CWE Enterprises v. McGraw-Hill Broadcasting

Filed 8/16/06 CWE Enterprises v. McGraw-Hill Broadcasting CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEALS from a judgment and orders of the Superior Court of San Diego County, William R. Nevitt, Jr., Judge. Affirmed and remanded with directions.

I.

INTRODUCTION

Appellants CWE Enterprises (Citywide Electric) and Cort Carpenter sued McGraw-Hill Broadcasting Company, Inc. (Broadcasting) for slander based on statements made on a television news broadcast during a consumer affairs segment concerning an investigation of appellants. The trial court granted Broadcasting's special motion to strike appellants' complaint pursuant to the anti-SLAPP^[1] statute (Code Civ. Proc.,^[2] § 425.16.) The trial court concluded that appellants failed to demonstrate a probability of prevailing on either of their two slander claims because both causes of action were barred by the applicable one-year statute of limitations. The trial court entered judgment in favor of Broadcasting and awarded it attorney fees in the amount of $48,972 pursuant to section 425.16, subdivision (c).

Appellants claim the trial court erred in granting Broadcasting's special motion to strike. Appellants contend that their slander causes of action are not barred by the statute of limitations because the limitations period was equitably tolled while they pursued identical claims in a federal action that was ultimately dismissed for lack of diversity jurisdiction. Appellants also maintain that they established a probability of prevailing on each of their causes of action. In a consolidated appeal, appellants claim the trial court abused its discretion in awarding Broadcasting attorney fees in the amount of $48,972, because Broadcasting failed to provide sufficient evidence to support its request for fees.

We agree with appellants that their causes of action are not barred by the statute of limitations, due to the operation of the equitable tolling doctrine. However, we conclude that appellants failed to establish a probability of prevailing on the merits of either of their slander claims, and that the trial court thus properly granted Broadcasting's anti-SLAPP motion. We further conclude that the trial court did not abuse its discretion in awarding attorney fees in the amount of $48,972. Accordingly, we affirm the judgment and the orders.

II.

FACTUAL AND PROCEDURAL BACKGROUND

Broadcasting owns and operates KGTV, a television station that broadcasts on Channel 10 in San Diego. On August 16, 2002, Broadcasting aired a news story concerning Citywide Electric and one of its owners, Cort Carpenter. The story aired on the Channel 10 Live at 5:00 news program in a consumer affairs segment called "Troubleshooter." The segment was narrated by host Marti Emerald. In the segment, Emerald noted that the Troubleshooter unit at the station had received numerous consumer complaints regarding Citywide Electric. Emerald also stated that Citywide Electric had been disciplined by various governmental agencies because of its business practices. During the segment, an on-camera test was conducted in which repair recommendations from a Citywide Electric employee were compared with those made by an electrician from another company. The results of the comparison suggested that the Citywide Electric employee was recommending unnecessary repairs. In addition, during the broadcast, Emerald noted that Citywide Electric was managed by Carpenter and that Carpenter had been the subject of previous Troubleshooter investigations.

On July 28, 2003, appellants filed a two count complaint in the United States District Court for the Southern District of California against Broadcasting's parent company, The McGraw-Hill Companies, Inc. (Companies). Citywide Electric and Carpenter each alleged one count of slander based on statements made during the August 16, 2002 broadcast. In February 2004, appellants filed an amended complaint in the federal action substituting Broadcasting for Companies as the only named defendant. In September 2004, the federal court dismissed the complaint against Broadcasting for lack of diversity jurisdiction. Shortly thereafter, appellants filed a two count complaint against Broadcasting in the San Diego County Superior Court. As in their federal complaint, Citywide Electric and Carpenter each alleged one count of slander based on statements made during the August 16, 2002 broadcast.

In January 2005, Broadcasting filed a special motion to strike appellants' complaint pursuant to section 425.16 (anti-SLAPP motion). In its motion, Broadcasting argued that appellants' claims arose from the exercise of Broadcasting's right of free speech. Broadcasting also argued that appellants could not establish a probability of prevailing on their slander claims because the claims were barred by the one-year limitations period contained in section 340, subdivision (c), and also because the statements giving rise to the claims were not actionable. In February 2005, after briefing and argument, the trial court granted Broadcasting's anti-SLAPP motion. In its order granting the motion, the trial court ruled that Broadcasting had carried its burden of demonstrating that appellants' causes of action arose out of Broadcasting's right of free speech as protected by the anti-SLAPP statute (§ 425.16, subd. (e)). The trial court also ruled that appellants failed to demonstrate a probability of prevailing on either of their slander claims because both causes of action were barred by the statute of limitations. In light of its ruling, the court did not address the merits of appellants' causes of action.

In March 2005, Broadcasting filed a motion seeking $146,609.50 in attorney fees. In April 2005, the trial court entered judgment in favor of Broadcasting. Appellants timely appealed the trial court's February 2005 order granting Broadcasting's anti-SLAPP motion. In May 2005, the trial court awarded Broadcasting attorney fees in the amount of $48,972. Appellants timely appealed the judgment and the attorney fee award. In November 2005, this court granted the parties' stipulation to consolidate the appeals.

III.

DISCUSSION

A. The trial court properly granted Broadcasting's anti-SLAPP motion

Appellants claim the trial court erred in granting Broadcasting's anti-SLAPP motion.

1. The law governing anti-SLAPP motions in the trial court and the

standard of review on appeal

Section 425.16 provides in relevant part:

"(a) The Legislature finds and declares that there has been a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process. To this end, this section shall be construed broadly.

"(b)(1) 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 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.

"(2) In making its determination, the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.

"(3) If the court determines that the plaintiff has established a probability that he or she will prevail on the claim, neither that determination nor the fact of that determination shall be admissible in evidence at any later stage of the case, or in any subsequent action, and no burden of proof or degree of proof otherwise applicable shall be affected by that determination in any later stage of the case or in any subsequent proceeding.

[¶] . . . [¶]

"(e) As used in this section, 'act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue' includes: (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; (4) or 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."

In Tutor-Saliba Corp. v. Herrera (2006) 136 Cal.App.4th 604, 609 (Tutor-Saliba), the court outlined the burdens of proof applicable to an anti-SLAPP motion:

"'Under the statute, the court makes a two-step determination: "First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. [Citation.] 'A defendant meets this burden by demonstrating that the act underlying the plaintiff's cause fits one of the categories spelled out in section 425.16, subdivision (e)' [Citation.] If the court finds that such a showing has been made, it must then determine whether the plaintiff has demonstrated a probability of prevailing on the claim. [Citation.]" [Citations.] "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." [Citation.]' [Citation.]"

The Tutor-Saliba court also outlined the standard of review applicable to the review of a trial court's ruling on an anti-SLAPP motion:

"'A ruling on a special motion to strike under section 425.16 is reviewed de novo. [Citation.] This includes whether the anti-SLAPP statute applies to the challenged claim. [Citation.] Furthermore, we apply our independent judgment to determine whether [plaintiff's] causes of action arose from acts by [defendant] in furtherance of [defendant's] right of petition or free speech in connection with a public issue. [Citations.] Assuming these two conditions are satisfied, we must then independently determine, from our review of the record as a whole, whether [plaintiff] has established a reasonable probability that he would prevail on his claims. [Citations.]' [Citation.]" (Tutor-Saliba, supra, 136 Cal.App.4th at pp. 609-610.)

2. Citywide Electric's claim and Carpenter's claim arise out of

Broadcasting's right of free speech

Citywide Electric concedes that its claim for slander arises out of Broadcasting's right of free speech and that the airing of the news story at issue constitutes "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).) Citywide Electric acknowledges that Broadcasting has a "free speech right to report whether private figures engaged in retail electrical repair services are selling unsuspecting consumers services they do not need." However, Carpenter claims that Broadcasting failed to demonstrate that his claim for slander arises out of Broadcasting's right of free speech. Broadcasting argues that the statements that form the basis of Carpenter's claim were made in a public forum in connection with an issue of public interest and, therefore, fall within the scope of section 425.16, subdivision (e)(3) and (e)(4).^[3]

In Damon v. Ocean Hills Journalism Club (2000) 85 Cal.App.4th 468, 475-478 (Damon), this court concluded that a news publication is a "public forum" within the meaning of the section 425.16, subdivision (e)(3) if the publication is a vehicle for discussion of public issues and is distributed to a large and interested community. (See id. at p. 476, quoting Metabolife Internat., Inc. v. Wornick (S.D.Cal. 1999) 72 F.Supp.2d 1160, 1165, affirmed in part, reversed in part on other grounds by Metabolife Intern., Inc. v. Wornick (9th Cir. 2001) 264 F.3d 832 ["'a widely disseminated television broadcast . . . is undoubtedly a public forum'"]; but see Weinberg v. Feisel (2003) 110 Cal.App.4th 1122, 1130-1131, fn. 4, [declining to follow Damon, applying the First Amendment definition of "public forum" used in connection with speech on public property, and concluding that most newspapers are not public forums].) Carpenter's slander claim is based on statements Emerald made during a television news broadcast in a consumer information segment. The statements were clearly made in a public forum under Damon.

With respect to the "public interest" prong of section 425.16, subdivision (e)(3) and (e)(4), in Wilbanks v. Wolk (2004) 121 Cal.App.4th 883, 898-899 (Wilbanks), the court stated, "Consumer information . . . at least when it affects a large number of persons, also generally is viewed as information concerning a matter of public interest." The Wilbanks court concluded that statements posted on a defendant's consumer information website warning individuals not to use the plaintiff's services were within the scope of section 425.16, subdivision (e)(3) and (4) because the statements constituted "information ostensibly provided to aid consumers choosing among brokers, [that] were directly connected to an issue of public concern." (Wilbanks, supra, 121 Cal.App.4th at p. 900.)

In this case, the Troubleshooter report provided consumers with information pertaining to a business selling electrical repair services in San Diego. Thus, as discussed in Wilbanks, the Troubleshooter report provided consumer information regarding a company that sells services to the public. Additionally, in this case, the report provided consumers with information about disciplinary actions taken by various agencies against Citywide Electric. With respect to the specific statements made regarding Carpenter, the gist of Emerald's statements was that in 1994 Carpenter ran a coupon book scheme called "Shopping Spree," and that Carpenter and people associated with Shopping Spree had lied to consumers and generated numerous complaints until Shopping Spree was shut down by authorities. Carpenter suggests that these statements were not related to "an issue of public interest" (§ 425.16, subd. (e)(3), (4)), because they involved events that were alleged to have taken place in 1994. In view of Carpenter's status as a co-proprietor of Citywide Electric, comments regarding previous consumer investigations pertaining to Carpenter were related to a current issue of public interest, namely Broadcasting's consumer investigation of Citywide Electric. (Wilbanks, supra, 121 Cal.App.4th at p. 900.)

Accordingly, we conclude that Carpenter's claim arises out of Broadcasting's right of free speech within the meaning of section 425.16, subdivision (e)(3) and (4).

3. Appellants' claims are not barred by the statute of limitations

Appellants claim the trial court erred in concluding that they could not establish a probability of prevailing on their slander claims because the claims are barred by the applicable one-year statute of limitations (§ 340, subd. (c)). Appellants maintain that their claims were timely filed as a result of the operation of the equitable tolling doctrine, which tolled the statute of limitations while they pursued their claims in federal court.

a. Factual and procedural history

On August 16, 2002, Broadcasting aired the television broadcast from which appellants' claims arise. On July 28, 2003, appellants filed a two-count complaint in federal court against Companies. In their complaint, appellants alleged that Companies "broadcasted or caused to be broadcast" the August 16, 2002 segment. Citywide Electric and Carpenter each alleged one count of slander arising from statements that were made during the broadcast. Appellants alleged that Citywide Electric was a corporation incorporated in California, with its principal place of business in California, and that Carpenter was a resident of California. Appellants also alleged that Companies was a corporation incorporated in New York, with its principal place of business in New York. Appellants served Companies with a summons and a copy of the complaint on August 15, 2003.

On September 8, 2003, Companies filed a combined motion to dismiss the complaint pursuant to Federal Rules of Civil Procedure, rule 12(b)(6) (28 U.S.C.) for failure to state a claim (12(b)(6) motion), and an anti-SLAPP motion, pursuant to California law. Companies supported its motion with a declaration from Ed Quinn, Broadcasting's president, in which Quinn stated that Broadcasting, not Companies, owned the television station that aired the August 16, 2002 television broadcast in question. Quinn also stated that Broadcasting is a wholly owned subsidiary of Companies.

Appellants filed an ex parte motion in which they sought relief under Federal Rules of Civil Procedure, rule 56(f) to conduct discovery related to Companies's anti-SLAPP motion, including discovery pertaining to the relationships among the television station, Companies, and Broadcasting. On September 26, 2003, the federal court denied the 12(b)(6) motion on the ground that, under the liberal federal rules of pleading, appellants had stated a claim against Companies. The federal court also continued consideration of Companies's anti-SLAPP motion and granted appellants a 120-day period within which to conduct discovery.

In January 2004, appellants filed an opposition to Companies's anti-SLAPP motion. On February 3, appellants filed a first amended complaint against Broadcasting that was identical in all respects to the original complaint, except that it named Broadcasting, rather than Companies, as the defendant. On February 13, appellants filed a voluntarily dismissal as to Companies. On February 23, the federal court denied Companies's anti-SLAPP motion on the ground that appellants' claims did not arise from Companies's right of free speech because Companies did not own or operate the television station on which the statements aired, and on the ground that Companies was no longer a party to the action.

On February 24, Broadcasting filed a 12(b)(6) motion to dismiss the first amended complaint on the ground that the action was barred by the one-year limitations period set forth in section 340, subdivision (c). In April, Broadcasting filed an anti-SLAPP motion. Shortly thereafter, Broadcasting filed a motion to dismiss the first amended complaint pursuant to Federal Rules of Civil Procedure, rule 12(b)(1) (12(b)(1) motion) on the ground that the court lacked diversity jurisdiction because Broadcasting was a citizen of California for diversity purposes since its principal place of business is California.

On September 1, 2004, having granted a continuance to allow discovery on the issue of Broadcasting's principal place of business and having ordered supplemental briefing on that issue, the federal court ruled that it lacked diversity jurisdiction. The court denied as moot both Broadcasting's anti-SLAPP motion and its 12(b)(6) motion. The court then dismissed the action, without prejudice. The following day, the federal court clerk entered a judgment dismissing the case.

On September 20, 2004, appellants filed a two-count complaint against Broadcasting in the San Diego County Superior Court. Citywide Electric and Carpenter each alleged one count of slander based on statements made during the August 16, 2002 broadcast. In January 2005, Broadcasting filed an anti-SLAPP motion. In the motion, Broadcasting argued that appellants could not demonstrate a probability of prevailing on their claims because the claims were time barred, and also because the statements were not actionable. In February 2005, after briefing and oral argument, the trial court granted Broadcasting's anti-SLAPP motion. The court ruled that appellants had not established a probability of prevailing on their slander claims because the claims were barred by the statute of limitations. The court ruled that the equitable tolling doctrine did not apply because Broadcasting had not received "timely notice" of the federal action, and also because appellants had not acted reasonably in waiting until February 3, 2004 to file their first amended complaint in federal court after having been put on notice no later than September 2003 that they had sued the wrong party.

b. The equitable tolling doctrine

In Addison v. State of California (1978) 21 Cal.3d 313 (Addison), the Supreme Court outlined the essential characteristics of the equitable tolling doctrine. The court held that the running of a statute of limitations period "'is tolled "[w]hen an injured person has several legal remedies and, reasonably and in good faith, pursues one." [Citations.]' [Citation.]" (Id. at p. 318.) In Addison, plaintiffs filed a tort action against various governmental authorities in federal court in which they alleged violations of both state and federal law. (Id. at p. 316.) After determining that a federal civil rights action would not lie against public entities, the federal court dismissed the federal claims. Thereafter, the federal court exercised its discretion to dismiss the pendent state law causes of action. (Id. at p. 317.) Within a week of the federal court's dismissal, but after the expiration of the six-month statute of limitations period applicable to their state law claims, the plaintiffs filed an action in state court asserting the same state law claims they had asserted in their federal action. (Ibid.) The trial court ruled that plaintiffs' claims were barred by the statute of limitations. (Id. at p. 316.)

On appeal, the Supreme Court ruled that the limitations period had been tolled while plaintiffs pursued their federal claims. In so ruling, the Addison court described the necessary elements for the doctrine's operation: "[A]pplication of the doctrine of equitable tolling requires timely notice, and lack of prejudice, to the defendant, and reasonable and good faith conduct on the part of the plaintiff." (Addison, supra, 21 Cal.3d at p. 319.) The Supreme Court found that these elements were present in Addison, noting that the "federal court, without prejudice, declined to assert jurisdiction over a timely filed state law cause of action and plaintiffs thereafter promptly asserted that cause in the proper state court." (Ibid.) The Addison court also noted that, "since the federal court action was timely filed, defendants were notified of the action and had the opportunity to begin gathering their evidence and preparing their defense." (Ibid.)

In Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 370 (Lantzy), the Supreme Court reaffirmed that the essential purpose of the doctrine of equitable tolling is to ensure fundamental fairness in situations in which the defendant will not suffer prejudice from the doctrine's operation:

"Equitable tolling is a judge-made doctrine 'which operates independently of the literal wording of the Code of Civil Procedure' to suspend or extend a statute of limitations as necessary to ensure fundamental practicality and fairness. [Citations]. This court has applied equitable tolling in carefully considered situations to prevent the unjust technical forfeiture of causes of action, where the defendant would suffer no prejudice."

c. The equitable tolling doctrine applies in this case

Appellants claim that each of the elements of the equitable tolling doctrine are present in this case. We agree.

(i.) The amended complaint in the federal action naming Broadcasting as

the proper defendant related back to the filing date of the original

complaint under both federal and state law, and was therefore timely filed

for purposes of the equitable tolling doctrine

The parties disagree as to whether federal or state law should apply in considering whether the amended complaint in the federal action related back to the filing date of the original complaint for purposes of determining whether the federal court action against Broadcasting was timely filed. We need not resolve that issue because we conclude that the amended complaint naming Broadcasting as the proper defendant related back to the filing date of the original complaint under both federal and state law. We therefore conclude that the federal action against Broadcasting was timely filed for purposes of the equitable tolling doctrine.

Federal law

Federal Rules of Civil Procedure, rule 15(c) (rule 15(c)) provides in relevant part:

"(c) Relation Back of Amendments. An amendment of a pleading relates back to the date of the original pleading when

"(1) relation back is permitted by the law that provides the statute of limitations applicable to the action, or

"(2) the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, or

"(3) the amendment changes the party or the naming of the party against whom a claim is asserted if the foregoing provision (2) is satisfied and, within the period provided by Rule 4(m)^[[4]] for service of the summons and complaint, the party to be brought in by amendment (A) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (B) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party."

Rule 15(c) provides a method by which "a plaintiff may amend his complaint, after a statute of limitation period has run, to accurately name a defendant who was not correctly named in the pleading before the limitation period had run." (G.F. Co. v. Pan Ocean Shipping Co., Ltd. (1994) 23 F.3d 1498, 1501; accord 6A Wright, Miller & Kane, Federal Practice and Procedure (2d ed. 1990) § 1498 [stating that rule 15(c) "alters the generally accepted rule that new parties, either plaintiffs or defendants, cannot be added to an action by amendment after the applicable limitations period has expired," footnotes omitted].)

In this case, appellants' claim in the amended complaint clearly arose out of the conduct, transaction, or occurrence set forth in the original complaint, because the complaints were identical in all respects except for the name of the defendant. Further,

Broadcasting clearly received notice of the action no later than September 8, 2003 ─ 42 days after the filing of the original complaint ─ when its president, Ed Quinn, filed a declaration in support of Companies's motion to dismiss. Thus, Broadcasting had notice of the action well within the 120-day period provided in Federal Rules of Civil Procedure, rule 4(m). Quinn's declaration also establishes that Broadcasting knew that, but for a mistake concerning its identity as the owner of the television station that broadcast the statements in question, the action would have been brought against Broadcasting.

All of the elements of rule 15(c) are met. Therefore, the filing date of the amended complaint related back to the filing date of the original complaint under federal law. Since the original complaint was filed on July 28, 2003, prior to the expiration of the one-year statute of limitations, the related back amended complaint was also timely filed.

State law

In Hawkins v. Pacific Coast Bldg. Products, Inc. (2004) 124 Cal.App.4th 1497 (Hawkins), the court discussed California law pertaining to whether a plaintiff may amend his or her complaint to correct a defect in the naming of a defendant after the applicable statute of limitations has expired:

"As a general rule, 'an amended complaint that adds a new defendant does not relate back to the date of filing of the original complaint and the statute of limitations is applied as of the date the amended complaint is filed, not the date the original complaint is filed.' [Citation.] But where an amendment does not add a 'new' defendant, but simply corrects a misnomer by which an 'old' defendant was sued, case law recognizes an exception to the general rule of no relation back. [Citations.]

"The rationale behind allowing an exception to the general no-relation-back rule when the plaintiff seeks to correct a mistake in the defendant's name was explained in Mayberry v. Coca Cola Bottling Co. (1966) 244 Cal.App.2d 350 [Mayberry] at pages 352 through 353, 53 Cal.Rptr. 317: '[T]he general rule supplies no litmus to differentiate between erroneous description and change of identity. It ignores the difference between a plaintiff who has committed an excusable mistake and one who seeks a free option among potential liability targets after the statute has run; neither does it consider modern business practices, which often divide integrated business operations─if only for tax purposes─among a group of artificial legal entities. To accommodate the latter factors, an 'exception to the general rule' has been formulated, which permits correction where the plaintiff has committed an excusable mistake attributable to dual entities with strikingly similar business names or to the use of fictitious names.' [Citation.]" (Id. at pp. 1503-1504.)

The Hawkins court further noted that "'the allowance of amendment and relation back to avoid the statute of limitations does not depend on whether the parties are technically or substantially changed; rather the inquiry is as to whether the nature of the action is substantially changed.' (Dilberti v. Stage Call Corp. [(1992) 4 Cal.App.4th 1468, 1470]; 5 Witkin [Cal. Procedure (4th ed. 1997) Pleading], § 1151, p. 609.)" (Hawkins, supra, 124 Cal.App.4th at p. 1504.)

Applying this law, the Hawkins court noted that the plaintiff in that case had sued his former employer as "Basalite Corporation," when in reality the employer's name was "Pacific Coast Building Products, Inc." (Hawkins, supra, 124 Cal.App.4th at pp. 1500-1501.) The plaintiff filed an amended complaint substituting the correct name of the defendant after the statute of limitations had expired as to various causes of action. (Id. at p. 1501.) The trial court sustained the defendant's demurrer on the ground that the statute of limitations barred plaintiff's claims. (Id. at p. 1502.)

On appeal, the Hawkins court held that the trial court had erred in concluding that the amended complaint did not relate back to the date on which he filed his original complaint:

"By defectively describing 'Pacific Coast dba Basalite' as Basalite Corporation, Hawkins's original complaint merely misnamed the proper defendant. . . . Allowing Hawkins to substitute the correct name for his original misdescription of the only named defendant neither changes the nature of the action nor represents an 'entire change of parties.' [Citation.] Hawkins was at all times attempting to sue a single entity, his former employer of three years, for wrongful termination. Although apparently unaware of his former employer's proper corporate name until he received Pacific Coast's motion to quash service of the original complaint and summons, Hawkins nonetheless knew the identity of the alleged tortfeasor ─ the business entity known as Basalite ─ and the address at which it conducted business.

"In our view, Hawkins 'committed an excusable mistake attributable to . . . the use of fictitious names' [Citation.]." (Hawkins, supra, 124 Cal.App.4th at pp. 1504-1505.)

Courts in other cases have cited additional factors to consider in determining whether an amended complaint should relate back, "such as the real tortfeasor's knowledge of the lawsuit and the desirability of protecting substantive rights." (Mayberry, supra, 244 Cal.App.2d at p. 353.) For example, in Smith v. Pickwick Stages System (1931) 113 Cal.App. 118, 121 (Smith), the plaintiff initially named Pickwick Corporation, rather than its subsidiary, Pickwick Stages System, as the defendant in her personal injury lawsuit. The Smith court held that the plaintiff could amend her complaint to name Pickwick Stages System as the proper defendant after the statute of limitations had lapsed on her claim. (Id. at pp. 121-123.) Among the facts on which the Smith court based its holding were the following:

"[T]he president of Pickwick Stages System was actually served with a copy of the summons and complaint in this action, thus giving the court jurisdiction of that corporation; and . . . that, while there were two corporations ─ one the 'Pickwick Corporation' and one 'Pickwick Stages System' ─ nevertheless, they used these names interchangeably throughout California, and that 'The Pickwick Corporation' was the holding company and owned all the capital stock of "Pickwick Stages System"; also that 'Pickwick Stages System' specifically advertised the stage business under the name of 'Pickwick Corporation.'" (Smith, supra, 113 Cal.App. at pp. 122-123, italics omitted.)

The Smith court specifically rejected the defendant's argument that the statute of limitations barred plaintiff's claim:

"It clearly appears from a reading of the original and amended complaint that the plaintiff at all times was urging her claim for damages against the corporation or concern operating the stage line and stage depot, and that had in its employ as a stage driver one D.G. Vaio. The amended complaint does not state a new and different cause of action, or bring in any new or different party defendant, but merely corrects the name of the real party defendant where a misnomer had occurred. Under such circumstances, the rule is elementary that the amendment relates back to the time of filing the original complaint, so far as the statute of limitations is concerned." (Smith, supra, 113 Cal.App. at p. 125, italics omitted.)

In this case, it is clear from appellants' original complaint that they intended to sue the entity that owned KGTV. (See Hawkins, supra, 124 Cal.App.4th at p. 1505.) Broadcasting had notice of the complaint within a month of the running of the one-year limitations period. (See Mayberry, supra, 244 Cal.App.2d at p. 353; Smith, supra, 113 Cal.App. at p. 125.) In addition, Broadcasting and Companies share similar business names and are parent and subsidiary. (See Mayberry, supra, 244 Cal.App.2d at p. 353.) Further, the nature of the action was not substantially changed by the amendment. (See Hawkins, supra, 124 Cal.App.4th at p. 1504.) Moreover, for the reasons discussed below, appellants' initial naming of Companies as the defendant was based on a good faith, albeit erroneous, assumption regarding corporate ownership, and cannot be characterized as an attempt to seek a "free option among potential liability targets after the statute has run." (See Hawkins, supra, 124 Cal.App.4th at p. 1503.) Finally, allowing the amended complaint to relate back to the date of the filing of the original complaint would not frustrate the primary purpose of a statute of limitations, which is to "'[prevent] surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared.' [Citations.]" (Elkins v. Derby (1974) 12 Cal.3d 410, 417.)

Accordingly, we conclude that appellants' amended complaint in the federal action related back to the filing of the original complaint and was, therefore, timely filed under California law.

(ii.) Appellants acted reasonably and in good faith

There is nothing in the record to suggest that appellants filed their federal claim in bad faith. With respect to the reasonableness of appellants' conduct, there was a reasonable basis for appellants having initially named the wrong defendant. Appellants lodged exhibits that showed signs on the premises of the television station that referred to "The McGraw-Hill Companies, Inc." Appellants also submitted a letter demonstrating that a lawyer had responded to its demand for a retraction, on Companies's stationery.^[5] Companies and Broadcasting share a similar name and a parent/subsidiary relationship. Although appellants would have been well advised to make further attempts to determine the proper defendant before they filed suit, we cannot say that under these circumstances, appellants' initial naming of Companies as the defendant in the federal suit was so unreasonable as to preclude application of the equitable tolling doctrine.

Appellants also acted reasonably in filing an amended complaint in February 2004, naming Broadcasting as the proper defendant. Although appellants were put on notice as early as September 2003 of the possibility that they had named the wrong defendant, appellants sought from the federal court, and were granted, a 120-period within which to conduct discovery on this and other issues in the federal action. Shortly after this period ended, appellants filed an amended complaint in the federal action naming Broadcasting as the defendant, rather than Companies. Further, although the federal court ultimately concluded that it lacked diversity jurisdiction in appellants' federal action, appellants' claim that Broadcasting was a citizen of New York for diversity purposes was reasonable. (Accord Mojica v. 4311 Wilshire, LLC (2005) 131 Cal.App.4th 1069, 1074 ["A plaintiff's seeming misanalysis of the facts or the law, particularly in a relatively esoteric area such as federal jurisdiction, does not amount to

the sort of bad faith found to thwart equitable tolling"].) Finally, appellants acted promptly in filing their state action after their federal case was dismissed.

(iii.) Broadcasting will suffer no undue prejudice

Broadcasting was aware of appellants' complaint, no later than September 8, 2003, which is within a month of the relatively short, one-year limitations period for slander. Although Broadcasting speculates that evidence from the case "has . . . disappeared" due to the fact that some of appellants' customers were elderly, Broadcasting points to no specific evidence that it was unable to obtain. Further, the appellate record demonstrates that Broadcasting was able to mount a vigorous defense to appellants' claims.

d. Appellants' slander claims are not barred by the one year statute of

limitations

Appellants filed the federal action on July 28, 2003, 21 days prior to the expiration of the one-year statute of limitations on August 18, 2003. The statute of limitations remained tolled until September 2, 2004, when the federal court dismissed the federal action. Appellants filed this action in state court on September 20, 2004, 18 days after the federal action was dismissed, and three days prior to the expiration of the statute of limitations as tolled by the equitable tolling doctrine.^[6]

Accordingly, we conclude that appellants' claims are not barred by the statute of limitations.^[7]

4. Appellants failed to demonstrate a probability of prevailing on their claims

Citywide Electric and Carpenter each allege one count of slander arising from statements made during the August 2002 broadcast. Appellants failed to demonstrate a probability of prevailing on either cause of action.

a. Governing law

Slander is a form of defamation. (Civ. Code, § 44.) Civil Code section 46 defines slander in relevant part as follows:

"Slander is a false and unprivileged publication, orally uttered, and also communications by radio or any mechanical or other means which:

"1. Charges any person with crime, or with having been indicted, convicted, or punished for crime;

[¶] . . . [¶]

"3. Tends directly to injure him in respect to his office, profession, trade or business, either by imputing to him general disqualification in those respects which the office or other occupation peculiarly requires, or by imputing something with reference to his office, profession, trade, or business that has a natural tendency to lessen its profits . . . ."

In addition to this statutory definition, "[t]he First Amendment [of the United States Constitution] . . . places constitutional limitations on the permissible extent of state [defamation] law . . . ." (Sipple v. Foundation For Nat. Progress (1999) 71 Cal.App.4th 226, 254.) In Philadelphia Newspapers, Inc. v. Hepps (1986) 475 U.S. 767, 775, the United States Supreme Court observed that there are "two forces that may reshape the common-law landscape to conform to the First Amendment. The first is whether the plaintiff is a public official or figure, or is instead a private figure. The second is whether the speech at issue is of public concern." These forces have shaped the common-law landscape in two primary areas: the requisite burdens and standards of proof on the issues of the falsity of the statement and the defendant's degree of fault in making the statement.

With respect to falsity, the First Amendment requires that both public and private-figure plaintiffs prove falsity whenever the allegedly defamatory statements pertain to a matter of public concern. (Nizam-Aldine v. City of Oakland (1996) 47 Cal.App.4th 364, 375.) With respect to fault, in California, a private figure plaintiff seeking compensatory damages must prove only that the defendant was negligent in making the defamatory statement. (Khawar v. Globe Intern., Inc. (1998) 19 Cal.4th 254, 274 (Khawar). However, for recovery of either presumed or punitive damages, even a private figure plaintiff must prove actual malice if the defamatory statement involves matters of public concern. (Id. at p. 274.) In order to prove actual malice, the plaintiff must prove that the statement was made "'with knowledge that it was false or with reckless disregard of whether it was false or not.'" (Id. at p. 275, quoting New York Times Co. v. Sullivan (1964) 376 U.S. 254, 280.) A plaintiff must prove actual malice by clear and convincing evidence. (Khawar, supra, 19 Cal.4th at p. 275.)

Applying this law in the SLAPP context, "If the defamatory statement pertains to a matter of public interest involving a private-figure plaintiff that plaintiff, in defending against a SLAPP motion, must show a reasonable probability of proving the statement was false." (Gallagher v. Connell (2004) 123 Cal.App.4th 1260, 1274 (Gallagher).) Further, if the statement pertains to a matter of public interest, a private-figure plaintiff who is seeking compensatory damages must demonstrate a reasonable probability of proving the defendant acted negligently. (See Khawar, supra, 19 Cal.4th at pp. 274-275.) A private-figure plaintiff who is seeking presumed or punitive damages for a statement involving the public interest must demonstrate a reasonable probability of proving actual malice. (See ibid.)

b. Appellants have not demonstrated a probability of prevailing on

their claims

We assume, without deciding, that Citywide Electric and Carpenter are private figures. In addition, we conclude, for the reasons set forth in part III.A.2., ante, that the statements made during the August 16, 2002 broadcast involve a matter of public interest. Accordingly, appellants were required to demonstrate a reasonable probability of establishing that the statements at issue were false. Further, in order to recover compensatory damages, appellants were required to demonstrate a reasonable probability of proving that Broadcasting made the statements negligently. To recover presumed or punitive damages, appellants had to show the probability of proving actual malice.

In its complaint, Citywide Electric claimed that a number of the statements made during the August 16, 2002 broadcast were defamatory. The gist of the first set of statements was that the Troubleshooter had become aware that Citywide Electric was generating a large number of customer complaints, particularly involving the sale of unneeded services to customers:

"'An electrical repair company [Citywide Electric] [is] generating a lot of complaints.'"

"'A business [Citywide Electric] is making a lot of customers unhappy.'"

"'One electrical firm in San Diego [Citywide Electric] is building a reputation for working "fast" in a different sort of way.'"

"'Customers tell us [KGTV Channel 10] these electricians [at Citywide Electric] are pulling a "fast" one selling services they don't need.'"

"'An electrical contracting firm [Citywide Electric] . . . has a reputation for selling services that are not necessary.'"

Citywide Electric claims those statements are false because the complaints against it related to overcharging, and not to selling unnecessary services. Citywide Electric failed to establish a probability of prevailing on its slander claim as to any of these statements. With respect to the statements regarding the Troubleshooter having becoming aware of a number of customer complaints, the record contains, among other evidence, letters and emails sent to the Troubleshooter by disgruntled customers, small claims judgments against Citywide Electric, and pleadings and a settlement of a criminal fraud action filed against Citywide Electric that resulted in the payment of restitution to a customer. Contrary to Citywide Electric's assertion that the complaints against it related solely to overcharging rather than the selling of unneeded services (and assuming there is a legally significant distinction between the two types of complaints), many of the complaints in the record allege that Citywide Electric sold unneeded services. In small claims court, the claim of one customer was premised on "unnecessary replacement," and a second customer stated that she had been informed that Citywide Electric electricians "make recommendations that are not necessary." A third customer stated that he had been told by a Citywide Electric electrician that he had to replace a circuit breaker, at a cost of over $3,000, while a second electrician took 30 seconds to determine that the breaker was not the problem. Citywide Electric failed to establish a reasonable probability of proving that the statements at issue were false. (See Gallagher, supra, 123 Cal.App.4th at p. 1274.)

The next set of statements that Citywide Electric claims are defamatory pertain to an on-camera test that Broadcasting aired as part of the segment. The first statement Citywide Electric claims was defamatory is Emerald's introduction of the on-camera test. In the introduction, after stating that customers have been telling the Troubleshooter that electricians from Citywide Electric are selling services that the customers do not need, Emerald stated, "[W]e [KGTV Channel 10] wondered, so we put them to the test." Following this introduction, Emerald told viewers that an electrician from McBride Electric, Todd Tanghee, was checking the breaker box at the test house. While examining the box on camera, Tanghee stated, "[E]verything seems to be okay," and "[E]verything seems to be up to code." After showing Tanghee as he examined other parts of the house, Emerald stated, "[T]his old house gets a clean bill of health." Later in the segment, Emerald informed viewers that a Citywide Electric employee had also examined the house. The segment continued with a woman who had posed as the homeowner during Citywide Electric's inspection, saying that the Citywide Electric employee just told her that "all those breakers that hadn't been replaced previously . . . needed to be replaced for five hundred sixty three dollars. . . ."

Emerald's opening statement that the Troubleshooter was going to put Citywide Electric to the test is not slanderous, since it does not tend to directly injure it in respect to its business. (Civ. Code, § 46.) With regard to the final statement made by the woman who posed as the homeowner, it is undisputed that the Citywide employee recommended replacing the breakers in the box, and appellants do not claim that this statement was false. Thus, Citywide Electric failed to establish a reasonable probability of proving this statement was false. (See Gallagher, supra, 123 Cal.App.4th at p. 1274.)

With regard to the remainder of the statements in this category, even assuming the falsity of Tanghee's equivocal statements that, based on his inspection of the house's circuit breaker box, everything "seems" to be okay and up to code, and Emerald's statement, which was clearly predicated on Tanghee's inspection, that the house "gets a clean bill of health," Citywide Electric failed to establish a probability of proving that Broadcasting acted negligently in making, or republishing those statements.

We reject appellants' suggestion that the fact that Tanghee testified in his deposition that Emerald told him Citywide Electric would also be performing an inspection of the same house proves, as appellants assert in their brief, that "the 'test' was clearly set-up for a pre-ordained outcome." Appellants also note that Tanghee prepared a report in which he stated that the home's electrical system had failed certain aspects of his inspection. Emerald testified in her deposition that she had never seen Tanghee's report. Finally, Emerald's refusal to grant Citywide Electric's request for an opportunity to further inspect the house was not negligent in light of the fact that appellants presented no evidence that Tanghee performed anything other than a qualified and independent inspection.

Citywide Electric also claims that a number of statements made during the August 2002 segment that pertained to Carpenter's former business, Shopping Spree, are defamatory.^[8] During the segment, Emerald stated that Citywide Electric is run by Cort Carpenter and that Carpenter had been the subject of previous Troubleshooter investigations. The segment then showed videotape of the prior investigations in which Emerald is seen telling Carpenter, "[Y]ou people [at Shopping Spree] are still lying to consumers," and, "[Y]ou [Cort Carpenter and/or Shopping Spree] still lie to the public." During her narration recounting the former Troubleshooter investigation of Shopping Spree, Emerald made the following three statements, which Citywide Electric claims are defamatory:

"In 1994, Cort Carpenter ran a coupon book scheme . . . ."

"The Shopping Spree generat[ed] lots of consumer complaints."

"The San Diego City Attorney shut him [Cort Carpenter] down."

In support of its anti-SLAPP motion, Broadcasting lodged videotapes and transcripts of various Troubleshooter segments involving Carpenter and Shopping Spree that aired in 1993 and 1994. The segments portrayed the Troubleshooter's investigation into complaints that Shopping Spree was making false or misleading promises of free airline tickets to people over the telephone in an attempt to induce them to purchase a coupon book for $59. In one of the segments, Carpenter admits to selling a coupon book entitled, "New Edition Shopping Spree." Broadcasting also lodged a preliminary injunction from a Sonoma County trial court, issued in December 1993, that enjoined, among others, defendant New Edition Shopping Spree, Inc., and "anyone else acting in concert with or participating with Defendants" from using a particular telemarketing script for the sale of a coupon book. The enjoined script is attached to the injunction order. Broadcasting also offered a final judgment in that action that enjoined, among others, defendant New Edition Shopping Spree, Inc. and "all persons who are acting in concert or in participation" with the defendant from performing various acts. Among the acts enjoined, was "unlawfully notifying consumers that they have 'won' or been 'specially selected' to receive a gift or prize and that as a condition of receiving the gift the consumer must purchase a coupon book. . . ."

The record contains a declaration from Amber Van Orden, a former telemarketer for Carpenter at Shopping Spree. Van Orden states that when she worked for Shopping Spree, she used a telemarketing script nearly identical to the script that the Sonoma County trial court enjoined. The telemarketing script Van Orden authenticated bears the address of Carpenter's Shopping Spree offices.

Emerald testified in a deposition, "[F]rom what I can remember ─ and its been a very long time ─ we did speak with the San Diego City Attorney's Office, and they said that they [Carpenter's Shopping Spree and the defendants in the Sonoma County court action] were connected and they served a court order." The record also contains a videotape from a November 1994 Troubleshooter segment concerning the Shopping Spree.^[9] On the videotap