SEGAL, J. —
E. Patrick Jenevein III, president of Tang Energy Group, Ltd., secretly recorded conversations with a business associate, Sherman Xuming Zhang, president of AVIC International USA, Inc. (AVIC USA), and later introduced the recordings as evidence in contractual arbitration. The arbitrators ultimately issued an award in favor of Tang Energy.
After the arbitration, Zhang and AVIC USA filed this action against Jenevein for invasion of privacy and eavesdropping on or recording confidential communications in violation of Penal Code sections 632 and 637.2. Jenevein filed a special motion to strike under Code of Civil Procedure section 425.16 (section 425.16). The trial court denied the motion, ruling that neither making the recordings nor using them as evidence in the arbitration was protected activity.
The trial court was correct. Because Jenevein's actions in recording the conversations and using the recordings in the arbitration were not in connection with a judicial or official proceeding authorized by law, they were not protected activities under section 425.16. Therefore, we affirm.
In 2008 Tang Energy, Aviation Industry of China (AVIC HQ) through its subsidiary AVIC USA, and others formed Soaring Wind Energy LLC (Soaring Wind) to develop wind farms and promote wind power equipment sales.
The Soaring Wind agreement included an arbitration provision applying, with exceptions not applicable here, to "any controversy, dispute or claim arising under or related to" the agreement, including "whether any [p]erson is in ... breach of any provision of" the agreement. The agreement also provided: "Any decision by a majority of the Arbitrators shall be final, binding and non-appealable. Any such decision may be filed in any court of competent jurisdiction and may be enforced ... as a final judgment in such court. There shall be no grounds for appeal of any arbitration award hereunder."
In 2013 Jenevein learned AVIC HQ had created a number of subsidiaries he thought were competing with Soaring Wind. Jenevein believed that by competing with Soaring Wind AVIC HQ breached the Soaring Wind agreement and that Tang Energy should demand arbitration on that claim. Jenevein also knew the relationship between AVIC HQ and its subsidiaries would be a central issue in an arbitration. Jenevein's theory was that "AVIC USA was in breach of the [Soaring Wind] Agreement if AVIC HQ controlled both AVIC
First, on March 22, 2014, Jenevein recorded a conversation with Zhang during a meeting at a restaurant. According to Jenevein, Zhang and Jenevein spoke within earshot of other patrons, and neither of them made any effort to keep his voice down or to conceal the conversation. Zhang said he selected a table away from other people at the restaurant, and both men stopped talking when the server approached the table. Zhang intended the conversation to be private and believed that it was.
Second, on June 12, 2014, Jenevein recorded a telephone conference call in which Jenevein, Zhang, and five other people participated. Jenevein said he and Zhang were in a room together when Jenevein dialed into the conference call on a speakerphone and heard a "clearly audible" announcement the call was being recorded. Zhang denied hearing the announcement and recalled that "[n]either Jenevein nor anybody else stated that the call was being recorded."
Tang Energy filed a demand for arbitration against AVIC HQ and AVIC USA and, subsequently, a claim on behalf of Soaring Wind. Although the record does not include any formal rulings by the arbitrators, the parties agree the arbitrators allowed Tang Energy to introduce the recorded conversations as evidence in the arbitration. The arbitrators found affiliates of AVIC USA had marketed wind energy equipment, services, and materials in violation of the exclusivity provision of the Soaring Wind agreement. The arbitrators awarded Tang Energy and Soaring Wind over $65 million in damages, attorneys' fees, and expenses. A federal district court in Texas affirmed the arbitration award, and AVIC USA's appeal from that decision is pending in the United States Court of Appeals for the Fifth Circuit.
Meanwhile, after the arbitrators issued their award, Zhang and AVIC USA filed this action against Jenevein, alleging a cause of action for eavesdropping on or recording confidential communications under Penal Code sections 632
Jenevein filed a special motion to strike pursuant to section 425.16. Jenevein argued that this action arose from the exercise of his constitutional right of petition or free speech in connection with an arbitration proceeding and that Zhang and AVIC USA could not establish a probability of prevailing. Zhang and AVIC USA argued in opposition to the motion that their claims did not arise from protected activity because contractual arbitration is not a judicial or official proceeding and because their claims arose from Zhang's acts of recording and not the subsequent use of the recordings in the arbitration. Zhang and AVIC USA also argued they had shown a probability of success on the merits of their claims. The trial court denied the motion, concluding neither recording the conversations nor using them as evidence in a contractual arbitration was protected activity. Jenevein timely appealed.
"`Section 425.16 provides, inter alia, that "[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
So do we. Contractual arbitration is not a "judicial proceeding"; it is an alternative dispute resolution process that bypasses judicial proceedings. (See Richey v. AutoNation, Inc. (2015) 60 Cal.4th 909, 916 [182 Cal.Rptr.3d 644, 341 P.3d 438] ["`the decision to arbitrate grievances evinces the parties' intent to bypass the judicial system'"]; Grafton Partners v. Superior Court (2005) 36 Cal.4th 944, 955 [32 Cal.Rptr.3d 5, 116 P.3d 479] [arbitration "`"is alternative to, and independent of, the judicial [forum]"'"]; Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 713 [131 Cal.Rptr. 882,
Nor is contractual arbitration an "official proceeding authorized by law" under section 425.16, subdivision (e)(1) or (2). (See Mission Beverage Co. v. Pabst Brewing Co., LLC, supra, 15 Cal.App.5th at p. 703 ["[a]s a general rule, `private contractual arbitration' is `not ... an "official proceeding authorized by law"' under ... section 425.16, subdivision (e)(1) and (2)"]; Century 21, supra, 173 Cal.App.4th at p. 9 ["[n]or is arbitration an `official proceeding authorized by law,' subject to anti-SLAPP protection"].) "When nongovernmental entities are involved, courts have limited `official proceeding' anti-SLAPP protection to (1) quasi-judicial proceedings that are part of a `comprehensive' statutory licensing scheme and `subject to judicial review by administrative mandate' [citation], and (2) proceedings `established by statute to address a particular type of dispute' [citations]. Unlike hospital peer review, arbitration is not part of a comprehensive statutory licensing scheme and not reviewable by administrative mandate. And unlike mandatory fee arbitration, private arbitration is not required by statute." (Century 21, at p. 9; cf. Mission Beverage Co. v. Pabst Brewing Co., LLC, at p. 704 [statutorily mandated arbitration involving beer distribution under the Alcoholic Beverage Control Act (Bus. & Prof. Code, § 23000 et seq.)]; Mallard v. Progressive Choice Ins. Co. (2010) 188 Cal.App.4th 531, 538-539 [115 Cal.Rptr.3d 487] [statutorily mandated arbitration of an uninsured motorist claim].) The arbitration between Tang Energy and AVIC USA was contractual, not statutorily mandated.
Jenevein places primary reliance on Manhattan Loft, LLC v. Mercury Liquors, Inc. (2009) 173 Cal.App.4th 1040 [93 Cal.Rptr.3d 457] (Manhattan Loft), which held that a party to an arbitration involving real property could not record a lis pendens because "a lis pendens may only be filed when an action in a court of law is pending." (Id. at p. 1045.) The court in Manhattan Loft reversed an order granting a special motion to strike a cause of action for slander of title against the parties that had improperly recorded the lis pendens because the court concluded the plaintiffs had shown a probability of prevailing. (Id. at pp. 1050-1054.) Before reaching that conclusion, however, the court in Manhattan Loft stated: "The filing of a notice of lis pendens falls squarely within th[e] definition" of protected activity in section 425.16, subdivision (e)(1) or (2). (Manhattan Loft, at p. 1050.) The parties, however, did not appear to dispute this proposition. The plaintiff did not argue, and the court did not hold, that contractual arbitration is a judicial or official
To be sure, the court's statement in Manhattan Loft that the "filing of a notice of lis pendens falls squarely within" the statutory definition of protected activity is true for lis pendens filed in connection with a pending lawsuit. (Manhattan Loft, supra, 173 Cal.App.4th at p. 1050; see Park 100 Investment Group II, LLC v. Ryan (2009) 180 Cal.App.4th 795, 805 [103 Cal.Rptr.3d 218] [filing a lis pendens is protected activity under § 425.16 because "[c]ommunications in connection with matters related to a lawsuit come within the scope of the litigation privilege and are acts arising from this protected activity"]; Salma v. Capon (2008) 161 Cal.App.4th 1275, 1285 [74 Cal.Rptr.3d 873] [party's "filing of the notice of lis pendens in superior court and the naming of ... lenders as defendants in his lawsuit were writings made in a judicial proceeding" and "are squarely covered by section 425.16, subdivision (e)(1)"].) But it is not true for acts, like the filing of lis pendens, in connection with proceedings that are not legislative, executive, or judicial, or other official proceedings authorized by law. And the cases cited by the court in Manhattan Loft on this point involved the recording of lis pendens in connection with lawsuits, not arbitrations. (See Manhattan Loft, supra, 173 Cal.App.4th at p. 1050, citing Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 736, fn. 6 [3 Cal.Rptr.3d 636, 74 P.3d 737], and Salma, at p. 1285.)
Jenevein also cites Greenberg v. Murray (C.D.Cal., June 14, 2010, No. SACV 10-375 AG (CTx)) 2010 WL 2511309, where the plaintiff alleged the defendants secretly recorded at least six telephone conversations without the plaintiff's knowledge and disclosed them during an arbitration. The plaintiff further alleged "[t]he recordings `adversely affected the outcome of the arbitration proceeding between the parties ... which resulted in an award against [p]laintiff.'" (Id. at p. *1.) The federal district court stated: "The use of recordings in an arbitration proceeding is protected under [section] 425.16[, subdivision] (e)(1) and (2)." (Greenberg, at p. *2.) The court, however, did not cite any authority for its statement, did not discuss Century 21, and issued
The order is affirmed. Zhang and AVIC USA are to recover their costs on appeal.
Perluss, P. J., and Feuer, J., concurred.