By James Purvis
A developer brought an action against the City of Oakland (City) alleging various causes of action. The City filed a demurrer, a standard motion to strike, and a special motion to strike on “SLAPP” grounds. The Superior Court overruled the demurrer in part, sustained it in part with leave to amend, and denied the SLAPP motion without prejudice in light of a pending amendment of the complaint. After the City immediately appealed, the Court of Appeal reversed, finding that while the Superior Court was not required to rule on the SLAPP motion before ruling on the demurrer and standard motion to strike, the SLAPP motion lacked merit because the claims did not arise from any protected activity. [Oakland Bulk and Oversized Terminal, LLC v. City of Oakland, 54 Cal.App.5th 738 (1st Dist. 2020).]
Factual and Procedural Background
The City of Oakland entered into various agreements with Oakland Bulk and Oversized Terminal, LLC (Developer) for the development of land at the former Oakland Army Base. Among other things, the project was to include a bulkshipping terminal for the transfer of certain commodities, including coal. After the subject of coal became public, it activated interest groups, leading to the passage of an ordinance banning coal handling and storage in the City and a resolution applying the ordinance to the terminal. The Developer filed suit in federal court, which ultimately held that the City’s resolution breached the terms of a development agreement between the City and the Developer. The federal court enjoined the City from relying on the resolution.
The Developer then filed suit against the City, alleging 12 causes of action, including three for breach of contract and seven for tort. The City filed a demurrer and a standard motion to strike, followed weeks later by a special motion to strike on “SLAPP” (i.e., Strategic Lawsuits Against Public Participation) grounds that sought to strike the complaint in part. The motions were heard at the same time, during which the court observed that the SLAPP motion “might be premature.” The hearing dealt primarily with the demurrer, which the court overruled in part and sustained it in part, with leave to amend. A few days later, the court entered an order on the SLAPP motion, denying it without prejudice and describing it as “premature” in light of the amended complaint that would be filed. Prior to the filing of an amended complaint, the City appealed.
The Court of Appeal’s Decision
After relatively quickly finding that the Superior Court was not required to rule on the City’s SLAPP motion before ruling on the demurrer and standard motion to strike, the Court of Appeal proceeded to address the merits of the motion. Generally, a two-step process is used for determining whether an action is a “SLAPP.”
First, a court decides if a defendant has made a threshold showing that the challenged cause of action is one arising from protected activity, that is, by demonstrating that the facts underlying the plaintiff’s complaint consist of acts made 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. If such a showing is made, a court will then reach a second step, which considers whether the plaintiff has demonstrated a probability of prevailing on the claims.
On the merits, the City contended that the Developer’s complaint alleged the City had breached its contractual obligations and committed torts by engaging in certain categories of protected activity. This included, among other things: defending against the Developer’s claims in the federal case; interfering with funding by writing a letter to the Alameda County Transportation Commission (ACTC) and introducing an ACTC resolution that would condition disbursement of ACTC funding for the terminal on a promise not to handle coal; failing to negotiate a Rail Access Agreement with the Port of Oakland; and issuing letters that the Developer was in default under a ground lease.
The Court of Appeal disagreed, finding that the City actions referenced in the complaint were not the basis for the Developer’s claims, but rather evidence in support of those claims, or that they otherwise were not protected activity. A claim may be struck, the court explained, only if the speech or petitioning activity itself is the wrong complained of, and not just evidence of liability or a step leading to some different act for which liability is asserted. Here, the essence of the complaint arose from acts or omissions by the City in breach of agreements, its refusal to cooperate, its stonewalling, and its tortious conduct. Whatever else might be in the complaint, the court found, was the background and context—that is, the evidence—to support those claims.
Conclusion and Implications
The case is significant because it includes a substantive discussion of the law regarding SLAPP motions, both procedurally and substantively. At the conclusion, the opinion also raises various policy concerns regarding the use of SLAPP motions. The decision is available online at: https://www.courts.ca.gov/opinions/documents/A157330.PDF
