Motion to Strike granted by Quinn, overturned by Court of

Freeman v. Schack

APPEAL from a judgment of the Superior Court of San Diego
County, Linda B. Quinn, Judge. Reversed and remanded with

Barry & Associates and David Barry for Plaintiffs and Appellants.

Law Offices of Anthony A. Ferrigno, Anthony A. Ferrigno; and Alexander M. Schack for Defendant and


Plaintiffs Arleen Freeman and James Alexander appeal from a judgment entered after the trial court
granted defendant Alexander Schack’s special motion to strike their complaint under Code of Civil
Procedure section 425.16. [FN1] Plaintiffs sued Schack for breach of contract, professional negligence
and breach of fiduciary duty based on allegations that he had entered into a contract by which he
assumed attorney-client duties toward plaintiffs but abandoned them in order to represent adverse
interests in the same and different litigation, thus breaching the contract as well as the fiduciary duties
owed them. The trial court granted Schack’s special motion to strike as to all causes of action on
grounds plaintiffs’ causes of action stemmed from petitioning activity and plaintiffs did not demonstrate
a probability of prevailing on their causes of action because the Noerr-Pennington doctrine [FN2]
provided a complete defense.

FN1. All statutory references are to the Code of Civil Procedure unless otherwise indicated. Section
425.16 is commonly referred to as the anti-SLAPP (strategic lawsuit against public participation)
statute. (Jarrow Formulas Inc. v. LaMarche (2003) 31 Cal.4th 728, 732, fn. 1.)

FN2. Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc. (1961) 365 U.S. 127 (Noerr );
United Mine Workers of America v. Pennington (Pennington ) (1965) 381 U.S. 657; see Freeman v.
Lasky, Haas & Cohler (9th Cir.2005) 410 F.3d 1180, 1183.)

Plaintiffs contend the trial court erred in granting the special motion to strike because (1) Schack did
not meet his burden of proving his actions-which constitute violations of State Bar Rules of
Professional Conduct-were constitutionally protected; (2) plaintiffs satisfied their burden of showing a
likelihood of prevailing on the merits; and (3) the Noerr-Pennington doctrine does not apply and cannot
provide Schack with a defense. We conclude section 425.16 does not apply to plaintiffs’ causes of
action and on that basis reverse the judgment with directions that the trial court deny the special
motion to strike.


Plaintiffs are real estate agents in San Diego County who were represented by attorney David Barry in
filing lawsuits against Sandicor and other entities for alleged violations of California’s antitrust laws
and other assertedly unlawful acts. (See Freeman v. San Diego Ass’n of Realtors (1999) 77 Cal.App.
4th 171, 177-178; California Ass’n of Realtors v. Barry (D048441, May 22, 2007) [nonpub. opn.].) [FN3]
Sandicor operated a real estate sales multiple listing service in San Diego County. (Freeman, 77 Cal.
App.4th at p. 177.) In March 2003, plaintiffs succeeded in reversing a summary judgment on appeal in
the Ninth Circuit in a federal district court case, Freeman et al. v. San Diego County Board of Realtors,
et al., United States District Court, Case No. 98-CV-0139 TW (JAH) (hereafter Freeman II ). [FN4] On the
day the Ninth Circuit filed its decision, Schack telephoned Barry and asked if Barry could use his help
in prosecuting the case. Schack described himself as a class action attorney who did antitrust litigation
and explained his credentials in detail. Barry accepted Schack’s offer, telling Schack about the
arrangement he had with other attorneys and explaining the division of contingent fees in the event of
success. During the course of several conversations that day, Barry and Schack discussed the overall
strategy of plaintiffs’ case, including matters such as getting plaintiffs certified as class representatives
and an early trial on damages.

FN3. We take judicial notice of our files and prior opinions relating to this matter. (Evid.Code, §§ 452,
subds.(a), (d)(1), 459 .)

FN4. Throughout, Schack refers to the district court action as Freeman II. We adopt that designation for
ease of reference. The Ninth Circuit’s decision appears in Freeman v. San Diego Assn. of Realtors
(9th Cir.2003) 322 F.3d 1133.

The next week, Barry drafted a fee agreement for the attorneys who would represent plaintiffs in what
he referred to as “phase 2″ of the case: the legal proceedings following the Ninth Circuit’s decision.
Those attorneys were Barry, Schack, attorney Richard Johnson and occasionally Ken Frost. Barry sent
Schack a copy of an earlier fee agreement and, over several revisions, Barry, Johnson and Schack
negotiated over the language for the phase 2 fee agreement. The versions of that fee agreement
confirmed that the phase 2 attorneys had attorney-client duties to plaintiffs.

In April 2004, Barry, Johnson and Schack signed an “Attorney Association and Fee Sharing Agreement”
(the Fee Sharing Agreement) relating to the pending Freeman II litigation. The Fee Sharing Agreement
contains provisions addressing the legal relationship between and respective responsibilities of Barry
and the other phase 2 attorneys. In particular, the Fee Sharing Agreement stated that the phase 2
attorneys were not parties to the existing attorney-client relationships between Barry and plaintiffs, but
“agree they will take no action which would breach any obligation owed to any client(s)” and
“acknowledge that, in undertaking the services covered by this agreement, they are subject to all
responsibilities and obligations owed by attorneys to their clients under applicable law … as to each
and every client who is or hereafter becomes a plaintiff in [Freeman II ], and for whom a signed written
agreement is provided by Barry, to the extent each respective phase 2 attorney provides services

At various times during March, April and May 2003, Barry and Schack communicated by telephone, e-
mail and letter about various matters concerning the case, including class certification, damages proof
and a proposed damages expert, pending motions and settlement strategies. [FN5]On June 3, 2003,
Schack emailed Barry and Johnson concerning his involvement in the cases. He wrote: “In signing the
agreement to split fees, it was intended that all clients would give their written consent before the
agreement was effective. Before that consent was obtained, I deemed it necessary to withdraw from
the agreement based on certain confidential circumstances. I will continue to assist you in any way
necessary to benefit my client and the class, and look for a successful resolution of these matters.”

FN5. Barry specifically recounts his communications and their subjects in his declaration filed in
support of a motion to disqualify Schack from the Freeman II action; that declaration is an exhibit to
plaintiffs’ papers in opposition to Schack’s section 425.16 special motion to strike and provides the
basis for much of our factual background.

Barry and Schack continued their communications through April 2004. In April 2004, Schack and
attorney Dan Mogin, with whom Schack frequently worked, filed a motion on behalf of “proposed
plaintiff in-intervention” Alan Hemphill to have Hemphill intervene as a representative of the proposed
class in Freeman II. In part, Schack and Mogin argued Hemphill, a purchaser and end-user of multiple
listing services in San Diego who was “acting independently of the Freeman Plaintiffs,” satisfied
typicality and other requirements to represent the class unlike plaintiffs, who were inadequate

In May 2004, Freeman, Schack, Barry, and Mogin participated in a mediation planning session in Los
Angeles. At the mediation, Schack and Mogin began proposing that Freeman II should be settled for
coupons to the class members valued at approximately $30 or less. The settlement would not provide
for real estate agents who had dropped out of the industry since 1994. It would provide for a $1 million
payment to Schack and Mogin. Freeman and Barry expressed their opposition to the idea. After the
mediation, Barry ceased conveying privileged or confidential information and work product to Schack
because Barry believed Schack was representing interests adverse to plaintiffs.

In June 2004, Barry attended a judicial settlement conference at which Mogin and Schack appeared
representing Hemphill. Before they addressed the court, Mogin and Schack told Barry and Freeman
that an agreement in principle had been worked out by which the defendants would provide class
members free use of Sandicor services for four consecutive Januarys, but members who left real
estate without using that opportunity would forfeit those usage rights. The settlement did not provide for
members who left the real estate business. Mogin and Schack stated they expected attorney fees to be
about $1 million to be paid in cash. Moments later, the magistrate judge presiding over the settlement
conference confirmed that an agreement in principle had been reached with the Freeman II
defendants. Barry and Freeman advised the court they were strongly against such a settlement; Barry
described the assets available to the Freeman II defendants with which they could fund a fair

Several days after the settlement conference, Barry wrote to Schack demanding that he and his client
immediately withdraw from Freeman II or Barry would move to disqualify them from the lawsuit based
on current conflicts of interest in their representation of Hemphill, Freeman and Alexander. Barry
eventually unsuccessfully brought a disqualification motion. Schack and Mogin filed a new federal court
action on Hemphill’s behalf and obtained preliminary approval of a settlement class that excluded
Freeman and Alexander. Freeman and Alexander settled and dismissed their action in November

In January 2005, plaintiffs, on behalf of themselves and a putative class, sued Schack, Mogin and other
entities for breach of contract, professional negligence and breach of fiduciary duty. They alleged
Schack had assumed attorney-client duties to plaintiffs in March 2003, executed a written agreement in
April 2003 reflecting his assumption of such duties and pledging, among other things, to use his best
efforts to obtain a full recovery of damages to the class, but breached the agreement by representing
Hemphill, filing a new lawsuit on Hemphill’s behalf, and concluding the Hemphill litigation.

Schack moved to strike the complaint under section 425.16 and joined in Mogin’s own section 425.16
motion. He argued plaintiffs’ causes of action were based on written or oral statements or writings
made before a judicial proceeding, written or oral statements or writings made in connection with an
issue under consideration or review by a judicial body, or other conduct in furtherance of the exercise of
the constitutional right of petition. (§ 425.16 subds. (e)(1), (e)(2) & (e)(4).).) On this prong, Schack
argued that “all of the conduct alleged in the Complaint arose out of petitioning activity, to-wit, it all
relates to the two underlying class actions.”; Turning to the second inquiry under section 425.16,
Schack further argued plaintiffs could not demonstrate a probability of prevailing because the Noerr-
Pennington doctrine-barring claims having as its gravamen constitutionally protected activity-provided a
complete defense and immunity for Schack’s conduct relating to the prosecution of Freeman II and the
Hemphill litigation, in particular, his decision to accept an offer of settlement. Schack also demurred to
the complaint. Schack filed a joint opposition to the demurrers and section 425.16 motions to strike.

FN6. That portion of plaintiffs’ opposition relating to Schack’s section 425.16 motion reads as follows:
“Schack does not deny that he had attorney-client duties to plaintiffs. Nor does he deny that he acted
adversely to plaintiffs in the San Diego Realtors case. He does not deny that abandoned [sic ] Freeman
and Alexander to pursue the interests of Hemphill adversely to Freeman and Alexander. As described
above under the Mogin motion to strike, the malpractice case against Schack is not subject to a special
motion to strike and must be denied.”

The court initially sustained the demurrers and deemed the section 425.16 motions moot. On
reconsideration, however, it granted the section 425.16 motion on grounds plaintiffs’ causes of action
“stem from … the two underlying federal class actions” and thus constituted petitioning activity, and
plaintiffs did not demonstrate a probability of prevailing on their causes of action because the Noerr-
Pennington doctrine provided a complete defense. Plaintiffs filed the present appeal.


I. Section 425.16/Appellate Standard of Review

“[S]ection 425.16, the anti-SLAPP statute, provides in relevant part: ‘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 in connection with a public issue shall be subject to a
special motion to strike, unless the court determines that the plaintiff has established that there is a
probability that the plaintiff will prevail on the claim.’ [Citation.] Under this statute, the party moving to
strike a cause of action has the initial burden to show that the cause of action ‘aris[es] from [an] act …
in furtherance of the [moving party's] right of petition or free speech.’ [Citations.] Once that burden is
met, the burden shifts to the opposing party to demonstrate the ‘probability that the plaintiff will prevail
on the claim.’ [Citations.] ‘To satisfy this prong, the plaintiff must “state [ ] and substantiate [ ] a legally
sufficient claim.” [Citation.] “Put another way, 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.’”‘”(Zamos v. Stroud (2004) 32 Cal.4th
958, 964-965.)

We review de novo the court’s order granting Schack’s section 425 .16 special motion to strike.
(Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3.)”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.’” (Ibid.)

II. Schack’s Threshold Prima Facie Burden

Speaking to the first prong, the California Supreme Court explains that “[t]he statutory phrase ’cause of
action … arising from’ means simply that the defendant’s act underlying the plaintiff’s cause of action
must itself have been an act in furtherance of the right of petition or free speech. [Citation.] … [T]he
critical point is whether the plaintiff’s cause of action itself was based on an act in furtherance of the
defendant’s right of petition or free speech. [Citations.] ‘A defendant meets this burden by
demonstrating that the act underlying the plaintiff’s cause fits one of the categories spelled out in
section 425.16, subdivision (e)….’” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78.) It is “;the
principal thrust or gravamen of the plaintiff’s cause of action that determines whether the anti-SLAPP
statute applies [citation], and when the allegations referring to arguably protected activity are only
incidental to a cause of action based essentially on nonprotected activity, collateral allusions to
protected activity should not subject the cause of action to the anti-SLAPP statute.” (Martinez v.
Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 188.)

...Schack also relies upon Peregrine Funding, Inc. v. Sheppard Mullin Richter Hampton LLP (2005) 133
Cal.App.4th 658, in which the court found some causes of action in an attorney malpractice case
subject to section 425.16. However, Peregrine Funding itself recognized that in cases where protected
activities and nonprotected activities are alleged in the same cause of action, the cause of action is not
subject to section 425.16 if the protected activities are “merely incidental” or “collateral” to the
nonprotected activities. (Peregrine Funding, at p. 672.) Although Peregrine Funding questioned
Benrasa, supra, 123 Cal.App.4th 1179, it was on the premise that Benrasa “focus[ed] on the theoretical
time that a breach of duty occurs, as opposed to the specific allegations of wrongdoing in the operative
complaint.” (Peregrine Funding, 133 Cal.App.4th at p. 674.) We need not decide whether we agree with
Peregrine Funding’s characterization of Benrasa; we prefer to apply the analysis set out by the
California Supreme Court requiring us to focus upon the “activity that gives rise to [Schack's] asserted
liability.” (Navellier v. Sletten, supra, 29 Cal.4th at p. 92; see also Huntingdon Life Sciences, Inc. v. Stop
Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1244)

For the foregoing reasons, we conclude plaintiffs’ causes of action were not
based on, and do not arise from, an exercise of the constitutional rights of
petition or free speech as enumerated in section 425.16, subdivision (e).
Consequently, the burden never shifted to plaintiffs to demonstrate a
probability of prevailing on the merits against Schack.


The judgment is reversed and the trial court is directed to enter an order
denying the Code of Civil Procedure section 425.16 special motion to strike.
Plaintiffs shall recover their costs on appeal.

WE CONCUR: NARES, Acting P.J., and AARON, J.
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Sanctions court of appeal: codes
and judge's benchbook (Findlaw link)
Sanctions codes
Rules of court
Motion to Strike
CCP Section 585 allows the plaintiff to take the defendant's
default if the defendant fails to respond to the complaint.

The responses that preclude the taking of default include:

timely service of a notice of motion to strike a pleading
[ Code Civ. Proc. § 585(c)[Deering's],  see right

(f)[Deering's] ;   
 (f) A notice of motion to strike within the meaning of this
section is a notice of motion to strike the whole or any part of a
pleading filed within the time which the moving party is required
otherwise to plead to that pleading. The notice of motion to strike
shall specify a hearing date set in accordance with Section 1005. The
filing of a notice of motion does not extend the time within which
to demur.

see Code Civ. Proc. § 585(e)[Deering's] (application to cross complaints)],

so that an untimely notice of motion to stike, if no other response has been
made to the pleading, exposes the defendant to default.

Section 586 contains a comparable provision relating to the defendant's failure
to respond to an amended complaint [ Code Civ. Proc. § 586(a)(1)[Deering's] ].

Section 586 also governs the taking of defaults after
the court has ruled on a demurrer or motion to strike [ Code Civ. Proc. §
586(a)(2)[Deering's], (3)[Deering's],

(7)[Deering's] ].   (7)
If a motion to strike the answer in whole, of the
character specified in Section 585, is granted without leave to amend, or if a
motion to strike the answer in whole or in part, of the character
specified in Section 585, is granted with leave to amend and the
defendant fails to amend the answer within the time allowed by the
CCP 585(c)    

(c) In all actions where the service of
the summons was
, upon the expiration of the
time for answering, and upon
proof of the publication and that no
answer, demurrer,
notice of
motion to strike of the character
specified in subdivision (f),

notice of motion to dismiss pursuant to
Article 2 (commencing with Section
583.210) of Chapter 1.5 of Title 8,

notice of motion to ... stay or dismiss
the action pursuant to Section
418.10, or

notice of the filing of a petition for writ of
mandate as
provided in Section 418.10 has been

the clerk, upon written
application of the plaintiff, shall enter
the default of the

The plaintiff thereafter may apply to the
court for the
relief demanded in the complaint; and
the court shall hear the
evidence offered by the plaintiff, and
shall render judgment in the
plaintiff's favor for that relief, not
exceeding the amount stated in
the complaint, in the statement required
by Section 425.11, or in
the statement provided for in Section
425.115, as appears by the
evidence to be just. If the defendant is
not a resident of the state,
the court shall require the plaintiff, or
the plaintiff's agent, to
be examined, on oath, respecting any
payments that have been made to
the plaintiff, or to anyone for the
plaintiff's use, on account of
any demand mentioned in the
complaint, in the statement required by
Section 425.11, or in the statement
provided for in Section 425.115,
and may render judgment for the
amount that the plaintiff is entitled
to recover...
Motion to Strike Answer/Defaults
§ 375.22 Order and Judgment
[1]--Motion Granted Without Leave to Amend Complaint
A judgment of dismissal may be entered if a motion to strike the whole of a complaint is
granted without leave to amend and either party moves for dismissal [ Code Civ. Proc. §
581(f)(3)[Deering's],(4)[Deering's] ].
[2]--Motion Granted With Leave to Amend Complaint
When a motion to strike is granted pursuant to Code Civ. Proc. § 436[Deering's] , the court
may order that an amendment or amended pleading be filed on terms it deems proper [
Code Civ. Proc. § 472a(d)[Deering's] ]. If a motion to strike all or part of a complaint is
granted with leave to amend and the plaintiff fails to amend within the time allowed by the
court, either party may move for dismissal. On that motion, the court may enter a judgment
of dismissal [ Code Civ. Proc. § 581(f)(4)[Deering's] ].
[3]--Time to Answer if Demurrer Is Stricken
If a demurrer is stricken pursuant to Code Civ. Proc. § 436[Deering's] and there is no
answer filed, the court must allow an answer to be filed on terms that are just [ Code Civ.
Proc. § 472a(c)[Deering's] ].
[4]--Default After Answer Is Stricken
A default judgment may be taken when a motion to strike the entire answer is
granted without leave to amend o
r when a motion to strike all or part of the answer is
granted with leave to amend and the defendant fails to amend within the time allowed by the
court [ Code Civ. Proc. § 586(a)(7)[Deering's] ].

§ 375.23 Review of Order
[1]--By Appeal
An order granting or denying a motion to strike the whole or any part of a pleading is usually
not appealable, although the ruling may be reviewed on appeal from the final judgment in
the action. If the order operates to remove from the case the only cause of action or
defense or leaves no further issue to be determined, the order is appealable [see Wilson v.
Sharp (1954) 42 Cal. 2d 675, 677, 268 P.2d 1062 ; Timberidge Enterprises, Inc. v. City of
Santa Rosa (1978) 86 Cal. App. 3d 873, 878, 150 Cal. Rptr. 606 (exception applicable to
order striking complaint in intervention)].

If, for example, the parties to a complaint and cross complaint are the same, an order
granting or denying a motion to strike the cross complaint is not appealable. If the parties
are not the same, the order striking the cross complaint is appealable [ Lerner v. Ehrlich
(1963) 222 Cal. App. 2d 168, 170, 35 Cal. Rptr. 106 ].
[2]--By Extraordinary Writ
In appropriate cases, the ruling on a motion to strike may be subject to review by a higher
court by extraordinary writ [see, e.g., Clauson v. Superior Court (1998) 67 Cal. App. 4th
1253, 1255, 79 Cal. Rptr. 2d 747 (mandate directing trial court to issue new order denying
motion to strike punitive damage allegations in complaint); Evans v. Superior Court (1977)
67 Cal. App. 3d 162, 170-171, 136 Cal. Rptr. 596 (mandate directing trial court to enter
order striking cross complaint); Ford Motor Co. v. Superior Court (1971) 16 Cal. App. 3d
442, 449, 94 Cal. Rptr. 127 (mandate directing trial court to reinstate affirmative defenses of
collateral estoppel in answers that had been stricken on motion)].