Stay Informed

Being served with a lawsuit is an unpleasant experience irrespective of whether it’s the first time, or one of many. Especially frustrating are situations in which it seems that the lawsuit has no basis. What are the options in these situations, when a company or individual is faced with a perceived frivolous lawsuit?

Though California was named as the number one “Judicial Hellhole” for the second year in a row by the American Tort Reform Foundation, a company or individual is not without recourse if it is indeed faced with a frivolous lawsuit. Depending on the specific circumstances, there are multiple courses of action a defendant can take both while the underlying lawsuit is pending, and after it has concluded, if the defendant is successful on the merits.

The law does not generally allow a defendant to sue plaintiff in return by filing a cross-complaint asserting that the action brought against the defendant is frivolous and/or malicious, thereby putting the merits of the claims at issue right from the start. The closest the law comes in that regard is what is known as an “anti-SLAPP” motion, which is a type of motion to strike, that may be brought at the outset of a lawsuit. It is authorized by code (California Code of Civil Procedure § 425.16), when the defendant believes that the lawsuit is intended “primarily to chill the valid exercise of constitutional rights of freedom of speech and petition for the redress of grievances.” The moving party must demonstrate that the claims made against it arise from protected first amendment activity. The burden then shifts to the plaintiff to demonstrate that there is a “probability of success.” If plaintiff is unable to do this, then the complaint (or applicable causes of action) is stricken. In other words, the defendant prevails very early on in the case and is entitled to recover attorney’s fees and costs.

The potential benefits of bringing an anti-SLAPP motion are obvious. However, only a very small percentage of cases that are filed actually qualify as the type of action where such a motion is appropriate. The analysis can be extremely complicated and there are many exemptions and special rules that apply. Cases involving anti-SLAPP motions are often appealed (in fact, a defendant who brings an unsuccessful motion may appeal as a matter of right, which is normally not the situation for motions attacking the pleadings). There are new appellate decisions coming down in this area frequently.

What can a defendant do if the case is one which is not appropriate for an anti-SLAPP motion? The most common mechanism for attacking a complaint is a demurrer, though it seldom results in total victory for the defendant early in the case. A demurrer is the legal equivalent of saying, “even if everything you say is true, you still don’t have a case.” There is no evidentiary hearing. In fact, the court must decide a demurrer based on the allegations of the complaint, as it will not hear testimony.

While a case is pending, there is also the possibility of obtaining sanctions pursuant to California Code of Civil Procedure § 128.7, which requires attorneys, “after an inquiry reasonable under the circumstances” to sign and verify all pleadings and moving papers in a matter. By signing the pleading or other paper, the attorney certifies that it is not presented for an improper purpose (such as harassment), the claims therein are legally supported, and the allegations have evidentiary support or “are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.” (The complaint must specify which allegations lack evidentiary support at the time of filing.)

Sanctions under § 128.7 can be sought in connection with specific pleadings or motions filed during the pendency of a case, including discovery motions and motions for summary judgment (on the basis that such motions lack factual and/or legal support) or are brought primarily for an improper purpose (such as solely to harass the other side). A motion for sanctions can also be brought with regard to the entire case, arguing that the claims in the complaint are likewise unsupported or asserted for an improper purpose. This is usually done after the parties have had ample opportunity to litigate the case and often utilized in connection with a summary judgment motion. This one-two punch has the added bonus of incentivizing the other side to dismiss the case, rather than preparing costly oppositions to both motions while simultaneously facing sanctions. A party can file a motion for sanctions with regard to the complaint even without a dispositive motion; however, the practicalities of bringing such a motion in this situation are such that they are seldom brought and rarely granted.

The party seeking sanctions must provide advance notice to the party against whom sanctions are sought, before filing the motion, so that they have an opportunity to withdraw the complaint. It is possible to obtain sanctions with respect to only certain claims or causes of action and not the lawsuit as a whole. California Code of Civil Procedure § 128.7 is not meant to provide a party with recourse against any lawsuit that is generally weak, lacks evidentiary support, or subject to a motion for summary judgment. The standard is very stringent and only in the most extreme circumstances, such as when a lawsuit is filed for the sole purpose of harassing another, is such a motion granted.

If the court grants the § 128.7 motion, it may award the prevailing party on the motion reasonable expenses and attorney’s fees incurred as a result of the violation. In addition, it can order fines or penalties payable to the court and strike the offending pleading. Of significance, § 128.7 authorizes sanctions only against counsel in most cases, as it is directly related to the attorney’s verification of pleadings. However, the court can order sanctions against the client in the event that it finds that the client caused a frivolous complaint.

If a defendant expects to prevail in the lawsuit and is considering bringing a sanctions motion, thought must be given as to whether, by bringing the motion, the defendant is possibly giving up other, potentially more substantial, remedies, such as abuse of process and/or malicious prosecution.

Those potential claims will be discussed in Part 2 of this article, which can be read here.