Long Beach Unified School District v. Margaret Williams, LLC

Long Beach Unified School District (the District)

appeals from the dismissal of its cross-complaint under Code

of Civil Procedure section 425.16, commonly known as the

anti-SLAPP statute. (See Wilson v. Cable News Network,

Inc. (2019) 7 Cal.5th 871, 880 (Wilson).) In 2006, the District

entered into a contract with respondent Margaret Williams,

LLC (Williams LLC), which had been formed by Margaret

Williams that year for the purpose of working for the

District. According to Williams, the District required her to

form a business entity to enter the contract, which was a

standardized form agreement with terms she could not

negotiate. For nearly a decade, Williams worked full-time

for the District, through her LLC, on construction

management and environmental compliance, including work

under the District’s agreement with a state agency to clean

up material at a school construction site contaminated with

arsenic. After a dispute arose between Williams and the

District about alleged violations of the cleanup agreement,

Williams was diagnosed with arsenic poisoning, and the

3

District terminated Williams LLC’s then-current contract,

which included an indemnity provision.1



Williams and her LLC filed a lawsuit against the

District (the Underlying Action). Each plaintiff brought

claims alleging the termination was retaliatory, and

Williams brought claims alleging the District unlawfully

caused her arsenic poisoning. The District invoked the

indemnity provision to demand that Williams LLC defend

and indemnify the District in the Underlying Action. After

Williams LLC refused to defend the District against the

LLC’s own and Williams’s claims, the District filed a crosscomplaint

alleging, inter alia, that this refusal breached the

contract. Williams LLC filed an anti-SLAPP motion to

strike the cross-complaint, arguing, inter alia, that the

District could not prevail on its cross-claims because the

indemnity provision is unconscionable. The trial court

granted the motion and struck the District’s cross-complaint.

1 In an indemnity contract, “one engages to save another

from a legal consequence of the conduct of one of the parties, or of

some other person.” (Civ. Code, § 2772; see also Rossmoor

Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 628

[“Indemnity may be defined as the obligation resting on one party

to make good a loss or damage another party has incurred”].)

Unless an indemnity contract provides otherwise, “[t]he person

indemnifying is bound, on request of the person indemnified, to

defend actions or proceedings brought against the latter in

respect to the matters embraced by the indemnity . . . .” (Civ.

Code, § 2778, subd. (4).)

4

On appeal, the District contends the trial court erred in

striking its cross-complaint under the anti-SLAPP statute.

In the alternative, it contends the trial court erred in

denying the District leave to include nine additional pages in

its brief opposing the anti-SLAPP motion.

Finding no error, we affirm. If enforced as the District

requested, the indemnity provision would require Williams

LLC to fund the District’s defense against the very litigation

the LLC and Williams brought against the District. The

District’s cross-complaint therefore arose from that litigation

or the LLC’s refusal to sabotage it -- each of which is

protected by the anti-SLAPP statute. Moreover, the District

sought to require the LLC not only to fund the District’s

defense, but also to reimburse the District for any award

secured by Williams or the LLC falling within the provision’s

broad scope. Such a bar to meaningful recovery embodies a

high degree of substantive unconscionability, sufficient --

when combined with the procedural unconscionability shown

through Williams LLC’s unrebutted evidence of adhesion,

oppression, and surprise -- to establish that the indemnity

provision is unconscionable. We limit the provision to avoid

an unconscionable result, rendering it inapplicable to claims

brought by Williams LLC and claims brought by Williams.

As a result of this limitation, the District fails to show error

in the dismissal of the District’s breach of contract and

declaratory relief claims. The District further fails to show

error in the dismissal of its other cross-claims, or in the

5

denial of its application for leave to file an oversized

opposition brief.

PROCEEDINGS BELOW

A. Williams LLC’s History with the District

Williams formed Williams LLC in 2006. The same

year, Williams LLC entered into a contract to work for the

District, as a consultant, on construction management and

environmental compliance. In a declaration submitted by

her LLC in support of its anti-SLAPP motion, Williams

stated that she formed her LLC as a requirement for

working for the District: “In order to work with the District,

I was directed by the Executive Facilities Planning Manager

to form a corporation or partnership. This was the only way

I could work for the District: I could not enter into a

contract with the District as an individual.” Further, the

District presented the contract “on a ‘you either sign or you

don’t work’ basis,” and Williams was “unable to negotiate the

terms.” The terms were standardized; the contract was “a

standard form contract given to all contractors before they

were allowed to perform any work for the District.” The

District has not submitted evidence that the terms of the

contract were negotiable. Nor has it submitted evidence that

Williams LLC was formed for any purpose other than to

meet the District’s requirements for Williams to work for it.

Williams worked full-time for the District, through her

LLC, for nearly a decade, during which she signed a new

contract between her LLC and the District in 2013.

6

Williams’s duties included overseeing environmental

compliance at a construction site for a school, the Newcomb

Academy (Academy). According to her declaration, Pinner

Construction (Pinner) -- the District’s general contractor at

the Academy site -- illegally brought contaminated material

onto the site in October 2013. Williams directed Linik

Corporation (Linik) -- the District’s construction supervisor

at the site -- to remove the contaminated material, but Linik

ignored her. Through the following year, Williams

attempted to resolve the problem by discussing it with two

District administrators, one of whom directed Williams to

oversee the site’s cleanup. In January 2015, the District and

the California Department of Toxic Substances Control

(DTSC) entered into a cleanup agreement requiring the

District to remove potentially hazardous material at the site.

The District designated Williams as its project manager for

the cleanup agreement.

Later that year, the District gave control over the

Academy site project (and all other projects affiliated with

Linik) to District employee Les Leahy and consultant Jerry

Vincent. According to Williams, Leahy and Vincent

deliberately interfered with her efforts to prevent continued

mishandling of the contaminated material. As a result,

while she was at the site between June 1 and 4, 2015, she

came into contact with arsenic.

In a declaration of his own, Leahy characterized the

dispute between Williams and Pinner as a “clash of

personalities” that impaired communication. On June 3,

7

2015, concerned with the “aggressive manner” in which

Williams communicated her concerns, he told Williams to

direct all communications to Pinner through himself or

Vincent.

The next day (June 4), Williams cancelled a meeting

with Vincent and announced that she would no longer work

on projects associated with Pinner or Linik. She also sent a

letter to District administrators, alleging that Leahy had

“completely neutralized” her on the Newcomb Academy

project, that her access to her District email account and a

facilities server had been disabled, and that Leahy had

refused to explain these events. She interpreted these

actions as constructive termination, explaining, “[M]y ability

to do my job has been completely eliminated by these

actions, and the ability to run my business impacted. I

cannot even contact my own company staff without getting

on the server and accessing my emails. I have worked in the

District for almost 10 years and everything is on that

computer, as it would be if I were a staff member in the

District, including important records for my company.”

Further alleging that the District had rebuffed her repeated

attempts to discuss these matters, she stated that she would

not allow Williams LLC employees to return to work until

the District clarified its recent actions. She and Williams

LLC’s employees did not return to work.

Three days later (June 7), Williams sent a report to

DTSC, asking for help in ensuring the District’s compliance

with the cleanup agreement and preventing danger at the

8

Academy site. Two days later (June 9), the District sent

Williams LLC a letter terminating its contract based on its

employees’ failure to return to work. Soon thereafter

(around June 12), Williams was rushed to a hospital due to

sudden illness and diagnosed with arsenic poisoning, which

she claims has caused her permanent neurological damage

and chronic pain.

According to Williams, she had worked full-time on

District projects in the near-decade between her formation of

her LLC and the District’s termination of its contract. As of

December 2017, when she executed her declaration, her LLC

had been a party to only one other contract -- a contract with

another school district for an “immaterial” profit. Her LLC

did not plan to form any other contracts. In his declaration,

Leahy alleged -- on information and belief -- that Williams

“and/or” her LLC had worked for two other school districts

before working for the District. The District submitted no

other evidence of Williams or her LLC working for anyone

but the District.

B. The Underlying Action and Tenders of Defense

Williams and her LLC brought the Underlying Action.

2



In their operative complaint, Williams and her LLC jointly

asserted a cause of action for retaliation under Government

2 Williams and her LLC also filed a related case against

Pinner, Linik, and a subcontractor, which has been consolidated

with the case against the District.

9

Code section 12653, alleging the District terminated

Williams LLC’s contract in retaliation for the efforts by

Williams and her LLC to stop Pinner and Linik from

violating environmental requirements. Williams LLC

separately brought causes of action for breach of contract

and breach of the covenant of good faith and fair dealing --

both similarly premised on the District’s termination of the

contract. Williams separately brought causes of action for

negligence (premises liability), negligent infliction of

emotional distress, and intentional infliction of emotional

distress -- all premised on the District’s wrongfully causing

Williams’s arsenic poisoning.

Williams LLC’s 2013 contract with the District

included an indemnity provision reading, in relevant part, as

follows:

“1. To the fullest extent permitted by law,

[Williams LLC] agrees to indemnify, and hold

DISTRICT entirely harmless from all liability

arising out of:

“[¶] . . . [¶]

“b. General Liability: Liability for

damages for (1) death or bodily injury to a person;

(2) injury to, loss or theft of property; (3) any

failure or alleged failure to comply with any

provision of law or (4) any other loss, damage or

expense arising under either (1), (2), or (3) above,

sustained by [Williams LLC] or the DISTRICT, or

any person, firm or corporation employed by

10

[Williams LLC] or the DISTRICT upon or in

connection with the PROJECT, except for liability

resulting from the sole or active negligence, or

willful misconduct of the DISTRICT, its officers,

employees, agents or independent consultants

who are directly employed by the DISTRICT;[

3

]

“[¶] . . . [¶]

“d. [Williams LLC], at its own

expense, cost, and risk, shall defend any and all

claims, actions, suits, or other proceedings,

arising out of Article VIII, Paragraphs 1 (a) and

(b) above, that may be brought or instituted

against the DISTRICT, its officers, agents or

employees, on any such claim or liability, and

shall pay or satisfy any judgment that may be

rendered against the DISTRICT, its officers,

agents or employees in any action, suit or other

proceedings as a result thereof.”

The contract separately provided, “If either PARTY

[viz., the District or Williams LLC] becomes involved in

litigation arising out of this AGREEMENT or the

performance thereof, each PARTY shall bear its own

3 The contract defined the “PROJECT” as “project

management and planning consulting services for the Facilities

Development and Planning Branch . . . .”

11

litigation costs and expenses, including reasonable attorney’s

fees.”

The District sent Williams LLC a letter quoting the

indemnity provision and demanding that it “uphold its

obligations to defend and indemnify the District with regard

to all . . . liability of any kind arising out of Plaintiffs’ lawsuit

. . . .” In a similar letter sent after Williams and her LLC

amended their complaint, the District again demanded that

Williams LLC “uphold its obligations to defend (and

ultimately indemnify) the District with regard to all . . .

liability of any kind arising out of Plaintiffs’ lawsuit . . . .”

Williams LLC did not respond to these tenders of defense.

Its counsel informed the District’s counsel, during

proceedings in the Underlying Action, that Williams LLC

would not be defending the District.

C. The Cross-Complaint and Anti-SLAPP Motion

The District filed a cross-complaint against Williams

LLC. It asserted causes of action for: (1) breach of contract,

alleging Williams LLC breached the 2013 contract by failing

to accept the District’s tenders of defense and indemnity; (2)

declaratory relief, seeking declarations that Williams LLC

was required, under the contract or otherwise, to defend the

District against the claims in the Underlying Action and to

indemnify the District for any liability resulting “from any

and all claims, damages, and losses at issue in [the] Action”;

(3) equitable indemnity, seeking to hold Williams LLC liable

for the District’s costs of defense and any liability imposed

12

on the District “as a result of any recovery by any party” in

the action; and (4) “apportionment of fault,” seeking to limit

the District’s liability, if any, on the ground that Williams

LLC itself had been negligent.

Williams LLC filed an anti-SLAPP motion, asking the

trial court to strike the District’s cross-complaint in its

entirety. It argued that the District’s claims arose from

protected activity, viz., the Underlying Action. It further

argued that requiring Williams LLC to fund the District’s

defense would impair its ability to pursue its claims, and

that the District’s requested relief would have the effect of

“stifling [Williams LLC’s] right to petition by pricing it out of

the litigation market . . . .” Finally, it argued that the

District had not shown a reasonable probability of prevailing

on its cross-claims because: (1) the claims in the Underlying

Action fell within the indemnity provision’s exception for

liability resulting from sole or active negligence or willful

misconduct; (2) the indemnity provision would be

unconscionable if applied in the manner the District sought;

and (3) if applied in that manner, the provision would be an

invalid exculpatory clause affecting the public interest.

The District opposed the motion (after the court denied

the District’s application for leave to include an additional

nine pages in its opposition brief). It argued that its crossclaims

did not arise from the Underlying Action, but instead

from Williams LLC’s refusal to defend and indemnify the

District. It further argued that the anti-SLAPP statute did

not protect this refusal. Finally, it argued that it had shown

13

a probability of prevailing on its cross-claims because: (1)

the indemnity provision potentially covered any liability that

might be imposed on the claims in the Underlying Action;

and (2) the indemnity provision was enforceable.

At the hearing on the motion, the court announced its

understanding that the District’s cross-complaint sought

indemnity for all potential liability in the Underlying Action,

stating, “[I]f I read it correctly it essentially says regardless

of how plaintiff prevails or fails to prevail on the main

complaint, that no monies will be paid because she has

agreed to indemnify everyone in this case.” The District’s

counsel characterized the cross-complaint differently (in a

manner contrary to its language), asserting that the crossclaims

sought defense and indemnity only with respect to

Williams’s claims against the District, not her LLC’s: “This

case is no different than any construction contractor dispute

. . . where the owner . . . contracts with a contractor . . . to

indemnify it against claims that are brought by [the

contractor’s] employees, in this case Margaret Williams. . . .

What’s important is that the District . . . [is] seeking

indemnity and it’s seeking a defense only with regard to the

claims brought by the employee of the contractor that the

District contracted with.”4

He argued the District’s cross-

4 The District’s counsel repeated this mischaracterization of

the cross-complaint twice more, asserting, “[O]ur cross-complaint

seeks indemnity for Ms. Williams’ personal injury claims and her

(Fn. is continued on the next page.)

14

claims arose from Williams LLC’s “refusal to accept the

tender of defense and indemnity,” which was not protected

because “that is a contractual dispute that’s not in support of

their petition or [speech] rights.” He further argued the

District had demonstrated a probability of prevailing by

showing that the indemnity provision potentially covered

Williams’s claims. The court granted the motion,

announcing (without elaboration) its findings that the crosscomplaint

arose from protected activity and that the District

had failed to demonstrate a probability of prevailing.

The District timely appealed from the order granting

the anti-SLAPP motion. It also appealed from the order

denying its application to include nine additional pages in its

opposition brief.

DISCUSSION

The District contends the trial court erred by striking

the District’s cross-complaint under the anti-SLAPP statute.

We review de novo a trial court’s decision on an anti-SLAPP

motion. (Monster Energy Co. v. Schechter (2019) 7 Cal.5th

781, 788.) Our Supreme Court has summarized the two-step

analysis required by the anti-SLAPP statute as follows: “At

the first step, the moving defendant bears the burden of

identifying all allegations of protected activity, and the

claims for relief supported by them. . . . If the court

retaliation claim. It doesn’t have anything to do with [Williams

LLC’s] breach of contract claim.”

15

determines that relief is sought based on allegations arising

from activity protected by the statute, the second step is

reached. There, the burden shifts to the plaintiff to

demonstrate that each challenged claim based on protected

activity is legally sufficient and factually substantiated. . . .

If [the plaintiff fails to satisfy this burden], the claim is

stricken.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 396

(Baral).)

A. The District’s Cross-Claims Arose from Protected

Activity

“At the first step of the [anti-SLAPP] analysis, the

defendant must make two related showings. Comparing its

statements and conduct against the statute, it must

demonstrate activity qualifying for protection. [Citation.]

And comparing that protected activity against the complaint,

it must also demonstrate that the activity supplies one or

more elements of a plaintiff’s claims.” (Wilson, supra,

7 Cal.5th at p. 887.) Protected activity includes the filing

and prosecution of lawsuits. (Takhar v. People ex rel.

Feather River Air Quality Management Dist. (2018)

27 Cal.App.5th 15, 27-28 (Takhar).) It further includes

“conduct in furtherance of the exercise of the constitutional

right of petition or the constitutional right of free speech in

connection with a public issue or an issue of public interest.”

(Code Civ. Proc., § 425.16, subd. (e)(4).)

We agree with Williams LLC that the District’s crossclaims

arose from the Underlying Action, which is protected

16

activity. We find Lennar Homes of California, Inc. v.

Stephens (2014) 232 Cal.App.4th 673 (Lennar Homes)

persuasive. There, three homebuyers (including a husband

and wife) bought homes from a developer, executing

purchase agreements that required the homebuyers to

indemnify and defend the developer from any costs and

liabilities arising out of the homebuyers’ own claims for

violation of disclosure requirements. (Id. at pp. 677-678.)

Two of the homebuyers (but not the wife) brought

nondisclosure claims against the developer in a federal class

action, which was dismissed without any finding of liability.

(Id. at p. 678.) The developer then brought a contractual

indemnity suit against all three homebuyers, seeking to

recover its defense costs incurred in the federal action.

(Ibid.) The homebuyers filed an anti-SLAPP motion, which

the trial court granted. (Id. at p. 679.) The Court of Appeal

affirmed, holding that the developer’s indemnity claim arose

from protected activity, viz., the federal action in which it

incurred the costs to be indemnified and without which the

indemnity claim would have no basis. (Id. at pp. 680-685.)5



5 The District mischaracterizes Lennar Homes, asserting the

court did not address whether the developer’s indemnity claim

arose from protected activity. Although the developer did not

challenge the first-prong showing made by two of the

homebuyers, it did challenge the showing made by the third (the

wife, who was not a plaintiff in the federal action). (Lennar

Homes, supra, 232 Cal.App.4th at p. 680.) Thus, the court’s

conclusion that “all three defendants adequately showed that [the

(Fn. is continued on the next page.)

17

Here, the District’s cross-claims for defense and indemnity

likewise would have no basis without the Underlying Action

in which it seeks to be defended and indemnified. (See

Takhar, supra, 27 Cal.App.5th at pp. 30-32 [declaratory

relief claim, which alleged government was wasting

resources in civil enforcement action and “other conduct

incidental to the filing of that action,” arose from that action,

without which there would have been no controversy].)

6

developer’s] claim against them [arose] from protected activity”

was essential to its resolution of the dispute. (Id. at p. 685.)

6 We find Lennar Homes and Takhar more persuasive on this

point than the cases on which the District relies. In State Farm

General Ins. Co. v. Majorino (2002) 99 Cal.App.4th 974, an

insurer brought a declaratory relief action against the parties in

an underlying lawsuit, seeking a declaration that the insurer had

no duty to defend and indemnify the underlying defendants (its

insureds). (Id. at p. 976.) The underlying plaintiffs filed an antiSLAPP

motion in the insurer’s action, which the trial court

denied. (Ibid. at p. 976.) The Court of Appeal affirmed, holding

that the declaratory relief action did not arise from the

underlying action, but instead from “the tender of defense and

the terms of an insurance policy . . . .” (Id. at p. 977.) The court

observed that the anti-SLAPP statute did not apply “merely

because the declaratory relief action followed the filing of [the

underlying] personal injury case.” (Majorino, supra, at p. 977.)

But the underlying action did more than precede the declaratory

relief action -- as the court acknowledged, it also “frame[d] the

scope of coverage under the [insurance] policy.” (Ibid.) The scope

of that coverage was the subject of the controversy the

declaratory relief action sought to resolve. (Id. at p. 976.) The

court did not address what supplied the controversy.

(Fn. is continued on the next page.)

18

Even had we found that the District’s cross-claims did

not arise from the Underlying Action, we would find they

arose from protected activity. The District’s own position is

that its cross-claims arose from Williams LLC’s refusal to

defend and indemnify the District in the Underlying Action.

This refusal was protected conduct in furtherance of

petitioning in connection with an issue of public interest.

(See Code Civ. Proc., § 425.16, subd. (e)(4).) A refusal to

fund the defense of one’s own litigation -- and the defense of

a co-plaintiff’s claims arising from the same facts -- is

conduct in furtherance of the litigation. (See Takhar, supra,

27 Cal.App.5th at p. 28 [litigation funding decisions are

protected petitioning activity]; cf. Blue v. Office of Inspector

General (2018) 23 Cal.App.5th 138, 152-153 [state agency’s

refusals of interviewees’ requests for representation were

protected decisions about manner of conducting

investigation].) Further, the Underlying Action is connected

with an issue of public interest. Its allegations concern an

environmental hazard at a construction site for a public

We find City of Alhambra v. D’Ausilio (2011) 193

Cal.App.4th 1301 inapposite. There, as another panel of the

same court noted in a later case, the controversy underlying the

declaratory relief action “did not involve the filing of a lawsuit

that resulted in the [asserted] breach . . . .” (Mundy v. Lenc

(2012) 203 Cal.App.4th 1401, 1409, citing City of Alhambra v.

D’Ausilio, supra, at pp. 1307-1308.) Here, the controversy

involves just that; the filing of the Underlying Action resulted in

Williams LLC’s asserted duty, and breach thereof, to defend and

indemnify the District in that action.

19

school, violations of the state’s requirements for remedying

that hazard, and a public school district’s punishment of

resistance to those violations. (See Hecimovich v. Encinal

School Parent Teacher Organization (2012) 203 Cal.App.4th

450, 465-468 (Hecimovich) [safety of children in after-school

sports and suitability of volunteer coach were issues of

public interest]; Ludwig v. Superior Court (1995)

37 Cal.App.4th 8, 15 [development of a mall, “with potential

environmental effects such as increased traffic and

impaction on natural drainage, was clearly a matter of

public interest”]; cf. BRV, Inc. v. Superior Court (2006)

143 Cal.App.4th 742, 757-760 [granting writ petition under

Public Records Act to require school district’s board of

education to release report analyzing allegations of

superintendent’s misconduct; superintendent’s privacy

interest, though significant, was “far outweighed” by public

interest in evaluating board’s response to alleged

misconduct].)

None of the cases on which the District relies persuade

us that Williams LLC’s refusal to defend and indemnify the

District was unprotected. The District cites Ericsson GE

Mobile Communications, Inc. v. C.S.I. Telecommunications

Engineers (1996) 49 Cal.App.4th 1591, 1601-1602, for the

proposition that “acts relating to the formation or

performance of contractual obligations are not in furtherance

of the right of free speech.” But our Supreme Court,

clarifying that “conduct alleged to constitute breach of

contract may also come within constitutionally protected

20

speech or petitioning,” has disapproved Ericsson to the

extent it suggested otherwise. (Navellier v. Sletten (2002)

29 Cal.4th 82, 92.) The other cases on which the District

relies are distinguishable, as neither concerned a refusal to

engage in conduct that would impair one’s pursuit of one’s

own litigation. (See Area 51 Productions, Inc. v. City of

Alameda (2018) 20 Cal.App.5th 581, 596 [anti-SLAPP

statute did not protect city’s reneging on commitment to

license property for private events]; Kajima Engineering and

Construction, Inc. v. City of Los Angeles (2002)

95 Cal.App.4th 921, 930 [anti-SLAPP statute did not protect

acts seeking to secure and work on construction contract].)

In sum, the District’s cross-claims arose from protected

activity, viz., the filing of the Underlying Action. Even had

we found they arose from Williams LLC’s refusal to defend

and indemnify the District in the Underlying Action, as the

District contends, we would conclude the cross-claims arose

from protected activity because that refusal was protected.

B. The District Failed to Meet Its Burden to Show a

Probability of Prevailing on Its Cross-Claims

At the second anti-SLAPP step, the plaintiff bears the

burden of demonstrating a probability of prevailing on each

claim arising from protected activity. (Baral, supra,

1 Cal.5th at p. 384.) Under the “‘summary-judgment-like

procedure’” applicable at this step, the court “does not weigh

evidence or resolve conflicting factual claims.” (Ibid.) Where

the defendant raises an affirmative defense in its anti-

21

SLAPP motion, “the court, following the summary-judgmentlike

rubric, generally should consider whether the

defendant’s evidence in support of an affirmative defense is

sufficient, and if so, whether the plaintiff has introduced

contrary evidence, which, if accepted, would negate the

defense.” (Bently Reserve LP v. Papaliolios (2013)

218 Cal.App.4th 418, 434; see also Flatley v. Mauro (2006)

39 Cal.4th 299, 323 [at second step, litigation privilege may

present defense that plaintiff “must overcome”].)

Here, Williams LLC raised an affirmative defense in

its anti-SLAPP motion, arguing that the District could not

prevail on its cross-claims because the indemnity provision is

unconscionable. “The overarching unconscionability

question is whether an agreement is imposed in such an

unfair fashion and so unfairly one-sided that it should not be

enforced.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 123

(OTO).) Both procedural unconscionability (the unfair

fashion in which the contract was imposed) and substantive

unconscionability (the unfairness of the contract’s terms)

must be shown -- but a high showing of one may compensate

for a relatively low showing of the other. (Id. at pp. 125-

126.) “‘The ultimate issue in every case is whether the terms

of the contract are sufficiently unfair, in view of all relevant

circumstances, that a court should withhold enforcement.’”

(Id. at p. 126, quoting Sanchez v. Valencia Holding Co., LLC

(2015) 61 Cal.4th 899, 912 (Sanchez).)



22

1. Substantive Unconscionability

“Substantive unconscionability examines the fairness

of a contract’s terms.” (OTO, supra, 8 Cal.5th at p. 129.)

The analysis ensures that a contract does not impose terms

that are unreasonably favorable to the more powerful party.

(Ibid.) Such terms may include “terms that undermine the

nondrafting party’s reasonable expectations.” (Id. at

pp. 129-130.) The analysis “must be sensitive to context,”

including the contract’s commercial setting and purpose.

(Id. at p. 136.)

We agree with Williams LLC that the facts here are

similar to those in Lennar Homes. There, as noted, an

indemnity provision purported to require homebuyers to

defend and indemnify a developer from any costs and

liabilities arising out of the homebuyers’ own claims against

the developer for nondisclosure. (Lennar Homes, supra,

232 Cal.App.4th at pp. 677-678.) “In other words, on its face,

the indemnity provision preclude[d] any possibility that a

buyer who ha[d] a meritorious claim of fraud falling within

the scope of the indemnity clause could be made whole; any

judgment obtained would be payable by the buyer, not [the

developer], and in addition the buyer would be responsible

for [the developer’s] attorney fees and costs, win or lose.”

(Id. at p. 691.) Because the provision “purport[ed] to bar any

possibility of meaningful recovery for claims falling within

its scope, regardless of merit,” the court found a high degree

of substantive unconscionability. (Id. at p. 693.)

23

Here, the indemnity provision drafted by the District

similarly purports to preclude any possibility of Williams

LLC obtaining meaningful recovery on a broad category of

meritorious claims. The provision requires Williams LLC to

indemnify the District for all liability for specified types of

damage sustained by Williams LLC itself as a result of the

District’s conduct, subject only to an exception for liability

based on sole or active negligence or willful misconduct.

Where the District injures Williams LLC through gardenvariety

negligence (or other non-willful misconduct) and is

not 100 percent liable, Williams LLC cannot meaningfully

recover: either it fails to establish liability, but must pay the

District’s defense costs (as damages for failing to actively

defend the District), or it establishes liability, but must pay

both the District’s defense costs and the very judgment it

won against the District. This “paradigmatic example of a

‘“heads I win, tails you lose”’ proposition” embodies a high

degree of substantive unconscionability. (Lennar Homes,

supra, 232 Cal.App.4th at p. 693.)

The indemnity provision is equally unfair in purporting

to require Williams LLC to defend and pay meritorious

claims brought by Williams. Unrebutted evidence indicates

that Williams LLC first contracted with the District for the

purpose of allowing Williams to work for the District --

indeed, that Williams LLC came into existence for that

purpose. Williams LLC could reasonably expect that in

entering contracts to allow Williams to work for the District,

it would not be depriving Williams of any possibility of being

24

made whole by the District (rather than by her own LLC) for

the District’s share of injuries jointly caused by its gardenvariety

negligence (or other non-willful misconduct). In this

context, to which we must be sensitive, the indemnity

provision undermines Williams LLC’s reasonable

expectations as the nondrafting party, and is therefore

substantively unconscionable. (See OTO, supra, 8 Cal.5th at

pp. 129-130, 136.)

Contrary to the District’s contention, the existence of a

limitation on the indemnity provision’s coverage -- its

exclusion of liability for sole or active negligence or willful

misconduct -- does not materially distinguish Lennar Homes.

There, the indemnity provision’s coverage was limited to

liability “‘for nondisclosure or incomplete disclosure of the

general disclosure items and items separately disclosed to

[the homebuyers] in writing . . . .’” (Lennar Homes, supra,

232 Cal.App.4th at p. 678.) Despite this limitation on the

provision’s scope, the court found a high degree of

substantive unconscionability because the provision barred

meaningful recovery on meritorious claims within that

defined scope. (See id. at p. 691 [provision precluded

possibility of homebuyer being made whole on claim of

“fraud falling within the scope of the indemnity clause”], id.

at p. 693 [same regarding damages “from fraud . . . with

respect to disclosures”].) Here, the indemnity provision

similarly bars meaningful recovery on meritorious claims

within its scope. Its effect on those claims is not mitigated

by its exclusion of other claims.

25

Indeed, as a practical matter, the indemnity provision

here is a more potent bar to recovery than the provision in

Lennar Homes. There, the indemnity provision was

effectively moot with respect to liability; the underlying

litigation had already ended (pending appeal) without any

finding of liability, and the developer had conceded the

provision would have been unenforceable if the homebuyers

had established liability within the provision’s scope. (See

Lennar Homes, supra, 232 Cal.App.4th at pp. 678, 691.)

Here, the District’s demand for Williams LLC to pay any

judgment rendered against the District is far from moot.

Indeed, the District asserts that Williams herself was

negligent in failing to avoid being poisoned, and argues that

her alleged negligence -- along with her allegations against

third parties and other facts in the record -- show that her

injuries “will never be due to the ‘sole or active negligence, or

willful misconduct of the District.’”7

7 The District asserts the trial court failed to apply the

holding of Crawford v. Weather Shield Mfg., Inc. (2008) 44

Cal.4th 541 (Crawford), but identifies no relevant holding of that

case. In Crawford, neither the anti-SLAPP statute, nor firstparty

indemnity, nor unconscionability were at issue. (See

Crawford, supra, at p. 568.) Far from discouraging

unconscionability defenses in future cases, our Supreme Court

observed that in noninsurance indemnity contracts, the

indemnitee “may often have the superior bargaining power, and

. . . may use this power unfairly to shift to another a

disproportionate share of the financial consequences of its own

legal fault.” (Id. at p. 552.)

26

2. Procedural Unconscionability

Courts analyzing procedural unconscionability begin by

determining whether the contract is adhesive, meaning the

contract is standardized (generally on a preprinted form)

and offered by the party with superior bargaining power on a

take-it-or-leave-it basis. (OTO, supra, 8 Cal.5th at p. 126,

citing Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237,

1245 (Baltazar).) A finding that the contract is adhesive is

“sufficient to establish some degree of procedural

unconscionability.” (Sanchez, supra, 61 Cal.4th at p. 915;

see also Baltazar, supra, at p. 1244 [ordinary contracts of

adhesion contain degree of procedural unconscionability and

danger of oppression even without notable surprise].)

A higher degree of procedural unconscionability may be

established through an additional showing of oppression or

surprise. (See OTO, supra, 8 Cal.5th at p. 126; Baltazar,

supra, 62 Cal.4th at p. 1245.) Oppression involves lack of

negotiation and meaningful choice. (See OTO, at p. 126; see

also id at p. 127 [complaining party need not show

unsuccessful attempt to negotiate].) “‘The circumstances

relevant to establishing oppression include . . . the amount

and type of pressure exerted on the party to sign the

proposed contract . . . and the length and complexity of the

challenged provision . . . .’” (Id. at pp. 126-127, quoting

Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc.

(2015) 232 Cal.App.4th 1332, 1348.) Relevant pressure may

include the economic pressure on an employee to accept a

contractual provision as a condition of keeping a job; as this

27

pressure may be substantial, courts must be particularly

attuned to the danger of oppression in the “posthiring”

setting. (OTO, at p. 127; see also Grand Prospect Partners,

L.P. v. Ross Dress for Less, Inc., supra, at p. 1348, fn. 10

[relevant pressure may be generated by market conditions or

other circumstances surrounding the contract’s formation].)

Surprise may be found where “the agreement appears to

have been drafted with an aim to thwart, rather than

promote, understanding,” undermining the nondrafting

party’s informed consent. (OTO, at p. 129.) An agreement

may thwart understanding by hiding the challenged

provision, or by using language -- for example, complex

sentences filled with legal jargon -- rendering the substance

of the challenged provision opaque. (See id. at p. 128.)

Once again, Lennar Homes is instructive. There, the

court declined to find a particularly high degree of

procedural unconscionability, citing several factors -- the

indemnity provision appeared on the same page as the

homebuyers’ signatures, and the homebuyers produced no

evidence that they were unaware of the provision, that they

were particularly unsophisticated, that similarly priced

housing was unavailable in the region, or that they

attempted to reject the indemnity provision. (Lennar

Homes, supra, 232 Cal.App.4th at pp. 689-690.)

Nevertheless, the court found a sufficient degree of

procedural unconscionability to invalidate the provision

when joined with the high degree of substantive

unconscionability also found by the court. (Id. at pp. 688,

28

690, 693.) The court found the provision procedurally

unconscionable because the contract was adhesive (as the

developer conceded), the developer’s bargaining power

exceeded that of the homebuyers, the indemnity provision

was a small part of a prolix form, and the homebuyers’

meaningful alternatives were limited by the fact that the

homes they bought from the developer were not “truly

interchangeable” with homes they might have bought from

others. (Id. at pp. 688-690.)

Here, Williams LLC has produced unrebutted evidence

of a moderate degree of procedural unconscionability. First,

Williams LLC’s evidence establishes that the 2013 contract

was adhesive. According to Williams’s declaration, her

LLC’s initial contract with the District was a standard form

contract presented by the District on a take-it-or-leave-it

basis. Further, Williams was unable to negotiate the

contract’s terms, or to enter the contract herself rather than

complying with the District’s requirement to form a business

entity. This evidence establishes the District’s superior

bargaining power. The District has submitted no contrary

evidence. Nor has it submitted any evidence that the

formation of this initial contract materially differed from the

formation of the 2013 contract. Thus, contrary to the

District’s contention, we need not weigh competing evidence

to conclude the 2013 contract was adhesive. (Cf.

Hecimovich, supra, 203 Cal.App.4th at pp. 471-472 [plaintiff

failed to meet second-step burden on defamation claim, even

assuming plaintiff made sufficient showing on claim’s

29

elements, where defendants produced evidence that

allegedly defamatory statements were privileged and

plaintiff failed to produce contrary evidence].)

Second, Williams LLC’s evidence establishes some

degree of oppression beyond that inherent in a contract of

adhesion. (See Sanchez, supra, 61 Cal.4th at p. 915.)

According to Williams’s declaration, she created her LLC for

the purpose of working for the District, and it worked for the

District exclusively (aside from one minor contract with

another school district) for nearly a decade. Thus, we infer

that in the “posthiring” setting in which Williams LLC

entered the 2013 contract, it experienced substantial

economic pressure to accept the contract as the District had

drafted it. (Cf. OTO, supra, 8 Cal.5th at p. 127 [“Employees

who have worked in a job for a substantial length of time

have likely come to rely on the benefits of employment. For

many, the sudden loss of a job may create major disruptions,

including abrupt income reduction and an unplanned

reentry into the job market”].) Although the District asserts

that Williams LLC could have found comparable work

elsewhere, it has produced no competent evidence to support

that assertion.

8

Moreover, work opportunities are not truly

8 Even if we could infer the existence of comparable work

opportunities from Leahy’s allegation that Williams “and/or”

Williams LLC worked for two other school districts before

working for the District, that allegation was inadmissible because

it was based only on information and belief. (5 Witkin, Cal.

(Fn. is continued on the next page.)

30

interchangeable. (Cf. Lennar Homes, supra, 232 Cal.App.4th

at p. 689 [homebuyers lacked meaningful choice because

homes are considered unique, unlike truly interchangeable

goods and services].)

Finally, the language drafted by the District

establishes some degree of surprise (or an additional degree

of oppression). (See OTO, supra, 8 Cal.5th at pp. 126-128

[finding surprise where challenged provision’s language

rendered its substance opaque, and separately noting that

“complexity of the challenged provision” may be relevant to

establishing oppression].) In a provision separate from the

indemnity clause, the contract requires each party to bear its

own costs (including attorney’s fees) in any litigation “arising

out of this AGREEMENT or the performance thereof . . . .”

This category of litigation includes Williams LLC’s claims

against the District for terminating the contract -- indeed,

the District tendered its defense of those claims on the

ground that they “arise solely from performance of work

under the Contract . . . .” The District cannot be required to

bear its defense costs while also being entitled to a defense

from Williams LLC. (See Crawford, supra, 44 Cal.4th at

pp. 554-558 & fn. 6 [indemnitee entitled to defense is

Procedure (5th ed. 2008) Pleading, § 1035, p. 467 [“Affidavits on

information and belief are inadequate to establish a probability of

prevailing on the claim under [the anti-SLAPP statute] and are

permitted only when the facts to be established are incapable of

positive averment”], citing Evans v. Unkow (1995) 38 Cal.App.4th

1490, 1498.)

31

entitled to defense costs as damages for breach of duty to

defend].) In light of the seemingly straightforward language

requiring each party to bear its own costs and fees in any

litigation between them arising out of the performance of the

contract, Williams LLC reasonably could have been

surprised by the District’s demands for a defense of Williams

LLC’s contract claims against the District.

9



Williams LLC’s unrebutted evidence of adhesion,

oppression, and surprise establishes a moderate degree of

procedural unconscionability. This degree is sufficient, when

combined with the high degree of substantive

9 In the District’s tenders of defense, it identified both

Williams and her LLC as the plaintiffs in the Underlying Action

and demanded defense and indemnity with regard to “all

damages, claims, loss and/or liability of any kind arising out of

Plaintiffs’ lawsuit . . . .” In its cross-complaint, it alleged that

Williams LLC owed the District indemnity from “any and all

claims, damages, and losses at issue in this Action, as more

[fully] set forth in the [Underlying] Complaint . . . .” Thus, at the

hearing on the anti-SLAPP motion, the trial court accurately

characterized the cross-complaint as seeking indemnity on all

claims in the Underlying Action; the District’s counsel

mischaracterized it by asserting that it did not seek indemnity on

Williams LLC’s claims. In its opening brief on appeal, the

District’s counsel again mischaracterized the cross-complaint by

suggesting it could not be read to seek indemnification from

Williams LLC on its own claims. At oral argument, the District’s

new counsel deferred to the language of the tenders and agreed

that they and the cross-complaint sought defense and indemnity

on all claims in the Underlying Action.

32

unconscionability we have found, to render the indemnity

provision unconscionable. In sum, the terms of the contract

are sufficiently unfair, in view of all relevant circumstances,

that we should withhold enforcement. (See OTO, supra, 8

Cal.5th at p. 126.)

3. Conclusion

The District failed to show a probability of overcoming

Williams LLC’s defense that the indemnity provision is

unconscionable. We exercise our discretion to limit the

application of the indemnity provision to avoid an

unconscionable result. (See Civ. Code, § 1670.5, subd. (a)

[court finding clause unconscionable has discretion to “refuse

to enforce the contract,” “enforce the remainder of the

contract without the unconscionable clause,” or “limit the

application of any unconscionable clause as to avoid any

unconscionable result”].) Specifically, we limit the

application of the indemnity provision by rendering it

inapplicable to claims brought by Williams LLC and claims

brought by Williams. This limitation avoids the

unconscionable result of Williams LLC being required to

defend or indemnify the District against its own claims or

Williams’s claims, including the claims in the Underlying

Action.

10

10 We express no opinion whether the indemnity provision

may be enforced to require Williams LLC to defend and

(Fn. is continued on the next page.)

33

As a result of this limitation on the indemnity

provision, the District failed to show a probability of

prevailing on its breach of contract and declaratory relief

claims, each of which sought to apply the provision to the

Underlying Action. (See South Sutter, LLC v. LJ Sutter

Partners, L.P. (2011) 193 Cal.App.4th 634, 670-673 [trial

court properly granted anti-SLAPP motion to strike

declaratory relief claim, where no substantial evidence

supported declaration interpreting contract in plaintiff’s

favor; mere existence of controversy was insufficient].)

The District has presented no argument on its

probability of prevailing on its equitable indemnity claim.

The District has therefore forfeited any such argument. (See

Wall Street Network, Ltd. v. New York Times Co. (2008)

164 Cal.App.4th 1171, 1177 [“Generally, appellants forfeit or

abandon contentions of error regarding the dismissal of a

cause of action by failing to raise or address the contentions

in their briefs on appeal”].)

Similarly, the District has neither argued the merits of

its purported cause of action for “apportionment of fault,” nor

replied to Williams LLC’s contention that “apportionment of

fault is not truly a separate cause of action, but rather an

affirmative defense to plaintiff’s complaint.” The District

has therefore forfeited any argument that “apportionment of

fault” is a cause of action on which it could prevail. (Cf.

indemnify the District against a claim brought by a party other

than Williams LLC or Williams.

34

Barry v. State Bar of California (2017) 2 Cal.5th 318, 326

[plaintiff may fail to demonstrate probability of prevailing

“because the court lacks the power to entertain the claims in

the first place”].)

Because the District failed to meet its burden to show a

probability of prevailing on its cross-claims, which arose

from protected activity, the trial court properly struck the

cross-complaint under the anti-SLAPP statute.

C. The District Is Not Entitled to Rehearing in the

Trial Court

The District contends this matter should be remanded

to the trial court with instructions to rehear the anti-SLAPP

motion after the District files a longer opposition brief,

arguing the court abused its discretion in denying the

District leave to include an additional nine pages. The

District concedes it could not find any published authority

reviewing the denial of such leave. The District falls far

short of showing error, and farther short of showing

prejudice. The District’s briefs on this appeal -- in which we

review the trial court’s decision de novo -- span 100 pages.

Nothing in them suggests that an extra nine pages below

would have made a difference.

The trial court’s orders are affirmed. Williams LLC is awarded its costs on appeal.