FYBEL, J.
Consortium Information Services, Inc. (Consortium), appeals from a judgment entered after the trial court granted summary adjudication of Consortium's causes of action for intentional interference with prospective economic advantage, trade libel, and violation of the Cartwright Act (Bus. & Prof. Code, § 16700 et seq.), and Consortium dismissed with prejudice its remaining cause of action for statutory unfair competition. Consortium, a marketer of credit reports, sued Experian Information Solutions, Inc. (Experian), a national credit bureau, for various causes of action arising out of Experian's listing of Consortium and its founder, Robert Esquinas, as persons and entities with whom Experian would not conduct business. The list, sometimes called the customer alert list, was distributed to Experian's affiliates and resellers.
We affirm. We conclude (1) the interference with prospective economic advantage and trade libel causes of action are barred by the relevant statutes of limitations; (2) Consortium cannot recover for trade libel because Experian's act of placing Consortium on the customer alert list was protected by the common interest privilege; (3) Consortium cannot recover for interference with prospective economic advantage because it cannot prove Experian engaged in independently wrongful conduct apart from the interference itself; and (4) Consortium failed to produce evidence of an injury to competition necessary to recover under its Cartwright Act cause of action.
Experian creates credit reports from information obtained through its data collection systems and sells the reports directly to end users such as banks, credit unions, and automobile dealers. Experian also sells its credit reports to affiliated service bureaus, which in turn sell the reports to end users or to marketers.
Experian, TransUnion, and Equifax are sometimes called the "Big 3" or the "National Bureaus." Each of them generates credit reports from its respective automated credit files. Local credit bureaus continue to operate and have their own credit data files. The National Bureaus and local credit bureaus form affiliations to obtain access to each other's data files.
As of October 2009, Experian had affiliations with local credit bureaus representing about 35 percent of the United States. Experian charges an affiliate a standard fee if the affiliate accesses a credit file within its geographic area for the affiliate's customer within the same area. An Experian affiliate in one area might also enter into agreements with Experian affiliates in other areas in order to have complete access to credit reports from throughout the United States. A cross-access fee is charged to an affiliate's customer who purchases a credit report pertaining to a person or entity in another affiliate's territory. Various other cross-access fees are charged.
Experian enters into reseller agreements with nonaffiliated entities that distribute or market credit reports. At one point, Experian had 300 to 400 such resellers. Experian affiliates also enter into their own agreements with resellers, which purchase credit reports from Experian and market them to end users. Experian at times competes with its affiliates and resellers by selling its credit reports directly to end users.
None of the National Bureaus has a majority share of the credit reporting market, and all three vigorously compete with each other. Each of the National Bureaus competes with its own affiliates and resellers by directly marketing credit reports to end users.
Consortium is an independent broker and marketer of credit reports created by the National Bureaus. Consortium markets credit reports primarily to automobile dealers. It does not purchase credit reports directly from Experian but makes arrangements with Experian affiliates and resellers to supply credit reports to Consortium customers. Consortium then reaches agreements with automobile dealers to obtain credit reports from Experian affiliates and resellers through Consortium.
Robert Esquinas founded Consortium in 1994 after leaving employment with Experian's predecessor, TRW. Despite its name, Consortium is a one-man shop: Esquinas is and has always been its only employee.
While employed at TRW, Esquinas was disciplined several times for poor job performance. He filed a discrimination claim against TRW with the Department of Fair Employment and Housing. The claim was resolved, and, as part of the resolution, Esquinas resigned his employment with TRW.
In 1997, Consortium brokered credit reports for Credit Bureau of Columbus. After several years, Consortium filed a lawsuit against Credit Bureau of Columbus and another lawsuit against TransUnion. Both lawsuits were resolved through settlement. In the settlement, Credit Bureau of Columbus agreed to pay Consortium $2.8 million.
In 1997 or 1998, Consortium filed a lawsuit against Experian alleging it was selling credit reports below cost and inducing Consortium's customers to breach their contracts with Consortium. Experian spent a significant amount of money defending the lawsuit, which ultimately settled without Experian paying Consortium any money in settlement.
From about 1996 to 1999, Consortium distributed credit reports for an affiliate of an Experian credit bureau in Abilene, Texas. Experian sued the Abilene credit bureau, alleging it sought to disguise Consortium and other unapproved resellers as sales agents, which Experian viewed as a breach of its agreement with the credit bureau. Consortium later sued the Abilene credit bureau and National Information Services.
Consortium also filed a lawsuit in federal court against an Experian affiliate in Florida, alleging the affiliate breached an agreement to broker and distribute credit reports. After a bench trial, Consortium prevailed and was awarded damages in the amount of about $1.29 million, which the Ninth Circuit Court of Appeals affirmed.
In late 2000 or early 2001, Consortium applied to become a reseller of Experian credit reports. Experian denied the application in April 2001 because doing business with Consortium "introduced undue risk to [Experian]" and because Esquinas was viewed as being highly litigious. The consensus of the management team at Experian was that the cost of doing business with Consortium would exceed any benefit to Experian.
In approximately April 2001, Experian placed Consortium and Esquinas on its customer alert report, also called the "Customer Alert List," which is a list of entities and persons with which or whom Experian has decided it will not do business. The Customer Alert List is a confidential document that is distributed only within Experian and to its affiliates and resellers, who are required to keep the list confidential.
Experian might place a person or entity on the Customer Alert List for any of a variety of reasons, usually because the person or entity has engaged in past activity that Experian has deemed inappropriate, or has failed to perform according to Experian's requirements. The Customer Alert List states at the top: "In Experian's opinion, the companies listed in this database have engaged in activity in the past that is deemed inappropriate and/or they have failed to perform according to Experian contractual requirements. Therefore, we choose not to do business with these companies or with the personnel identified with those companies. It is mandatory that you cross-reference all of your potential and existing customers with this list to ensure compliance to your agreement. Any membership affiliation with companies identified in this database will be considered a violation of Experian policy and a breach of your contract with Experian, and may result in the immediate suspension or termination by Experian of your Experian services or that of your customers."
Experian placed Consortium and Esquinas on the Customer Alert List because Experian viewed them as being highly litigious and believed the cost of doing business with them would exceed any potential benefit. Experian unilaterally made the decision to place Consortium and Esquinas on the Customer Alert List. The precise reason for placing a person or entity on the Customer Alert List is not revealed to its recipients.
Once Consortium and Esquinas were placed on the Customer Alert List, Experian affiliates could not allow them to distribute Experian credit reports because neither Consortium nor Esquinas would be allowed access to Experian's databases, which was necessary to sell credit reports. In order for an Experian reseller to have access to allow its customers to download credit reports, the customer must have a subscriber number, which Experian would not issue to a person or entity on the Customer Alert List. In addition, each Experian affiliate had a contractual duty not to sell credit reports to anyone on the Customer Alert List.
In May 2001, Consortium attempted to enter into an agreement to purchase Experian credit reports through the Credit Bureau of Monterey Peninsula (the Monterey Bureau). An agreement with the Monterey Bureau was prepared, but failed to receive the necessary approval from Experian.
On June 12, 2001, Art St. Laurent of the Monterey Bureau told Esquinas the Monterey Bureau could not do business with Consortium because "they have a list or a database of some kind that is a consumer alert and that my name personally was on there, Robert Esquinas, and my company, Consortium . . ., was on that list." St. Laurent told Esquinas he was placed on the list "so that Experian could not and would not do business with me nor any of their affiliates."
Esquinas first learned Experian distributed the Customer Alert List in 2002, in testimony during the federal court lawsuit. As of December 2009, Consortium had not distributed, sold, or marketed Experian credit reports since about August 1999. Consortium continues to market TransUnion and Equifax credit reports.
Consortium initiated this lawsuit by filing a complaint in June 2005. Successive demurrers resulted in Consortium filing the third amended complaint, the operative pleading, in March 2006. The third amended complaint alleged causes of action for (1) interference with prospective economic advantage, (2) trade libel, (3) common law unfair competition, (4) statutory unfair competition, and (5) violation of the Cartwright Act. All causes of action were based on Experian's placement of Consortium and Esquinas on the Customer Alert List.
The trial court sustained, without leave to amend, Experian's demurrer to the third amended complaint. In Consortium Information Services, Inc. v. Experian Information Solutions, Inc. (Sept. 5, 2007, G037712) (nonpub. opn.), we reversed on all causes of action except for common law unfair competition and remanded. Our opinion stated: "Because we are reviewing a judgment entered after a demurrer was sustained without leave to amend, we are concluding only that the complaint alleges facts sufficient to constitute a cause of action and are not commenting on the merit of Consortium's claims." (Ibid. )
About two years after remand, Experian moved for summary judgment, and, alternatively, for summary adjudication of issues. The trial court denied summary judgment but granted summary adjudication of issues resulting in the adjudication of the causes of action for interference with prospective economic advantage, trade libel, and Cartwright Act violation.
Experian filed a motion for judgment on the pleadings on the remaining cause of action for statutory unfair competition. In response, Consortium dismissed that cause of action with prejudice. Judgment in Experian's favor was entered, and Consortium appealed.
"A trial court properly grants summary judgment where no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law. [Citation.] We review the trial court's decision de novo, considering all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports. [Citation.]" (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.)
The trial court denied summary adjudication of any cause of action based on the statute of limitations. We review the trial court's decision de novo, however, and conclude the statute of limitations barred Consortium's causes of action for trade libel and interference with prospective economic advantage. Both parties addressed the statute of limitations in their appellate briefs, and, pursuant to Code of Civil Procedure section 437c, subd. (m)(2), we requested and received supplemental briefing on the issue.
Claims for interference with prospective economic advantage and trade libel are subject to a two-year statute of limitations. (Kolani v. Gluska (1998) 64 Cal.App.4th 402, 408; Guess, Inc. v. Superior Court (1986) 176 Cal.App.3d 473, 478.) Consortium's cause of action for violation of the Cartwright Act is subject to a four-year statute of limitations. (Bus. & Prof. Code, § 16750.1.)
The statute of limitations usually commences when a cause of action accrues. (Bernson v. Browning-Ferris Industries (1994) 7 Cal.4th 926, 931.) A cause of action accrues on the date of injury or "`upon the occurrence of the last element essential to the cause of action.'" (Ibid.) "When damages are an element of a cause of action, the cause of action does not accrue until the damages have been sustained." (City of Vista v. Robert Thomas Securities, Inc. (2000) 84 Cal.App.4th 882, 886.)
Damages are a necessary element of each of Consortium's causes of action. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153 [interference with prospective economic advantage]; Guess, Inc. v. Superior Court, supra, 176 Cal.App.3d at p. 479 [trade libel]; Bus. & Prof. Code, § 16750, subd. (a) [requiring injury to business or property for private action under the Cartwright Act].) A cause of action for trade libel thus accrues when the plaintiff suffers "special damages in the form of pecuniary loss." (Guess, Inc. v. Superior Court, supra, 176 Cal.App.3d at p. 479.)
When Experian placed Consortium on its customer alert list, Consortium was in the process of negotiating a relationship with the Monterey Bureau. It was undisputed that on June 12, 2001, St. Laurent told Esquinas that Experian had denied the Monterey Bureau's application to do business with Consortium and that Experian had placed Consortium and Esquinas on a list of persons and entities with whom or which the Monterey Bureau was not permitted to conduct business. Esquinas testified Consortium suffered damage immediately upon denial of the Monterey Bureau's application to sell it Experian credit reports. Consortium filed its lawsuit in June 2005, well past the two-year limitations period for trade libel and interference with prospective economic advantage.
The trial court denied summary adjudication based on the statute of limitations because "[Experian] has failed to address the allegations of the Third Amended Complaint and has failed to establish when the claim against National Credit Center, Consolidated Credit, Advantage Information Services and the end users accrued and therefore when the statute of limitations commenced." The trial court erred in drawing this conclusion. To recover for interference with prospective economic advantage, a plaintiff must plead and prove the existence of an economic relationship between the plaintiff and a third party, with the probability of future economic benefit to the plaintiff. (Korea Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th at p. 1153.) In opposing summary judgment, Consortium did not dispute Experian's undisputed material fact No. 17, which stated: "Other than the Monterey Bureau and Fidelity National, Plaintiff knows of no other organization that turned Consortium down when approached about distributing credit reports." Consortium presented no evidence showing it ever had any kind of a prospective economic relationship with National Credit Center, Consolidated Credit, Advantage Information Services or anyone else except for the Monterey Bureau.
In his deposition, Esquinas testified that after Experian denied the Monterey Bureau's application to sell credit reports to Consortium, it sought to enter into a contract with an entity called Fidelity National Credit Services to sell Experian credit reports. But when asked for details, Esquinas testified the negotiations with Fidelity National occurred in the 1990's, well before Consortium was placed on the Customer Alert List, and Consortium never reached an agreement with Fidelity National because "there was a lot of turnover at the organization, different staffers and things like that."
Consortium argues Experian has never taken Consortium or Esquinas off the Customer Alert List, which is continuously republished. Kathleen Centanni, the Experian employee who maintains the list, testified in her deposition that Consortium had been on the Customer Alert List up to the time she testified. As a result, Consortium argues, its damages are "continuing." The flaw in that argument is Consortium has not identified any damages it incurred as a result of its placement on the Customer Alert List other than the loss of business with the Monterey Bureau, which first occurred in 2001. Consortium's causes of action for interference with prospective economic advantage and trade libel are, therefore, barred by the two-year limitations period.
Under the evidence presented to the trial court, the statute of limitations does not bar Consortium's Cartwright Act cause of action. That cause of action is based on the theory Experian coerced its affiliates and resellers to refuse to do business with Consortium by placing its name on the Customer Alert List, thereby establishing a group boycott. Business and Professions Code section 16750.1 provides that any civil action to enforce the Cartwright Act "shall be commenced within four years after the cause of action accrued." Consortium suffered damages, if any, from the alleged group boycott in about June 2001, when Experian denied the Monterey Bureau's application to sell credit reports to Consortium. On June 12, 2001, St. Laurent of the Monterey Bureau told Esquinas that Experian had "a list or a database of some kind that is a consumer alert" and that Consortium and Esquinas were on that list. Consortium filed its complaint on June 10, 2005, just shy of the end of the limitations period. But, as explained in the discussion section, part IV., Consortium's Cartwright Act cause of action fails because Consortium did not present evidence of an injury to competition.
Consortium alleged Experian committed trade libel by placing Consortium and Esquinas on the Customer Alert List.
The trial court granted summary adjudication of the issue whether the Customer Alert List was protected by the common interest privilege.
"Application of the [common interest] privilege involves a two-step analysis. The defendant has the initial burden of showing the allegedly defamatory statement was made on a privileged occasion, whereupon the burden shifts to the plaintiff to show the defendant made the statement with malice." (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 915.) The defendant meets its initial burden by showing it made the communication to a person or entity with whom or which it shares a business relationship, the communication was reasonably calculated to further that relationship, the communication did not include matter that was irrelevant to that relationship, and the communication was not published to anyone outside that relationship. (SDV/ACCI, Inc. v. AT & T Corp. (9th Cir. 2008) 522 F.3d 955, 961-962.)
The applicability of this common interest privilege is a question of law if the facts on which the privilege is asserted are undisputed. (SDV/ACCI, Inc. v. AT & T Corp., supra, 522 F.3d at p. 961.)
The common interest privilege applies to a defendant acting to protect a pecuniary or proprietary interest and between parties in a contractual, business, or similar relationship. (Kashian v. Harriman, supra, 98 Cal.App.4th at p. 914.) Consortium does not dispute that Experian and the recipients of the Customer Alert List had such a business or contractual relationship. In its opening brief, Consortium argues Experian failed to show how placing Consortium on the Customer Alert List was reasonably calculated to further that relationship. Consortium argues: "The question is how blacklisting Consortium from doing business with the recipients of the Customer Alert List somehow helped the relationship between Experian and those recipients."
That is an incorrect statement of the law. For the common interest privilege to apply, it is not necessary that the communication actually benefit the relationship. "The standard is one of reasonableness, not of necessity." (SDV/ACCI, Inc. v. AT & T Corp., supra, 522 F.3d at p. 962.) It was sufficient for Experian to produce evidence that placing Consortium and Esquinas on the Customer Alert List was reasonably calculated to further or protect its business relationships and pecuniary interests. (Kashian v. Harriman, supra, 98 Cal.App.4th at p. 914.) Experian submitted the declaration of Terry McComas, its senior vice-president of specialized sales from 1996 to 2007, who stated, "Consortium was put on the Customer Alert List because Esquinas and Consortium were viewed as highly litigious and it was believed that the cost of doing business with them would greatly exceed any perceived benefits." McComas explained, "Consortium and Esquinas were viewed as litigious due to their history of filing claims against Experian, and/or its affiliates, or being involved in situations that led to litigation."
We have reviewed the Customer Alert List found in the appellant's appendix, and it did not include any material that was extraneous or irrelevant to protecting Experian's pecuniary interests and business relationships with affiliates and resellers. The Customer Alert List was kept confidential and published only to Experian affiliates and resellers.
In the reply brief, Consortium argues, "Experian has never explained, and does not do so here, why its own concerns about Consortium's alleged litigiousness would require that third parties not enter into contracts with Consortium, contracts to which Experian was not a party." By this statement, Consortium could be arguing its alleged litigiousness was not a legitimate reason for placing it or Esquinas, or anyone else for that matter, on the Customer Alert List. But McComas explained: "Once Consortium was placed on the Customer Alert[] List, the affiliates could not allow Consortium to distribute Experian credit reports because Experian would not let Consortium have access to its data bases, which was necessary for it to sell credit reports. In order for a reseller to have access to allow its customers to download credit reports, it needs a subscriber number, which would not be issued to a person or entity on the Customer Alert List." Experian had a legitimate reason not to provide a subscriber number to persons or entities whom or which it perceived as litigious.
We conclude Experian met its burden of proving the common interest privilege applied to the act of placing Consortium and Esquinas on the Customer Alert List. The burden thus shifted to Consortium to present evidence creating a triable issue of malice. For purposes of the common interest privilege, malice means "`"a state of mind arising from hatred or ill will, evidencing a willingness to vex, annoy or injure another person."'" (Kashian v. Harriman, supra, 98 Cal.App.4th at p. 930, quoting Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 723.) Malice may not be inferred from the communication itself. (Civ. Code, § 48.)
Consortium did not meet its burden of presenting evidence of malice. Consortium's appellate briefs do not identify any evidence in support of a claim of malice, and Consortium does not argue Experian acted with malice in placing Consortium and Esquinas on the Customer Alert List. Giving Consortium the benefit of the doubt, we will presume it contends Experian lacked reasonable grounds to believe Consortium and Esquinas were litigious and therefore acted with reckless disregard for their rights. (Kashian v. Harriman, supra, 98 Cal.App.4th at p. 931 ["Malice may be established by showing the publisher of a defamatory statement lacked reasonable grounds to believe the statement was true, and therefore acted with a reckless disregard for the rights of the person defamed"].) Esquinas did have a history of litigating against Experian and its affiliates. The existence of those lawsuits was enough for Experian to form the belief that Consortium and Esquinas were litigious and that placing them on the Customer Alert List was necessary to protect Experian's business relationships and pecuniary interests.
On the cause of action for interference with prospective economic advantage, the trial court granted summary adjudication of the issue Experian engaged in no independently wrongful conduct that caused Consortium injury (issue No. 11).
Consortium asserts the independently wrongful act was its inclusion in the Customer Alert List. We have concluded Experian's conduct in placing Consortium on the Customer Alert List was protected by the common interest privilege. Because Experian did not engage in conduct that was legally wrongful apart from the interference itself, Consortium cannot recover for interference with prospective economic advantage.
Consortium argues its inability to recover for trade libel does not mean Experian's act of placing it on the Customer Alert List is not wrongful for purposes of interference with prospective economic advantage. "The test," Consortium asserts, "is whether the actor's conduct is inherently `wrongful,' not whether the victim of the act can necessarily prevail under the specific facts of its case." The test stated by the California Supreme Court is whether the defendant's conduct was "wrongful by some legal measure other than the fact of interference itself." (Della Penna v. Toyota Motor Sales, U.S.A., Inc., supra, 11 Cal.4th at p. 393, italics added.) Placing Consortium and Esquinas on the Customer Alert List was not wrongful by some legal measure because doing so was protected by the common interest privilege. (See Contemporary Services Corp. v. Staff Pro, Inc. (2007) 152 Cal.App.4th 1043, 1059-1060 [conduct protected by litigation privilege cannot serve as basis for interference claim]; Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 685, fn. 24 [litigation privilege bars interference claim].)
On the cause of action for violation of the Cartwright Act, the trial court granted summary adjudication of the issue Consortium's inclusion on the Customer Alert List had no material effect on competition (issue No. 15).
The Cartwright Act prohibits two or more persons from combining to do certain specified anticompetitive acts. Those include creating or carrying out restrictions on trade or commerce, and preventing competition in the sale or purchase of any commodity. (Bus. & Prof. Code, § 16720, subds. (a), (c).) "Two forms of conspiracy may be used to establish a violation of the antitrust laws: a horizontal restraint, consisting of a collaboration among competitors; or a vertical restraint, based upon an agreement between business entities occupying different levels of the marketing chain." (G.H.I.I. v. MTS, Inc. (1983) 147 Cal.App.3d 256, 267.)
Consortium contends Experian and its affiliates and resellers engaged in a horizontal restraint by placing Consortium and Esquinas on the Customer Alert List. Consortium explains in its opening brief: "Experian's action in putting Consortium on the Customer [A]lert List is best characterized as the instigation of a group boycott. As Experian has never denied, the effect of being on the Customer Alert List is that not only will Experian refuse to deal with the listed company, its affiliates will also refuse to deal with it; in fact, they must, or Experian will put them out of business. By agreeing not to deal with Consortium, the affiliates became part of the concerted activity by the group. The net effect was, and is, that a competitor was excluded from the market, and potential customers lost a potential source of supply, as a result of concerted activity by a group of suppliers."
An unlawful horizontal group boycott occurs when a group of competitors with separate and independent economic interests, or a single competitor with sufficient leverage, forces another to boycott a competitor at the same level of distribution. (Freeman v. San Diego Assn. of Realtors (1999) 77 Cal.App.4th 171, 195.) We do not address the issue whether Experian engaged in an unlawful group boycott because we conclude Consortium failed to present evidence of an injury to competition. To recover for an unlawful group boycott, a plaintiff must prove the boycott was intended to or did restrain trade; that is, an injury to competition. (A. H. Cox & Co. v. Star Machinery Co. (9th Cir. 1981) 653 F.2d 1302, 1306.) The antitrust laws prohibit the intent to harm competition in the relevant market, not to harm a particular competitor. (Id. at p. 1307; see also Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc. (1977) 429 U.S. 477; Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 186 ["Injury to a competitor is not equivalent to injury to competition; only the latter is the proper focus of antitrust laws"].)
Consortium presented no evidence of an injury to competition sufficient to create a triable issue of material fact.
The judgment is affirmed. Respondent shall recover costs incurred on appeal.
WE CONCUR:
BEDSWORTH, ACTING P. J.
ARONSON, J.
