ROTHSCHILD, P. J. —
Plaintiffs Michael D. Drobot and Healthsmart Pacific, Inc., sued certain lawyers and their law firms for defamation and other causes of action arising from statements two of the lawyers made on television and radio programs about a pending lawsuit. The attorney defendants filed a special motion to strike the complaint as a strategic lawsuit against public participation, or SLAPP. (Code Civ. Proc., § 425.16.) The court granted the motion and awarded the attorney defendants their fees and costs. Plaintiffs appealed. Reviewing the matter de novo, we conclude that the action arises
Drobot owns and operates Healthsmart Pacific, Inc. (Healthsmart), which owned and operated Pacific Hospital of Long Beach (Pacific Hospital) from approximately 1995 until October 2013. Pacific Hospital specialized in performing spinal surgeries.
In February 2014, Drobot pled guilty in federal court to charges of conspiracy to violate certain federal statutes (18 U.S.C. § 371)
Drobot further admitted that for approximately 15 years he participated in a conspiracy involving "kickbacks" to "dozens of doctors, chiropractors, marketers, and others ... in return for those persons to refer thousands of patients to Pacific Hospital for spinal surgeries and other medical services." The kickbacks to surgeons were larger if the surgeon used the hardware supplied by International Implants. From 2008 to 2013, Drobot paid between $20 million and $50 million in kickbacks, resulting in "several thousand spinal surgeries" at Pacific Hospital.
Neither the charging pleading in the federal criminal case nor Drobot's plea agreement referred to anyone making, purchasing, or using any counterfeit or non-FDA approved medical hardware. Nor did any documents refer to anyone supplying prostitutes or adult entertainers to anyone.
In 2010, Mary Cavalieri underwent two spinal surgeries at Pacific Hospital. On July 17, 2014, the attorney defendants filed a complaint in the superior court on Cavalieri's behalf against Drobot, Healthsmart, and others (the Cavalieri complaint).
The Cavalieri complaint further alleged that, in addition to bribing legislators, inflating medical hardware prices, and paying illegal kickbacks, Drobot and other conspirators used "counterfeit, non-FDA approved, `knock-off'" medical hardware, which they "implanted into thousands of patients, including [Cavalieri]," with "conscious disregard for the health, safety and well-being of the patients." The allegedly counterfeit hardware was produced by Crowder Machine & Tool Shop in Temecula, California. Cavalieri alleged that she "now suffers from having foreign objects in her spine, the origin or provenance of which cannot be identified and the safety and efficacy of which cannot be measured due to the extremely egregious conduct of the [d]efendants." She asserted numerous causes of action, including battery, fraud, breach of fiduciary duty, strict products liability, breach of express and implied warranties, unjust enrichment, negligent and intentional infliction of emotional distress, and negligence.
On July 24, 2014, one week after the Cavalieri complaint was filed, Fox 11 television news aired a report that included excerpts of an interview with one of Cavalieri's lawyers, defendant Brian Kabateck. Fox 11 posted the report on its website. In the approximately four-and-one-half-minute report, the Fox 11 reporter identifies Kabateck as Cavalieri's attorney in a lawsuit, which alleges that medical devices were "implanted in [Cavalieri's] body as part of a scam to illegally profit from insurance companies [and] California taxpayers." The report alternates between scenes of Kabateck speaking to a person off-camera, images of the complaint, video of persons and places referred to in the story (such as Senator Calderon and Pacific Hospital's former facility), and the reporter speaking to the camera.
Kabateck begins by stating: "Basically what was happening here was, the hospitals we alleged in the complaint and the doctors were conspiring together to install effectively counterfeit hardware in people's backs." The reporter continues: "According to the complaint, Cavalieri was told she
"At the center of this," Kabateck continues, "is an individual named Michael Drobot who has already pled guilty to a number of counts of insurance fraud." At this point, the reporter states, "you may recognize the name. In February Drobot admitted to bribing California State Senator Ron Calderon." In addition to such bribes, the reporter discussed Drobot's admission to "paying kickbacks to doctors who funneled patients to his hospital." Kabateck then states: "There's evidence here that there were lavish trips on private jets, that there were prostitutes, that there were large amounts of kickbacks that were going on all to drive patients in the doors."
An image of the caption of the Cavalieri complaint then fills the television screen as the reporter states: "In this civil lawsuit, Mary Cavalieri claims she was a victim of the alleged scheme, and adds the explosive allegation that knock-off devices were implanted in her spine." Kabateck adds: "These parts were being made in a machine shop in Temecula. They weren't FDA supervised, they weren't necessarily clean, and they may not even be the right material." The reporter identifies Crowder Machine & Tool as the Temecula machine shop named "in the lawsuit as the maker of the devices." The reporter continues: "Here's the allegation: Crowder would make a $65 screw in the machine shop. Keep in mind an FDA-approved screw wholesales for about $400. But by the time the same screw was used in a hospital, insurers were billed over $12,000." Kabateck adds: "They were fabricating the costs, they were billing the insurance companies and as a result of it, they were receiving millions of dollars."
The reporter states that she contacted Drobot's attorney, who said that "the lawsuit is completely unfounded, that the hardware was purchased from an FDA-approved manufacturer, and that they have the documentation. But Cavalieri's attorneys say in the complaint that the defendants lied to the FDA and used the political system to benefit." Kabateck adds that "there's certainly connections here between legislation that had been passed, legislation that had been authored or championed by Senator Calderon and Michael Drobot. But what we know is that this legislation was the vehicle, it was the mechanism by which they were able to perpetuate the fraud."
An image of the Cavalieri complaint is shown again as the reporter described the allegations that Senator Calderon and Tom Calderon accepted kickbacks and extravagant trips to support legislation to further the conspiracy. The reporter adds: "Again, from the complaint, between 2001 and
On August 12, 2014, defendant Robert Hutchinson participated in a CBS radio program called "Money 101," hosted by Bob McCormick. The following colloquy took place.
Following a commercial break in the program, the program continued:
On December 14, 2014, plaintiffs filed a complaint against the attorney defendants, asserting causes of action arising from the statements Kabateck made during the Fox 11 news report and the statements Hutchinson made on the CBS radio program. In essence, plaintiffs alleged that Kabateck and Hutchinson falsely stated or implied: Plaintiffs were involved in a "scheme[] to ... purchase and use cheap counterfeit screws for ... spinal surgery patients"; the counterfeit, non-FDA-approved screws, which were manufactured by a machine shop in Temecula, could cause infections and seriously harm the patients; Pacific Hospital physicians inserted such counterfeit screws, which may not have been clean or sterilized, into Cavalieri's spine; the scheme may have resulted in many thousands of victims; the counterfeit screw scheme is related to the federal charges involving a physician referral kickback scheme to which Drobot pled guilty and involved the hiring of prostitutes.
The attorney defendants, plaintiffs contend, knew or should have known that their statements were false, and, by making them, not only caused them harm, but "have needlessly created incredible hysteria for hundreds of former patients" of Pacific Hospital. Plaintiffs further alleged that the false and defamatory statements have caused harm and interfered with their existing and prospective economic relations with health insurers and others. The statements also constitute "unfair business acts" and "false advertising" for purposes of the unfair competition law. (See Bus. & Prof. Code, § 17200 et seq.)
In January 2015, the attorney defendants filed a special motion to strike the complaint under Code of Civil Procedure section 425.16, the anti-SLAPP statute, and Drobot filed an opposition.
After a hearing, the trial court granted the motion and awarded the attorney defendants $64,450 in attorney fees and costs. Plaintiffs appealed.
"A SLAPP suit is a meritless lawsuit `filed primarily to chill the defendant's exercise of First Amendment rights.'" (Paul v. Friedman (2002) 95 Cal.App.4th 853, 861 [117 Cal.Rptr.2d 82].) In order "to protect the valid exercise of [these rights] from the abuse of the judicial process," the Legislature enacted the anti-SLAPP statute. (Flatley v. Mauro (2006) 39 Cal.4th 299, 324 [46 Cal.Rptr.3d 606, 139 P.3d 2].) The statute authorizes a special motion to strike a cause of action arising from the defendant's exercise of his or her constitutional right of petition or free speech, unless the plaintiff establishes a probability of prevailing on the claim. (Code Civ. Proc., § 425.16, subd. (b).)
If the defendant shows that a challenged cause of action arises out of protected activity, the plaintiff then has the burden to demonstrate a probability of prevailing on the claim. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 733 [3 Cal.Rptr.3d 636, 74 P.3d 737].) To satisfy this burden, the plaintiff must "demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated. The court, without resolving evidentiary conflicts, must determine whether the plaintiff's showing, if accepted by the trier of fact, would be sufficient to sustain a favorable judgment. If not, the claim is stricken." (Baral v. Schnitt (2016) 1 Cal.5th 376, 396 [205 Cal.Rptr.3d 475, 376 P.3d 604].)
We review a trial court's grant of an anti-SLAPP motion de novo. (Flatley v. Mauro, supra, 39 Cal.4th at p. 325; Ben-Shahar v. Pickart (2014) 231 Cal.App.4th 1043, 1050 [180 Cal.Rptr.3d 464].)
Plaintiffs allege five causes of action, all of which arise out of the statements Kabateck made in the Fox 11 news report and Hutchinson made during the CBS radio program. Under the first prong of the anti-SLAPP analysis, the attorney defendants must show that these activities are protected under the anti-SLAPP statute. Protected activity includes "conduct in furtherance of the exercise of ... the constitutional right of free speech in connection with a public issue or an issue of public interest." (Code Civ. Proc., § 425.16, subd. (e)(4).) Plaintiffs do not dispute that the attorney defendants were acting in furtherance of their right of free speech when they made the challenged statements. They argue, however, that the statements were not made "in connection with a public issue or an issue of public interest."
Some courts have attempted more helpful statements. In Rivero v. American Federation of State, County and Municipal Employees, AFL-CIO (2003) 105 Cal.App.4th 913 [130 Cal.Rptr.2d 81], the First District surveyed numerous cases and, after concluding that none defined "the precise boundaries of a public issue," categorized the cases where a public issue existed as being concerned with either (1) "a person or entity in the public eye"; (2) "conduct that could directly affect a large number of people beyond the direct participants"; or (3) "a topic of widespread, public interest." (Id. at p. 924; see also Damon v. Ocean Hills Journalism Club (2000) 85 Cal.App.4th 468, 479 [102 Cal.Rptr.2d 205] [public interest includes "private conduct that impacts a broad segment of society and/or that affects a community in a manner similar to that of a governmental entity"].)
In Weinberg v. Feisel (2003) 110 Cal.App.4th 1122, 1132-1133 [2 Cal.Rptr.3d 385], the Third District, after declaring it "doubtful [that] an all-encompassing definition could be provided," identified the following "guiding principles ... derived from decisional authorities" (1) "`public interest' does not equate with mere curiosity"; (2) "a matter of public interest should be something of concern to a substantial number of people," not merely "a matter of concern to the speaker and a relatively small, specific audience"; (3) "there should be some degree of closeness between the challenged statements and the asserted public interest"; (4) "the focus of the speaker's conduct should be the public interest rather than a mere effort `to gather ammunition for another round of [private] controversy'"; and (5) "`those charged with defamation cannot, by their own conduct, create their own defense by making the claimant a public figure.'"
Informed by these efforts, we turn to the attorney defendants' conduct in this case. Kabateck's statements during the Fox 11 news report raise issues concerning (1) the installation of alleged counterfeit hardware in Cavalieri's
Other than the first issue, which would appear to concern only Cavalieri and those responsible for installing alleged counterfeit medical hardware in her spine, the statements raise matters of public interest. First, because the alleged counterfeit hardware may have been installed in "many thousands" of Californians, there is a substantial number of people who may have been directly affected by the alleged counterfeit hardware. (See Grenier v. Taylor (2015) 234 Cal.App.4th 471, 481-483 [183 Cal.Rptr.3d 867] [an allegedly defamatory Internet posting to a church community of 550 to 1,000 members was "large enough to qualify as a `community' for purposes of [Code of Civil Procedure] section 425.16"].)
Third, the assertions of a widespread illegal physician kickback scheme raise issues concerning the integrity of the health care system, which is a matter of widespread public concern. (See Integrated Healthcare Holdings, Inc. v. Fitzgibbons (2006) 140 Cal.App.4th 515, 524 [44 Cal.Rptr.3d 517] [publication raising concerns about the financial survival of four hospitals involved a matter of widespread public interest].) If there were, as Kabateck claimed, "large amounts of kickbacks," the scheme likely involved numerous doctors. Indeed, Drobot's plea agreement states that the scheme involves
Fourth, the attorney defendants' statements link the alleged counterfeit medical hardware conspiracy, Drobot's referral kickback scheme, and the bribery of a state legislator. As Kabateck explained, the legislation that Senator Calderon authored or championed "was the mechanism by which [Drobot and the other conspirators] were able to perpetuate the fraud." Bribery of a senator and its connection with health care legislation is undeniably a matter of public concern.
"In general, whether a privileged occasion exists within the meaning of Civil Code section 47, subdivision (d), is for the court to decide; whether the report of the official proceedings itself is `fair and true,' provided reasonable minds could disagree as to the effect of the communication on the average reader or listener, is a question of fact for the jury." (J-M Manufacturing, supra, 247 Cal.App.4th at p. 98.) When, however, "there is no dispute as to what occurred in the judicial proceeding reported upon or as to what was contained in the report," the question is one of law. (McClatchy, supra, 189 Cal.App.3d at p. 976; accord, J-M Manufacturing, supra, 247 Cal.App.4th at p. 99.)
Although the fair report privilege is typically invoked by news media defendants, it also protects those who communicate information to the media. (J-M Manufacturing, supra, 247 Cal.App.4th at p. 105; Civ. Code, § 47, subd. (d).) Indeed, the Legislature's explicit purpose for enacting a 1996 amendment to section 47, subdivision (d), was to protect such intermediaries. That amendment expanded the privilege to include fair and true "communication[s] to," as well as fair and true "report[s] in," public journals concerning judicial, legislative, or other public proceedings. (J-M Manufacturing, supra, 247 Cal.App.4th at pp. 97-98.) This amendment was enacted to abrogate the holding in Shahvar v. Superior Court (1994) 25 Cal.App.4th 653 [30 Cal.Rptr.2d 597] that an attorney's transmittal of a copy of a pleading to a
Here, the parties do not dispute that the Fox 11 television news show and CBS radio program are "public journals," within the meaning of this statute. (See Green v. Cortez (1984) 151 Cal.App.3d 1068, 1073 [199 Cal.Rptr. 221] [television broadcast company and newspapers were "no doubt `public journals' within the meaning of the statute"].) Nor is there any question that Kabateck's and Hutchinson's statements were "communicat[ed] to" such entities. (Civ. Code, § 47, subd. (d)(1).)
Plaintiffs contend that reports based upon the mere filing of a complaint are not privileged, and that the privilege does not apply until there has been some "judicial action" in the underlying case. They rely on Burrill v. Nair (2013) 217 Cal.App.4th 357 [158 Cal.Rptr.3d 332] (Burrill), disapproved on another point in Baral v. Schnitt, supra, 1 Cal.5th 376, 396 & fn. 11. In Burrill, the plaintiff, Dr. Burrill, was a psychologist who had been appointed by a court to act as a counselor in a contentious custody dispute between the defendant, Nair, and Nair's former wife. Nair filed criminal complaints with two police departments and the Federal Bureau of Investigation (FBI), alleging that Dr. Burrill committed numerous wrongful acts and crimes, including fraud, perjury, extortion, racketeering, obstructing justice, and accepting bribes from
The Third District Court of Appeal rejected Nair's reliance on the fair report privilege, stating that "Nair's radio interview was not a report of `a verified charge or complaint made by any person to a public official, upon which complaint a warrant has been issued.' (Civ. Code, § 47, subd. (d), italics added.)" (Burrill, supra, 217 Cal.App.4th at p. 396.) Moreover, the court stated that it had found no authority that the "privilege applies to a report of the charges made in a citizen's criminal complaint, made by the citizen who filed that complaint, when there is no evidence any official action has been taken with respect to the complaint." (Id. at p. 398.)
The court also quoted the following comment to the Restatement Second of Torts, section 611: "`A report of a judicial proceeding implies that some official action has been taken by the officer or body whose proceedings are thus reported. The publication, therefore, of the contents of preliminary pleadings such as a complaint or petition, before any judicial action has been taken is not within the [fair report privilege]. An important reason for this position has been to prevent implementation of a scheme to file a complaint for the purpose of establishing a privilege to publicize its content and then dropping the action.'" (Burrill, supra, 217 Cal.App.4th at p. 397, quoting Rest.2d Torts, § 611, com. e, p. 300.)
Here, plaintiffs rely on this quote in Burrill to support their argument that there must be some judicial action on a complaint before a report about the complaint is privileged. There are two problems with this reliance. First, the criminal complaints Nair filed with police departments and the FBI were, at most, possible precursors to a judicial proceeding; they were not filed in any court and were not part of any judicial proceeding. The Restatement comment was therefore inapt and the Burrill court's quotation of it was unnecessary to its decision. More importantly, the principle expressed in the Restatement comment is not the rule in California. Although there is, as commentators
Plaintiffs address this issue by comparing what the attorneys said in the television and radio reports with what Drobot admitted in his federal plea
There is no dispute that the statements Kabateck and Hutchinson made in their television and radio appearances were substantially similar to the allegedly defamatory statements made in the Cavalieri complaint. Specifically, the Cavalieri complaint includes allegations that Drobot and Pacific Hospital used "counterfeit, non-FDA approved, `knock-off'" medical hardware, which they "implanted into thousands of patients, including [Cavalieri]." The complaint further alleged that Drobot's kickbacks included cash, air travel, "and prostitutes or other `adult entertainers'" as part of a "conspiracy to defraud insurance carriers." The statements Kabateck and Hutchinson made in their media appearances that gave rise to plaintiffs' claims reflect the gist or sting of these allegations. (See Carver, supra, 135 Cal.App.4th at p. 351; Jennings v. Telegram-Tribune Co. (1985) 164 Cal.App.3d 119, 127 [210 Cal.Rptr. 485] (Jennings).)
An attorney may not, however, make defamatory allegations in a complaint and then report the same alleged facts, as facts, to the media with impunity. This is because the fair report privilege protects reports and communications "of ... a judicial ... proceeding, or ... of anything said in the course thereof." (Civ. Code, § 47, subd. (d)(1), italics added.) That is, the statements are privileged if they are fair and true reports about the proceedings or of what was said in the proceedings. (See Hawran v. Hixson, supra, 209 Cal.App.4th at p. 280; Microsoft, supra, 993 F.Supp. at p. 784.) There is thus a critical difference between communicating to the media what is alleged in a complaint and communicating the alleged facts without reference to the complaint. More particularly, the attorney defendants in this case are protected from liability under the fair report privilege in informing the news media that they have alleged that plaintiffs used counterfeit screws in spinal surgeries and were part of a scheme that supplied prostitutes, but they are not protected if they informed the media that such facts were true. The issue is whether the average viewer or listener of the media reports would understand the attorneys' statements as communications about the Cavalieri complaint
We have examined the video of the television news report involving Kabateck and listened to Hutchinson's statements on the CBS radio report. Kabateck's initial statement in the television report refers to a conspiracy among the hospitals and doctors that "we allege in the complaint." Although his subsequent statements do not mention the complaint or allegations, Kabateck is identified by the reporter near the outset of the news report as Cavalieri's attorney, and his statements are interspersed among the reporter's frequent references to the Cavalieri lawsuit and images of the complaint shown in the background. The average person watching the report in its entirety would reasonably understand that Kabateck was referring to the allegations in the lawsuit he filed on Cavalieri's behalf. Although some statements, when viewed in isolation, could be understood to communicate the allegedly defamatory matter as facts, not mere allegations of facts, when the media reports are viewed in their entirety and in the context in which they were made, the only reasonable conclusion is that the statements refer to the allegations made in the Cavalieri complaint.
The CBS radio report involving Hutchinson begins with the announcement that a "massive medical fraud lawsuit has been filed against several Southern California hospitals and doctors," and Hutchinson is introduced as an attorney who was "alleging that insurance companies were defrauding ... when these phony medical devices were billed at outrageously high prices." The reporter precedes Hutchinson's edited comments by informing the listener that the "lawsuit alleges," what "[a]ttorney Robert Hutchinson alleges," what "[t]hey alleged," and by referring to "this [S]outhern California case." Near the end of the interview, Hutchinson states, "`we alleged that doctors actually knew that they were using counterfeit screws and agreed to do it and they were getting kickbacks from the hospitals and some of the marketers to bring their patients to the hospitals involved and use the counterfeit screws and that's what provided the cash flow which in turn was — we alleged delivered [to] many of these doctors in the form of kickbacks.'" (Italics added.) Viewed in their context, the only reasonable conclusion that listeners could draw from the radio program is that Hutchinson is an attorney alleging the matters described in the program.
For the foregoing reasons, Kabateck's and Hutchinson's statements constituted fair and true communications to the news media about a judicial proceeding — i.e., the allegations in the Cavalieri complaint — and are therefore protected by the fair report privilege.
Plaintiffs contend that this result would allow an attorney who has filed a complaint in court to repeat false and defamatory allegations from the complaint to the media and thereby "effectively immunize the sort of litigation through the press that cases applying the litigation privilege have condemned." This concern, while valid, is offset by the policy reasons for the privilege. Although the privilege "may result in persons suffering injury to their reputations without recourse, the rule is considered essential to allow the public to keep informed as to what is occurring in its judicial system." (Annot., Libel and Slander: Reports of Pleadings as Within Privilege for Reports of Judicial Proceedings (1983) 20 A.L.R.4th 576, 579, § 2.) Moreover, the Legislature has limited the fair report privilege to address the concern that attorneys will litigate in the press by precluding its application to any communication that violates rule 5-120(A) of the California State Bar Rules of Professional Conduct. (Civ. Code, § 47, subd. (d)(2)(A).) That rule provides: "A member [of the State Bar] who is participating or has participated in the investigation or litigation of a matter shall not make an extrajudicial statement that a reasonable person would expect to be disseminated by means of public communication if the member knows or reasonably should know that it will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter." (Cal. Rules of Professional Conduct, rule 5-120(A).) Further limitations on the fair report privilege should be left to the Legislature.
The risk that attorneys will abuse the fair report privilege is further reduced by the possibility that the privilege, while "absolute," would not immunize the attorneys from malicious prosecution liability for prosecuting the underlying lawsuit. (Cf. Albertson v. Raboff (1956) 46 Cal.2d 375, 382 [295 P.2d 405] [communication absolutely privileged for purposes of defamation does not prevent malicious prosecution action based on the communication]; see also Salzano, supra, 993 A.2d at p. 790 [availability of malicious prosecution cause of action supports application of fair report privilege to initial pleading].)
The order granting the attorney defendants' special motion to strike and awarding the attorney defendants their attorney fees is affirmed.
Respondents are awarded their costs on appeal.
Johnson, J., and Lui, J., concurred.
In 2010, the New Jersey Supreme Court conducted an exhaustive review of the issue and the competing policy concerns, and observed "a clear trend away from recognizing the initial pleadings exception" to the privilege. (Salzano v. North Jersey Media Group Inc. (2010) 201 N.J. 500, 517 [993 A.2d 778, 789] (Salzano).) The court concluded: "We now align ourselves with the weight of modern authority and hold that the fair-report privilege extends to defamatory statements contained in filed pleadings that have not yet come before a judicial officer." (Id., 993 A.2d at p. 790.)
