CHRISTIAN RESEARCH INSTITUTE v. ALNOR

Filed 2/28/07

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from an order of the Superior Court of Orange County, Robert J. Moss, Judge. Reversed with directions.

Ross, Dixon & Bell, Kevin F. Kieffer, Becki F. Kieffer, Jenece D. Solomon; ACLU Foundation of Southern California and Peter J. Eliasberg for Defendant and Appellant.

Tom S. Chun for Plaintiffs and Respondents.

* * *

Defendant William Alnor appeals the trial courts denial of his special motion to strike brought under the anti-SLAPP statute.^[1](Code Civ. Proc.,  425.16.)^[2] Alnor contends plaintiffs Hank Hanegraaff and Christian Research Institute (CRI) failed to meet their burden of demonstrating a likelihood of success on their defamation complaint because they failed to show by clear and convincing evidence Alnors statement about plaintiffs was false or that Alnor acted with malice.

We conclude the law does not require a defamation plaintiff to prove falsity by clear and convincing evidence and that plaintiffs have shown by a preponderance of the evidence that Alnors statements were false. Plaintiffs, however, have failed to demonstrate a probability of prevailing by clear and convincing evidence that Alnor made the challenged statement with actual malice. We therefore reverse the trial courts order denying Alnors special motion to strike, and direct the trial court to enter a new order granting the motion and striking the complaint.

I

Factual and Procedural Background

A. The Defamation Lawsuit

Hanegraaff is president of CRI, a nonprofit organization that disseminates religious information. Defendant William Alnor is a former CRI employee who maintains the Christian Sentinel, a web site reporting on the fundraising and spending practices of various Christian organizations.

Hanegraaff posted an urgent letter on CRIs web site stating that the post office branch in Rancho Santa Margarita had misdirected some of CRIs mail to the wrong address, and that the recipient had discarded some of it. The letter explained that although the local post office branch has accepted full responsibility for this error and has fixed the problem, the mishap caused CRI to lose a substantial amount of money, perhaps in the hundreds of thousands of dollars. The letter requested readers to send a sacrificial gift to CRI to cover the loss. Suspicious of CRIs claims, Alnor called several post office branches to verify the incident. Based on his findings, Alnor published a Christian Sentinel edition disputing CRIs claim that a substantial amount of CRIs mail had been diverted, and questioning the fundraising tactics of Hanegraaff and CRI. Under the heading of BREAKING NEWS, the edition bore the headline: Federal Criminal Mail Fraud Investigation Launched Against CRI and Leader Hank Hanegraaff. Under a picture of Hanegraaff, the story began: Christian Research Institute (CRI) President Hank Hanegraaff has become the focus of a federal criminal mail fraud investigation sparked last week by an unusual urgent memo fundraising appeal letter he released on Friday on CRIs website.

Plaintiffs filed a defamation complaint against Alnor based on his statement that CRI and Hanegraaff were under a federal criminal investigation. Alnor responded with a special motion to strike under the anti-SLAPP statute. In support of the motion, Alnor submitted a declaration outlining his investigation into the CRI memo.

B. Alnors Evidence

According to his declaration, Alnor called the Rancho Santa Margarita office of the United States Postal Service (USPS) and asked to speak to the postmaster. A person who identified himself as Gus, the acting postmaster told Alnor he was unaware of the mail diversion discussed in the CRI letter. After providing Gus a copy of the CRI memo, Alnor again called the branch and learned from an unidentified person that the CRI letter had been posted at the facility for the employees to view. This person told Alnor that no one at the facility knew anything about the allegations made in the CRI memo, and that the issue had become a matter of internal investigation. The person also advised Alnor to contact the postal inspectors office in Pasadena, California, so they could start an investigation.

Alnor then called the USPS Pasadena postal inspectors office and spoke to Debra, who advised Alnor that she was aware of the claims in CRIs memo, and her office was investigating it on the basis of mail fraud. Debra asked Alnor to fax her a copy of the CRI memo, and referred him to a web site where he could file a mail fraud report. Debra explained that all complaints regarding suspected mail fraud were filed with the USPSs national postal inspectors office in Chicago, Illinois. Alnor then printed off, completed, and sent a mail fraud report to both the Rancho Santa Margarita branch and the Chicago postal inspectors office. Alnor subsequently called the Chicago postal inspectors office to ask about the status of his mail fraud report, and was referred to someone who did not return his call. Shortly after Alnor published the allegedly defamatory article, he received a letter from the Chicago postal inspectors office informing him [t]he information you provided will be reviewed to determine if this matter constitutes any violation of the Mail Fraud or False Representation Statutes.

Alnor spoke on two more occasions with Gus, who said he had received Alnors mail fraud report and that the postal inspectors office was investigating the situation. Gus said CRI had never complained about diverted mail, and that [n]o apologies were ever made to CRI. Gus opined the mail diversion outlined in the CRI letter appeared fabricated. Gus told Alnor, It never happened. There were no diversions of mail. On another call to the Rancho Santa Margarita Post Office, Alnor spoke with an unidentified woman who told him the employees of the office were annoyed over the allegations in the CRI letter and claimed [CRI] never came in to talk to us at all. She also confirmed that CRI had not filed a complaint regarding the allegedly diverted mail. Alnor also contacted the San Juan Capistrano USPS branch, whose postmaster told Alnor he had never heard of the matters claimed by Hanegraaff in the CRI memo. Alnor attempted to speak with CRI about the matter on several occasions, but the organization would not provide any information.

In addition to his own declaration, Alnor submitted the declaration of Jay Howard, another person who monitors religious organizations. Howard stated that shortly after Alnor published the allegedly defamatory article, he confirmed with someone named Mildred that the post office had initiated a mail fraud investigation based on the CRI letter. Alnor also introduced evidence, including a Los Angeles Times article, to demonstrate plaintiffs public figure status.

C. Plaintiffs Evidence

In opposing the special motion to strike, plaintiffs submitted Hanegraaffs declaration. Hanegraaff stated that in the last quarter of 2004, he became aware there had been a noticeable drop in mail volume and the amount of donations received compared with the same period in prior years. In December 2004, CRI received a call from a company named On-Target Marketing (On-Target), a direct mail marketing company which deals with large volumes of mail daily. The On-Target employee claimed the company had retrieved from its dumpster mail belonging to CRI. Hanegraaff dispatched Paul Young, CRIs chief operating officer, who returned with a full tray of CRI mail from On-Target. Young then met with a USPS official to discuss the situation. CRI decided not to file a formal complaint with the USPS because it did not wish to seek compensation, but only to correct the problem. Believing the drop in donations occurred because the post office diverted their mail, Hanegraaff prepared and published the CRI letter.

Hanegraaffs declaration states that Alnor had made numerous personal attacks against Hanegraaff, including claims of plagiarism and financial improprieties, since CRI terminated Alnors employment in 1992. Hanegraaff stated he was aware of only one postal service investigation relating to the CRI memo, which was commenced over a month after Alnors article. The investigation did not concern any wrongdoing on the part of CRI or Hanegraaff, but focused only on the post offices alleged mishandling of CRIs mail. Plaintiffs included a copy of the post offices investigative report, which confirmed plaintiffs were not targeted.

Plaintiffs also introduced copies of letters received from the Office of Inspector General of the USPS, Federal Trade Commission, and the Federal Bureau of Investigation, in response to CRIs Freedom of Information Act document request; each of the letters stated the agency had no investigative records concerning CRI or Hank Hanegraaff during the preceding two-year period.

II

Standard of Review

An order denying an anti-SLAPP special motion to strike is appealable under sections 425.16, subdivision (i), and 904.1. We review the trial courts order de novo. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999.)

III

Discussion

A. Applicable Anti-SLAPP and Libel Principles

The anti-SLAPP statute provides: A cause of action against a person arising from any act of that person in furtherance of the persons 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. ( 425.16, subd. (b)(1).) An act in furtherance of the right of free speech includes conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest. ( 425.16, subd. (e)(4).)

The anti-SLAPP statute arose from the Legislatures recognition that SLAPP suit plaintiffs are not seeking to succeed on the merits, but to use the legal system to chill the defendants first amendment right of free speech. (Integrated Healthcare Holdings, Inc. v. Fitzgibbons (2006) 140 Cal.App.4th 515, 522 (Integrated Healthcare).) To prevail on an anti-SLAPP motion, the movant must first make a threshold showing that the challenged cause of action arises from an act in furtherance of the right of petition or free speech in connection with a public issue. [Citation.] Once the movant meets this burden, the plaintiff must demonstrate a probability of prevailing on the claim. [Citation.] If the plaintiff cannot meet this burden, the trial court must strike the cause of action. [Citation.] (Ibid.)

Plaintiffs concede Alnors statement arose from constitutionally protected activity, and that the statutes first prong has been met. Thus, the only issue here is whether plaintiffs have demonstrated a probability of success on the merits.

To establish a probability of prevailing, the plaintiff must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited. [Citation.] In doing so, the trial court considers the pleadings and evidentiary submissions of both the plaintiff and the defendant. [Citation.] Although the court does not weigh the credibility or comparative probative strength of competing evidence, it should grant the motion if, as a matter of law, the defendants evidence supporting the motion defeats the plaintiffs attempt to establish evidentiary support for the claim. [Citation.] Moreover, the plaintiff cannot rely on the allegations of the complaint, but must produce evidence that would be admissible at trial. [Citation.] (Integrated Healthcare, supra, 140 Cal.App.4th at p. 527.)

Plaintiffs sole cause of action against Alnor is libel. Civil Code section 45 provides: Libel is a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation. There is no question the phrase Federal Criminal Mail Fraud Investigation Launched Against CRI and Leader Hank Hanegraaff exposes plaintiffs to hatred, contempt, ridicule, or obloquy, would cause them to be shunned or avoided, and has a tendency to injure Hanegraaff in his occupation.

Plaintiffs do not dispute they are public figures.^[3] As such, they have the burden of proving both that the challenged statement is false, and that Alnor acted with actual malice. (See New York Times Co. v. Sullivan (1964) 376 U.S. 254, 280 (Sullivan); Curtis Publishing Co. v. Butts (1967) 388 U.S. 130, 155 (plur. opn. of Harlan, J.) [applying Sullivan actual malice standard to public figures that are not public officials].) In this context, a defendant acts with actual malice when publishing a knowingly false statement or where he entertained serious doubts as to [its] truth. (Readers Digest Assn. v. Superior Court (1984) 37 Cal.3d 244, 256 (Readers Digest).) A public figure plaintiff must prove actual malice by clear and convincing evidence. (Gertz v. Robert Welch, Inc. (1974) 418 U.S. 323, 342 (Gertz).)

B. Plaintiffs Have Met Their Burden to Show Falsity

1. Plaintiffs Are Required to Demonstrate Falsity by a Preponderance of the Evidence

Alnor contends plaintiffs must not only prove malice by clear and convincing evidence, but must also prove falsity by the same standard. In support, Alnor cites Annette F. v. Sharon S. (2004) 119 Cal.App.4th 1146, 1170 (Annette F.). Plaintiffs, citing CACI No. 1700, contend they are required to prove falsity only by a preponderance of the evidence. We conclude plaintiffs are correct.

In Annette F., the court reversed an order denying an anti-SLAPP motion in part on the plaintiffs failure to prove the falsity of the challenged statement by clear and convincing evidence. (119 Cal.App.4th at p. 1171.) Annette F. relied solely on the California Supreme Courts decision in Blatty v. New York Times (1986) 42 Cal.3d 1033, 1042 (Blatty). According to Annette F., Blatty held the plaintiff in [a] case governed by . . . Sullivan, supra, 376 U.S. 254 . . . bears [the] burden of proving falsehood by clear and convincing evidence. (Annette F., at p. 1170.). Blatty, however, never applied the clear and convincing standard for falsity, nor did it even discuss the issue. Based on the pinpoint citation provided, it appears the Annette F. court simply misread Blattys discussion regarding the burdens of proof in defamation actions involving public figures.^[4]

As plaintiffs correctly note, CACI No. 1700 requires falsity to be proved by a preponderance of the evidence. Pattern jury instructions, however, while designed to accurately reflect the law, are not the law itself. (People v. Alvarez (1996) 14 Cal.4th 155, 217.) Some courts have interpreted United States Supreme Court precedent to require proof of falsity by clear and convincing evidence (see, e.g., Kapiloffv. Dunn (1975) 27 Md.App. 514, 530-531), but the Supreme Court itself has never done so. Indeed, in Harte-Hanks Communications, Inc. v. Connaughton (1989) 491 U.S. 657, 661 fn. 2, the court noted: There is some debate as to whether the element of falsity must be established by clear and convincing evidence or by a preponderance of the evidence. [Citations.] We express no view on this issue.

The requirement that a public figure plaintiff prove malice by clear and convincing evidence arises from First Amendment concerns that freedom of expression be provided the breathing space that [it] need[s] . . . to survive . . . . (Sullivan, supra, 376 U.S. at p. 272.) Although citing Annette F., Alnor provides no argument why the element of falsity requires a clear and convincing evidence standard to protect freedom of expression. Neither the California Supreme Court nor the United States Supreme Court has expressly mandated this requirement, and we perceive no reason to do so now. Where the law specifies no higher burden of proof, the preponderance of the evidence standard applies. (Evid. Code, 115.)

2. The Plaintiffs Submitted Admissible Evidence Demonstrating Falsity

To meet their burden of proving the challenged statement was false, plaintiffs cite to (1) the letters received from federal agencies in response to plaintiffs Freedom of Information Act request (FOIA letters); (2) the report from the Office of Inspector General (OIG report); and (3) a Los Angeles Times article submitted by Alnor. Alnor raised hearsay objections to challenge the admissibility of these items.

Plaintiffs contend the FOIA letters and the OIG report fall within the official records exception to the hearsay rule. Evidence Code section 1280 provides: Evidence of a writing made as a record of an act, condition, or event is not made inadmissible by the hearsay rule when offered in any civil or criminal proceeding to prove the act, condition, or event if all of the following applies: [] (a) The writing was made by and within the scope of duty of a public employee. [] (b) The writing was made at or near the time of the act, condition, or event. [] (c) The sources of information and method and time of preparation were such as to indicate its trustworthiness.

The FOIA letters are authenticated by the declaration of Tom S. Chun, an attorney representing plaintiffs. Chun declares he received the FOIA letters after submitting a written request under the Freedom of Information Act for any and all investigative records pertaining to either CRI or Hanegraaff. The FOIA letters each state they were prepared in response to the FOIA request, and identify the time period searched. Each of the letters is dated shortly after the requests were made, and identify the position of the sender. We conclude the official record exception to the hearsay rule has been met.

The OIG report is more problematic. The report contains information which was not directly observable by the investigator who prepared the report, and the investigator identifies no independent sources. Indeed, some of the information on the report appears to have come directly from CRI. For example, the report states: Beginning in October 2004, CRI began to notice a marked decline in the volume of mail they were receiving. Donations received in October and November of 2004 were down 36.730% compared to donations received in October and November of 2003. Because there is insufficient information to indicate the trustworthiness of the OIG report, we decline to consider it here.

We also conclude the Los Angeles Times newspaper article is hearsay and therefore decline to consider it for its truth. Because Alnor introduced the article, plaintiffs contend he cannot now dispute its accuracy. The record demonstrates, however, Alnor specifically sought judicial notice of [t]he fact that the Los Angeles Times published the article, and not the truth of its contents. Because neither Alnor nor plaintiffs sought to introduce the contents of the article for its truth, Alnor did not waive his hearsay objection to the article.

Thus, we are left with the question whether the FOIA letters are sufficient to sustain a favorable judgment if the evidence . . . is credited. (Integrated Healthcare, supra, 140 Cal.App.4th at p. 527.) Alnor contends the letters are unreliable because they did not disclose the investigation of CRI and Hanegraaff prompted by Alnors complaint. We reject this contention. As noted above, a court may not weigh competing evidence in an anti-SLAPP motion. If the defendants evidence does not demonstrate that plaintiff cannot prevail as a matter of law, we consider only whether evidence favoring the plaintiff, standing alone, would sustain a judgment in his or her favor. Here, plaintiffs have met their burden to prove falsity because the FOIA letters provide sufficient evidence the USPS did not investigate the plaintiffs, contrary to Alnors claim.

C. Plaintiffs Have Not Shown Actual Malice by Clear and Convincing Evidence

Unlike the falsity requirement, plaintiffs must demonstrate actual malice by clear and convincing evidence. This requirement presents a heavy burden, far in excess of the preponderance sufficient for most civil litigation. (Hoffman v. Capital Cities/ABC, Inc. (9th Cir. 2001) 255 F.3d 1180, 1186-1187.) The burden of proof by clear and convincing evidence requires a finding of high probability. The evidence must be so clear as to leave no substantial doubt. It must be sufficiently strong to command the unhesitating assent of every reasonable mind. (Copp v. Paxton (1996) 45 Cal.App.4th 829, 846 (Copp).)

To show actual malice, plaintiffs must demonstrate Alnor either knew his statement was false or subjectively entertained serious doubt his statement was truthful. (Bose Corp. v. Consumers Unionof U.S., Inc. (1984) 466 U.S. 485, 511 (Bose).) The question is not whether a reasonably prudent man would have published, or would have investigated before publishing. There must be sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication. Publishing with such doubts shows reckless disregard for truth or falsity and demonstrates actual malice. (Readers Digest, supra, 37 Cal.3d at pp. 256-257.)

A defamation plaintiff may rely on inferences drawn from circumstantial evidence to show actual malice. (Readers Digest, supra, 37 Cal.3d at pp. 257-258.) A failure to investigate [fn. omitted] [citation], anger and hostility toward the plaintiff [citation], reliance upon sources known to be unreliable [citations], or known to be biased against the plaintiff [citations] such factors may, in an appropriate case, indicate that the publisher himself had serious doubts regarding the truth of his publication. (Id. at p. 258.) Thus, malice may be inferred where, for example, a story is fabricated by the defendant, is the product of his imagination, or is based wholly on an unverified anonymous telephone call. (St. Amant v. Thompson (1968) 390 U.S. 727, 732 (St. Amant).) Similarly, an inference of malice may be drawn when the publishers allegations are so inherently improbable that only a reckless man would have put them in circulation[,] . . . [or] where there are obvious reasons to doubt the veracity of the informant or the accuracy of his reports. [fn. omitted.] (Ibid.) Conversely, [t]he failure to conduct a thorough and objective investigation, standing alone, does not prove actual malice, nor even necessarily raise a triable issue of fact on that controversy. [Citations.] Similarly, mere proof of ill will on the part of the publisher may likewise be insufficient. [Citation.] (Readers Digest, supra, 37 Cal.3d at p. 258.)

Alnor asserts he believed his challenged statement about plaintiffs to be true at the time he made it. To demonstrate this, Alnor relies on his declaration which describes a telephone conversation he allegedly had with Debra at the postal inspectors office in Pasadena: Debra advised me that she was aware of the claims in Hanegraaffs fundraising letter and that her office was investigating it on the basis of mail fraud. Our analysis of whether plaintiffs have demonstrated actual malice by clear and convincing evidence focuses largely on Alnors purported conversation with Debra.

TO BE CONTINUED AS PART II.

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^[1] SLAPP is an acronym for strategic lawsuit against public participation, first coined by two University of Denver professors. (See Comment, Strategic Lawsuits Against Public Participation: An Analysis of the Solutions(1990/1991) 27 Cal. Western L.Rev. 399.)

^[2] Unless otherwise indicated, all further statutory references are to the Code of Civil Procedure.

^[3] As Alnor points out, CRI bills itself as the largest, most effective apologetics ministry in the world, receiving over $7 million a year in donations. Plaintiffs also produce Bible Answer Man, a nationally syndicated daily radio program reaching millions of listeners every week.

^[4] The portion of the Blatty opinion cited by Annette F. on burden of proof reads as follows: At the threshold, in defamation actions in which, of course, the alleged injurious falsehood of a statement is the gravamen of the plaintiffs claim the amendment has abrogated the common law of strict liability. (Gertz v. Robert Welch, Inc. (1973) 418 U.S. [323,] 347 . . . .) For constitutional purposes it is not enough that the traditional affirmative defense of truth, with the burden of proof on the defendant, be available to the press; rather it is the plaintiff who is required to plead and prove falsehood. (Id. at pp. 339-348 . . . ; . . . Sullivan, supra, 376 U.S. at pp. 278-280 . . . ; see, e.g., Bose Corp. v. Consumers Union of U.S., Inc. [(1984)] 466 U.S. [485], 511, fn. 30 . . . [holding that when the plaintiff is a public official or public figure, in order to carry his burden he must prove actual malice i.e., he must demonstrate with clear and convincing evidence that the defendant realized that his statement was false or that he subjectively entertained serious doubt as to the truth of his statement]; Gertz . . . , supra, [418 U.S.] at p. 347 . . . [effectively holding that when the plaintiff is a private individual, he must prove that the defendant made the falsehood with at least negligence]). (Blatty, supra, 42 Cal.3d at p. 1042.)