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Date: 03-17-2020
Case Style:
Citizens of Humanity, LLC v. Coni Hass
Case Number: D074790
Judge: Huffman, Acting P.J.
Court: California Court of Appeals Fourth Appellate District, Division One on appeal from the Superior Court, County of San Diego
Plaintiff's Attorney: Arie L. Spangler
Defendant's Attorney: Douglas A. Pettit, and Jocelyn D. Hannah
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John H. Donboli, JL Sean Slattery, and Del Mar Law Group LLP (collectively the
Del Mar Attorneys) filed a mislabeling lawsuit on behalf of a putative class of consumers
who claimed they were misled by "Made in the U.S.A." labels on designer jeans
manufactured by Citizens of Humanity (Citizens). Citizens's jeans were allegedly made
with imported fabrics and other components. The linchpin of the purported class action
was that the "Made in the U.S.A." labels violated former Business and Professions Code
section 17533.7.1 However, a new law was passed after the complaint was filed that
relaxed the previous restrictions and, ultimately, the lawsuit was dismissed with
prejudice. (Stats. 2015, ch. 238, § 1.)
Citizens then filed this malicious prosecution action against the named plaintiff in
the prior case (Coni Hass), a predecessor plaintiff (Louise Clark), and the Del Mar
Attorneys. Each defendant filed a motion to strike the complaint under the anti-SLAPP
(Strategic Lawsuit Against Public Participation) statute, Code of Civil Procedure
section 425.16. Finding that Citizens met its burden to establish a probability of
prevailing on the merits, the trial court denied defendants' motions.
Hass and the Del Mar Attorneys (together Appellants) appeal contending Citizens
failed to make a prima facie showing that it would prevail on its claims. We disagree.
As we shall explain, (1) there are no undisputed fact on which we can determine, as a
matter of law, whether the Del Mar Attorneys and Clark had probable cause to pursue the
1 Statutory references are to the Business and Professions Code unless otherwise
specified.
3
underlying actions; (2) there is evidence which would support a reasonable inference the
Appellants were pursuing the litigation against Citizens with an improper purpose; and
(3) the district court's dismissal of the underlying action, with prejudice, constituted a
favorable termination in the context of a malicious prosecution suit. Accordingly, we
affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The Underlying Litigation
In June 2014, the Del Mar Attorneys initiated a putative class action lawsuit
against Citizens in the U.S. District Court for the Southern District of California, alleging
the company misleadingly labeled that its jeans were "Made in the U.S.A." when they
used imported components (fabric, thread, buttons, zipper assembly). The putative class
consisted of "all persons in the United States" who bought apparel from Citizens that was
labeled "Made in the U.S.A." within the four-year limitations period. Louise Clark, the
named plaintiff, allegedly bought a pair of "Boyfriend"-style Citizens jeans for $218 at a
Macy's store in San Diego shortly before the lawsuit was filed.
An amended complaint followed, and the district court thereafter denied Citizens's
motion to dismiss the action on federal preemption grounds. In May 2015, Citizens filed
an answer to the First Amended Complaint, admitting that it placed the label "Made in
the U.S.A." on the outer label of some "Boyfriend" jeans and that "some component
parts" of those jeans were from outside the United States.
The case proceeded to discovery. At her deposition in November 2015, Clark
admitted she was related to Slattery, one of the attorneys handling her case. Citizens
4
promptly moved to disqualify the Del Mar Attorneys. Clark filed a declaration stating
she felt the attention would distract from the merits of the case and indicating she no
longer felt comfortable "being 'in the spotlight' in this manner." The district court denied
the disqualification motion and in early May 2016 permitted the Del Mar Attorneys to
substitute Coni Hass for Clark as the named plaintiff. Clark withdrew her claims, and the
district court found no bad faith in the firm's decision to bring in a new class plaintiff.
Now proceeding on behalf of Hass and the putative class, the Del Mar Attorneys
filed a second amended complaint on May 5, 2016. That complaint alleged that Hass
bought a pair of Citizens "Ingrid"-style jeans from Nordstrom around November 2013,
relying on the "Made in the U.S.A." label. It asserted three interrelated causes of action:
false labeling under Business and Professions Code section 17533.7, a derivative
violation under the Unfair Competition Law (UCL, Bus. & Prof. Code, § 17200 et seq.),
and a violation of the Consumers Legal Remedies Act (CLRA, Civ. Code, § 1750 et
seq.).
Meanwhile, the Legislature amended section 17533.7. (Stats. 2015, ch. 238, § 1,
effective Jan. 1, 2016.) Like its predecessor, the amended statute prohibits selling
products in California labeled with "Made in U.S.A." or the like where the item "has been
entirely or substantially made, manufactured, or produced outside the United States."
(Compare former § 17533.7 with current § 17533.7, subd. (a).) But unlike the original
statute, the amended version includes two safe harbors. Merchandise could now be
labeled "Made in U.S.A." if foreign parts comprise no more than 5 percent of the
product's final wholesale value (§ 17533.7, subd. (b)), or if foreign-sourced materials
5
could not be domestically sourced and comprise no more than 10 percent of the product's
final wholesale value (§ 17533.7, subd. (c)).2
Citizens filed a motion to dismiss Hass's second amended complaint for failure to
state a claim under the amended statute. (Fed. Rules Civ.Proc., rule 12(b)(6).) The
district court granted the motion. Although statutes generally apply only prospectively,
the court applied an exception under California law that wholly statutory claims abate
with repeal or amendment of the remedial statute. Based on California's safe harbor
doctrine, the court also dismissed Hass's related claims under the CLRA and UCL. The
dismissals as to all three causes of action were without prejudice to amending the
complaint to show the safe harbors in amended section 17533.7 did not apply.
Citizens also argued in its motion to dismiss that Hass lacked standing as to
products she did not purchase. The court accepted this as an alternative basis to dismiss a
substantial portion of the class claims. Hass alleged she bought Ingrid-style jeans but did
not allege that Citizens's other products were substantially similar, as required for
standing over those putative class claims. As with its ruling on the merits, the dismissal
2 Under the old law, enacted in 1961, courts interpreted the "entirely or substantially
made" language in section 17533.7 strictly. (See Colgan v. Leatherman Tool Group, Inc.
(2006) 135 Cal.App.4th 663, 690-692 (Colgan) [although tools were designed,
assembled, and finished in the United States, manufacturer's use of foreign-made
component parts precluded a "Made in U.S.A." label]; see generally, Kwikset Corp. v.
Superior Court (2011) 51 Cal.4th 310, 329 ["to some consumers, the 'Made in U.S.A.'
label matters"].) By amending the statute in 2015, the Legislature sought to update
labeling standards to reflect the realities of a complex global economy, which limit a
manufacturer's ability to make products exclusively with domestic components. (Assem.
Com. on Privacy & Consumer Protection, Rep. on Sen. Bill No. 633 (2015−2016 Reg.
Sess.) Jul. 7, 2015, p. 4.)
6
was without prejudice to adding additional standing allegations in an amended pleading.
However, Hass decided not to amend and instead requested voluntary dismissal. In
December 2016, based on that request, the court dismissed the federal case with
prejudice.
The Malicious Prosecution Action and Anti-SLAPP Motion
In February 2018, Citizens filed the instant malicious prosecution action against
Clark, Hass, and the Del Mar Attorneys. The defendants moved to strike the complaint
under the anti-SLAPP statute (Code Civ. Proc., § 425.16). Included with their motions
was a declaration by Donboli describing the underlying litigation, his firm's reasons for
substituting Hass for Clark, and admitting Hass filed a notice of intent not to amend the
complaint. In the notice of intent not to amend the complaint, Hass explained:
"The Court's December 6, 2016 order found, in part, that Coni Hass
lacked subject matter jurisdiction to bring claims on additional
products. In light of this ruling, Plaintiff Coni Hass requests the
Court to dismiss the entire case for lack of subject matter
jurisdiction."
In support of the anti-SLAPP motion, Hass filed a declaration indicating she relied
on the "Made in the USA" label in buying her jeans and though she lacked
documentation, believed in good faith that she bought those jeans at a Nordstrom store in
San Diego in 2013. Each of the defendants also submitted pleadings, discovery
responses, motions, and rulings by the federal court.
Citizens opposed the anti-SLAPP motions with evidence it maintained showed the
Del Mar Attorneys selected Clark and Hass to represent the class, knowing neither had
relied on the labels in the jeans they purchased and thus were illegitimate, "shill"
7
plaintiffs. A declaration by Gary Freedman, Citizens's manager and general counsel,
indicated the company had "made a deliberate choice to manufacture its denim jeans
products in [the U.S.], despite the extra cost" and employed nearly 500 workers in the
Los Angeles area. Excerpts of depositions taken of Clark, Hass, and the Del Mar
Attorneys in the underlying case were offered to question their motivations for
prosecuting that action. The Clark and Hass excerpts explored whether either named
plaintiff actually relied on the "Made in the U.S.A." label in purchasing their jeans.
These excerpts were also offered to question how the two women became involved in the
case—in Clark's case, based on her relationship to Slattery and past participation in the
firm's mislabeling lawsuits, and in Hass's case, being contacted out-of-the-blue by an
attorney at the Del Mar Law Group after she made an unrelated complaint on a class
action website about the mislabeling of essential oils. Excerpts from the depositions of
Slattery and Donboli were offered to question their firm's investigation of Clark's and
Hass's claims.
Citizens also submitted prior putative class action complaints filed by the Del Mar
Attorneys with Clark as the named plaintiff. These complaints and Clark's January 2016
declaration requesting to withdraw because of the " 'spotlight' " were offered to support
its argument that Clark was a "shill." Finally, Citizens submitted a copy of the second
amended complaint in the prior case and the court's dismissal orders.
The trial court denied all three anti-SLAPP motions, finding Citizens had
established a probability of prevailing on the merits as to each essential element of its
malicious prosecution action. As to favorable termination, the court relied on Hass's
8
decision not to amend and Clark's decision to step down as putative class representative.
Crediting Citizens's deposition excerpts, it further found a sufficient showing that the
underlying case was prosecuted without probable cause:
"Plaintiff Citizens has shown a prima facie case to defeat the AntiSLAPP motion on this element. As for the original plaintiff, Clark,
her deposition testimony has been provided which provides evidence
to support lack of probable cause to assert 'Made in the USA' claims,
particularly with respect to reliance. With respect to Hass, plaintiff
has provided evidence related to how Hass came into the litigation
and her apparent lack of knowledge of Citizens jeans.
"With respect to attorneys Slattery and Donboli, plaintiff has
provided evidence regarding their handling of the litigation that
supports inferences of lack of probable cause if not at the inception
of the litigation, at least after the deposition of Ms. Clark."
Finally, the court found that Citizens had made a prima facie case that the prior case was
brought for an improper purpose, such as extracting a settlement having no relation to the
merits of the claim.
DISCUSSION
Appellants appeal the order denying their anti-SLAPP motions.3 They argue that
Citizens did not produce sufficient evidence to support the superior court's conclusion
that Citizens established a probability of prevailing on the merits as to each element of its
malicious prosecution action. We disagree.
3 Although Clark filed a notice of appeal, her appeal was dismissed when she failed
to file an opening brief. Thus, we discuss Clark in the context of Hass's and the Del Mar
Attorneys' arguments, but we eschew any analysis of the anti-SLAPP motion or the
malicious prosecution action as it relates solely to Clark.
9
I
THE ANTI-SLAPP MOTIONS
A. Anti-SLAPP Overview
A SLAPP suit, or a strategic lawsuit against public participation, is one that seeks
to chill a party's valid exercise of constitutional rights to free speech and to petition for
redress. (JSJ Limited Partnership v. Mehrban (2012) 205 Cal.App.4th 1512, 1520.) The
goal of the anti-SLAPP procedure is to eliminate meritless or retaliatory litigation at an
early stage of proceedings. (Ibid.) Code of Civil Procedure, section 425.16 provides in
pertinent part:
"A cause of action against a person arising from any act of that
person in furtherance of the person's right of petition or free speech
under the United States Constitution 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."
(Code Civ. Proc. § 425.16, subd. (b)(1).)
We use a two-step process to resolve an anti-SLAPP motion. In the first step, the
defendant must establish that the challenged claim arises from protected activities.
(Baral v. Schnitt (2016) 1 Cal.5th 376, 384 (Baral).) The parties agree that Citizens's
malicious prosecution action meets that standard. "The plain language of the anti-SLAPP
statute dictates that every claim of malicious prosecution is a cause of action arising from
protected activity because every such claim necessarily depends upon written and oral
statements in a prior judicial proceeding." (Daniels v. Robbins (2010) 182 Cal.App.4th
204, 215 (Daniels); see generally, Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th
728, 733-741.)
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This case therefore turns on the second inquiry—whether Citizens has met its
burden of establishing a probability it would prevail on the merits. (Baral, supra, 1
Cal.5th at p. 384; Code Civ. Proc., § 425.16, subd. (b)(1).)4 "Only a cause of action that
satisfies both prongs of the anti-SLAPP statute—i.e., that arises from protected speech or
petitioning and lacks even minimal merit—is a SLAPP, subject to being stricken under
the statute." (Navellier v. Sletten (2002) 29 Cal.4th 82, 88.)
This second step is a summary-judgment-like procedure. (Sweetwater Union High
School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 940 (Sweetwater).) We first
determine whether Citizens's prima facie showing is enough to win a favorable judgment.
(Ibid.) This threshold is "not high." (Greene v. Bank of America (2013) 216 Cal.App.4th
454, 458.) Claims with minimal merit proceed. (Sweetwater, at p. 940.) We accept
Citizens's evidence as true and do not weigh evidence or resolve conflicting factual
claims. (Ibid.) We may consider affidavits, declarations, and their equivalents if it is
reasonably possible these statements will be admissible at trial. (Id. at p. 949.)
After examining Citizens's evidence, we evaluate Appellants' showings only to
determine if they defeat Citizens's claim as a matter of law. (Sweetwater, supra, 6
Cal.5th at p. 940.) Appellants can prevail either by establishing a defense or the absence
of a necessary element. (1-800 Contacts, Inc. v. Steinberg (2003) 107 Cal.App.4th 568,
585.) If there is a conflict in the evidence (the existence of a disputed material fact), the
4 Citizens contends Hass and the Del Mar Attorneys waived their right to challenge
the sufficiency of the evidence by failing to fairly summarize evidence in its favor. We
disagree that Appellants' summary of the evidence was deficient.
11
anti-SLAPP motion should be denied. (See Oviedo v. Windsor Twelve Properties, LLC
(2012) 212 Cal.App.4th 97, 112 (Oviedo).)
An action for malicious prosecution has three required elements: "(1) the
defendant brought (or continued to pursue) a claim in the underlying action without
objective probable cause, (2) the claim was pursued by the defendant with subjective
malice, and (3) the underlying action was ultimately resolved in the plaintiff's favor."
(Lane v. Bell (2018) 20 Cal.App.5th 61, 67.) The trial court determined that Citizens
established a probability of success as to each of these three elements and denied the antiSLAPP motions.
"We review de novo the grant or denial of an anti-SLAPP motion." (Park v.
Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1067.)
B. The Likelihood of Success on the Merits
1. Probable Cause
"An action is deemed to have been pursued without probable cause if it was not
legally tenable when viewed in an objective manner as of the time the action was initiated
or while it was being prosecuted." (Sycamore Ridge Apartments LLC v. Naumann (2007)
157 Cal.App.4th 1385, 1402 (Sycamore).) The test is whether, on the basis of facts then
known, any reasonable attorney would have believed that instituting or maintaining the
prior action was tenable. (Ibid.; see Zamos v. Stroud (2004) 32 Cal.4th 958, 973
[continuing to pursue an action discovered to lack probable cause meets the standard].)
" 'A litigant will lack probable cause for his action either if he relies upon facts which he
has no reasonable cause to believe to be true, or if he seeks recovery upon a legal theory
12
which is untenable under the facts known to him.' " (Soukup v. Law Offices of Herbert
Hafif (2006) 39 Cal.4th 260, 292 (Soukup).)
If there is " 'no dispute as to the facts upon which an attorney acted in filing the
prior action, the question of whether there was probable cause to institute that action is
purely legal.' [Citation.] 'The resolution of that question of law calls for the application
of an objective standard to the facts on which the defendant acted.' [Citation.]" (Daniels,
supra, 182 Cal.App.4th at p. 222.) So, it is often said that "the existence or absence of
probable cause has traditionally been viewed as a question of law to be determined by the
court, rather than a question of fact for the jury. . . . [¶] . . . [It] requires a sensitive
evaluation of legal principles and precedents, a task generally beyond the ken of lay
jurors . . . ." (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 875
(Sheldon).)
On the other hand, when there is a dispute as to the state of the defendant's
knowledge and the existence of probable cause turns on resolution of that dispute, there
becomes a fact question that must be resolved before the court can determine the legal
question of probable cause. (See Sheldon, supra, 47 Cal.3d at p. 881 ["[T]he jury must
determine what facts the defendant knew . . . ."].) "[C]ases have also made clear that if
the facts upon which the defendant acted in bringing the prior action 'are controverted,
they must be passed upon by the jury before the court can determine the issue of probable
cause . . . . "What facts and circumstances amount to probable cause is a pure question of
law. Whether they exist or not in any particular case is a pure question of fact. The
13
former is exclusively for the court, the latter for the jury." ' " (Id. at p. 877, citing Ball v.
Rawles (1892) 93 Cal. 222, 227.)
Although probable cause must exist as to each cause of action (see Soukup, supra,
39 Cal.4th at p. 292), all three causes of action in the underlying case turned on Citizens's
alleged violation of section 17533.7 in labeling its jeans as being "Made in the U.S.A."
a. Representation of Clark
Citizens argues no reasonable attorney would have sued on Clark's behalf, or
continued litigating on her behalf when her deposition testimony revealed she was not
misled. Its theme, echoed throughout the briefs, is that Clark is a "shill" who, with her
brother-in-law, Slattery, participates in a cottage-industry of contrived "Made in the
U.S.A" labeling lawsuits. Citizens asserts that the Del Mar Attorneys years ago
"developed a scheme to misuse the court system for their own financial gain."
In response, the Del Mar Attorneys argue that Citizens has not shown that no
reasonable attorney would have filed suit on Clark's behalf, and they emphasize the
following facts. Clark bought a pair of Citizens Boyfriend-style jeans from a Macy's
store in San Diego in 2014. The jeans were labeled, "Made in the U.S.A." At the time,
courts construed the "entirely or substantially made" language in section 17533.7 strictly,
such that merchandise containing even one foreign-made component could not be labeled
as "Made in the U.S.A." (See Colgan, supra, 135 Cal.App.4th at pp. 690-692.) Donboli
saw the labels on the jeans Clark bought and confirmed on retailers' websites that
Citizens included "Made in the U.S.A." labels on other apparel. Although Clark's jeans
had an outer label stating "Made in the U.S.A.," an inner label clarified in small print that
14
they were "Made in the USA with imported fabrics." This inner label did not change
Donboli's view that the outer label violated the statute. Based on these facts, the Del Mar
Attorneys contend probable cause existed.
We would agree with the Del Mar Attorneys that Citizens failed to carry its burden
if these were the only facts in the record. Similarly, if Citizens merely called Clark a liar
or asserted she was a shill, without evidence, we would find probable cause existed.
However, that is not the record before us.
Instead, Citizens proffered significant evidence to support the reasonable inference
that Clark was a shill plaintiff, and the Del Mar Attorneys were aware of this fact. It is
undisputed that Slattery is Clark's brother-in-law, and that Clark was a named plaintiff in
Slattery's firm's prior Made-in-USA labeling lawsuits involving air freshener and nasal
spray products. Clark also was the named plaintiff in an ingredient mislabeling lawsuit
filed by the Del Mar Attorneys against a dog food company. Although these facts alone
would not support a reasonable inference that Clark was a shill, when combined with
other facts that became apparent at Clark's deposition, we determine that a reasonable
inference could be drawn that Clark was a shill plaintiff.
For example, Clark testified at her deposition that she purchased the Citizens jeans
from Macy's, brought them home, took them out of the bag, placed them on the floor, left
the tags on the jeans, and then went to wash them. However, when she went to wash the
jeans, she first noticed that the care label on the inside of the jeans stated that the jeans
were made with imported fabric. It is not clear why Clark would leave the tags on the
jeans when she testified that she was going to wash them and was apparently preparing to
15
do so. Such a detail supports the inference that Clark purchased the jeans to serve as the
lead plaintiff in the mislabeling case, not because she wanted to purchase and own jeans
that were made in the United States.
Also, Clark admitted that she had purchased a lot of jeans and did not regularly
look to see where the jeans were made before she purchased them. She brought 32 pairs
of jeans to her deposition and, apparently, all but three of them had labels indicating they
were made outside the United States. Clark testified that she owned "a lot" of shoes but
could only think of one pair that was made in the United States. Indeed, beyond just in
buying jeans, Clark acknowledged that for the products she buys, she does not look at the
labels before she makes purchases. This deposition testimony further supports Citizens's
claim that Clark did not care where her jeans were made and would not have purchased
the Citizens jeans simply to wear. Rather, she purchased them to serve as a plaintiff in a
mislabeling case for the Del Mar Attorneys, like she had several times previously.
After she was deposed, Clark filed a declaration in support of a motion for leave to
amend complaint to name a new class plaintiff. In the declaration, Clark stated that she
did not wish to serve as a named plaintiff any longer because she was "no longer
comfortable with being 'in the spotlight' in this manner." Citizens had filed a motion to
disqualify the Del Mar Attorneys as counsel of record based on what Citizens had learned
during Clark's deposition, and Clark declared that she believed "that focusing attention on
me in this manner would be a distraction from the merits of this case." A reasonable
inference to be drawn from Clark's withdrawal, coupled with the foundation of her
16
deposition testimony, is that she did not want to serve as the named plaintiff to avoid
further scrutiny as to why she purchased the Citizens jeans.
Considering Clark's familial relationship with Slattery, her history of serving as a
plaintiff on mislabeling cases for the Del Mar Attorneys, her willingness to buy foreign
made products (including jeans and shoes), her admission that she did not look at the
labels before buying products, the fact she left the tags on her jeans, and her withdrawal
as the named plaintiff, a reasonable inference could be drawn that she was a shill
plaintiff. In other words, she purchased the subject jeans not because she was duped by
the "Made in the U.S.A." label, but because she wanted to again assume the role as a
named plaintiff in another mislabeling case for the Del Mar Attorneys. And a reasonable
attorney would not represent a shill plaintiff.
Thus, we are faced with two conflicting narratives, both supported by evidence,
regarding the origin of the federal mislabeling case. According to the Del Mar Attorneys,
Clark was a consumer who would purchase products that were made in the U.S.A. when
it was within her budget. She purchased the Boyfriend-style jeans with a "Made in the
U.S.A. label" believing they were made in the United States. When she discovered they
were actually made with imported fabric, she decided to sue and engaged the Del Mar
Attorneys. In contrast, Citizens argues that Clark has a history of serving as a lead
plaintiff in mislabeling claims filed by the Del Mar Attorneys, and she purchased the
subject jeans not because she was fooled by the label, but because she wanted to again
serve as a plaintiff. Further, based on Clark's relationship with Slattery and her
experience serving as a named plaintiff in previous mislabeling cases, the Del Mar
17
Attorneys were aware that Clark was a shill. There are no undisputed facts on which we
can determine, as a matter of law, whether probable cause existed. Instead, there are
disputed material facts that present factual questions that must be resolved before a legal
determination of probable cause can be made. As a result, Citizens has met its burden for
purposes of opposing an anti-SLAPP motion on this issue as to the Del Mar Attorneys
involving their representation of Clark. (See Oviedo, supra, 212 Cal.App.4th at p. 115;
Sheldon, supra, 47 Cal.3d at pp. 877, 881.)
b. Representation of Hass
Having found that Citizens satisfied its burden of showing a prima facia case that
the Del Mar Attorneys lacked probable cause to file the underlying mislabeling complaint
with Clark as the named plaintiff, we next consider whether Hass had probable cause to
bring suit. Hass was added as the lead plaintiff in the underlying suit after Clark
withdrew. Hass alleged that she purchased a pair of Ingrid-style jeans from a San Diego
Nordstrom store in or around November 2013 and, that those jeans were "marked with a
'Made in the U.S.A.' country of origin designation when the product actually contains
component parts made outside of the United States."
Apparently, Hass entered her contact information on a website called Top Class
Actions to complain about the mislabeling of cypress essential oil as "cedarwood
essential oil." Hass did not recall providing any additional information on the website.
18
Sometime later, Hass was contacted by Camille DeCamp from the Del Mar Law Group.
DeCamp and Hass spoke by phone for "a few minutes."5
During her deposition, Hass testified that she thought the fabric of her jeans "wore
thin faster than [she] would have thought," but she wore the jeans on multiple occasions,
and, in fact, subsequently purchased a second pair of Citizens jeans from May Company
because "they were having a really good clearance sale."6 Regarding the purchase of
Hass's first pair of Citizens jeans, Hass stated that a "sales gal" at Nordstrom brought her
"lots" of brands of jeans, and she chose to purchase the Ingrid-style Citizens jeans. She
paid in cash and no longer possessed a receipt evidencing her purchase. She testified that
she looked at the label on the jeans before she purchased them but did not recall if the
label stated, "Made in the U.S.A." or "Made in the U.S.A. with imported fabrics."
However, Hass did not investigate what materials Citizens used to manufacture the
Ingrid-style of jeans, and she did not know where the materials Citizens used to
manufacture the jeans came from or even where Citizens manufactured the Ingrid-style
5 At his deposition, Donboli recalled that DeCamp might have contacted Hass
through a fee-based website, "Classaction.com." But he explained that the site generally
included prompts, such as, "did you buy Hebrew National kosher hotdogs during this
time period? If you did, there's X, Y, Z person that's conducting an investigation. Please
contact them." There is no evidence in the record that Donboli and Hass talked before
Hass was added as a named plaintiff in the second amended complaint.
6 During her deposition, Hass was asked if she looked at the label before purchasing
the second pair of jeans. She replied, "I always look at the labels." She then clarified that
she looks at the labels of all products: "Yeah. I often will read the label on a can of
beans." There is no indication in the record regarding the style of these second pair of
Citizens' jeans or what the label on them said. Further, there do not appear to be any
allegations in the second amended complaint specifically addressing Hass's second pair
of Citizens jeans. Appellants do not argue that the second pair of jeans plays any role in
the instant probable cause analysis.
19
jeans. When asked later if she still owned the Ingrid-style jeans, she answered, "They're
not jeans anymore. They're cutoffs."
Hass acknowledged that before talking to DeCamp, she was not contemplating
suing Citizens. Yet, after she learned Citizens was "labeling [its] products in a way that
was not true because it wasn't all made in America," she apparently agreed to be a named
plaintiff in the second amended complaint.
There is other evidence in the record bearing on what Hass and the Del Mar
Attorneys knew when the second amended complaint was filed. In opposition to the antiSLAPP motions, Gary Freedman, Citizens's general counsel, submitted a declaration.
Among other things, Freedman declared that Ingrid-style jeans were not sold at
Nordstrom in San Diego in or around November 2013. He also stated, "At no time has
Citizens labeled its Ingrid-style jeans with labels that solely read 'Made in the U.S.A.' At
all times, the labels on Citizens'[s] Ingrid-style jeans have expressly stated the jeans were
made with imported fabrics."
With this foundation in mind, we try to ascertain Hass's and the Del Mar
Attorneys' knowledge at the time of filing the second amended complaint. To do so, we
begin with the specific allegations in the second amended complaint regarding the Ingridstyle jeans purchased by Hass.
The second amended complaint states in part: "In or around November 2013,
Plaintiff Hass purchased the Ingrid brand jeans at a Nordstrom store in San Diego. At the
time of the purchase, the product itself was marked with a 'Made in the U.S.A.' country of
20
origin designation when the product actually contains component parts made outside of
the United States."
Hass also alleged that she "relied upon" the " 'Made in the U.S.A.' representation"
in deciding to purchase the Ingrid-style jeans. She alleged that at the time she made the
subject purchase, "she was supporting U.S. jobs and the U.S. economy."
In the second amended complaint, Hass emphasized the importance of a label
explicitly stating "Made in the U.S.A.": "The 'Made in the U.S.A.' claim is prominently
printed on the apparel products themselves." Indeed, as Hass brought the complaint as a
named plaintiff in a purported class action, the allegations in the complaint underscored
the significance of the "Made in the U.S.A." label: "Plaintiffs intend to seek class wide
relief on behalf of all California purchasers of any [Citizens] apparel product labeled as
'Made in the U.S.A.' that incorporated foreign-made component parts (in violation of
California and/or federal law) and not just the specific brand of jeans purchased by
Plaintiff." Therefore, the second amended complaint hinged on two essential alleged
facts: the subject apparel (in Hass's case, Ingrid-style jeans) contained: (1) a label stating
"Made in the U.S.A." and (2) foreign made component parts in violation of California
and/or federal law. Based on these two primary allegations, the Del Mar Attorneys, with
Hass as the lead plaintiff, aimed to certify a class action, obtain restitution and injunctive
relief, and be awarded attorney fees and costs. Consequently, at the time the second
amended complaint was filed, in order to have probable cause, we would expect
Appellants to know that Hass purchased Ingrid-style jeans with a label that said "Made in
the U.S.A." and components of those jeans came from a foreign country in violation of
21
California and/or federal law. On the record before us, it is unclear whether Appellants
had the requisite knowledge.
DeCamp contacted Hass after Hass provided her contact information on the Top
Class Actions website. They talked for a "few minutes." We do not know the substance
of that conversation as it is covered by the attorney-client privilege. However, it is clear
that Hass told DeCamp that she had purchased Ingrid-style jeans from Nordstrom around
November 2013. We are aware that there is evidence in the record that Nordstrom was
not selling those style of jeans in November 2013. Yet, that evidence does not cause us
concern. In general, a lawyer may rely on information provided by his or her client in
prosecuting an action unless the lawyer discovers that information is false. (Daniels,
supra, 182 Cal.App.4th at p. 223.) Moreover, the evidence that Nordstrom did not sell
the subject jeans during November 2013 does not necessarily call into question whether
Hass actually purchased the jeans. Rather, it could simply indicate that Hass was
mistaken about where she purchased the jeans some two years earlier.7 If this was the
only evidence calling into question the existence of probable cause in filing the second
amended complaint, we would find Citizens did not satisfy its burden. However, there is
other evidence, which raises serious concerns.
Hass admits that she did not do any investigation regarding the origin of the
components of the Ingrid-style jeans. She was not aware of where Citizens manufactured
7 Nonetheless, Citizens could still argue at trial that the fact Nordstrom did not sell
Ingrid-style jeans in November 2013 shows that Hass is lying about ever purchasing
these jeans. We do not consider this argument in our analysis.
22
those jeans. Nevertheless, it is apparent that DeCamp told her that "not all the jeans
[made by Citizens] were from the United States" and that Citizens was "labeling [its]
products in a way that was not true because [they weren't] all made in America." But, we
do not know if DeCamp told Hass that the Ingrid-style jeans were not made in the United
States or contained foreign components. Indeed, there is no indication in the record that
DeCamp or anyone else at the Del Mar Law Group knew if the Ingrid-style jeans were
made with foreign components. At this time, Citizens had answered the first amended
complaint. In its answer, it admitted "that the phrase 'Made in the U.S.A.' appears on the
outer label of some Citizens of Humanity brand, Boyfriend style jeans." Citizens also
admitted "that some component parts of Citizens of Humanity brand, Boyfriend style
jeans were made outside the United States." Thus, it appears the Del Mar Attorneys
knew that some components of Citizens's Boyfriend-style jeans were made from foreign
components. However, there is no indication in the record that the Del Mar Attorneys
had the same knowledge as to Ingrid-style jeans.
Further, it is unclear whether Hass or the Del Mar Attorneys knew the Ingrid-style
jeans Hass purchased contained a "Made in the U.S.A." label. At her deposition, Hass
did not recall whether the label on her jeans said "Made in the U.S.A." or "Made in the
U.S.A. with imported fabrics." There is no indication in the record that the Ingrid-style
23
jeans purchased by Hass were an exhibit at her deposition.8 There is no indication in the
record that the Del Mar Attorneys ever saw the label on Hass's jeans. And Freedman's
declaration indicates that Citizens did not label its Ingrid-style jeans with labels that
solely read "Made in the U.S.A." but, instead, carried labels that indicated the jeans were
made with imported fabrics.
We are aware that Hass submitted a declaration in support of her anti-SLAPP
motion that stated she purchased the Ingrid-style jeans, "which were marked with a 'Made
in the USA' tag." Hass's declaration is not consistent with her deposition testimony and
contradicts Freedman's declaration. At most, Hass's declaration does not establish what
she and/or the Del Mar Attorneys knew when the second amended complaint was filed.
Instead, it indicates a disputed issue of material fact, the existence of which, requires us
to conclude Citizens met its burden with respect to the probable cause element. (See
Oviedo, supra, 212 Cal.App.4th at pp. 114-115; Sheldon, supra, 47 Cal.3d at pp. 877,
881.) This conflict as to the contents of the label on Hass's jeans is especially disquieting
under the unique facts of this case. The Del Mar Attorneys filed a purported class action
based on a pair of jeans alleged to have a "Made in the U.S.A." label. It is unclear that
Hass or the Del Mar Attorneys knew the subject jeans had such a label at the time the
second amended complaint was filed. In fact, there is no indication in the record that the
8 In contrast, Clark brought the Boyfriend-style jeans she purchased to her
deposition. Also, there are pictures of the Clark's jeans in the record, including labels
that say "Made in the U.S.A." There are not any pictures of the Ingrid-style jeans
purchased by Hass in the record.
24
Ingrid-style of jeans allegedly purchased by Hass had the "Made in the U.S.A." label in
any event.9
2. Malice
" 'For purposes of a malicious prosecution claim, malice "is not limited to actual
hostility or ill will toward [appellant]. Rather, malice is present when proceedings are
instituted primarily for an improper purpose." [Citation.]' " (Oviedo, supra, 212
Cal.App.4th at p. 113.) For example, evidence suggesting that " ' " ' "the proceedings are
initiated for the purpose of forcing a settlement which has no relation to the merits of the
claim" ' " ' " (ibid.), and evidence that an attorney failed to conduct an adequate
investigation before filing a lawsuit (Sycamore, supra, 157 Cal.App.4th at p. 1407)
supports a finding of malice.
"[T]he defendant's motivation is a question of fact to be determined by the jury."
(Sheldon, supra, 47 Cal.3d at p. 874.) "Because direct evidence of malice is rarely
available, 'malice is usually proven by circumstantial evidence and inferences drawn from
the evidence.' [Citation.]" (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1543.)
The record contains some evidence that would support a reasonable inference by a
trier of fact that Appellants were pursuing the litigation against Citizens with an improper
purpose. As to Hass, she testified that she believed she purchased the Ingrid-style jeans
from Nordstrom in 2013, but she has no receipt evidencing the purchase. She did not
9 Because we conclude Citizens carried its burden of establishing a prima facia
showing of a lack of probable cause under former section 17533.7, we do not reach
Citizens's argument that Appellants lacked probable cause once section 17533.7 was
amended.
25
recall if the label on the Ingrid-style jeans contained a label that said "Made in the
U.S.A." or "Made in the U.S.A. with imported fabric." She did not investigate where
Citizens made its jeans. She purchased a second pair of Citizens jeans, but there is no
information in the record recording the style of those jeans or what the subject label said.
There is no evidence that she purchased this second pair of jeans based on a "Made in the
U.S.A." label. Instead, she indicated she bought them at a clearance sale. Hass admitted
that she had no plans to sue Citizens until she was contacted by the Del Mar Attorneys
and informed that Citizens mislabels its jeans.
In addition, Citizens offered additional evidence that further calls into question
Hass's motive for being a plaintiff in the underlying action. Citizens provided evidence
that at the time Hass claimed she purchased the Ingrid-style jeans (November 2013),
Nordstrom was not selling those jeans. Also, Citizens offered evidence that Ingrid-style
jeans did not have labels that solely stated: "Made in the U.S.A." A reasonable inference
can be drawn from this evidence that Hass did not subjectively believe that the action was
tenable. (See Sycamore, supra, 157 Cal.App.4th at p. 1407.)
Likewise, we determine there is sufficient evidence of malice as to the Del Mar
Attorneys. As we discuss above, a reasonable inference can be drawn that Clark was a
shill plaintiff, that she purchased the Citizens jeans to serve as a plaintiff in a class action
in order to be paid. Further, based on her role in previous suits filed by the Del Mar
Attorneys, it was reasonable to infer that the Del Mar Attorneys were aware of Clark's
motivations in serving as the lead plaintiff in a purported class action against Citizens (or
at least should have been aware after her deposition).
26
The evidence also shows similar problems in the Del Mar Attorneys'
representation of Hass. They never saw the Ingrid-style jeans that Hass allegedly
purchased. They did not know what the label on those jeans actually said. In fact, based
on the record, it appears the Del Mar Attorneys spent little more than a few minutes
discussing Hass's potential claims against Citizens with Hass before they decided to
represent her and add her as a class plaintiff. In short, the Del Mar Attorneys conducted
little investigation into Hass's claims, even when significant questions were raised
regarding the validity of her claims. Moreover, the attorneys for Citizens represented that
the Del Mar Attorneys pressured them for a quick settlement before a class was certified
or extensive discovery conducted.
Appellants deny all the allegations of malice and point to evidence they believe
undercuts Citizens's claim of malice.10 But none of the evidence put forward by
Appellants defeats the evidence in Citizens's favor as a matter of law. (See Oviedo,
supra, 212 Cal.App.4th at p. 114.) Simply put, there is enough evidence here that
satisfies Citizens's burden with respect to this element. (See Bergman v. Drum (2005)
129 Cal.App.4th 11, 25 ["While these circumstances do not conclusively establish
malice, they are sufficient to allow the issue to go to the trier of fact for resolution."].)
3. Favorable Termination
10 For example, Appellants emphasize they believed in their claims, the Del Mar
Attorneys investigated Clark's claim before filing suit, the claims were based on
Citizens's violations of the law as the law existed at that time, Clark and Hass testified
they were involved in the suit to vindicate similarly situated consumers, and the Del Mar
Attorneys never paid Hass to be a plaintiff.
27
After the change in the mislabeling statute, Citizens brought a motion to dismiss,
contending Hass did not plead a violation of the new version of section 17533.7, and as
such, her other claims fail because they are contingent on section 17533.7. Citizens also
argued Hass lacked standing to sue for products that she did not purchase. The district
court agreed with Citizens that Hass had not stated a valid claim under the new statute.
Thus, it dismissed Hass's claim under section 17533.7 without prejudice. Additionally,
the court determined that Hass's other claims under the UCL and CLRA failed under
"California's safe harbor doctrine" and dismissed those causes of action without prejudice
Finally, the court concluded that Hass lacked "standing to proceed either for herself or on
behalf of others as to products she did not purchase." As such, the court dismissed
without prejudice all of Hass's claims on this ground as well. Hass opted not to file an
amended complaint, and the district court then dismissed the entire action with prejudice.
In ruling on the Appellants' anti-SLAPP motion, the superior court found that the
district's court's dismissal with prejudice of the entire action was a favorable termination
in the context of a malicious prosecution suit. Appellants claim this finding was
erroneous. We disagree.
"A voluntary dismissal is presumed to be a favorable termination on the merits,
unless otherwise proved to a jury. [Citations.] This is because ' "[a] dismissal for failure
to prosecute . . . does reflect on the merits of the action [and in favor of the
defendant]. . . . The reflection arises from the natural assumption that one does not
simply abandon a meritorious action once instituted." ' [Citation.]" (Sycamore, supra,
157 Cal.App.4th at p. 1400.)
28
Appellants acknowledge the existence of the presumption that a voluntary
dismissal reflects a favorable termination on the merits; however, they insist the superior
court had a duty to "evaluate the underlying reasons for terminating the action." To this
end, they rely on Sycamore, supra, 157 Cal.App.4th 1385, and point out that the appellate
court there noted that the trial court observed that the malicious prosecution plaintiff
"offered evidence that reasonably suggested that the dismissal occurred because [the
underlying suit plaintiff's] claims lacked merit." (Id. at p. 1400.) Appellants contend that
Citizens offered no analogous evidence below, and the superior court did not properly
consider why Hass did not amend her complaint. We find Appellants' reliance on
Sycamore misplaced.
In Sycamore, after she failed to show up for her deposition, the plaintiff in the
underlying suit instructed her attorneys to dismiss her complaint. Thus, the plaintiff
voluntarily dismissed her claims. Subsequently, in exchange for a waiver of costs, the
plaintiff agreed to have her claims dismissed with prejudice. (Sycamore, supra, 157
Cal.App.4th at p. 1394.) Before the dismissal of plaintiff's claims, the trial court did not
evaluate the merit of those claims. Alternatively stated, the defendant did not bring a
dispositive motion or demur to challenge the plaintiff's causes of action.
Here, contrary to Sycamore, Citizens brought a successful motion to dismiss all of
Hass's claims. The district court ruled on the merits of Hass's three causes of action,
explicitly finding that Hass "failed to adequately allege that [Citizens] violated the
amended and controlling version of § 17533.7" and that her other two claims "fail to state
a plausible claim of relief." The court also found that Hass lacked standing to sue on
29
behalf of a putative class of purchasers of products that she, herself, did not purchase. In
other words, the district court determined it lacked subject matter jurisdiction to hear
claims Hass was bringing based on products she did not purchase. Therefore, the court
dismissed Hass's "claims on behalf of other purchasers for products she did not purchase"
on jurisdictional grounds. However, the court granted Hass leave to amend to address
these deficiencies.
Hass elected not to file an amended complaint and requested the court "dismiss the
entire case for lack of subject matter jurisdiction." The court then dismissed Hass's "case
WITH PREJUDICE pursuant to Federal Rule of Civil Procedure 41(a)(2)." Hass
maintains her actions coupled with the district court's dismissal underscore that the court
dismissed her actions on purely jurisdictional grounds, and as such, the dismissal did not
address the merits of her claims against Citizens.11 We are not persuaded.
Hass asked the district court to dismiss the entire case for lack of subject matter
jurisdiction. Such a dismissal would be inconsistent with the court's order on Citizens's
motion to dismiss. The court did not find Hass lacked standing to bring claims on her
behalf against Citizens for alleged violations of section 17533.7, the UCL, and the CLRA
based on the jeans she purchased. Rather, the court found, on the merits, that Hass had
not stated valid claims under any of those statutes based on the allegations in the
11 A "lack of standing" is a jurisdictional defect. (Common Cause v. Board of
Supervisors (1989) 49 Cal.3d 432, 438; McKinny v. Board of Trustees (1982) 31 Cal.3d
79, 90.) "[A] dismissal for lack of jurisdiction does not involve the merits and cannot
constitute a favorable termination." (Cantu v. Resolution Trust Corp. (1992)
4 Cal.App.4th 857, 882; Lackner v. LaCroix (1979) 25 Cal.3d 747, 750.)
30
operative complaint, but gave her leave to amend. The district court concluded Hass did
not have standing to bring claims on behalf of others who had purchased different types
of apparel from Citizens, unless she could plead additional facts to show the same alleged
violations that plagued the Ingrid-style jeans also infected the other apparel sold by
Citizens. Accordingly, the court did not have any grounds to dismiss the entire case for
lack of subject matter jurisdiction as requested by Hass.
Moreover, it is clear from the court's order dismissing the entire case with
prejudice that it did not simply find the case wanting on jurisdictional grounds. Federal
Rules of Civil Procedure, rule 41(a)(2) (Rule 41(a)(2)) provides the following:
"Except as provided in Rule 41(a)(1), an action may be dismissed at
the plaintiff's request only by court order, on terms that the court
considers proper. If a defendant has pleaded a counterclaim before
being served with the plaintiff's motion to dismiss, the action may be
dismissed over the defendant's objection only if the counterclaim can
remain pending for independent adjudication. Unless the order
states otherwise, a dismissal under this paragraph (2) is without
prejudice."
Thus, Rule 41(a)(2) allows a district court to dismiss any action, upon a plaintiff's
request, "on terms that the court considers proper." Additionally, the rule dictates that the
dismissal will be without prejudice, unless the order specifically states otherwise. Here,
the district court dismissed the entire action with prejudice. It was not required to do so.
Obviously, it thought such a dismissal was proper on the record before it. This dismissal
effectively prevents Hass from suing Citizens for any alleged violations of section
17533.7, the UCL, and the CLRA based on her purchase of the Ingrid-style jeans. We
struggle to see how such a dismissal could not be considered on the merits. As such, we
31
agree with the superior court that Citizens made a prima facia showing of favorable
termination of the underlying lawsuit.12
Based on the foregoing, we agree with the superior court that Citizens has satisfied
its minimal burden in opposing the anti-SLAPP motions. Citizens "demonstrated that the
complaint is both legally sufficient and supported by a sufficient prima facie showing of
facts to sustain a favorable judgment if the evidence submitted by the plaintiff is
credited." (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.) That said,
we offer no opinion regarding the eventual success of Citizens's malicious prosecution
suit on the merits.
Outcome:
The order is affirmed. Citizens is entitled to its costs on appeal.
Plaintiff's Experts:
Defendant's Experts:
Comments: