United States: Think Twice Before Removing California SLAPP Cases To Federal Court

Co-written by Gialisa Whitchurch

Unless there is a compelling reason to remove a case to federal court, defendants who plan to file a special motion to strike under California’s anti-SLAPP statute, C.C.P. ¤ 425.16, should stay in state court. Defendants can file anti-SLAPP motions in federal court, but for a variety of reasons defendants should strongly consider keeping SLAPP cases in state court:

Unlike state court, there is no automatic stay of discovery once a special motion to strike is filed in federal court.

The federal courts have not addressed whether the automatic right to appeal exists if a special motion to strike is denied.

According to one federal court, Section 425.16 cannot be used to strike federal question claims in federal court.

A federal judge may not have prior experience with the objectives of Section 425.16.

It is uncertain whether, in federal court, defendants have a full 60 days from service of the complaint to file a special motion to strike without leave of court.

California’s anti-SLAPP statute (California Code of Civil Procedure ¤ 425.16) was enacted to assure prompt dismissal of lawsuits that would chill one’s right to free speech through costly, time-consuming litigation. This statute permits a special motion to strike any cause of action arising from any act of the person in furtherance of his "right of petition or free speech under the United States or California Constitution in connection with a public issue . . . ." C.C.P. ¤ 425.16(b). In 1997, reacting to court rulings that did not go far enough to quash lawsuits that targeted free speech rights, the Legislature amended the statute to ensure that it "shall be construed broadly."1

Due to a recent Ninth Circuit opinion, Metabolife Int’l., Inc. v. Wornick, 264 F.3d 832 (9th Cir. 2001), it is especially important for SLAPP defendants to pause before removing to federal court. The Ninth Circuit adopted a lower court’s decision that the early-filing provision and automatic discovery stay of California’s anti-SLAPP statute directly conflict with the right of discovery available under Federal Rule of Civil Procedure 56.

When a defendant meets its initial burden under Section 425.16(b) of showing that the anti-SLAPP statute applies to a plaintiff’s complaint, the statute requires dismissal unless the plaintiff can show by competent and admissible evidence that he probably will prevail on his claims.2 As an additional deterrent to filing lawsuits that would chill a person’s right to free speech, a prevailing defendant will recover fees and costs under section 425.16(c). Consistent with the intent to protect defendants from burdensome legal expenses to defend meritless lawsuits, a special motion to strike can be brought without leave of court, early in the lawsuit (60 days after service of the complaint), and all discovery is stayed upon filing of the motion unless good cause for discovery is demonstrated.

In light of the Ninth Circuit decision in Metabolife, however, the subsection of the anti-SLAPP statute that stays discovery – probably the most effective mechanism for limiting a defendant’s expenses – will not protect defendants when a SLAPP suit is being litigated in federal court.

The anti-SLAPP statute is relatively new to federal courts. In 1999, in a case of first impression, the Ninth Circuit found that Section 425.16 may apply in federal court. United States v. Lockheed Missiles & Space Co., 171 F.3d 1208, 1218 (9th Cir. 1999). The court analyzed the issue by asking whether the provisions allowing the special motion to strike and fee-shifting would result in a "direct collision" with the Federal Rules of Civil Procedure. The court found no direct collision with federal rules because a litigant could bring other federal motions – such as a motion to dismiss or a motion for summary judgment – in addition to a special motion to strike. Under an Erie analysis, the court found that, if the statute were not applied in federal court, a SLAPP plaintiff would have considerable incentive to "shop for a federal forum" while a SLAPP defendant would find "considerable disadvantage" in a federal proceeding.

Subsequently, a district court read Lockheed narrowly, as applying only to the right to bring anti-SLAPP motions in federal court and to the statute’s fee-shifting provision. In Rogers v. Home Shopping Network, 57 F. Supp.2d 973, 979 (C.D. Cal. 1999), Judge Pregerson refused to apply the "discovery-limiting aspects" of the anti-SLAPP statute, finding that the purpose of Section 425.16 conflicted with the purpose of Federal Rule of Civil Procedure 56. The court based its ruling on the tension between Section 425.16’s limits on discovery and the policy under Rule 56 of favoring discovery to facilitate motions for summary judgment. The court noted that, as a general rule, procedural state laws are not to be used in federal court because they directly collide with federal laws. In the absence of a direct collision, the court must make a decision under an Erie analysis whether to follow state or federal law. However, because the early filing of an anti-SLAPP motion combined with the automatic stay of discovery "collided" with "discovery-allowing aspects" of Rule 56, the court found an Erie analysis unnecessary.

In Metabolife, the Ninth Circuit adopted the Rogers court’s reasoning. In finding that Sections 425.16(f) and (g) were procedural matters in direct collision with the federal rules, the Ninth Circuit side-stepped formulating an analysis under the Erie doctrine. The Ninth Circuit found that a procedure testing the plaintiff’s evidence "before the plaintiff has completed discovery" conflicts with Rule 56. Although the anti-SLAPP statute permits discovery when it is necessary to decide the merits of that motion, the Rogers court objected to the statute’s making discovery "an exception, rather than the rule," whereas the federal rules ensure adequate discovery before summary judgment can be considered.

The Ninth Circuit, however, just as easily could have followed its own rationale in Lockheed, which found that the special motion to strike and the availability of fees and costs did not conflict with federal law, and could be applied in federal court under an Erie analysis. First, the statute’s early filing requirement and discovery stay do not necessarily conflict with Rule 56’s "discovery-allowing aspects." Both the federal rule and the state statute mandate that discovery be allowed if necessary to overturn the respective motions. As intended by the legislature when it enacted Section 425.16, the automatic stay on discovery prevents SLAPP defendants from having to respond to expensive and burdensome discovery requests until after the anti-SLAPP motion has been decided – i.e., until after a determination has been made that plaintiff’s case has merit. The Metabolife decision contravenes the express purpose of the statute by precluding a defendant from obtaining relief from the burden and expense of discovery pending a determination of an anti-SLAPP motion. Especially where a lawsuit is designed to chill the expression of free speech, a plaintiff has an interest in forcing defendants to spend money on discovery. This certainly could encourage plaintiffs to "forum shop," contrary to the policy behind the Erie doctrine, and the Metabolife decision will likely increase the occurrence of SLAPP suits brought in federal court.

In addition, the unavailability of the discovery stay in federal court will permit non-residents of California to have the advantage of suing in California federal court on diversity grounds, while residents of California are not afforded this same opportunity. The fact that all subsections of California’s anti-SLAPP statute do not apply equally in state and federal court gives non-resident plaintiffs a distinct advantage over resident plaintiffs: they are entitled to discovery from defendant while resident plaintiffs are not. Arguably, this can result in inequitable administration of the anti-SLAPP statute. Thus, while the Ninth Circuit adhered to the "discovery-allowing aspects" of Federal Rule of Civil Procedure 56, it seemed to disregard the broader policy of deterring lawsuits brought to chill a person’s constitutional right to free speech.

The Ninth Circuit’s decision in Metabolife highlights the biggest pitfall to litigating California SLAPP cases in federal court. There are, however, other issues to consider, and even more reasons to hesitate before removing a SLAPP case. For example, with almost no analysis, one district court concluded that the anti-SLAPP statute does not apply to federal question claims in federal court. Globetrotter Software, Inc. v. Elan Computer, Inc., 63 F.Supp.2d 1127, 1130 (N.D. Cal. 1999).

Another area of uncertainty is how federal courts will treat appeals under the statute. Section 425.16(j) guarantees a right of appeal if a moving party’s special motion to strike is denied. No reported federal decisions address the issue. It is possible a federal court could deem the right to appeal to conflict with the federal rules governing appellate procedure.

Moreover, it is less likely that a federal judge will have prior experience with the objectives of Section 425.16. There are dozens of published opinions from California’s appellate courts, reflecting a history of Section 425.16 analysis that dates back to the statute’s inception in 1992. In contrast, there are fewer than ten published federal decisions, at the trial and appellate levels combined, that discuss Section 425.16.

Among its other procedural analyses, the Ninth Circuit in Metabolife ruled that Section 425.16(f) – which provides that an anti-SLAPP motion may be filed within 60 days of service of the complaint without leave of court – "directly collides" with the Federal Rules of Civil Procedure. Metabolife, 264 F.3d at 846. In context, the Ninth Circuit’s obvious concern was that a special motion to strike could be filed "immediately" to stop discovery, but the so-called "direct collision" with the federal rules makes the deadline for filing a special motion to strike without leave of court uncertain. The uncertainty is apparent in Metabolife itself, which incorrectly states that Section 425.16(f)’s 60-day limit runs from the filing of the complaint; but, according to the statute, the 60-day limit runs from service of the complaint.3 On the one hand, this uncertainty could benefit defendants inasmuch as there may be no set deadline. On the other hand, the uncertainty could lead to more adverse federal rulings, further limiting the application and availability of the anti-SLAPP statute.

A few other federal published and unpublished decisions indicate that federal court can, with respect to certain SLAPP issues, be as advantageous a forum as state court. In an unpublished 1999 opinion, the Ninth Circuit applied Section 425.16 to individual causes of action, reflecting a pro-defendant stance in an area where California Courts of Appeal have been divided.4 Moreover, the same unpublished decision rejected a trial court’s across-the-board cut in the prevailing defendants’ fee request.5 Indeed, federal courts apply the mandatory fee-shifting in Section 425.16(c) even where the special motion to strike is technically moot, but must be heard as a precursor to a fee award.6

Despite these examples, from the moving party’s perspective there are no procedural advantages – but there are numerous disadvantages – to removing a SLAPP lawsuit to federal court.

1 C.C.P. ¤ 425.16(a); see Briggs v. Eden Council, 19 Cal. 4th 1106, 1120-21, 969P.2d 564, 81 Cal. Rptr. 2d 471(1999).

2 See Marcias v. Hartwell, 55 Cal. App. 4th 669, 675, 64 Cal. Rptr. 2d 222 (1997).

3 Id. Cf. Globetrotter Software, 63 F.Supp.2d at 1129 (ruling that 60-day limit ran from filing of amended complaint).

4. Frias v Los Angeles County Metro. Trans. Auth, 176 F.3d 482 (Table), 1999 WL 273152 at *1 (9^th Cir. 1999). Compare Computer Xpress, Inc. v. Jackson, 93 Cal. App. 4^th 993, 113 Cal Rptr. 2d 625 (2001) (allowing special motion to strike individual causes of action) and Shekter v. Financial Indemnity Co., 89 Cal. App. 4t^h 141, 150, 106 Cal Rptr. 2d 843 (2001) (same) with M.G. v. Time Warner, 89 Cal. App. 4^th 623, 637, 107 Cal. Rptr. 2d 504 (2001) (imputing probability of success on one claim to others without analysis.

5 Frias, 1999 WL 273152 at *2.

6 See, e.g., eCash Technologies, Inc. v. Guagliardo, 127 F.Supp.2d 1069, 1084-85 (C.D.Cal. 2000).