The opinion
Filed 9/25/24 AWI Builders v. Payne CA2/4
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
AWI BUILDERS, INC. et al., B322626
Plaintiffs and Respondents, (Los Angeles County
Super. Ct. No. BC696666)
v.
HAROLD T. PAYNE, as Successor in
Interest, etc.,
Defendant and Appellant.
APPEAL from an order of the Superior Court of
Los Angeles County, Robert Broadbelt, Judge. Reversed with
instructions.
Rob Bonta, Attorney General, Jodi L. Cleesattle, Assistant
Attorney General, Pamela J. Holmes, Donna M. Dean and
Shirley R. Sullinger, Attorneys General for Defendant and
Appellant.
Pacheco & Neach, Rod Pacheco; Feldman & Associates and
Mark Feldman for Plaintiffs and Respondents.
Plaintiffs AWI Builders, Inc., and its principals, Zhirayr
“Robert” Mekikyan and Anna Mekikyan, sued numerous entities
and individuals involved with a state Division of Labor Standards
Enforcement (DLSE) investigation of their business practices.
Plaintiffs’ third amended complaint included a federal civil rights
claim under 42 U.S.C. section 1983 (section 1983) alleging that
defendant Susan Nakagama, a DLSE employee, violated their
due process rights in both her official and individual capacities by
participating in a conspiracy to unlawfully investigate plaintiffs
and withholding and instructing a subordinate DLSE employee
to withhold documents from plaintiffs during the investigation.
Nakagama moved to strike the section 1983 cause of action under
the anti-SLAPP statute, Code of Civil Procedure section 425.16.1
The trial court granted the motion as to the official capacity
claim but denied it as to the individual capacity claim. Although
it found that Nakagama met her first-step burden of showing
that the individual capacity cause of action arose from protected
activity (§ 425.16, subd. (e)(2)), it also found that plaintiffs
carried their second-step burden of showing a probability of
prevailing on the merits. The trial court rejected Nakagama’s
assertions of absolute prosecutorial immunity, qualified
immunity, and litigation privilege under Civil Code section 47,
subdivision (b) (section 47).
Nakagama died during the pendency of this appeal. Her
successor in interest and personal representative, Harold T.
Payne, now contends that the trial court should have granted the
1 “SLAPP” stands for “strategic lawsuits against public
participation.” (FilmOn.com Inc. v. DoubleVerify Inc. (2019) 7
Cal.5th 133, 139.) All further undesignated statutory references
are to the Code of Civil Procedure.
2
anti-SLAPP motion in full. In addition to asserting the immunity
and privilege arguments raised below, he contends that plaintiffs
failed to meet their burden of showing a probability of prevailing
on the merits. Plaintiffs respond that Nakagama failed to carry
her burden at the first step below. They further contend that
even if the matter is subject to the anti-SLAPP statute, the trial
court properly rejected Nakagama’s assertions of privilege and
immunity, and we should not address Payne’s new argument
regarding the merits of the claim.
We reverse. The trial court correctly found the cause of
action subject to the anti-SLAPP statute. However, its analysis
at the second step of the anti-SLAPP inquiry was inadequate, as
was plaintiffs’ showing. We exercise our discretion to consider
Payne’s belatedly raised legal argument regarding plaintiffs’
likelihood of prevailing on the merits, which is persuasive in light
of plaintiffs’ failure to plead or demonstrate the lack of adequate
state remedies for the alleged due process violation. We need not
and do not address the arguments regarding privilege and
immunity.
FACTUAL BACKGROUND
Plaintiffs allege the following in the operative third
amended complaint.
Between 2011 and 2013, after a public and competitive bid
process, Riverside County awarded plaintiffs three public works
contracts: the $16.9 million “Mead Valley Project,” the $14
million “Public Defender Project,” and the $13.5 million “Medical
Center Project.” Plaintiffs were also awarded a $10.5 million
contract in Orange County, the “OC Fair Project,” in 2013.
In mid-to-late 2013, plaintiffs discovered significant
structural problems with the building in the Public Defender
3
Project that were unknown at the time of the bid. The change
orders necessary to account for the issues “became significant
points of contention between AWI and Riverside County.”
Riverside County subsequently terminated AWI’s contract on the
Public Defender Project and awarded the project to a different
construction company, increasing the amount of the contract from
$14 million to $32 million. In late 2013, after “pointed
communications” with Riverside County, AWI obtained counsel
and “identified the possibility of a lawsuit and government claims
regarding the county’s refusal to pay AWI for work it had
performed under the contract awarded.”
Plaintiffs allege that refusal to pay contractors was “a
pattern and practice for Riverside County.” They further allege
that Riverside County also had a pattern of “harass[ing]
contractors who were possible litigants with a host of crushing
abuses, directed at drying up all sources of revenue by
withholding payments, using a labor compliance firm to generate
specious complaints to the [DLSE], which would then levy
exponential fines against the contentious contractor, and finally
to falsely generate criminal investigations which would either put
the company out of business and or [sic] put the owners in
prison.”
Pursuant to this alleged “playbook,” in the “early months of
2014” Riverside County, through “straw man” company GKK
Works, hired a private labor consulting firm, Alliant Consulting,
and Alliant’s president, Christa Schott, to start a specious
investigation into plaintiffs. Although GKK Works hired Alliant
and Schott, Schott “took her orders from only two entities,
Riverside County Administration officials and the Orange County
District Attorney’s Office (OCDA), and had little or no contact
4
with GKK.” By June 2014, despite having uncovered no evidence
of wrongdoing by plaintiffs, Schott “succeeded in convincing
DLSE . . . to open an investigation” into plaintiffs. Schott worked
closely with a DLSE employee, Maria Sandoval, and provided
Sandoval with “fabricated” “investigative materials.” Sandoval
“spearheaded” DLSE’s investigation, “which was overseen by
Nakagama, and spurred on by Schott.” At Schott’s “constant and
aggressive insistence throughout 2014 and 2015,” DLSE filed
“various labor code administrative claims” against plaintiffs in
2015. The DLSE claims enabled Riverside County “to withhold
payments of over millions of dollars [sic] in monies owed to AWI.”
While the DLSE was investigating, plaintiffs “sought to
defend themselves” and also continued their efforts to obtain
payment from Riverside County on the various projects, filing
government claims and eventually suing Riverside County in
2015. In 2014, plaintiffs, through their counsel, “made requests
for documents from DLSE” to defend against the administrative
claims levied against them. Sandoval contacted Schott, who in
turn contacted the Riverside and Orange County district
attorneys’ offices. Schott “made every attempt to convince
Sandoval not to turn over documents Schott had created or given
to Sandoval, in an effort to hide her unlawful involvement.”
Sandoval “consulted with her supervisor Nakagama, who also
instructed Sandoval not to turn over documents.” During the
deposition in which Sandoval testified to receiving this
instruction, which occurred “in a related civil case in Orange
County,” Sandoval also stated that Nakagama told her “that the
instruction to conceal documents was a directive that came
directly from” the OCDA and an attorney there. Plaintiffs allege
that Riverside County and OCDA personnel “convinced”
5
Nakagama and Sandoval to “also withhold numerous documents”
plaintiffs requested in 2014 and 2015, “in violation of due process
protections afforded the accused in administrative hearings.” In
her own deposition in the related case, Nakagama “admitted”
that concealing documents from the subject of an administrative
investigation “was not only a violation of DLSE regulations, but
also of due process rights.” Plaintiffs were unaware of the
concealment until “civil discovery in related litigation against
Riverside County.”
Meanwhile, Alliant and Schott concurrently “stepped up
the pressure on AWI” and “badgered” Riverside County’s district
attorney’s office to initiate criminal prosecutions against AWI.
Alliant and Schott similarly “badgered” Orange County to
investigate and prosecute plaintiffs. Orange County initiated an
investigation into plaintiffs in 2015. In 2015, Schott visited
plaintiffs’ business offices without a warrant, broke into locked
filing cabinets, and photocopied documents contained therein.
On a separate occasion in 2015, Schott met with Tony Hawk, a
“high-ranking job superintendent for AWI on one of the Riverside
projects,” and paid him to provide her with plaintiffs’ confidential
records that later served as the basis for multiple search
warrants executed by OCDA and Riverside County in October
2015.
Many “business documents, an extensive amount of
computer equipment, thumb drives, external hard drives, an
iPhone and a credit card were seized” in connection with the
search warrants. The loss of these records “caused havoc” for
plaintiffs during their efforts to refute the DLSE’s allegations of
Labor Code violations and seek redress against Riverside County
because they had no access to their electronic or written records.
6
After plaintiffs filed a successful motion to compel in a case
against Riverside County, a forensic examination of Alliant’s and
Schott’s computers “revealed well over 80,000 pages of
documents” that had been concealed. Riverside County
ultimately settled all plaintiffs’ claims against it for $4.5 million.
Neither OCDA nor Riverside County filed a criminal
complaint against plaintiffs. However, the DLSE issued several
civil wage and penalty assessments against plaintiffs, including
an “over $500,000” assessment related to the Public Defender
Project, and assessments totaling approximately $460,000 related
to the OC Fair Project.
OCDA also filed a civil case against plaintiffs in February
2018. The deposition testimony from Sandoval and Nakagama
discussed above was elicited in that action.
PROCEDURAL HISTORY
Plaintiffs filed their initial complaint on March 6, 2018, a
first amended complaint on March 29, 2018, and a second
amended complaint on April 20, 2018. The second amended
complaint asserted causes of action for violation of civil rights
pursuant to section 1983; a Monell2 claim under section 1983;
negligent interference with contractual relations; negligent
interference with prospective economic opportunity; intentional
interference with contractual relations; intentional interference
with prospective economic opportunity; and negligent
supervision. Nakagama was not named as a defendant.
Numerous defendants filed anti-SLAPP motions to strike
the second amended complaint, and some filed demurrers. The
trial court largely granted the anti-SLAPP motions, including
2 Monell v. Department of Social Services (1978) 436 U.S. 658
(Monell).
7
those filed by Alliant and Schott, GKK Works, various Orange
County defendants, the State of California, and Sandoval. (See
AWI Builders, Inc. v. Alliant Consulting (Oct. 22, 2021, B294662,
B297189, B298699, B300834) [nonpub. opn.].) Notably, it denied
Sandoval’s motion to strike in part, as to the section 1983 cause
of action in her individual capacity, and also overruled her
demurrer to that cause of action. Plaintiffs appealed the court’s
orders; no defendant cross-appealed. The appeals were
consolidated, and a different panel of this court affirmed all the
orders. (See AWI Builders, Inc. v. Alliant Consulting (Oct. 22,
2021, B294662, B297189, B298699, B300834) [nonpub. opn.].)
In January 2020, while the appeals were pending, plaintiffs
filed a motion for leave to file a third amended complaint to add
Nakagama as a defendant in the section 1983 cause of action.
They asserted that “the facts necessitating the amendment came
to light during the course of discovery” in the Orange County civil
lawsuit, when Sandoval testified during her July 2018 deposition
that Nakagama directed her to withhold documents from
plaintiffs. The trial court granted plaintiffs leave to file the third
amended complaint on October 9, 2020, over the objections of
multiple defendants.
Plaintiffs filed the operative third amended complaint on
October 16, 2020. In the section 1983 cause of action, the
Mekikyans (not AWI) alleged that Nakagama and Sandoval,
while acting under color of law, “without cause or justification,
intentionally and maliciously deprived Plaintiffs . . . of rights
secured to them by the First, Fourth and Fourteenth
Amendments to the United States Constitution in that each of
them conspired and acted to create, cause, encourage or seek
unlawful investigations and prosecutions by the Orange and
8
Riverside County District Attorney’s Offices” and “administrative
prosecutions by the DLSE.” The Mekikyans alleged that they
“suffered and sustained great physical, emotional and
professional damages,” and their businesses “suffered by the loss
of numerous projects and business opportunities in the millions of
dollars.”
Nakagama filed an anti-SLAPP motion to strike the section
1983 cause of action in December 2020. She argued that her
alleged instructions to Sandoval were protected communications
under section 425.16, subdivisions (e)(1) and (e)(2), because they
were made in preparation for or anticipation of litigation, and
under section 425.16, subdivision (e)(4) because they were made
in connection with an issue of widespread public interest.
Nakagama further argued that plaintiffs could not meet their
burden of showing a probability of prevailing on the merits. She
contended that she was immune from liability in her official
capacity because individuals acting in an official capacity are not
“persons” for purposes of section 1983. Nakagama also argued
that plaintiffs could not prevail on their individual capacity
claim. Specifically, she argued there was no evidence that she
personally participated in violating plaintiffs’ due process rights
because Sandoval’s deposition testimony was inadmissible
hearsay and her own deposition testimony indicated that she only
directed Sandoval to redact the documents at issue. Nakagama
additionally argued that plaintiffs “cannot overcome” various
forms of immunity and privilege, including absolute prosecutorial
immunity, qualified immunity, and the section 47 litigation
privilege.
Plaintiffs filed a written opposition to Nakagama’s anti-
SLAPP motion in February 2021. They argued that the anti-
9
SLAPP statute did not apply under principles of federal
preemption and because the gravamen of their complaint, the
withholding of documents during an investigation, is not
protected conduct under section 425.16, subdivisions (e)(1), (e)(2),
or (e)(4). Plaintiffs argued in the alternative that they
demonstrated a probability of prevailing on the merits even if the
anti-SLAPP statute did apply. They asserted that their evidence,
including Sandoval’s deposition testimony, Nakagama’s
deposition testimony, a DLSE policy manual, and a declaration
from Robert Mekikyan, demonstrated a prima facie claim for
violation of their due process rights. They further argued that
they were likely to prevail on the official capacity claim because
they sought equitable relief; that prosecutorial immunity did not
apply because the alleged wrongdoing did not occur during a
judicial phase; that Nakagama was not entitled to qualified
immunity because the evidence showed she knew she was acting
wrongly; and that the litigation privilege did not apply to section
1983 claims. Nakagama filed a reply the following week.
The trial court heard the motion in June 2022. In its
written order, the court rejected plaintiffs’ preemption argument.
It then found that Nakagama met her first-step burden of
establishing that the cause of action arose from activity protected
under section 425.16, subdivision (e)(2), because the gravamen of
plaintiffs’ cause of action concerned Nakagama’s instructions,
which were made in connection with official proceedings. At the
second step, the court first found that plaintiffs met their burden
of demonstrating a probability of prevailing on the merits
because the Sandoval deposition testimony established a prima
facie showing that Nakagama ordered the withholding of
documents to which plaintiffs were entitled. However, it then
10
considered Nakagama’s affirmative defenses, and concluded that
she was immune from suit in her official capacity. The trial court
rejected Nakagama’s assertions of immunity and privilege in her
individual capacity. The court accordingly granted the motion in
part, as to the official capacity claim, and denied it in part, as to
the individual capacity claim.
Nakagama timely appealed. After her death, her personal
representative, Payne, was substituted into the case.
DISCUSSION
I. Legal Standards
Under section 425.16, “[a] cause of action arising from a
person’s act in furtherance of the ‘right of petition or free speech
under the United States Constitution or the 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 claim
will prevail.” (Monster Energy Co. v. Schechter (2019) 7 Cal.5th
781, 788 (Monster Energy), citing § 425.16, subd. (b)(1).)
“Anti-SLAPP motions are evaluated through a two-step
process.” (Park v. Board of Trustees of California State
University (2017) 2 Cal.5th 1057, 1061 (Park).) At the first step,
“the moving defendant bears the burden of establishing that the
challenged allegations or claims ‘aris[e] from’ protected activity in
which the defendant has engaged.” (Ibid.; § 425.16, subds. (b),
(e).) To carry that burden, the defendant must identify the acts
upon which each challenged claim rests and show how those acts
are protected under a statutorily defined category of protected
activity. (Bonni v. St. Joseph Health System (2021) 11 Cal.5th
995, 1009 (Bonni).) Section 425.16, subdivision (e) describes four
categories of acts “‘in furtherance of a person’s right of petition or
11
free speech’”: “(1) any written or oral statement or writing made
before a legislative, executive, or judicial proceeding, or any other
official proceeding authorized by law, (2) any written or oral
statement or writing made in connection with an issue under
consideration or review by a legislative, executive, or judicial
body, or any other official proceeding authorized by law, (3) any
written or oral statement or writing made in a place open to the
public or a public forum in connection with an issue of public
interest, or (4) any other conduct in furtherance of the exercise of
the constitutional right of petition or the constitutional right of
free speech in connection with a public issue or an issue of public
interest.” (§ 425.16, subd. (e).)
“A claim arises from protected activity when that activity
underlies or forms the basis for the claim.” (Park, supra, 2
Cal.5th at p. 1062.) Courts consider the elements of the
challenged claim and what actions by the defendant supply those
elements and thus form the basis for liability. (Id. at p. 1063.) “A
claim may be struck only if the speech or petitioning activity
itself is the wrong complained of, and not just evidence of liability
or a step leading to some different act for which liability is
asserted.” (Id. at p. 1060.)
If the moving defendant carries its burden at the first step,
the analysis proceeds to the second step, at which the plaintiff
must demonstrate that the claim has at least “minimal merit.”
(Park, supra, 2 Cal.5th at p. 1062.) This second step is analogous
to a summary judgment procedure. (Monster Energy, supra, 7
Cal.5th at p. 788.) “The court does not weigh evidence or resolve
conflicting factual claims. Its inquiry is limited to whether the
plaintiff has stated a legally sufficient claim and made a prima
facie factual showing sufficient to sustain a favorable judgment.
12
It accepts the plaintiff’s evidence as true, and evaluates the
defendant’s showing only to determine if it defeats the plaintiff’s
claim as a matter of law. [Citation.] “[C]laims with the requisite
minimal merit may proceed.’”” (Ibid., quoting Baral v. Schnitt
(2016) 1 Cal.5th 376, 384-385.)
We review the trial court’s determination on a special
motion to strike de novo. Like the trial court, “‘[w]e consider “the
pleadings, and supporting and opposing affidavits ... upon which
the liability or defense is based.” [Citation.] However, we neither
“weigh credibility [nor] compare the weight of the evidence.
Rather, [we] accept as true the evidence favorable to the plaintiff
[citation] and evaluate the defendant’s evidence only to
determine if it has defeated that submitted by the plaintiff as a
matter of law.” [Citation.]’ [Citation.]” (Flatley v. Mauro (2006)
39 Cal.4th 299, 326.)
II. First Step
At the first step of the analysis, the trial court found that
Nakagama met her burden of showing that the section 1983
cause of action against Nakagama in her individual capacity
came within the ambit of section 425.16, subdivision (e)(2).
Subdivision (e)(2) protects “any written or oral statement or
writing made in connection with an issue under consideration or
review by a legislative, executive, or judicial body, or any other
official proceeding by law” (§ 425.16, subd. (e)(2)), even if the
litigation has not yet commenced. (See Flatley v. Mauro, supra,
39 Cal.4th at p. 322, fn. 11.) The court concluded plaintiffs’ cause
of action arose from the instructions Nakagama gave to Sandoval
in connection with the DLSE investigation, an official proceeding
within the meaning of section 425.16, subdivision (e)(2).
13
Payne contends the trial court’s analysis was correct. He
further argues that the trial court also could have found that
Nakagama met her first-step burden under section 425.16,
subdivision (e)(4). In response, plaintiffs argue that the trial
court should have denied the anti-SLAPP motion at the first step
rather than the second, because the gravamen of their claim
against Nakagama was the “unlawful and unconstitutional
withholding of documents,” which is not protected conduct under
section 425.16, subdivision (e). Although plaintiffs did not file a
cross-appeal, they are permitted to raise this argument under
section 906, the purpose of which is “‘to allow a respondent to
assert a legal theory which may result in affirmance of the
judgment.’” (Khorsand v. Liberty Mutual Fire Ins. Co. (2018) 20
Cal.App.5th 1028, 1034.)
There is no dispute that the DLSE investigation and
hearing process in which the alleged conduct took place “qualify
as official proceedings authorized by law for purposes of . . .
section 425.16, subdivision (e)(2).” (County of Riverside v. Public
Employment Relations Board (2016) 246 Cal.App.4th 20, 31.)
The question thus is whether the conduct that forms the basis of
plaintiffs’ claim is protected activity. “The ‘gravamen is defined
by the acts on which liability is based, not some philosophical
thrust or legal essence of the cause of action.’” (Optional Capital,
Inc. v. Akin Gump Strauss, Hauer & Feld LLP (2017) 18
Cal.App.5th 95, 111; see also Bonni, supra, 11 Cal.5th at p. 1012.)
A section 1983 claim has two essential elements: “(1) the
conduct complained of was committed by a person acting under
color of state law; and (2) the conduct deprived the plaintiff of a
right, privilege or immunity secured by the Constitution or laws
of the United States.” (McAllister v. Los Angeles Unified School
14
District (2013) 216 Cal.App.4th 1198, 1207.) Here, plaintiffs
allege that Nakagama, while acting under color of law, denied
plaintiffs due process by instructing a subordinate employee to
withhold documents from them despite her awareness that
plaintiffs were entitled to the documents. They further allege
that Riverside County and Orange County officials “convinced”
Nakagama “in 2014 and 2015 to also withhold numerous
documents [plaintiffs] had requested in violation of due process
protections afforded the accused in administrative hearings.”
Essentially, Payne argues we should focus exclusively on the
allegation that Nakagama instructed Sandoval to withhold the
documents, while plaintiffs contend we should focus exclusively
on the allegation that Nakagama personally withheld the
documents.
However, under Bonni, supra, 11 Cal.5th at p. 1012, “each
act or set of acts must be analyzed separately,” and Payne bears
the burden of showing that each allegation supporting the claim
of recovery rests on protected activity. As to the instructions,
Payne argues that they are statements or writings related to the
investigation and gathering of evidence in anticipation of an
official proceeding. We agree. Apparently plaintiffs do as well;
they do not dispute that Nakagama’s instructions to Sandoval
constitute protected activity. Instead, the entirety of their
argument is predicated on their position that the conduct at issue
is the withholding of documents.
To the extent plaintiffs’ claim rests upon Nakagama’s
alleged withholding of documents, Payne asserts that this court
“previously held that the failure to disclose information in
connection with an official proceeding falls within section [sic]
(e)(2) of the anti-SLAPP statute.” Although she cites an older
15
case from this Division, Suarez v. Trigg Laboratories, Inc. (2016)
3 Cal.App.5th 118, a different panel of this court reached the
same conclusion in the previous appeal in this very case. As
explained at length in AWI Builders, Inc. v. Alliant Consulting,
Inc., supra, “the claims arose from Sandoval’s withholding of
documents in the course of an official proceeding. That conduct is
protected under subdivision (e)(2) of the anti-SLAPP statute.”
Payne also contends that the withholding of documents
constitutes protected activity under section 425.16, subdivision
(e)(4), which covers “any other conduct in furtherance of the
exercise of the constitutional right of petition or the
constitutional right of free speech in connection with a public
issue or an issue of public interest.” (§ 425.16, subd. (e)(4).) We
agree. AWI Builders, Inc. v. Alliant Consulting, Inc. held that
“the conduct at issue”—the alleged withholding of documents—“is
protected under the catchall provision of section 425.16,
subdivision (e)(4).” In distinguishing the cases plaintiffs again
cite here, most prominently Anderson v. Geist (2015) 236
Cal.App.4th 79, the panel emphasized that the withholding of
documents occurred “during the course of an administrative
proceeding in which she [there, Sandoval] was a representative of
one of the parties, i.e., the DLSE, an agency of the State, and
thus was part of the petitioning conduct. The determination of
what documents should be withheld involved some exercise of
discretion, since DLSE is required under Labor Code section 1736
to keep confidential any information that may identify any
employee who reported a violation.” It continued, “the
withholding of documents in the present case was done in
connection with an administrative proceeding involving an
16
important public issue, i.e., the violation of labor laws by
contractors on a public work project.”
For the same reasons as previously stated in AWI Builders,
Inc. v. Alliant Consulting, Inc., we conclude that both forms of
challenged conduct, the instructions to withhold documents and
the actual withholding of the documents, constitute protected
activity.
III. Second Step
At the second step of the anti-SLAPP analysis, the burden
shifts to the plaintiff to demonstrate a probability of prevailing on
the merits of the claim. In an abbreviated analysis, the trial
court found that plaintiffs carried that burden by submitting “the
deposition of Sandoval to establish that [Nakagama], as a
regional supervisor of the DLSE, ordered the withholding of
documents to which plaintiffs were entitled.” The trial court
rejected Nakagama’s contention that plaintiffs could not show
her personal involvement in the alleged deprivation of due
process, because the parties had presented conflicting evidence on
that point and courts do not resolve evidentiary conflicts in
connection with anti-SLAPP motions. The court further rejected
Nakagama’s arguments that plaintiffs could not prevail because
she had absolute immunity, qualified immunity, and/or the
litigation privilege barred the claim.
Payne now contends that the trial court incorrectly
concluded that plaintiffs met their burden of showing a
probability of prevailing. He argues that “any allegation that
exculpatory documents were withheld from plaintiffs during a
DLSE action could have been readily remedied by plaintiffs
pursuant to the Labor Code, Code of Regulations, and Code of
Civil Procedure, including motions to exclude evidence and
17
petition for writ of mandate. Plaintiffs did not allege in the TAC
if they employed these procedural tools to remedy the deprivation
of their procedural due process rights. There is no evidence that
Nakagama’s alleged withholding of documents resulted in an
adverse binding order against plaintiffs in a DLSE action.” In
short, Payne argues that plaintiffs cannot prevail because they
did not allege or show that state remedies for the alleged due
process violation were inadequate.3
Payne acknowledges that his current argument differs from
those raised below, and requests that we exercise our discretion
to consider it because it presents only issues of law. Plaintiffs
respond that Payne has waived the current argument by failing
to present it below and has not demonstrated why we should
exercise our discretion in his favor. They also substantively
oppose the new argument; we address these concerns below.
As a general rule, a reviewing court will not consider claims
made for the first time on appeal which could have been but were
not presented to the trial court. (Truck Ins. Exchange v. AMCO
Ins. Co. (2020) 56 Cal.App.5th 619, 635.) However, application of
the forfeiture rule is not automatic, and we have discretion to
consider pure questions of law raised for the first time on appeal.
3 Although Nakagama argued below that plaintiffs failed to
meet their burden, her theory was that plaintiffs lacked evidence
that she “personally participated in violating plaintiffs [sic] due
process rights” or “conspired with Sandoval, Schott, or OCDA
personnel to prevent plaintiffs from lawfully accessing documents
needed in DLSE administrative hearings to defend themselves,
or prevented plaintiffs from defending themselves without the
documents.”
18
(Cox v. Griffin (2019) 34 Cal.App.5th 440, 450 [“[C]ourts have
discretion to consider a new theory on appeal if it involves a legal
question based on undisputed facts”].) Because this appeal raises
a purely legal issue, and plaintiffs have responded to the new
contention, we exercise our discretion to consider it during our de
novo review of plaintiffs’ second-step showing.
At the second step of the anti-SLAPP analysis, the plaintiff
bears the burden of demonstrating that the challenged claim is
legally sufficient and supported by a sufficient prima facie factual
showing to sustain a judgment. (Monster Energy, supra, 7
Cal.5th at p. 788.) Here, the challenged claim alleges a violation
of due process under federal law in connection with an
administrative hearing. Despite their assertion that this lawsuit
does not seek review of a civil wage and penalty assessment,
plaintiffs allege they responded to “various labor code
administrative claims . . . [a]s allowed by law” by requesting the
documents on which the DLSE relied, and DLSE, through
Nakagama, did not provide them. Plaintiffs’ supporting evidence
consists primarily of Sandoval’s deposition testimony that
Nakagama instructed her to withhold the documents. The claim
and showing are not legally sufficient.
The allegations and record are not adequate to demonstrate
a probability that plaintiffs will prevail on the merits of a
constitutional due process claim. We look to federal law to
determine the sufficiency of a complaint alleging a federal civil
rights cause of action under section 1983. (Martinez v. City of
Clovis (2023) 90 Cal.App.5th 193, 254.) In the context of a
procedural due process claim, federal law provides that “[w]hen
state remedies are adequate to protect an individual’s procedural
due process, a section 1983 action alleging a violation of those
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rights will not stand.” (Brogan v. San Mateo County (1990) 901
F.2d 762, 764; see also Jefferson v. Jefferson County Public School
System (6th Cir. 2004) 360 F.3d 583, 588 [“Plaintiff may not seek
relief under Section 1983 without first pleading and proving the
inadequacy of state or administrative processes or remedies to
redress her due process violations.”].) “Although one need not
exhaust state remedies before bringing a Section 1983 action
claiming a violation of procedural due process, one must
nevertheless prove as an element of that claim that state
procedural remedies are inadequate.” (Marino v. Ameruso (2d.
Cir. 1988) 837 F.2d 45, 47.) It is axiomatic that we cannot
determine whether plaintiff has sufficiently alleged a cause of
action for lack of due process without knowing what process is
due.” (Van Horn v. Department of Toxic Substances Control
(2014) 231 Cal.App.4th 1287, 1295.)
We therefore consider the procedural remedies available
under California law in DLSE administrative hearing cases,
particularly the statutes dealing with discovery in administrative
hearings. “Generally, there is no due process right to prehearing
discovery in administrative hearing cases.” (Cimarusti v.
Superior Court (2000) 79 Cal.App.4th 799, 808.) “The scope of
discovery in administrative hearings is governed by statute and
the agency’s discretion.” (Id. at pp. 808-809.) The relevant
statutes here are Labor Code sections 1741 and 1742. Labor Code
section 1741 authorizes the Labor Commissioner or his or her
designee to conduct investigations to determine if wage laws have
been violated. (Lab. Code, § 1741, subd. (a).) If a violation is
found, the Commissioner “shall with reasonable promptness
issue a civil wage and penalty assessment to the contractor or
subcontractor, or both. The assessment shall be in writing, shall
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describe the nature of the violation and the amount of wages,
penalties, and forfeitures due, and shall include the basis for the
assessment. . . . The assessment shall advise the contractor and
subcontractor of the procedure for obtaining review of the
assessment.” (Lab. Code, § 1741, subd. (a).) It must be
“sufficiently detailed to provide fair notice to the contractor or
subcontractor of the issues at the hearing.” (Lab. Code, § 1742,
subd. (b).)
Labor Code section 1742 gives a contractor or subcontractor
the right to “review of a civil wage and penalty assessment” if a
request for review is made within 60 days after the assessment is
served. (Lab. Code, § 1742, subd. (a).) The contractor or
subcontractor “shall have the burden of proving that the basis for
the civil wage and penalty assessment is incorrect,” but also
“shall be provided an opportunity to review evidence to be
utilized by the Labor Commissioner at the hearing within 20
days of the receipt of the written request for a hearing.” (Lab.
Code, § 1742, subd. (b).) If the Commissioner fails “to make
evidence available for review as required by Labor Code section
1742(b) and this Rule [Cal. Code Regs., tit. 8, § 17224], [sic] shall
preclude the Enforcing Agency from introducing such evidence in
proceedings before the Hearing Officer or the Director.” (Cal.
Code Regs., tit. 8, § 17224, subd. (d).) If the contractor or
subcontractor is dissatisfied with the hearing procedures or
resultant decision, he or she may seek review by filing a petition
for writ of mandate in the superior court. (Lab. Code, § 1742,
subd. (c); Mobley v. Los Angeles Unified School District (2001) 90
Cal.App.4th 1221, 1241.) If the contractor or subcontractor
believes he or she was deprived of the opportunity to fully present
a claim or defense due to extrinsic fraud, he or she may move to
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vacate the resultant judgment. (See Department of Industrial
Relations, Division of Labor Standards Enforcement v. Davis
Moreno Construction, Inc. (2011) 193 Cal.App.4th 560, 566, 570-
573.)
The record contains two civil wage and penalty
assessments related to the OC Fair Project, issued in September
and October 2015. It also alludes to but does not contain a civil
wage and penalty assessment “over $500,000” related to the
Public Defender Project that appears to have been issued around
the same time. Plaintiffs do not specify the civil wage and
penalty assessment(s) for which they sought review or related
documents; they assert only that they made requests for
documents in 2014—long before the assessments were issued—
and in 2015, and those requests were denied. There are no
allegations in the operative complaint or evidence in the record
regarding the hearings on the petitions, their outcomes, or
plaintiffs’ efforts to seek review. The complaint alleges only that
unspecified documents were withheld in connection with
unspecified proceedings, and plaintiffs’ evidence indicates only
that Nakagama may have been involved in that withholding.
The Labor Code provisions, related regulations, and other
aspects of state law discussed above impose requirements and
provide remedies aimed at ensuring that contractors and
subcontractors receive due process in connection with civil wage
and penalty assessments. The allegations and record are silent
as to plaintiffs’ utilization of these remedies or the adequacy or
inadequacy thereof. This is fatal to their claim under federal law.
Plaintiffs contend this is “absurd” and “equivalent to telling
a criminal defendant that he must prove he did not rob a store
while at the same time refusing to disclose to him an alibi
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witness, but the defendant can prevent the prosecutor calling the
alibi witness at trial.” However, federal law clearly provides that
state remedies for procedural due process violations must be
taken into consideration when a plaintiff seeks to assert a section
1983 claim for violation of due process. Plaintiffs also assert that
Labor Code sections 1741 and 1742 do not apply to “limit [their]
available remedies” because they “do not seek review for a civil
wage and penalty assessment . . . [or] the withholding of contract
payments.” These statutes are the law that gave plaintiffs the
right to request documents from DLSE after “various labor code
administrative claims were filed by DLSE in 2015.” They govern
the scope of discovery and other process to which plaintiffs are
entitled and provide a framework for plaintiffs to seek relief from
civil wage and penalty assessments they believe are inaccurate or
improper. Plaintiffs do not cite any authority for the proposition
that Labor Code sections 1741 and 1742 and the procedural
remedies provided therein are irrelevant to their section 1983
claim.
Plaintiffs assert they were “severely harmed” because the
withholding of the unspecified documents prevented them from
“adequately preparing for the various DLSE investigations and
administrative proceedings”; forced them to incur “unnecessary
attorney’s fees, the costs of several settlements, and assessment
of administrative penalties”; and deprived them of the ability “to
counteract additional lawsuits and the various attacks on their
reputation.”4 They did not present any evidence of these harms
to the trial court, however. Instead, they sought to establish a
4 Injury to one’s reputation alone will not support a federal
due process claim. (Burt v. County of Orange (2004) 120
Cal.App.4th 273, 283.)
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probability of prevailing based solely on the allegedly wrongful
withholding of documents during the administrative process.
Similarly, the trial court’s second-step analysis narrowly focused
on the plaintiffs’ evidence that documents were withheld rather
than on the bigger picture of the procedural remedies available to
plaintiffs and the adequacy thereof.
Finally, plaintiffs emphasize that Nakagama testified that
she understood “due process” to mean “[p]roviding the contractors
with information that would be relevant . . . to any allegations or
issues against him.” Nakagama’s personal understanding of the
contours of due process is not sufficient to demonstrate a
probability that plaintiffs will prevail on their section 1983 claim
against her. The ultimate question in a due process action is
whether the plaintiff received the procedural due process to
which he or she was legally entitled. Plaintiffs’ allegations and
evidentiary showing do not establish a likelihood that they will
prevail on that question. We accordingly need not and do not
address Payne’s arguments regarding immunities and privilege.
DISPOSITION
The order denying Nakagama’s anti-SLAPP motion to
strike the third amended complaint is reversed with directions to
grant the motion and strike the complaint as to Nakagama and
her personal representative Payne. The parties are to bear their
own costs.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
COLLINS, J.
We concur:
CURREY, P. J. ZUKIN, J.
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