leopard Liniment at IKF sanctioned events fall within section 425.16, subdivision (e)(2). These are oral statements made in connection with an issue under consideration or review in an official proceeding authorized by law. Therefore, we conclude the trial court should have determined that the third cause of action arose from protected activity as to both IKF and Fossum.
A claim for intentional interference with contractual relations requires proof of (1) a valid contractual relationship between the plaintiff and a third party; (2) the defendant's knowledge of the contractual relationship; (3) an intentional act on the part of the defendant to induce the third party to breach or disrupt the contractual relationship; (4) the actual breach or disruption of the contractual relationship; and (5) resulting damage. (Pacific Gas & Electric v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.) Alchemie presented evidence that the promoters of two different kickboxing events cancelled Alchemie's vendor booths based on Fossum's statements to the promoters that "the promoters would have difficulty renewing their licenses the follow year" if they allowed Three Leopard Liniment to attend.
Alchemie founder Phillips submitted the results of independent tests performed by FDA-registered laboratories showing that Three Leopard Liniment "does not contain any bacteria, yeast, or mold; nor does Three Leopard Liniment contain Staphylococcus aureus, Gram-negative bacteria, Escherichia coli, Pseudomonas aeruginosa, Salmonella, Clostridium, or Candida albicans microorganisms." Phillips further declared that based on his education and experience, he "recognized that many of the ingredients in Three Leopard Liniment are antibacterial, antiseptic, and antifungal by nature." Phillips had confirmed his observations by having Accuden Laboratories perform a "Time-kill test" on Three Leopard Liniment that showed that it killed Escherichia coli (E. coli), Staphylococcus aureus (Staph), and Trichophton mentogrophytes (Ring worm).
Benjamin M. Cutchshaw, counsel to Alchemie, also provided a declaration in opposition to the motion to strike. In relevant part, Cutchshaw declared: "On or about September 16, 2016, I called IKF headquarters and spoke to Steve Fossum. During the call, I repeated Plaintiff's request that IKF either provide proof of its alleged test results or publish a retraction/clarification of its statements made regarding Three Leopard Liniment. Fossum admitted that IKF conducted no testing of Three Leopard Liniment. Fossum was noncommittal about publishing a retraction." (Italics added.) Malaszewski confirmed Cutchshaw's statements regarding the lack of testing of Three Leopard Liniment by IKF: "Despite multiple requests, IKF never provided proof of any test results regarding Three Leopard Liniment."
This factual showing establishes a prima facie case for each of Alchemie's claims against IKF.
Defamation requires a publication that is false, defamatory, unprivileged, and has a natural tendency to injure or cause special damage. (Taus v. Loftus (2007) 40 Cal.4th 683, 720.) Alchemie made a prima facie case of defamation based on (1) IKF's statements that Three Leopard Liniment was unsafe and unsanitary; (2) Alchemie's test results that the product was neither unsafe nor unsanitary; (3) IKF's later admissions that it had not done any testing on the product; and (4) Alchemie's proof of damages suffered.
Commercial disparagement (otherwise known as trade libel) requires proof of (1) a publication (2) which induces others not to do business with the plaintiff, (3) resulting in special damages. (Nichols v. Great American Ins. Companies (1985) 169 Cal.App.3d 766, 775.) Alchemie made a prima facie case of commercial disparagement based on its evidence that IKF's public statements at IFS 22 caused consumers to avoid purchasing Three Leopard Liniment at that event, and its evidence that IKF's statements to other event promoters caused those promoters to cancel Alchemie's vendor booths.
A claim for intentional interference with prospective economic advantage requires proof of (1) an economic relationship between the plaintiff and a third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of that relationship; (3) intentional acts on the part of the defendant designed to disrupt that relationship, which are "`wrongful by some legal measure other than the fact of interference itself'"; (4) actual disruption of that relationship; and (5) economic harm to the plaintiff caused by the defendant's acts. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153.)
To make a claim under Business and Professions Code section 17200, Alchemie must establish it suffered an injury as a result of IKF's unlawful acts or that members of the public are likely to be deceived by the complained-of practice. (Prata v. Superior Court (2001) 91 Cal.App.4th 1128, 1144.) Alchemie's evidence that it lost customers and vendor booths at events due to IKF's defamatory statements regarding Alchemie's products is sufficient to make a prima facie case.
The order is affirmed. Respondent to recover costs on appeal.
ARONSON, ACTING P. J. and IKOLA, J., CONCURS.
