Court of Appeal, Fourth Appellate District
Division One  
State of California

Ilena Rosenthal, Plaintiff and Respondent,
v.
Patrick O'Leary, Defendant and Appellant
D036457
(Super. Ct. No. GIC 739307)

APPEAL from an order of the Superior Court of San Diego County, William C.
Pate, Judge.  Reversed with directions.

Ilena Rosenthal brought a defamation action against Patrick O'Leary arising out
of statements O'Leary made on an internet newsgroup forum.   O'Leary filed a
special motion to strike the complaint pursuant to Code of Civil Procedure
section 425.16 but, while the motion date was pending,
Rosenthal dismissed the action without prejudice.  (All further statutory
references are to the Code of Civil Procedure unless otherwise specified.)  
Thereafter, O'Leary sought to recover his attorney fees incurred in bringing
the motion to strike, but the superior court denied his motion. He appeals the
resulting order, contending that the trial court erred in finding that
Rosenthal had established the probability of prevailing on her defamation
claim.  We agree and reverse the order.

FACTUAL AND PROCEDURAL BACKGROUND

Rosenthal is an activist for the rights of women who have had breast implant
surgery.  She is the director of the San Diego Humantics Foundation for Women
and heads an International Silicone Support Network.  She established
the Internet News Group (alt.support.breast-implant), a website forum designed
to provide information and support to women who had, or wanted information
about, implants. On the forum, Rosenthal posted her views about the dangers of
breast implants and the falsity of the information provided by silicone
manufacturers to the public about the complications from having breast
implants.

O'Leary was an officer of McGhan Medical Corporation, a manufacturer of
silicone breast implants.  Using the internet name "MPLNT" and claiming to be a
"caring professional," O'Leary began to post his own messages on the forum
and at other internet sites, challenging Rosenthal's theories and assertions.  
A number of O'Leary's messages were caustic and included personal barbs and
insults against Rosenthal.

After O'Leary posted messages anonymously on the forum for four or five years,
Rosenthal discovered his identity when he forwarded to her a crude message he
had received from someone else.  Shortly thereafter, Rosenthal filed this
action against him and others for defamation, negligence, intentional and
negligent infliction of emotional distress and injunctive relief.  O'Leary
filed a special motion to strike Rosenthal's complaint pursuant to section
425.16, Rosenthal dismissed her action without prejudice before the motion was
heard.  O'Leary then filed a motion seeking to recover attorney fees and costs
of $8,370.50 for preparing the motion to strike.
The superior court found that O'Leary was entitled to a ruling on his request
for attorney fees notwithstanding the dismissal of the action, but denied the
request on
the ground that Rosenthal had established the probability of prevailing on the
merits of her claims.  O'Leary appeals.

DISCUSSION

1.         Section 425.16

Section 425.16 establishes a procedure that allows a trial court "to dismiss at
an early stage non meritorious litigation meant to chill the valid exercise of
the constitutional rights of freedom of speech and petition in connection
with a public issue.  [Citation.}" (Sipple v. Foundation for Nat. Progress
(1999) 71 Cal.App.4th 226,235.) Such a non meritorious action is referred to as
a "strategic lawsuit against public participation," or SLAPP, suit.   (Ibid.)
To further the legislative goals of encouraging participation
in matters of public significance and discouraging abuse of the judicial
process, the courts "broadly" construe section 425.16, which is known as the
anti-SLAPP statute.  (& 425.16, subd. (a).)

Pursuant to section 425.16, the defendant may bring a special motion to strike
any cause of action against him arising from his acts "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  Ǫ."(&425.16, subd.
(b)(1).) In support of the motion, the defendant must "make an initial prima
facie showing that the plaintiff's suit arises from an act in furtherance of
[his] right of petition or free speech.  [Citation.]" (Braun v. Chronicle
Publishing Co. (1997) 52 Cal.App.4th 1036, 1042-1043.) If the defendant meets
this burden, the trial court must grant the special motion to strike the
complaint unless the plaintiff establishes a reasonable probability that
she will prevail on the merits.  (&425.16, subd. (b)(a); Wilcox v. Superior
Court (1994) 27 Cal. App.4th 809, 824-825.)

A defendant who prevails on a special motion to strike is entitled to recover
attorney fees and costs incurred in bringing the motion.  (& 425.16, subd.
(c); Lafayette Morehouse,Inc. v. Chronicle Publishing Co. (1995) 39
Cal.App.4th 1379,1382-1384; compare Dove Audio, Inc. v. Rosenfeld, Meyer &
Susman (1996) 47Cal. App.4th 777, 785 [statute authorizes award of fees so as
to adequately compensate the defendant for having to respond to a baseless
lawsuit].)  Under such circumstances, the award of fees and costs is mandatory.
 (& 425.16,subd.  (c).)

 Where, as here, the plaintiff voluntarily dismisses her lawsuit while a
special motion to strike it is pending, appellate decisions have recognized
that the trial court may nonetheless award attorney fees and costs to the
moving defendant pursuant to the anti-SLAPP statute.  In Coltrain v. Shewalter
(1998) 66 Cal.App.4th94 (Coltrain), after the plaintiffs' dismissal of their
complaint while a special motion to strike it was pending, the trail court
awarded the defendants attorney fees pursuant to section 425.16,
subdivision (c).  The plaintiffs appealed, arguing that the defendants were not
entitled to recover fees because they had not prevailed on the special motion
to strike.  (Cotrain, supra, 66 Cal.App.4th at p. 101.) Based on a
review of authorities determining the issue of who is the "prevailing party" in
the event of a voluntary dismissal of the case, the appellate court rejected
the plaintiffs' argument.  It concluded that, for purposes of applying section
245.16, subdivision  (c),  the trial court had the discretion to
determine whether the defendant was the prevailing party and thus entitled to
recover fees.  (Coltrain, supra, 66 Cal.App.4th745 at pp. 101-108.)  The court
indicated that, in exercising its discretion, the critical issue for the trial
court's determination was which party realized its objectives in
the litigation.  (Id. at  p. 107.).

Faced with a similar issue, the court in Liu v. Moore (1999) 69 Cal. App.4th
745 analyzed section 425.16, subdivision  (c) differently.  In that case, the
trial court denied the motion for attorney fees because the statute allowed
fees only to a party who prevailed on a special motion to strike and, because
the alleged SLAPP pleading (in that case a cross-complaint) was dismissed prior
to a hearing on the special motion to strike, the moving cross-defendant was
not entitled to recover fees.  The appellate court reversed, holding that
the cross-defendant was entitled to have the merits of her special motion to
strike heard as a necessary predicate to a determination of her request for
attorney fees and costs under section 425.16,subdivision  (c).  (Liu v. Moore,
supra, 69Cal.App.4th at pp. 750-753; see also Kyle V. Carmon (1999)
71Cal.App.4th 901, 918-919.)

 In its analysis, the court recognized that pursuant to the language of section
425.16, subdivision  (c), the requesting party's entitlement to fees turns on
the merits of the defendant's motion to strike.  "An award of [fees and costs]
under section425.16 is only justified when a defendant
demonstrates that plaintiff's action falls within the provisions of subdivision
(b) and the plaintiff is unable to establish a reasonable probability of
success. [Citation.]  Until a court determines that these circumstances exist,
a moving defendant is not entitled to its fees and costs under section 425.16.
If such a judicial determination were not firs
required, and a fair procedural opportunity to obtain it allowed, then a
plaintiffs voluntary dismissal of the action could have the effect of (1)
depriving a true SLAPP defendant of statutorily authorized fees, or (2)
entitling a defendant to such relief in a non-SLAPP action [that] was dismissed
by the plaintiff for entirely legitimate reasons.  In both
situations, the purpose of the statute's remedial provisions would be
frustrated." (Liu v. Moore, supra, 69 Cal.App.4th at pp. 752-753.)

 Pursuant to the Liu court's analysis, the trial court must make a
determination on the merits of the special motion to strike before or in
conjunction with ruling on the moving party's request for attorney fees.  

This interpretation comports with the express language of the statute, which
provides for the recovery of fees and costs by "a prevailing defendant on a
special motion to strike  Ǫ." (&426.15,subd. (c).) It also recognizes that, if
the statutory prerequisites are met, the recovery of attorney fees and costs by
the moving party is made as a matter of right rather than as a matter of an
exercise of discretion by the trial court, as suggested in Coltrain. The
analytical approach of Liu also is in keeping with well-established authorities
holding that the trial court's determination as to whether the statutory
prerequisites for an award of fees are met is subject to de nova review on
appeal, whereas the approach in Coltrain requires an abuse of discretion
standard of review of a trial court's decision to award fees.  (Damon v. Ocean
Hills Journalism Club (2000) 85 Cal.App.4th 468, 474;
see also Aquino v. Superior Court (1993) 21Cal.App.4th 847, 850, 855; compare
Galan v. Wolfriver Holding Corp.(2000) 80 Cal.App.4th 1124, 1129 [determination
of prevailing party for purposes of awarding attorney fees is a
discretionary matter with the trial court and is subject to review on appeal
for abuse of discretion].) For these reasons, we find that the analytical model
discussed in Liu applies in determining the matter before us.

 Here, in conjunction with O'Leary's motion for attorney fees and costs, the
parties fully briefed and the trial court adjudicated the merits of O'Leary's
special motion to strike.  The trial court found that O'Leary met his initial
burden to shot that the anti-SLAPP statute applies to Rosenthal's claims and
Rosenthal has not filed across-appeal challenging the court's finding.

Accordingly, the focus of this appeal is on whether Rosenthal established a
probability of prevailing on her claims.  On this issue, we independently
review the record to determine whether Rosenthal established a probability
that she would prevail on her claims, i.e., made a prima facie showing of facts
that would, if proven at trial, support a judgment in her favor.   (Church of
Scientology v. Wollersheim (1996) 42 Cal.App.4th628, 646.)

2.         Probability of Prevailing

Each of Rosenthal's claims against O'Leary is premised on alleged defamation.
 Defamation is the intentional publication of a statement of fact that is
false and unprivileged and that has a natural tendency to injure or causes
special damage.  (Smith v.Maldonado (1999) 72 Cal.App.4th 637, 645; Civ. Code
&& 45,46.) Where, as here, the plaintiff claiming to have been defamed is a
public figure, it is not sufficient for her merely to show that the defendant
made false, injurious statement; rather, to succeed on her claim at trial,
the plaintiff must also prove, by clear and convincing evidence, that
the defamatory statement were made with "actual malice," i.e., knowledge that
the statements were false or reckless disregard of whether they were.  
(Reader's Digest Assn. V. Superior Court(1984) 37 Cal.3d 244, 256,
citing New York Times Co. v. Sullivan (1964) 376U.S. 254, 279,280.) To
establish a reasonable probability of prevailing on her defamation claim
against O'Leary, Rosenthal was required to make a prima facie showing of facts
that would, if credited, be sufficient to support a judgment in her favor.  
(Conroy v. Spitzer (1999)70 Cal.App.4th 1446, 1451; see College Hospital,
Inc. v. Superior Court (1994) & Cal.4th 704, 719-720, fn. 6.) In
determining whether Rosenthal has met her burden, we may not weigh the
evidence or determine questions of credibility, but must accept all admissible
evidence favorable to her as true and indulge in every legitimate favorable
inference that may be drawn from it.  (Wilcox v. Superior Court, supra, 27
Cal.App.4th at pp. 827-828; see College Hospital Inc. v. Superior Court,
supra, 8 Cal.4th at pp 719-720, fn.6.)

A.  Defamatory Statements

A viable claim for defamation must be based on the existence of statements
that contain express or implied false assertions of fact. (Milkovich v. Lorain
Journal Co. (1990) 497.U.S. 1, 16, 21; compare Gregory v. McDonnell Douglas
Corp. (1976) 17 Cal.3d 596, 600 (Gregory).) The determination of whether the
statement alleged to be defamatory will support such a claim is a question of
law and will often turn on the context in which the statement was made.  
(Milkovich v.Lorain Journal Co., supra, 497 U.S. at p. 17; Gregory,
supra, 17 Cal.3d at p.601.) What constitutes an actionable statement in one
context may be nonactionable in another, depending on "the nature and content
of the communication taken as a whole." (Gregory, supra, 17 Cal.3d at p. 601.)
"[In the context of} a public debate, a heated labor dispute, or in another
setting in which the audience may anticipate efforts by the parties to
persuade others to their positions by use of epithets, fiery rhetoric or
hyperbole," language that in another context might be considered defamatory
may be protected speech.  (Ibid; Greenbelt Pub. Ass. V. Bresler (1970)398
U.S. 6, 14 {newspaper's publication of a statement that a
developer's negotiating position with a city was "blackmail" was not
defamatory where "even the most careless reader must have perceived that the
word was no more than rhetorical hyperbole, a vigorous epithet used by those
who considered [the developer's} negotiating position extremely
unreasonable."].)  The nature of the statement " Ǫis to be measured not so
much by its effect when subjected to the critical analysis of a mind trained
in the law, but by the natural and probably effect upon the mind of the
average reader."  (Morningstar, Inc. v. Superior Court (1994) 23 Cal.App.4th
676, 688, quoting Edwards v. Hall (1991) 234 Cal.App.3d 886, 903, fn. 14.)