Opinion
A124070 No. FSC031532 A124097 A124096
10-20-2010
LEIGH ROBINSON, Plaintiff and Appellant, v. U-HAUL CO. OF CALIFORNIA et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
In these consolidated appeals, defendants U-Haul Co. of California (UHC) and UHaul International (UHI) (collectively U-Haul) appeal from an order denying their combined special motion to strike (Code Civ. Proc., § 425.16) plaintiff Leigh Robinsons complaint for malicious prosecution and unfair business practices (Bus. &
Subsequent unspecified statutory references are to the Code of Civil Procedure.
Prof. Code, § 17200). The trial court denied UHCs motion in its entirety and partially granted UHIs motion with respect to the malicious prosecution cause of action. Robinson appeals from that part of the order striking his malicious prosecution cause of action against UHI. We affirm.
I.
Background
A. Introductory Facts
In 2001, Robinson purchased a business known as Downtown Self-Storage (Downtown), located at 1411 W. Texas Street in Fairfield, California. At the time of Robinsons purchase, Downtown was an independent U-Haul dealer, offering U-Haul trucks and equipment for rent. On August 1, 2001, Robinson signed a dealership contract with UHC, permitting him to rent out U-Haul moving equipment and trucks. Pursuant to the dealership contract, Robinson agreed that upon termination of the agreement, he would not represent or render any service for another entity engaged in any business similar to that operated by UHC at the Downtown location or within a three-mile radius of that location during the period of the then-existing telephone directory listing for the Downtown location.
On August 1, 2004, Robinson signed a new dealership contract with UHC, as well as two related addendums, to wit: an electronic system reporting (ESR) agreement and a rotation truck agreement (RTS). All three agreements contained the same noncompetition covenant. Additionally, the ESR and RTS agreements purported to extend the noncompetition obligations under the dealership contract for a period of one year "after termination of all other accumulated [d]ealer noncompetition obligations" under the existing contracts.
In September 2006, Robinson terminated his relationship with UHC. After consulting with friends in the legal profession, Robinson determined that the noncompetition covenant was illegal and unenforceable. Robinson then opened a Budget rental dealership at the Downtown location.
B. UHC sues Robinson for Breach of Contract; Robinson Cross-complains
In December 2006, UHC filed a complaint against Robinson, alleging unfair competition, breach of contract, and specific performance. The gravamen of the complaint was that Robinson was acting unlawfully in offering the products and services of Budget at the same time that widespread advertising, which prominently displayed the U-Haul trademark and trade name, informed the public that Robinsons Downtown location was a place to rent U-Haul products.
In response, Robinson filed a cross-complaint, alleging claims for declaratory relief and breach of contract. Robinson asserted that the noncompetition clauses were unenforceable. He also alleged that UHC breached its contractual obligations to Downtown by, among other things, failing to ensure that trucks reserved by customers were actually present at Downtowns location at the date and time specified in the reservations, and by failing to provide mechanically sound rental trucks to Downtown.
Thereafter, UHC sought a preliminary injunction, seeking to enjoin Robinson from offering Budget trucks and equipment during the active period of the telephone directory advertising that promoted Downtown as a place to rent U-Haul trucks and equipment. Following a hearing, the trial court denied UHCs motion for preliminary injunction without providing the rationale for its ruling.
After its unsuccessful application for an injunction, UHC opted to dismiss its complaint without prejudice. In response, Robinson dismissed his cross-claim for damages, but elected to pursue his claim for declaratory relief. Robinson then moved for summary judgment of his remaining cross-claim, seeking to have the dealer contract declared unenforceable. In denying the motion, the trial court ruled that Robinson had "failed to provide... admissible evidence that U-HAUL had, or currently has, cases against other dealers pending in which U-HAUL attempted or is attempting to enforce non-competition covenants without a reasonable expectation that the dealer used or is using its trade secrets."
Robinsons cross-complaint is still pending in the trial court.
C. The Special Motion to Strike
In June 2008, Robinson filed the operative complaint against UHC and UHI and their attorneys, alleging malicious prosecution and unfair business practices.Robinsons complaint, like his cross-claim for declaratory relief, is based on the alleged unenforceability of U-Hauls noncompetition covenant. The complaint also alleges that U-Haul unfairly engages in " poaching of reservations." UHC and UHI filed a special motion to strike the complaint pursuant to section 425.16.
The attorney defendants are not part of the instant appeal.
D. Evidence Submitted in Opposition to the Special Motion to Strike
Robinson filed an opposition to the special motion to strike with several declarations in support of his position. Robinson explained that although he believed UHauls noncompetition covenant was illegal and unenforceable, he opened the Budget dealership with "some trepidation" because he had been informed that U-Haul had a policy of " brutally " litigating against former dealers who went with competing truck companies, and "such was especially likely in [his] case because Downtown is [four] doors down the street from U-Hauls corporate office in Fairfield." Robinson averred that "[t]he financial and emotional toll taken by U-Hauls litigation was indeed brutal. " Robinson further explained that long after he filed his cross-complaint in the prior action, he learned that: (1) in the decade before U-Haul sued him to "enforce its noncompetition covenant, U-Haul had previously brought court actions seeking to enforce the non-competition covenants against other former dealers" in "virtually identical" actions; and (2) in each case where the action was contested by the former dealer, "UHaul would seek an injunction, the injunction would be denied by the [c]ourt, and U-Haul would then dismiss the action without going to judgment, thus avoiding the payment of attorneys fees."
Matthew Freeman, counsel for Robinson, submitted a declaration describing UHauls behavior in the underlying litigation as being "literally the most egregiously abusive" conduct he had ever experienced. Freeman, paraphrasing the trial court in the underlying action, characterized U-Hauls conduct as an "example of a multi-billion dollar corporation vindictively punishing... a comparative [] economic midget. " Freeman also attached court records from three other actions by U-Haul against former dealers.
Tony Concepcion, a manager at Crespi Mini Storage, submitted a declaration describing his former relationship with U-Haul and the litigation that ensued once Crespi Mini Storage terminated its dealership with U-Haul and began operating a Budget rental agency. Concepcion explained that although he believed U-Hauls noncompetition covenant was illegal under Business and Professions Code section 16600, he decided to shut down the Budget rental agency "because the cost of defending the lawsuit would exceed the net income... receive[d] from continued operations...."
June Vassey, the day-to-day manager at Downtown, submitted a declaration. Vassey and her husband were hired by Robinson in September 2001 to manage Downtown and the on-site U-Haul rental agency. At no time did anyone from U-Haul ever train Vassey or her husband on how to operate the rental agency or its then-existing reservations system. Vassey stated "unequivocally" that neither she nor her husband ever saw "a U-Haul operations manual either on site at Downtown or anywhere else."
Vassey explained that when the reservations system was replaced with an Internetbased system, U-Haul provided no training or support. Vassey and her husband received only a user name and password. As with all other aspects of the U-Haul rental agency, Vassey and her husband learned by " trial and error. "
Vassey opined that the "overwhelming majority" of U-Haul truck rentals being processed by Downtown were reserved "by customers who either went onto U-Hauls Internet website or who called U-Hauls toll-free reservation number." She explained that "[s]ome customers" called the telephone number listed in the local Yellow Pages advertisement to reserve a truck. However, in the entire five-year period that Downtown operated a U-Haul rental agency, the Vasseys "never had one customer who came in without a reservation and said they [wanted to] rent[] a truck through [Downtown] because they saw an ad in the Yellow Pages with [Downtowns] address in it."
Vassey explained that a few days prior to the opening of the Budget rental agency at Downtown, someone from U-Haul came to Downtown and removed the on-site UHaul sign, as well as any U-Haul materials. Vassey stated the telephone number shown in the U-Haul Yellow Pages listing for Downtown stopped operating on or about October 5, 2006. Out of curiosity, two weeks later Vassey called the former telephone number, which rang at Crockers Lockers, another self-storage, located a few blocks away from Downtown. Later that month, Vassey drove by Crockers Lockers and saw a U-Haul sign and U-Haul trucks at that location.
Vasseys declaration also alleged instances of "poaching," a term she used to describe "the large number of instances where customers would make truck rental reservations with Downtown designated as the pick-up location and then the reservation would vanish. " Vassey averred that she spoke with "Patrice Inzicab, a U-Haul employee at the corporate office whom [Vassey] had gotten to know," about the increasing number of "poaching" incidents that Downtown experienced. According to Vassey, Inzicab explained that "starting in 2004,... if a truck was coming into one of the corporate owned stores and there was no reservation at [that location] for that size truck, U-Haul would shift a reservation for a truck of that size, which had been designated by the customer for pick-up at an independent dealer, and [would] have the pick-up occur instead at the U-Haul corporate store. There were two benefits to this for U-Haul: (1) Uhaul would not have a fallow (i.e., unrented) truck at its corporate store; and (2) U-Haul would get the entire truck rental contract amount, rather than having to give the independent dealer their 22% commission." Vassey stated that she "did a little digging and every other independent U-Haul dealer [she] spoke with had similar experiences[.]"
Finally, Vassey averred that she and her husband have "used absolutely no [UHaul] information, processes or procedures" in operating the Budget rental agency at Downtown. She explained that "with the exception of passwords for accessing U-Hauls on-line reservations system every single bit of the limited information imparted... by UHaul with regard to operating a U-Haul truck rental dealership was... just common sense practices used by virtually every business."
U-Haul filed numerous objections to the evidence submitted by Robinson, arguing the declarations lacked foundation and constituted inadmissible hearsay. U-Haul also asserted that declarations contained irrelevant information and improper opinion evidence. Following a contested hearing, the trial court denied in part and granted in part U-Hauls objections.
E. Trial Courts Ruling on the Special Motion to Strike
The trial court granted in part and denied in part the special motion to strike. As to the malicious prosecution claim against UHI, the court found Robinson failed to meet his burden as to the "favorable termination" element. As to the malicious prosecution claim against UHC, the court found that Robinson met his burden as to the elements of probable cause and malice. In so ruling, the court explained as follows: "[W]hen an action is brought without any reasonably debatable basis for prevailing, the lack of probable cause element is satisfied. The law on enforceability of non-competition covenants, in the absence of actual evidence, or at least a reasonable probability of discovery of evidence, of the use of trade secrets by the defendant in these circumstances is not debatable. [¶] As to the element of malice, this element requires evidence of ill will or some improper purpose, whether express or implied... [¶] The court takes judicial notice that [UHC] had, prior to the filing of [the underlying action], filed two virtually identical actions in California to enforce virtually identical non-competition covenants, with both of those prior actions unsuccessful in obtaining any relief, injunctive or otherwise.... The filing of this virtually identical action against [Robinson], after those prior failures, and the denial... of the motion for preliminary injunction in this action, demonstrate a probability that [Robinson] will prevail on the element of malice, as to [UHC]."
As to the unfair business practices cause of action, the trial court ruled that Robinson had established a probability of prevailing against UHC insofar as the complaint alleged an "improper business practice of attempting to enforce noncompetition covenants without reasonable legal and factual bases to do so...." Moreover, as to UHI, "cease and desist letters were sent by in-house counsel for [UHI] on behalf of [UHC], to California dealers in 2005, after the two prior unsuccessful lawsuits against former dealers in California." Thus, the trial court found that Robinson had established a probability of prevailing against UHI "on at least part of the second cause of action for unfair business practices."
II.
DISCUSSION
A. Applicable Law and Standard of Review
" SLAPP is an acronym for strategic lawsuits against public participation. [Citation.] A special motion to strike a SLAPP action, codified in... section 425.16, provides a procedural remedy to gain an early dismissal of a lawsuit or cause of action that qualifies as a SLAPP. [Citation.]" (Daniels v. Robbins (2010) 182 Cal.App.4th 204, 210, fn. 1.) This procedure is also known as an anti-SLAPP motion. (Id. at p. 210.)
Section 425.16, subdivision (b)(1) provides that a cause of action arising from a constitutionally protected right of free speech is subject to a special motion to strike unless the plaintiff establishes the probability he or she will prevail on the claim. (§ 425.16, subd. (b)(1).) In ruling on such a motion, the trial court must first determine whether the defendant has met the burden to show the activity underlying the cause of action is constitutionally protected. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) If the defendant establishes this, the burden shifts to the plaintiff to show a probability of prevailing on the cause of action. (Ibid.) Here, it is undisputed that UHC engaged in protected activity. Consequently, the only issue to be determined in this appeal is whether Robinson carried his burden to show a probability of prevailing at trial. (§ 425.16, subd. (b)(1).)
"In ruling on a special motion to strike, the court does not weigh the evidence or make credibility determinations. [Citations.] (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 906.) Rather, once the plaintiff makes a prima facie showing of facts which would support a judgment in his or her favor, the court will consider[] the defendants opposing evidence, but only to determine if it defeats the plaintiffs showing as a matter of law. [Citation.] (Ibid.) The process the court uses in determining whether the plaintiff has shown a probability of prevailing on the merits is similar to the process used in determining motions for nonsuit, directed verdict or summary judgment. (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 672; ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010; Kyle v. Carmon (1999) 71 Cal.App.4th 901, 907.) [I]n order to establish the requisite probability of prevailing [citation], the plaintiff need only have " stated and substantiated a legally sufficient claim " [Citations.] "Put another way, the plaintiff must demonstrate 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. " [Citations.] (Navellier v. Sletten (2002) 29 Cal.4th 82, 88-89.)" (Ross v. Kish (2006)145 Cal.App.4th 188, 197.) "Only a minimal showing of merit is required." (Robinson v. Vicory (2006) 143 Cal.App.4th 1416, 1421.) "If the plaintiff meets [his or her] burden the motion must be denied. (Mattel, Inc. v. Luce, Forward, Hamilton & Scripps (2002) 99 Cal.App.4th 1179, 1189.)" (Ross at p. 197.)
"We review de novo a trial courts ruling on a motion to strike under section 425.16 by "conducting an independent review of the entire record. [Citations.]" (Paulus v. Bob Lynch Ford, Inc., supra, 139 Cal.App.4th at p. 672; see HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212; ComputerXpress, Inc. v. Jackson, supra, 93 Cal.App.4th at p. 999.)" (Ross v. Kish, supra, 145 Cal.App.4th at p. 197.)
B. Evidentiary Issues
U-Haul argues there was insufficient evidence refuting the anti-SLAPP motion because most of Robinsons proffered evidence was inadmissible. We are not persuaded.
Although a cause of action arising from activity protected by section 425.16 will be stricken only if it "lacks even minimal merit" (Navellier v. Sletten, supra, 29 Cal.4th at p. 89), the prima facie showing of facts to sustain a favorable judgment must nevertheless be made with admissible evidence. (Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 830, disapproved on another point in Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 68, fn. 5.) Unless plaintiff resists the motion with admissible evidence "there would be nothing for the trier of fact to credit" (ibid.) and plaintiff would fail to establish a probability of prevailing. (Wilcox at p. 830.) With one exception, Robinson presented admissible evidence in opposing the special motion to strike.
1. Robinsons Declaration
U-Haul objected to Robinsons declaration on the ground that his statements about what he had heard from third parties constituted inadmissible hearsay. U-Haul further objected to Robinsons statements about his perceived problems with U-Haul, as lacking foundation and being irrelevant. Additionally, U-Haul claimed that Robinsons testimony regarding the state of the law as both improper opinion evidence and lacking foundation. Finally, U-Haul objected to Robinsons statements regarding what he had heard about prior lawsuits filed by U-Haul as lacking foundation, being irrelevant, and constituting inadmissible hearsay.
The trial court admitted the majority of Robinsons declaration, finding that the challenged statements were relevant to his state of mind. As it asserted below, U-Haul argues that Robinsons state of mind was not relevant to any issue in the action, i.e., whether Robinson could establish a probability of prevailing on his malicious prosecution and unfair business practices causes of action.
Under the Evidence Code, "evidence of a statement that was made other than by a witness while testifying at the hearing and that is offered to prove the truth of the matter stated" constitutes hearsay and, absent an applicable hearsay exception, is inadmissible. (Evid. Code, § 1200, subds.(a), (b).) However, an out-of-court statement is not hearsay if it is offered to show the effect on the hearer, reader, or viewer rather than to prove the content of the statement. (See Wegner et al., Cal. Practice Guide: Civil Trials and Evidence (The Rutter Group 2010) ¶ 8:1049, p. 8D-12.) Typical issues on which these statements are commonly offered are knowledge and belief. (1 Witkin, Cal. Evidence (4th ed. 2000) Hearsay, § 40, pp. 722-723.) In this regard, an extrajudicial statement is not hearsay if used " to prove... the hearer... obtained certain information by hearing... the statement and, believing such information to be true, acted in conformity with such belief.... The statement is not hearsay, since it is the hearers reaction to the statement that is the relevant fact sought to be proved—not the truth of the matter asserted in the statement. [Citation.]" (Holland v. Union Pacific Railroad Co. (2007) 154 Cal.App.4th 940, 942; see also Wiz Technology, Inc. v. Coopers & Lybrand (2003) 106 Cal.App.4th 1, 13 [statements of others admissible where reasonableness of declarants conduct at issue].)
Here, the out-of-court statements were offered regarding Robinsons beliefs about U-Hauls business and litigation tactics with respect to its covenant not to compete, and the reasonableness of Robinsons ensuing conduct in reliance on that information (i.e., decision to terminate contract with U-Haul and open a Budget rental agency), not the truth of the matters asserted in the out-of-court statements (i.e., U-Hauls noncompetition covenant was illegal or that U-Haul "poached" customers from independent dealers). This circumstantial evidence of Robinsons state of mind was probative in determining whether Robinson had established a probability of prevailing on the key issues in the instant action, to wit: whether the underlying litigation was maliciously instigated without probable cause and whether U-Haul engaged in unfair business practices by, among other things, including a covenant not to compete in the dealer contracts. The outof-court statements admitted for these purposes are not hearsay.
2. Freemans Declaration
U-Haul objected to Freemans declaration on the ground that three of the attached exhibits (A, C, and M) lacked foundation and constituted inadmissible hearsay. The challenged exhibits pertained to the prior lawsuits involving UHC and other independent U-Haul dealers. As it asserted below, U-Haul maintains that these exhibits were attached to Freemans declaration without a proper request for judicial notice. Citing California Rules of Court, rule 3.1113(l) (request for judicial notice must be made in separate document), U-Haul claims that the trial court erroneously took judicial notice of these exhibits, as "Robinsons last minute oral request for judicial notice at the hearing was improper, untimely, and could not serve as the basis for admission."
While judicial notice as to the fact of the court actions is proper (Evid. Code, § 452, subd. (d)), the truth of the matters asserted in court records is not necessarily subject to judicial notice. (Sosinksy v. Grant (1992) 6 Cal.App.4th 1548, 1564-1569 [court cannot take judicial notice of hearsay statements in court record or file]; see also Bach v. McNelis (1989) 207 Cal.App.3d 852, 864-865 [same].) Here, U-Haul does not suggest that the trial court erroneously took judicial notice of the contents of the court records. Indeed, in the trial court, U-Haul conceded that the objection was one of "pure form" due to Robinsons failure to file a separate request for judicial notice. Finding this objection to be of "no value to anybody," the trial court judicially noticed the other lawsuits.
The trial court acted well within its discretion in taking judicial notice of the fact of the other lawsuits between UHC and its former dealers. (Evid. Code, §§ 452, 453; see also Cal. Law Revision Com. com., 29B Pt. 1 Wests Ann. Evid. Code (1995 ed.) foll. § 453, pp. 528-529.)
3. Concepcions Declaration
U-Haul objected to Concepcions declaration on the ground that his statements were irrelevant and lacking foundation. U-Haul argues that Concepcions status as the "manager" of Crespi Mini Storage did not qualified him to opine as to the legality of covenants not to compete in California. U-Haul further claims that Concepcions managerial status did not qualify him to testify as to what the "owner" of the business may have been thinking.
Concepcions declaration consists primarily of admissible statements summarizing the litigation between Crespi Mini Storage and UHC, in which he participated by doing legal research and preparing a draft answer. Moreover, the trial court struck any references as to what the "owner" of Crespi Mini Storage thought about U-Haul, its business practices, or the litigation.
Finally, to the extent that U-Haul claims that Concepcion failed to establish a "nexus" between his job duties and the requisite knowledge for offering his testimony (Evid. Code, § 702), Concepcions declaration was properly admitted, as there is a high probability he could establish a proper foundation at trial. (See Fashion 21 v. Coalition for Humane Immigrant Rights of Los Angeles (2004) 117 Cal.App.4th 1138, 1148
[evidence lacking proper foundation admissible where high probability proper foundation could be established at trial].)
4. Vasseys Declaration
U-Haul objected to Vasseys declaration on the ground that her testimony, as to the extent of the training and information she had received from U-Haul, was irrelevant and lacked foundation. U-Haul also argued that Vasseys purported conversation with a "Ms. Inzicab," regarding U-Hauls business practices, lacked foundation and constituted inadmissible hearsay.
Contrary to U-Hauls contention, the extent of the training and information Vassey received from U-Haul has a tendency to prove or disprove U-Hauls misappropriation of trade secrets claim; thus, this evidence was relevant. (Evid. Code, § 210.) Moreover, Vasseys statements about her own training, et cetera, were properly admitted because of the high probability that a proper foundation could be established at trial. (Fashion 21 v. Coalition for Humane Immigrant Rights of Los Angeles, supra, 117 Cal.App.4th at p. 1148.)
We reach a different conclusion, however, as to the admission of Vasseys statements about her conversation with Inzicab. The trial court admitted this evidence as a party admission, i.e., a statement offered against a party that was made by a person authorized to speak on the partys behalf. (Evid. Code, § 1222.) However, there is no evidence that Inzicab was U-Hauls agent or that it authorized her to speak on its behalf. (See Miller v. Filter (2007) 150 Cal.App.4th 652, 664, fn. 4 [in anti-SLAPP case district attorneys hearsay statements not admissible as authorized admissions where no evidence district attorney was authorized to speak on behalf of deputy district attorneys]; Rochlis v. Walt Disney Co. (1993) 19 Cal.App.4th 201, 217, disapproved on another point in Turner v. Anheuser-Busch, Inc.(1994) 7 Cal.4th 1238, 1251 [in defamation action statement about plaintiff inadmissible where no foundation established that declarant was authorized to speak on defendants behalf]; see also Cal. Law Revision Com. com., 29B Pt. 4 Wests Ann. Evid. Code (1995 ed.) foll. § 1222, p. 159.) Nevertheless, to the extent the trial court erred in admitting this evidence, U-Haul has not demonstrated, nor does the record disclose, a prejudicial error resulting in a miscarriage of justice. (See Cal. Const., art. VI, § 13; Evid. Code, § 353, subd. (b).)
C. Malicious Prosecution
The elements of malicious prosecution, which Robinson was required to establish, are a termination of a prior action in his favor, lack of probable cause in bringing or continuing to prosecute the action, and malice. (Zamos v. Stroud (2004) 32 Cal.4th 958, 965, 970.) "The actionable harm is in forcing [an] individual to expend financial and emotional resources to defend against a baseless claim." (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1131, italics omitted.)
1. Robinson Has Shown a Probability of Prevailing on his Malicious Prosecution Cause of Action Against UHC
UHC contends that Robinson failed to produce sufficient evidence on two elements: lack of probable cause and malice. We examine each of these elements in turn.
a. Lack of 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. he court must determine whether, on the basis of the facts known to the defendant, the institution of the prior action was legally tenable. 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.] [Citation.] The test the court is to apply is whether any reasonable attorney would have thought the claim tenable.... [Citation.]" (Sycamore Ridge Apartments LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1402, italics omitted (Sycamore Ridge Apartments)?)
" In analyzing the issue of probable cause in a malicious prosecution context, the trial court must consider both the factual circumstances established by the evidence and the legal theory upon which relief is sought. 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 which is untenable under the facts known to him. [Citation.]" (Sycamore Ridge Apartments, supra, 157 Cal.App.4th at p. 1402.)
"In determining whether the prior action was legally tenable, i.e., whether the action was supported by probable cause, the court is to construe the allegations of the underlying complaint liberally, in a light most favorable to the malicious prosecution defendant. [Citation.]" (Sycamore Ridge Apartments, supra, 157 Cal.App.4th at p. 1402.) Construing the allegations of the underlying complaint in the light most favorable to UHC, it is clear that probable cause was lacking.
UHC alleged that Robinsons operation of a Budget rental agency at the Downtown location constituted a breach of the noncompetition covenant, and constituted an unfair business practice. UHC further alleged that in the course of operating the Budget rental agency, Robinson misappropriated U-Hauls trade secrets, by wrongfully using U-Hauls "confidential and proprietary information" contained in the dealer operations manual, including "pricing information, marketing strategy, organization, management and operation." According to UHCs complaint, this information was "not generally known to the equipment rental industry."
Although " counsel and their clients have a right to present issues that are arguably correct even if it is extremely unlikely that they will win (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 885), no reasonable attorney would have thought tenable UHCs noncompetition claims against Robinson in the underlying action. Business and Professions Code section 16600 declares that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." Section 16600, or a version thereof, has been the law in California since 1872. (Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 945 (Edwards); Bosley Medical Group v. Abramson (1984) 161 Cal.App.3d 284, 288.) It represents the " strong public policy of the State of California" that " [t]he interests of the employee in his own mobility and betterment are deemed paramount to the competitive business interests of the employers. " (Application Group, Inc. v. Hunter Group, Inc. (1998) 61 Cal.App.4th 881, 900; Metro Traffic Control, Inc. v. Shadow Traffic Network (1994)
22 Cal.App.4th 853, 859 ["California courts have consistently declared this provision an expression of public policy to ensure that every citizen shall retain the right to pursue any lawful employment and enterprise of their choice"].) In light of this longstanding public policy in favor of open competition, covenants not to compete are void, subject to a few statutory exceptions not applicable here. (Edwards, supra, 44 Cal.4th at p. 945.)
"Business and Professions Code sections 16601 and 16602 permit broad covenants not to compete in two narrow situations: where a person sells the goodwill of a business, and where a partner agrees not to compete in anticipation of dissolution of a partnership." (Kolani v. Gluska (1998) 64 Cal.App.4th 402, 406.)
Paragraph 5.h. of the dealership contract prohibits a dealer, upon termination of the contract, from engaging in "any rental business similar to that operated by UHaul...." The prohibition is for the duration of the then-existing telephone directory listing and prevents a dealer from operating a competing business at the dealer location within a three-mile radius of this location. This agreement unquestionably restricts Robinsons "mobility and betterment" and thus violates Business and Professions Code section 16600.
UHC argues that this agreement does not violate Business and Professions Code section 16600 because the covenant not to compete was necessary to protect U-Hauls trade secrets. Although a lengthy line of cases has consistently held former employees may not misappropriate the former employers trade secrets to unfairly compete with the former employer (see The Retirement Group v. Galante (2009) 176 Cal.App.4th 1226, 1237 (Retirement Group)), the so-called "trade secrets" exception to Business and Professions Code section 16600, upon which UHC relies, rests on shaky legal grounds (see Edwards, supra, 44 Cal.4th at p. 946, fn. 4; Dowell v. Biosense Webster, Inc. (2009) 179 Cal.App.4th 564, 578 (Dowell); Retirement Group, supra, at pp. 1238-1239.) Even assuming the continued viability of this exception, it has no application here.
The instant case is analogous to Dowell, supra, 179 Cal.App.4th 564, where an appellate court held that a broadly worded noncompete clause was a facially void restriction on employees practice of their chosen profession, where the clause prohibited employees, for a period of 18 months after termination of employment, from rendering services, directly or indirectly, to any competitor in which the services they might provide could enhance the use or marketability of a conflicting product by application of confidential information to which the employees had access during employment. (Id. at pp. 575, 577-578.) There, as here, the employer argued that the noncompete clause was valid because it was tailored to protect trade secrets. (Id. at pp. 575-576.) After discussing the questionable viability of the trade secret exceptions to covenants not to compete, the court held that, even assuming this common law exception still exists, the clause was not "narrowly tailored" or "carefully limited" to the protection of trade secrets. (Id. at pp. 576-579.)
Here, as in Dowell, supra, 179 Cal.App.4th 564, the noncompete clause is not "narrowly tailored" or "carefully limited" to the protection of trade secrets but acts as a restraint on Robinsons profession. Moreover, we do not perceive the intended purpose of the instant covenant not to compete to be the protection of U-Hauls trade secrets and other proprietary information, since this provision makes no reference to trade secrets. Indeed, another provision of the dealership agreement specifically addresses trade secrets. That paragraph (5.g.), which immediately precedes the covenant not to compete, is entitled "Proprietary and Confidential Information" and it provides, in pertinent part, as follows: "U-Haul will disclose to [d]ealer certain... [p]roprietary information... that may include, but [is] not limited to, the Dealer Operations Manual, scheduling logs, sales practices, financial information, marketing strategies, day-to-day [and] business operations.... Dealer acknowledges and agrees that all such information, documents and materials shall be confidential and shall, at all times, remain confidential." The presence of this provision in the dealership contract belies UHCs claim that the noncompete provision must be seen as a necessary measure to protect trade secrets. (See Dsa v. Playhut, Inc. (2000) 85 Cal.App.4th 927, 935 [covenant not to compete could not be interpreted as requisite for protecting trade secrets where other provisions specifically and comprehensively addressed this issue]; see also Whyte v. Schlage Lock Co. (2002)
101 Cal.App.4th 1443, 1454 [requiring employees to sign confidentiality agreement is reasonable step to ensure secrecy].)
Furthermore, UHC failed to provide even minimal factual proof that the alleged confidential information came within the ambit of a trade secret; in other words, "whether the matter sought to be protected is information (1) which is valuable because it is unknown to others and (2) which the owner has attempted to keep secret. [Citation.]" (Whyte v. Schlage Lock Co., supra, 101 Cal.App.4th at p. 1454; Civ. Code, § 3426.1, subd. (d).) Other than the generalized statements of confidentiality regarding the dealer operations manual and other alleged propriety information, UHC presented no evidence that this information derived its value from being not readily known in the truck rental industry. UHC similarly failed to present any evidence regarding its efforts to maintain the secrecy of the so-called confidential and proprietary information.
Finally, even assuming arguendo that U-Hauls generalized assertions qualified as trade secrets, the record neither includes evidence that suggests Robinson improperly used U-Hauls trade secrets nor even hints at the possibility of such evidence being discoverable.
b. Malice
The malice element of a cause of action for malicious prosecution "relates to the subjective intent or purpose" with which the defendant acted in prosecuting the prior action. (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 494, italics omitted (Downey).) "The motive of the defendant must have been something other than... the satisfaction in a civil action of some personal or financial purpose. [Citation.] The plaintiff must plead and prove actual ill will or some improper ulterior motive. [Citation.] It may range anywhere from open hostility to indifference." (Ibid., italics omitted.)" Since parties rarely admit an improper motive, malice is usually proven by circumstantial evidence and inferences drawn from the evidence. [Citation.]" (Daniels v. Robbins, supra, 182 Cal.App.4th at p. 225.)
"[M]alice is present when proceedings are instituted primarily for an improper purpose. Suits with the hallmark of an improper purpose are those in which:
"... (1) the person initiating them does not believe that his claim may be held valid; (2) the proceedings are begun primarily because of hostility or ill will; (3) the proceedings are initiated solely for the purpose of depriving the person against whom they are initiated of a beneficial use of his property; (4) the proceedings are initiated for the purpose of forcing a settlement which has no relation to the merits of the claim." " " (Sierra Club Foundation v. Graham (1999) 72 Cal.App.4th 1135, 1157).)
Applying these factors, there is sufficient evidence to infer that UHC commenced the underlying litigation for an improper purpose. Robinson presented evidence that UHC had engaged in three prior lawsuits that sought injunctive relief for alleged breaches of contract based on similar noncompetition covenants. UHC argues that the fact that it had filed only three lawsuits in the preceding decade shows restraint on its part, not malice. We disagree. This evidence suggests that UHC was aware of facts demonstrating the causes of action alleged against Robinson, like those alleged against other former dealers, were not legally tenable. (See e.g., Padres L.P. v. Henderson (2003) 114 Cal.App.4th 495, 522 [inference of malice established where defendant filed repeated actions against plaintiff in order to interfere with plaintiffs business venture].) "While the mere absence of probable cause, without more, is not sufficient to demonstrate malice [citation], " [m]alice may... be inferred from the facts establishing lack of probable cause." [Citation.] [Citation.]" (Sycamore Ridge Apartments, supra, 157 Cal.App.4th at p. 1409.) As discussed, covenants not to compete, like those included in UHCs dealer agreements, have been prohibited in California since 1872. Although the area of law addressing the tension between covenants not to compete and the protection of trade secrets may be subject to debate, where (as here) there is no evidence to suggest a protectable trade secret or misappropriation, the subject is not debatable. From the evidence Robinson presented, one could infer that UHC was at best indifferent as to whether the claims alleged in the underlying litigation had any basis in fact.
For the first time on appeal, Robinson references a fourth lawsuit. Robinson filed a request for judicial notice along with his motion to consolidate the appeals. We deferred ruling on the request for judicial notice and now deny it in its entirety. (See Evid. Code. § 453.)
There is also evidence that would support the conclusion that the proceedings were initiated solely for the purpose of depriving Robinson of the beneficial use of Downtown, by prohibiting him from offering any truck rental services for a period up to one year at that location or within a three-mile radius. Although UHC vehemently maintains that without the underlying litigation Robinson would have unfairly used U-Hauls name and resources to lure truck rental customers to Downtown, the record establishes otherwise. Upon termination of the dealership contract, U-Haul removed its signs from Downtowns location and discontinued the telephone number listed in the Yellow Pages; within a matter of days, Downtowns former telephone number became the U-Haul reservation line for a nearby self-storage company. A reasonable inference based on this evidence is that UHCs claims were brought for an improper purpose.
2. Robinson Has Forfeited His Claims on Appeal
Robinson claims the trial court erred in granting UHIs special motion to strike the malicious prosecution cause of action. According to Robinson, the trial court erroneously determined that UHI was not actively involved in the underlying litigation. In his 76-page combined respondents brief and opening brief, Robinson devotes a mere page and a half to discuss this claim of error. Due to the absence of any cogent analysis, relevant legal authority, or proper citation to the record, Robinson has forfeited his claims on appeal. (See Miller v. Filter, supra, 150 Cal.App.4th at p. 671.)
We also need not consider the vast majority of Robinsons respondents brief, as it is woefully lacking in proper citations to the record. (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246.) Additionally, Robinsons reply brief goes far beyond the scope of addressing issues germane to his own appeal. (See Cal. Rules of Court, rule 8.216(b)(3) & Advisory Com. com., 23 pt. 3Wests An. Court Rules (2006) foll. rule 8.216, p. 52 [party that is both an appellant and a respondent must confine its crossappellants reply brief to issues germane to its own appeal].) Finally, Robinson improperly raises the issue of attorney fees for the first time in his reply brief. (Taylor v. Roseville Toyota, Inc. (2006) 138 Cal.App.4th 994, 1001, fn. 2.) Thus, this contention is similarly forfeited.
D. Unfair Business Practices
U-Haul asserts that Robinson failed to offer sufficient evidence to show a probability of prevailing on his class action claims for unfair business practices under Business and Professions Code section 17200. In order to demonstrate a probability of prevailing on his class action claim for unfair competition, Robinson was required to demonstrate: (1) a probability of class certification (see Huntington Life Sciences, Inc. v. Stop Huntington Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1262), and (2) a probability of prevailing on one of his alleged theories of unfair competition (see Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 106).
" The party seeking certification has the burden to establish the existence of both an ascertainable class and a well-defined community of interest among class members. [Citation.] The "community of interest" requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. [Citations.] "[T]his means each member must not be required to individually litigate numerous and substantial questions to determine his [or her] right to recover following the class judgment; and the issues which may be jointly tried, when compared with those requiring separate adjudication, must be sufficiently numerous and substantial to make the class action advantageous to the judicial process and to the litigants. " [Citation.] [¶] A class action also must be the superior means of resolving the litigation, for both the parties and the court. [Citation.] "Generally, a class suit is appropriate when numerous parties suffer injury of insufficient size to warrant individual action and when denial of class relief would result in unjust advantage to the wrongdoer. [Citations.]" [Citation.] "[R]elevant considerations include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing." [Citation.] "[B]ecause group action also has the potential to create injustice, trial courts are required to "carefully weigh respective benefits and burdens and to allow maintenance of the class action only where substantial benefits accrue both to litigants and the courts." [Citation.]" [Citations.]" (Harper v. 24 Hour Fitness, Inc. (2008) 167 Cal.App.4th 966, 973-974 (Harper))
According to U-Haul, "a class could never be certified" because individual issues would necessarily predominate over issues common to the class. We are not persuaded.
Preliminarily, we observe that the dealer contracts must reasonably be considered contracts of adhesion." The term signifies a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it. [Citation.] They are sometimes defined as a standardized contract prepared entirely by one party to the transaction for the acceptance of the other; such a contract, due to the disparity in bargaining power between the draftsman and the second party, must be accepted or rejected by the second party on a "take it or leave it" basis, without opportunity for bargaining and under such conditions that the "adherer" cannot obtain the desired product or service save by acquiescing in the form agreement. [Citation.]" (Wilson v. San Francisco Fed. Sav. & Loan Assn. (1976) 62 Cal.App.3d 1, 7.) This definition patently describes the dealer contracts at issue here.
Long ago, our Supreme Court in La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, recognized that "[c]ontroversies involving widely used contracts of adhesion present ideal cases for class adjudication; the contracts are uniform, the same principles of interpretation apply to each contract, and all members of the class will share a common interest in the interpretation of an agreement to which each is a party" (id. at p. 877); and that in a class action, if the "evidence discloses that the [subject of the action] is adhesive as to virtually all members of the class, plaintiffs will not need to elicit individual testimony from each [affected member]." (Ibid., fn. omitted.)
Nevertheless, U-Haul asserts that class certification would fail because there are "countless circumstances" under which U-Haul may "lawfully" seek to enforce the covenant not to compete in the dealer contracts. This argument is fatally flawed. The use of a covenant not to compete in the absence of protectable trade secrets qualifies as an unfair business practice. (See Retirement Group, supra, 176 Cal.App.4th at pp. 1237-
1238.) Moreover, "the need to individually examine each [dealers] contract to ultimately determine whether he or she qualifies for inclusion in the class, does not, as suggested, demonstrate a lack of ascertainability or manageability or establish that common questions of fact or law do not predominate. [Citation.]" (Harper, supra, 167 Cal.App.4th at p. 976; see also Lee v. Dynamex, Inc. (2008) 166 Cal.App.4th 1325, 1334 [class ascertainable where basic parameters of class could by ascertained through company records].)
Thus, it follows that Robinson established a probability of prevailing on his class action claim for unfair competition with respect to the covenant not to compete, in that there is an ascertainable class with a well-defined community of interest in questions of law and fact involved, where the right of each class member will not be based on a separate set of facts applicable only to him or her. (Harper, supra, 167 Cal.App.4th at p. 973.)
By reason of this holding, we need not determine whether Robinson established a probability of prevailing on his "poaching" theory of unfair competition. (See Mann v. Quality Old Time Service, Inc., supra, 120 Cal.App.4th at p. 106.)
III.
Disposition
The judgment is affirmed. Each party to bear their own costs on appeal.
Sepulveda, J.
We concur:
Ruvolo, P.J.
Reardon, J.