Free Motion to Strike - District Court of California - California

Case 3:07-cv-02405-L-CAB

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1 Gerald L. McMahon, Esq. (SBN 036050) 2 G. Scott Williams, Esq. (SBN 226516) 3 SELTZER CAPLAN McMAHON VITEK 4 750 B Street, 2100 Symphony Towers 5 San Diego, California 92101-8177
Telephone: 6 Facsimile: (619) 685-3003 (619) 685-3100 A Law Corporation Monty A. McIntyre, Esq. (SBN 95796)

7 9

Attorneys for Defendants LOWLIFE CORPORATION LIMITED (incorrectly sued as 8 LOWLIFE CORPORATION, LTD); DALE MASTERS; and EBTM plc UNITED STATES DISTRICT COURT OF CALIFORNIA SOUTHERN DISTRICT

10

11 REALLY LIKEABLE PEOPLE, INC., a ) CASE NO. 07 CV 2405 L CAB Delaware corporation, LOSERKIDS, INC., a ) 12 13 California corporation, MACBETH OPTICS, ) AUTHORITIES IN SUPPORT OF ) SPECIAL MOTION TO STRIKE UNDER 14 LP, a California limited partnership, and
REALLY LIKEABLE PEOPLE II, INC. California Corporation, MACBETH, INC., a ) MEMORANDUM OF POINTS AND

15 (formerly ATTICUS CLOTHING, INC.), a 16 California corporation, 17 18 19 20 English limited company, EVERYTHING 21 BUT THE MUSIC, plc, an English
corporation, DALE MASTERS, an 22 individual, and DOES 1 through 25, 23 inclusive, LOWLIFE CORPORATION, LTD, an vs. Plaintiffs,

24 25 26 27 28

Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 425.16 Date: Time: Courtroom: Judge: March 24, 2008 10:30 a.m. 14 M. James Lorenz

DEFENDANTS' MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SPECIAL MOTION TO STRIKE PLAINTIFFS' COMPLAINT

CASE NO. 07 CV 2405 L CAB

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1

Defendants LOWLIFE CORPORATION LIMITED ("Lowlife") and DALE

2 MASTERS ("Masters") (collectively, "Moving Defendants") submit the following 3 memorandum of points and authorities in support of the special motion to strike under 4 California Code of Civil Procedure section 425.16: 5 6 I. INTRODUCTION

Defendants Lowlife and Masters hereby move, under California Code of Civil

7 Procedure section 425.16, to strike the Third and Fourth Causes of Action alleged in Plaintiffs' 8 Complaint. Section 425.16, known as the anti-SLAPP ("Strategic Litigation Against Public 9 Participation") statute, protects against meritless claims that arise from a defendant's free 10 speech and petitioning activity. Pursuant to California Code of Civil Procedure section 425.16, 11 subdivisions (b) and (e)(2), a cause of action is subject to a special motion to strike if: (1) its 12 allegations arise from an act of the defendant in furtherance of the right of petition or free 13 speech, including statements made in connection with a legal proceeding; and (2) plaintiff 14 cannot meet his or her burden of showing a probability of success on the merits. 15
On November 13, 2007, Plaintiffs REALLY LIKEABLE PEOPLE, INC.,

16 LOSERKIDS, INC., MACBETH, INC., MACBETH OPTICS, LP, and REALLY LIKEABLE 17 PEOPLE II, INC. (formerly ATTICUS CLOTHING, INC.) (collectively, "Plaintiffs") filed a 18 Complaint (the "Complaint") in the San Diego Superior Court, Case No. 37-2007-0008158219 CU-BC-CTL ("RLP v. Lowlife") against Lowlife, Masters, and another Defendant, 20 EVERYTHING BUT THE MUSIC, 1 alleging 1) Breach of Contract; 2) Breach of Implied 21 Covenant of Good Faith and Fair Dealing; 3) Fraud in the Inducement; 4) Rescission; 5) 22 Misappropriation of Trade Secrets; 6) Breach of Fiduciary Duty; 7) Aiding and Abetting 23 Breach of Fiduciary Duty; 8) Intentional Interference with Contract; 9) Unfair Competition; 24 and 10) Violation of Business & Professions Code § 17200, et seq. On approximately 25 December 21, 2007, RLP v. Lowlife was removed to the United States District Court, Southern 26 District of California, Case No. '07 CV 2405 L CAB. 27 28
1

Defendant EVERYTHING BUT THE MUSIC is not a participant in this special motion to strike.
CASE NO. 07 CV 2405 L CAB

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1

Moving Defendants' special motion to strike should be granted because: (1) the Third

2 and Fourth Causes of Action in the Complaint arise from statements made by the Moving 3 Defendants during settlement negotiations in a prior action and arbitration, which constitute 4 protected activities under the anti-SLAPP statute; and (2) Plaintiffs cannot meet their burden to 5 establish a probability of success on the merits because the Third and Fourth Causes of Action 6 are barred by the litigation privilege. 7 8 10 II. FACTUAL BACKGROUND

The Complaint filed by Plaintiffs in this action arises out of earlier litigation between

9 the parties that was settled when they entered into five different agreements.
The saga began on March 19, 2007, when Lowlife filed the underlying action, a

11 Complaint for Declaratory Relief, Damages, and Imposition of Constructive Trust in the San 12 Diego Superior Court, Case No. GIC 881995 ("Underlying Action"), against Defendants 13 Really Likeable People, L.P. ("RLP"), Macbeth, Inc. ("Macbeth"), and others as a result of the 14 wrongful attempted termination by RLP, Macbeth, and others of a joint venture with Lowlife 15 for the operation of a United Kingdom website called www.loserkids.uk.com, and distributor 16 relationships with Lowlife regarding the sale in the United Kingdom and Europe of Atticus, 17 Macbeth, and Loserkids branded products. A copy of the complaint in the Underlying Action is 18 attached to the Notice of Lodgment as Exhibit 1. 19
The Underlying Action was settled by the execution of five agreements. The first

20 agreement was the Heads of Agreement, signed by Lowlife, RLP and Atticus Clothing, Inc. on 21 March 28, 2007 ("Heads of Agreement"). The Heads of Agreement gave Lowlife the option to 22 purchase the Atticus clothing brand for $4.2 million, and provided for the wind-down of the 23 existing relationships between the parties. The Heads of Agreement called for the parties to 24 enter into more detailed agreements, and if they were unable to do so they agreed to conduct an 25 arbitration to decide any final definitive terms of said agreements. A copy of the Heads of 26 Agreement is attached to the Notice of Lodgment as Exhibit 2. 27
On May 3, 2007, Lowlife filed a demand to arbitrate the final definitive terms and

28 conditions of the agreements, as provided in the Heads of Agreement ("Underlying
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1 Arbitration"). A copy of the demand for arbitration is attached to the Notice of Lodgment as 2 Exhibit 3. 3
On or about May 23, 2007, counsel for the parties to the arbitration executed a

4 Stipulation Re: Statement and Scope of Claim For Arbitration. A copy of the stipulation is 5 attached to the Notice of Lodgment as Exhibit 4. 6
On May 29, 2007, as a result of extensive settlement negotiations that began before the

7 signing of the Heads of Agreement, the parties executed four additional agreements to resolve 8 the Underlying Action and the Underlying Arbitration. These four agreements were an asset 9 purchase and sales agreement regarding the Atticus clothing brand, and three "wind-down" 10 agreements. In the Asset Purchase and Sale Agreement ("Atticus Purchase Agreement"), dated 11 May 29, 2007, RLP agreed to sell Atticus brand assets to Lowlife for $4.2 million. The three 12 "wind-down" agreements, all dated May 29, 2007, provided for 1) the wind-down of the 13 distribution relationship between RLP and Lowlife created by the Atticus Manufacturing 14 Agreement ("Atticus Wind-Down Agreement"); 2) the wind-down of the distribution 15 relationship created by the Macbeth Manufacturing Agreement ("Macbeth Wind-Down 16 Agreement"); and 3) the wind-down of the relationship between RLP and Lowlife with regard 17 to the operation of the www.loserkids.uk.com website ("Loserkids.uk.com Wind-Down 18 Agreement").
A copy of the Atticus Purchase Agreement is attached to the Notice of

19 Lodgment as Exhibit 5, a copy of the Atticus Wind-Down Agreement is attached to the Notice 20 of Lodgment as Exhibit 6, a copy of the Macbeth Wind-Down Agreement is attached to the 21 Notice of Lodgment as Exhibit 7, and a copy of the loserkids.uk.com Wind-Down Agreement 22 is attached to the Notice of Lodgment as Exhibit 8. 23
As a result of the settlement between the parties as set forth in the five agreements, on

24 May 18, 2007, the Underlying Action was dismissed, and on June 5, 2007, the Underlying 25 Arbitration was dismissed. A copy of the Underlying Action dismissal is attached to the 26 Notice of Lodgment as Exhibit 9, and a copy of the Underlying Arbitration dismissal is 27 attached to the Notice of Lodgment as Exhibit 10. 28
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1

Plaintiffs' Third Cause of Action for Fraud claims that Lowlife and Masters made two

2 misrepresentations during the pendency of the Underlying Action and Underlying Arbitration. 3 Plaintiffs allege that on May 14, 2007, Lowlife, through its agent attorney Michael Riney, 4 represented that Lowlife was working with a financing source in connection with the purchase 5 of the Atticus assets. (Complaint, ¶ 116.) In addition, Plaintiffs allege that on May 29, 2007, 6 Lowlife and Masters represented that Lowlife would fulfill its obligations under the terms of 7 the wind-down agreements. (Complaint, ¶ 117.) Plaintiffs further allege that these statements 8 were false. (Complaint, ¶ 118.)
The alleged misrepresentations were made during the

9 pendency of both the Underlying Action and the Underlying Arbitration, and were made 10 during settlement negotiations that ultimately resolved the case and arbitration proceedings 11 when the Atticus Purchase Agreement, Atticus Wind-Down Agreement, Macbeth Wind-Down 12 Agreement, and the Loserkids.uk.com Wind-Down Agreement were signed on May 29, 2007. 13
The Third Cause of Action for Fraud should be stricken under the California anti-

14 SLAPP statute because it is rooted in the negotiation, terms and implementation of the five 15 agreements executed to settle the Underlying Action and the Underlying Arbitration. Because 16 the Fourth Cause of Action for Rescission arises from the Third Cause of Action, and is 17 dependent upon it, it too must be stricken. 18 19 20 A. 21 III. MOVING DEFENDANTS' ANTI-SLAPP MOTION IS
PROCEDURALLY PROPER

California's Anti-SLAPP Statute Applies in Federal Court Proceedings.
California Code of Civil Procedure section 425.16, subdivisions (b) and (e), the

22 subdivisions under which Moving Defendants bring this special motion to strike, are applicable 23 in federal court in a diversity case. (United States v. Lockheed Missiles & Space Co., Inc. 171 24 F.3d 1208, 1217-1218 (9th Cir. 1999).) A special motion to strike under the anti-SLAPP statute 25 does not conflict with the Federal Rules, including but not limited to Rules 8, 12, and 56. (Id. 26 at p. 1217.) Moreover, California "has a strong interest" in the application of the anti-SLAPP 27 statute in federal cases because its application serves the two purposes of the Erie rule, the 28
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1 discouragement of forum shopping and avoidance of an inequitable administration of the law. 2 (Id. at p. 1218.) Specifically, if defendants were precluded from utilizing the anti-SLAPP 3 statute in federal court, plaintiffs would have incentive to shop for a federal forum, resulting in 4 a significant disadvantage to defendants in a federal proceeding. (Ibid.) 5 B. 6 7 Moving Defendants' Anti-SLAPP Motion is Timely and is Similar to a Rule 12(b)(6) Motion.
Subdivision (f) of California Code of Civil Procedure section 425.16 provides that a

8 special motion to strike may be filed within 60 days after service of the complaint. Nothing in 9 section 425.16 bars service of a special motion to strike after an answer has been filed, and 10 California case law supports the review of motions to strike even after the answer is filed. (See 11 Dixon v. Superior Court 30 Cal.App.4th 733, 739-740 (1994).) In addition, the seventh 12 affirmative defense in the answer filed by moving defendants asserted the objection that the 13 causes of action in the complaint are barred by California Code of Civil Procedure section 14 425.16. Any claim or defense sufficiently raised in state court remains at issue once the case is 15 removed to federal court. (Lally v. Allstate Ins. Co., 724 F. Supp. 760 (S.D. Ca. 1989).) The 16 special motion to strike is timely filed. 17
A special anti-SLAPP motion to strike, premised on legal arguments, similar to a

18 12(b)(6) motion, is available in federal court. (Rogers v. Home Shopping Network, Inc. 57 F. 19 Supp. 2d 973, 981 (C.D. Ca 1999).) The anti-SLAPP motion filed by the Moving Defendants 20 is in the nature of a motion to dismiss under Rule 12(b)(6). The Third and Fourth Causes of 21 Action are defective as a matter of law, and cannot be cured by amendment, because they arise 22 out of the Moving Defendants' constitutionally protected activities and are based upon 23 evidence that is inadmissible under the litigation privilege. 24 IV. 25 26 27 28
MOVING DEFENDANTS' MOTION UNDER THE ANTI-SLAPP STATUTE TO STRIKE THE THIRD AND FOURTH CAUSES OF ACTION OF PLAINTIFFS' COMPLAINT SHOULD BE GRANTED California Code of Civil Procedure § 425.16, subdivision (b)(1) provides that: 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
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1 2 3 4

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. Thus, when a defendant moves to strike a cause of action under subdivision (b)(1), the

5 court engages in a two-step process. In the first step, the court must determine whether or not 6 the moving defendant has made a threshold showing that the challenged cause of action arises 7 from that defendant's protected activity by demonstrating that the act(s) underlying the cause 8 of action fall within one of the categories set forth in subdivision (e) of the anti-SLAPP statute. 9 Once the defendant has made such a showing, in the second step of the analysis, the burden 10 shifts to the plaintiff to establish a probability that the plaintiff will prevail on merits of the
th 11 cause of action. (Navallier v. Sletten, 29 Cal. 4 82, 88 (2002).)

12 A. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Step One: The Third and Fourth Causes of Action in Plaintiffs' Complaint Arise From Defendants' Protected Activity. 1. Defendants' oral and written statements made in connection with the negotiations and settlement agreements in the Underlying Action and Underlying Arbitration are protected activity under California Code of Civil Procedure section 425.16, subdivision (e)(2).

Under Code of Civil Procedure section 425.16, subdivision (e)(2), statements made in connection with an issue under consideration or review in an official proceeding are protected activities under the anti-SLAPP statute: "As used in this section, `act 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' includes: ...(2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; ..." A "person," as used in Section 425.16, includes both natural persons and corporations. (Mattel, Inc. v. Luce, Forward, Hamilton & Scripps, 99 Cal. App. 4th 1179, 1188 (2002).) Moreover, for the purposes of the anti-SLAPP statute,
an arbitration proceeding qualifies as a judicial proceeding. (Paul v. Friedman, 95 Cal. App. 4th 853, 865-66 (2002)).
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1

The California Supreme Court has held that allegedly fraudulent statements made in the

2 context of negotiating a settlement are protected activities that "fall squarely within the plain 3 language of the anti-SLAPP statute." (Navallier v. Sletten, 29 Cal. 4th 82, 90 (2002) [finding 4 that a defendant's allegedly fraudulent negotiation and execution of a release in a previous 5 action constituted protected activity under subdivision (e)(2)].) Moreover, our Fourth District 6 Court of Appeal, Division One has held that acts of negotiating a settlement, including 7 allegedly false representations made during such negotiations, are protected acts under the anti8 SLAPP statute. (Dowling v. Zimmerman, 85 Cal. App. 4th 1400, 1420 (2001).) This finding 9 has been echoed by other appellate courts as well. (See, e.g., Navarro v. IHOP Properties, Inc., 10 134 Cal. App. 4th 834, 841-842 (2005) [holding that a defendant's allegedly fraudulent 11 statements made in exchange for stipulation of judgment fell within subdivision (e)(2)].) 12
Thus, under Navallier, Dowling and Navarro, supra, all oral and written statements

13 made by the Moving Defendants (whether or not alleged by Plaintiffs to have been fraudulent) 14 during settlement negotiations in the Underlying Action and Underlying Arbitration, and the 15 Moving Defendants' execution of the five agreements in settlement of the Underlying Action 16 and Underlying Arbitration, are protected activities under Code of Civil Procedure section 17 425.16, subdivision (e)(2). 18 19 20 21
Under Code of Civil Procedure section 425.16, subdivision (b), a defendant must

2.

Plaintiffs' Third and Fourth Causes of Action arise from Defendants' protected activity in negotiating and executing the settlement agreements in the Underlying Action and Underlying Arbitration.

22 demonstrate that the challenged cause of action arises from the protected act. "The statutory 23 phrase `cause of action...arising from' means simply...that defendant's act underlying the 24 plaintiff's cause of action must itself have been an act in furtherance of the right of petition or 25 free speech. In the anti-SLAPP context, the critical point is whether the plaintiff's cause of 26 action itself was based on an act in furtherance of defendant's right of petition or free speech." 27 (City of Cotati v. Cashman, 29 Cal. 4th 69, 78 (2002).) "A defendant meets this burden by 28
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1 demonstrating that the act underlying the plaintiff's cause fits one of the categories spelled out 2 in section 425.16, subdivision (e)." (Navallier, supra, 29 Cal. 4th at p. 88.) 3
Moreover, Section 425.16 expressly provides that its provisions "shall be construed

4 broadly." [Code Civ. Proc. § 425.16(a).] A defendant need only demonstrate that the 5 "principal thrust or gravamen" of a cause of action implicates the protected activity. (Cotati, 6 supra, 29 Cal. 4th at p. 78.) In addition, where a cause of action alleges both protected and 7 unprotected activity, the entire cause of action will be subject to section 425.16 unless the 8 protected conduct is `merely incidental' to the unprotected conduct. (See Mann v. Quality Old 9 Time Service, Inc., 120 Cal. App. 4th 90, 103 (2004); Philipson & Simon v. Gulsvig, 154 Cal. 10 App. 4th 347, 359 (2007); Fox Searchlight Pictures, Inc. v. Paladino, 89 Cal. App. 4th 294, 308 11 (2001); see also Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc., 12 129 Cal. App. 4th 1228, 1245 (2005)). 13
Here, the "principal thrust or gravamen" of the Third and Fourth Causes of Action is

14 Plaintiffs' allegations that the Moving Defendants, during the negotiation of the settlement of 15 the Underlying Action and Underlying Arbitration, made statements that Plaintiffs claim were 16 untrue, and that such statements fraudulently induced Plaintiffs to enter settlement agreements 17 in the underlying cases (Third Cause of Action) and entitle Plaintiffs to rescission of one of the 18 settlement agreements (Fourth Cause of Action). As established above, Navallier, Dowling 19 and Navarro specifically hold that such statements constitute protected acts under Code of 20 Civil Procedure section 425.16, subdivision (e)(2). Thus, in the language of Cotati, supra, 21 "defendant[s'] act[s] underlying the plaintiff[s'] cause[s] of action [were themselves]...act[s] in 22 furtherance of the right of petition or free speech." 23
Therefore, Moving Defendants have met their burden to make a threshold showing that

24 the Third and Fourth Causes of Action arise from Moving Defendants' protected acts, and the 25 burden shifts to Plaintiffs to establish a probability of success on the merits of their claims. 26 27 28
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1 B. 2 3

Step Two: Plaintiffs Cannot Prevail On The Third and Fourth Causes of Action Because These Claims Are Barred By The Litigation Privilege. Under California Code of Civil Procedure section 425.16, subdivision (b)(1), once the

4 defendant has met his or her burden under Step One, the burden shifts to the plaintiff in Step 5 Two to demonstrate that "there is a probability that the plaintiff will prevail on the claim." 6 (DuPont Merck Pharmaceutical Co. v. Sup. Ct., 78 Cal. App. 4th 562, 567-568 (2000)). To 7 meet his or her burden, the plaintiff must demonstrate that he or she has "stated and 8 substantiated a legally sufficient claim." (Briggs v. Eden Council for Hope and Opportunity, 19 9 Cal. 4th 1106, 1123 (1999), quoting Rosenthal v. Great Western Financial Securities Corp., 14 10 Cal. 4th 394, 412 (1996)). "Put another way, the plaintiff[s] must demonstrate that the 11 complaint is both legally sufficient and supported by a sufficient prima facie showing of facts 12 to sustain a favorable judgment if the evidence submitted by the plaintiff is credited." (Wilson 13 v. Parker, Covert & Chidester, 28 Cal. 4th 811, 821 (2002)). "[T]he evidence upon which the 14 plaintiff bases his or her response must be admissible at trial." (Rogers, supra, 57 F. Supp. 2d 15 at p. 977.) 16
Here, Plaintiffs cannot meet their burden to demonstrate a probability of prevailing on

17 the Third and Fourth Causes of Action because these claims are barred by the litigation 18 privilege. Civil Code section 47, subdivision (b) provides that statements made in any 19 "judicial proceeding" are privileged. Statements made orally or in writing in the course of 20 settlement negotiations are "absolutely privileged pursuant to Civil Code section 47, 21 subdivision (b)." (Joseph A. Saunders, P.C. v. Weissburg & Aronson, 74 Cal. App. 4th 869, 875 22 (1999); see also Asia Investment Co. v. Borowski, 133 Cal. App. 3d 832, 842 (1982); and 23 O'Neil v. Cunningham, 118 Cal. App. 3d 466, 477 (1981).) 24
Where, as is the case here, the causes of action challenged by an anti-SLAPP motion are

25 based upon allegedly fraudulent statements made during settlement negotiations, the litigation 26 privilege prevents the plaintiff from demonstrating a probability of prevailing. In Navarro, 27 supra, the Court of Appeal held that a plaintiff could not meet her burden under Step Two of 28 the analysis under the anti-SLAPP statute because her claims, which were based upon
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1 allegedly fraudulent statements made by the defendant during settlement negotiations, were 2 barred by the litigation privilege under Civil Code section 47, subdivision (b). (Navarro, supra, 3 134 Cal. App. 4th at pp. 845-846.) Here, as in Navarro, the statements at the root of Plaintiffs' 4 Third and Fourth Causes of Action were made during settlement negotiations to resolve a 5 pending lawsuit and arbitration. As a result, Plaintiffs' Third and Fourth Causes of Action are 6 barred by the litigation privilege set forth in Civil Code section 47, subdivision (b). Thus, 7 Plaintiffs cannot meet their burden to demonstrate a probability of prevailing on the Third and 8 Fourth Causes of Action, and Moving Defendants' special motion to strike under the anti9 SLAPP statute should be granted. 10 11
V. CONCLUSION

The Third and Fourth Causes of Action in the Complaint arise from Defendants'

12 protected statements made in connection with the settlement of the Underlying Action and 13 Underlying Arbitration. Moreover, Plaintiffs cannot establish a probability of prevailing on 14 these causes of action because the claims are barred by the litigation privilege. Therefore, 15 Moving Defendants' special motion to strike should be granted. In addition, if their motion is 16 granted, Moving Defendants request that the Court make the mandatory order of attorney fees 17 and costs under Code of Civil Procedure section 425.16, subdivision (c). 18 19 Dated: February 5, 2008 20 21 22 23 24 25 26 27 28
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SELTZER CAPLAN McMAHON VITEK

By: /s/ Monty A. McIntyre Gerald L. McMahon Monty A. McIntyre G. Scott Williams Attorney for Defendants LOWLIFE CORPORATION LIMITED, DALE MASTERS; and EBTM plc

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 V. B. 2. A. IV. B. II. III. I.

TABLE OF CONTENTS Page

INTRODUCTION.........................................................................................1 FACTUAL BACKGROUND .......................................................................2 MOVING DEFENDANTS' ANTI-SLAPP MOTION IS ............................4

PROCEDURALLY PROPER .................................................................................4 A. California's Anti-SLAPP Statute Applies in Federal Court Proceedings. ........................................................................................4 Moving Defendants' Anti-SLAPP Motion is Timely and is Similar to a Rule 12(b)(6) Motion. .....................................................5

MOVING DEFENDANTS' MOTION UNDER THE ANTI-SLAPP STATUTE TO STRIKE THE THIRD AND FOURTH CAUSES OF ACTION OF PLAINTIFFS' COMPLAINT SHOULD BE GRANTED .....5 Step One: The Third and Fourth Causes of Action in Plaintiffs' Complaint Arise From Defendants' Protected Activity. ....................6 1. Defendants' oral and written statements made in connection with the negotiations and settlement agreements in the Underlying Action and Underlying Arbitration are protected activity under California Code of Civil Procedure section 425.16, subdivision (e)(2)..................6 Plaintiffs' Third and Fourth Causes of Action arise from Defendants' protected activity in negotiating and executing the settlement agreements in the Underlying Action and Underlying Arbitration. .........................................7

Step Two: Plaintiffs Cannot Prevail On The Third and Fourth Causes of Action Because These Claims Are Barred By The Litigation Privilege. ............................................................................9

CONCLUSION ...........................................................................................10

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