L. Lobos Renewable Power, LLC v. AmeriCulture, Inc.
Opinion
The United States Bureau of Land Management leased 2,500 acres of geothermal mineral rights in Hidalgo County, New Mexico to Plaintiff Lightning Dock Geothermal HI-01, LLC (LDG), a Delaware company. Consistent therewith, LDG developed and presently owns a geothermal power generating project in Hidalgo County. LDG also developed a geothermal well field on the subject tract as part of its project. Defendant AmeriCulture, a New Mexico corporation under the direction of Defendant Damon Seawright, a New Mexico resident, later purchased a surface estate of approximately fifteen acres overlying LDG's mineral lease-ostensibly to develop and operate a tilapia fish farm. Because AmeriCulture wished to utilize LDG's geothermal resources for its farm, AmeriCulture and LDG (more accurately its predecessor) entered into a Joint Facility Operating Agreement (JFOA). The purpose of the JFOA, at least from LDG's perspective, was to allow AmeriCulture to utilize some of the land's geothermal resources without interfering or competing with LDG's development of its federal lease. We are told that Plaintiff Los Lobos Renewable Power LLC (LLRP), also a Delaware company, is the sole member of LDG and a third-party beneficiary of the JFOA.
The parties eventually began to quarrel over their contractual rights and obligations. Invoking federal diversity jurisdiction under
Defendants Seawright and Americulture have both intentionally and negligently made material misrepresentations concerning the Plaintiffs and the Project to numerous state agencies and other public bodies for the sole purpose of delaying and subverting the Project solely for the purpose of giving Defendants a competitive advantage for the Defendants own intended production of Geothermal Power in violation of the JFOA.
Defendants responded to these allegations and conclusions by filing a "special motion to dismiss" pursuant to the New Mexico anti-SLAPP statute, a state legislative enactment aimed at thwarting "strategic lawsuits against public participation."
The district court was not persuaded and denied Defendants' "special" motion because "New Mexico's Anti-SLAPP statute is a procedural provision that does not apply in the courts of the United States."
Los Lobos Renewable Power, LLC v. Americulture, Inc.
,
Given the respective positions of the panel members, this appeal requires us to resolve two issues:
1. Whether we may exercise jurisdiction over this appeal pursuant to the collateral order doctrine.
2. Whether the New Mexico anti-SLAPP statute applies in this federal diversity action.
We answer the first query yes, the second query no, and affirm the decision of the district court.
* * *
Because the language of the New Mexico anti-SLAPP statute predominates this appeal, we set forth its relevant provisions prior to both our jurisdictional and merits analyses. The statute consists of two parts,
The legislature declares that it is the public policy of New Mexico to protect the rights of citizens to participate in quasi-judicial proceedings before local and state governmental tribunals. Baseless *663 civil lawsuits seeking or claiming millions of dollars have been filed against persons for exercising their right to petition and to participate in quasi-judicial proceedings before governmental tribunals. Such lawsuits [1] can be an abuse of the legal process and [2] can impose an undue financial burden on those having to respond to and defend such lawsuits and [3] may chill and punish participation in public affairs and the institutions of democratic government. These lawsuits should be subject to prompt dismissal or judgment to prevent the abuse of legal process and avoid the burden imposed by such baseless lawsuits.
Consistent with the "[f]indings and purpose" of the New Mexico anti-SLAPP statute, § 38-2-9.1 is entitled "[s]pecial motions to dismiss unwarranted or specious lawsuits; procedures; sanctions; ...." Subsections A, B, and C of § 38-2-9.1 provide:
A. Any action seeking money damages against a person for conduct or speech undertaken or made in connection with a public hearing or public meeting in a quasi-judicial proceeding before a tribunal or decision-making body of any political subdivision of the state is subject to a special motion to dismiss, motion for judgment on the pleadings, or motion for summary judgment that shall be considered by the court on a priority or expedited basis to ensure the early consideration of the issues raised by the motion and to prevent the unnecessary expense of litigation.
B. If the rights afforded by this section are raised as an affirmative defense and if a court grants a motion to dismiss, a motion for judgment on the pleadings or a motion for summary judgment filed within ninety days of the filing of the moving party's answer, the court shall award reasonable attorney fees and costs incurred by the moving party in defending the action. If the court finds that a special motion to dismiss or motion for summary judgment is frivolous or solely intended to cause unnecessary delay, the court shall award costs and reasonable attorney fees to the party prevailing on the motion.
C. Any party shall have the right to an expedited appeal from a trial court order on the special motions described in Subsection B of this section or from a trial court's failure to rule on the motion on an expedited basis.
APPELLATE JURISDICTION
TYMKOVICH, Chief Judge, with Judge Briscoe joining, on the issue of appellate jurisdiction.
As a preliminary matter, Plaintiffs contend the court does not have appellate jurisdiction.
After the district court refused to consider Defendants' special motion, the court certified for interlocutory review the question of whether New Mexico's anti-SLAPP statute applies to federal diversity cases.
See
*664
As a prerequisite to jurisdiction under these circumstances, we generally require a timely petition for permission to appeal.
Crystal Clear Commc'ns, Inc. v. Sw. Bell Tel. Co.
,
That leaves the collateral order doctrine. This court's jurisdiction is generally limited to "all final decisions" of the district courts.
A party asserting jurisdiction under the collateral order doctrine must show that the district court's order: (1) "conclusively determine[d] the disputed question," (2) "resolve[d] an important issue completely separate from the merits of the action," and (3) is "effectively unreviewable on appeal from a final judgment."
Coopers & Lybrand v. Livesay
,
Importantly, we "decide appealability for categories of orders rather than individual orders."
Johnson v. Jones
,
With that in mind, we consider whether the district court's decision to not *665 apply the New Mexico anti-SLAPP statute in federal court warrants interlocutory review under the collateral order doctrine. We address each of the three Cohen conditions below.
1. Condition One: Conclusively Determined
Neither party disputes that the district court conclusively determined the
Erie
issue in its order denying Defendants' special motion to dismiss. An order is "conclusive" if it is not subject to later review or revision by the district court.
Cf.
Coopers
,
2. Condition Two: Separate from the Merits
Whether New Mexico's anti-SLAPP statute applies in federal court is a discrete legal question completely separate from the underlying merits. An issue is completely separate from the merits if it is "significantly different from the fact-related legal issues that likely underlie the plaintiff's claim on the merits."
Johnson
,
Plaintiffs claim the district court's application of the anti-SLAPP statute necessarily required considering and evaluating the merits of this action. We disagree.
It is one thing for a court to consider a New Mexico anti-SLAPP motion, apply the New Mexico anti-SLAPP statute, and deny the motion under the statute.
Cf., e.g.
,
Schwern v. Plunkett
,
But the latter scenario presents a more abstract question of federal law that has nothing to do with the particular facts in this case. Indeed, whether federal courts can apply the New Mexico anti-SLAPP statute depends on considerations entirely external to the dispute between Plaintiffs and Defendants. Several other circuits have already recognized this crucial distinction.
See
Royalty Network, Inc. v. Harris
,
This is precisely the type of issue the collateral order doctrine's second condition contemplates.
See, e.g.
,
*666
Cohen
,
3. Condition Three: Effectively Unreviewable on Appeal from Final Judgment
Lastly, we conclude the district court's order would be effectively unreviewable on appeal from final judgment.
"A major characteristic of the denial or granting of a claim appealable under
Cohen
's 'collateral order' doctrine is that 'unless it can be reviewed before [the proceedings terminate], it can never be reviewed at all.' "
Mitchell v. Forsyth
,
Plaintiffs argue the rights enshrined in New Mexico's anti-SLAPP statute could be protected after final judgment because they do not shield defendants from the burden of standing trial. But that is not the issue. True, the Supreme Court has placed orders denying certain species of immunity among the categories warranting interlocutory review.
Will
,
Moreover,
similar
to a protection from standing trial, the New Mexico statute seeks to reduce the ordinary time and expense of litigation.
See
This means that were we to wait for this case to conclude in the court below by ordinary process, the statute's sole aim would already be lost. Defendants would have already incurred the ordinary time and expense of litigation that the statute potentially grants them a right to avoid. Indeed, we can reverse the rulings of a subordinate court, but we cannot order away proceedings and legal fees that have already passed into history. Nor can we remand the case with instructions to "do it again, but faster this time."
Defendants' characterization of the statute as conferring an immunity from trial carries some significance as well. While we ultimately conclude in this case that the statute is better read as not conferring immunity, Defendants' contention in the district court and on appeal is far from fanciful. Even so, on questions of first impression, we usually decline to credit a party's claim to immunity, opting to conduct our own analysis instead.
See
Gen. Steel Domestic Sales, L.L.C. v. Chumley
,
We also think it instructive that
Cohen
itself presented markedly similar facts. In that case, the Supreme Court considered whether a federal court sitting in diversity had to apply a New Jersey statute requiring plaintiff shareholders to post a security before prosecuting certain derivative actions.
See
Cohen
,
In a similar way, the New Mexico anti-SLAPP statute aims to nip harassing litigation in the bud, thus protecting potential victims from the effort and expense of carrying on a frivolous lawsuit. We could not secure this statute's protections after final judgment on the merits because-just as in
Cohen
-burdensome legal process has already been brought to bear at that point.
See
Royalty Network
,
The dissent points out that federal district courts have tools at their disposal to accomplish the same ends. And indeed they do. But the collateral order doctrine does not ask whether trial courts
might
-in their discretion-guarantee the deprived right by other means. It asks whether courts of appeals have sufficient remedial power to reverse the effects of an erroneous order after litigation has run its course on the trial level. True, the Supreme Court has said that other "source[s] of recompense" weigh against satisfaction of
Cohen
's third prong.
Digital Equipment
,
Nor does
Mohawk Industries, Inc. v. Carpenter
,
Several other circuits agree with our course.
See
Royalty Network
,
*668
Liberty Synergistics
,
Accordingly, this appeal meets Cohen 's third requirement.
* * *
Because Defendants have satisfied all three conditions of the collateral order doctrine, we have jurisdiction to decide this appeal on the merits.
ANALYSIS
BALDOCK, Circuit Judge, for a unanimous panel on the merits.
Having concluded that we may exercise jurisdiction over Defendants' appeal, our next task is to determine whether the district court must apply the New Mexico anti-SLAPP statute in this federal diversity action for the enforcement of state-created rights. In undertaking this task, known as an
Erie
analysis after
Erie R.R. Co. v. Tompkins
,
Of course, distinguishing between procedural and substantive law is not always a simple task. "Classification of a law as 'substantive' or 'procedural' for
Erie
purposes is
sometimes
a challenging endeavor."
Gasperini v. Ctr. for Humanities, Inc.
,
Section 38-2-9.2, which sets forth the anti-SLAPP statute's purpose, says the statute addresses
only
"[b]aseless civil lawsuits" arising out of a defendant's participation in proceedings before a quasi-judicial governmental body. These are lawsuits designed to "abuse ... the legal process," "impose an undue financial burden on those having to respond," and "chill and punish participation in public affairs."
4
Consistent therewith, the title to § 38-2-9.1 says the anti-SLAPP statute addresses "unwarranted or specious lawsuits; procedures; sanctions." The New Mexico Supreme Court has told us that "[f]or the purpose of determining the legislative intent we may look to the title, and ordinarily it may be considered as a part of the act if necessary to its construction."
Tri-State Generation andTransmission Assoc., Inc. v. D'Antonio
,
Also critical to a sound construction of the New Mexico anti-SLAPP statute are the first three subsections of § 38-2-9.1. Subsection A is unquestionably the most important of the three subsections. It mandates the expedited procedures applicable to the type of frivolous or retaliatory lawsuits at which § 38-2-9.2 tells us the statute is aimed. Subsections B and C are dependent subsections, entirely meaningless absent subsection A. Both the title of § 38-2-9.1 and the body of subsection A state that a dispositive pretrial motion filed pursuant to the anti-SLAPP statute is "special." According to the plain terms of subsection A, the only reason such motion is "special" is that it "shall be considered by the court on a priority or expedited basis to ensure early consideration of the issues raised by the motion and to prevent the unnecessary expense of litigation." Id . § 38-2-9.1.A. Most importantly for our purpose, subsection A sets forth no rule(s) of substantive law. Rather, it tells the trial court to hurry up and decide dispositive pretrial motions in lawsuits that a movant claims fit the description of "baseless" provided in § 38-2-9.2, i.e. , frivolous lawsuits-and that's it. All subsection A demands is expedited procedures designed to promptly identify and dispose of such lawsuits.
The New Mexico Supreme Court's recent decision in
Cordova v. Cline
,
After
Cordova
, one cannot reasonably read the language of the New Mexico anti-SLAPP statute as providing a defendant with a substantive defense to SLAPP liability. To be sure, the statute seeks to spare those who exercise their free speech rights before a quasi-judicial governmental body from unwarranted and harassing litigation that threatens to chill the exercise of such rights. As
Cordova
plainly tells us, however, the statute as written pursues this policy through purely
procedural
means. The New Mexico anti-SLAPP statute sets forth a unique "judicial process for enforcing rights and duties recognized by substantive law," that is, substantive law located
entirely
outside the four corners of the anti-SLAPP statute.
Sibbach
, 312 U.S. at 14,
A defendant's reliance on § 38-2-9.1 may very well hasten a SLAPP suit's outcome. This is precisely what the New Mexico statute is designed to do. Unlike many other states' anti-SLAPP statutes that shift substantive burdens of proof or alter substantive standards, or both, under no circumstance will the New Mexico anti-SLAPP statute have
any
bearing on the suit's merits determination.
See
,
e.g.
,
Makaeff v. Trump Univ., LLC
,
Subsections B and C of § 38-2-9.1 reinforce our plain reading of subsection A because, like subsection A, neither subsection states any rule of substantive law. Subsection B, which the title of § 38-2-9.1 plainly tells us is a "sanctions" provision, consists of two sentences. The second sentence
*671
protects a responding party's interests by stating that if a special motion filed pursuant to the anti-SLAPP statute is "frivolous or solely intended to cause unnecessary delay," the trial court shall award fees and costs to the party responding to the motion.
Given the context in which § 38-2-9.2 places § 38-2-9.1, why should the Court construe subsection B's first sentence which awards fees and costs to a successful movant any differently? To be sure, the subsection's first sentence does not expressly refer to frivolous or retaliatory lawsuits. But why should it? Section 38-2-9.2 plainly tells us the New Mexico anti-SLAPP statute is aimed at a particular type of frivolous or retaliatory lawsuit. Therefore, construing the entirety of subsection B as a procedural fee-shifting device makes perfect sense. Save the second sentence of subsection B, which is aimed at a type of frivolous motion, the entire statute is aimed at a type of "baseless" lawsuit. As § 38-2-9.1 's title plainly suggests, Subsection B's first sentence provides for the imposition of fees and costs as a sanction primarily designed not to compensate for legal services but to vindicate First Amendment rights threatened by a kind of "unwarranted or specious" litigation.
All this leaves only subsection C for our consideration. Subsection C provides for an "expedited appeal" from a trial court's ruling, or failure to rule, on a "special" motion. In
Cordova
, the New Mexico Supreme Court held § 38-2-9.1.C allows a party to bring an interlocutory appeal in state court from a decision on a special motion filed pursuant to the New Mexico anti-SLAPP statute.
Cordova
,
Importantly, the plain language of Subsection A explicitly provides that the expedited process must allow for the early consideration of the issues raised by the motion and to prevent the unnecessary expense of litigation. Therefore the plain language of Subsections A, B, and C of the Anti-SLAPP statute describes an expedited process that is necessarily interlocutory in nature .
Id . at 164 (second emphasis added) (internal citation and quotation marks omitted). Nowhere in Cordova did the New Mexico Supreme Court suggest the "expedited process" mandated by subsection A of § 38-2-9.1 constitutes a substantive defense to a SLAPP suit. Relying exclusively on "the plain language and the purpose" of the statute, the court decided the New Mexico legislature's desire for expedited procedures to thwart retaliatory lawsuits that abused the judicial process and *672 threatened to chill free speech alone justified an interlocutory appeal. Id . at 165.
Undeterred by the New Mexico anti-SLAPP statute's plain language and the New Mexico Supreme Court's interpretation of it in
Cordova
, Defendants tell us "the statute clearly expresses the intent of New Mexico's legislature to provide individuals immunity from suit" or "a right not to stand trial." Defs' Br. at 12. The statute expresses nothing of the sort. Civil immunity, whether absolute or qualified, is properly defined as an exemption from liability.
See Black's Law Dictionary
817 (9th ed. 2009);
see also
Antoine v. Byers & Anderson, Inc.
As the astute reader recognizes by now, the New Mexico anti-SLAPP statute does not exempt a party subject to an alleged SLAPP suit from liability. Because absolutely nothing in the language of the anti-SLAPP statute exempts from liability under any circumstance one who has violated the law while petitioning a governmental body, the statute cannot constitute a grant of immunity. The "right not to stand trial" is not, as Defendants suggest, a substantive defense in the form of immunity itself. Such right is an entitlement dependent upon an exemption from liability, an exemption that under a plain reading of the New Mexico anti-SLAPP statute does not appear therein. 7
*673
In this case, the line between procedure and substance is clear. A plain reading of the New Mexico anti-SLAPP statute reveals the statute is not designed to influence the
outcome
of an alleged SLAPP suit but only the
timing
of that outcome. The statute simply does not define the scope of any state substantive right or remedy. As we have learned, the statute is procedural in all its aspects. The statute's purpose is the prompt termination of certain lawsuits the New Mexico legislature deemed to be both unduly burdensome and a threat to First Amendment rights. To this end, the statute provides a movant the "right" to have a trial court promptly review the merits of the case (and, if necessary, the "right" to have an appellate court do so as well), so as to limit any harm engendered by the "baseless" lawsuit defined in
Accordingly, the decision of the district court denying application of the New Mexico anti-SLAPP statute in this federal diversity action is AFFIRMED. Defendants' motion to certify a question of state law is DENIED.
BALDOCK, Circuit Judge, dissenting as to jurisdiction.
The Court initially holds that we may exercise jurisdiction over Defendants' appeal pursuant to the collateral order doctrine, a doctrine identified with
Cohen v. Beneficial Indus. Loan Corp.
,
As the Court's opinion ultimately concludes, the New Mexico anti-SLAPP statute in no sense constitutes a grant of immunity to Defendants. Thus, the present appeal unquestionably falls outside the line the Supreme Court has marked for categories of collaterally appealable orders. Under the third
Cohen
inquiry,
i.e.,
whether a claim would be effectively unreviewable absent application of the collateral order doctrine, "[t]he justification for immediate appeal must ... be sufficiently strong to overcome the usual benefits of deferring appeal until litigation concludes."
Mohawk Indus.
,
So what is this Court's "sufficiently strong" justification for ignoring the final judgment rule and exercising jurisdiction
*675
over this appeal pursuant to the collateral order doctrine? Or stated otherwise, what is "the danger of denying justice" by delaying an appeal until final judgment?
Johnson v. Jones
,
This Court could not be more wrong. An immediate appeal in this case is unnecessary to protect Defendants from what they say is a frivolous lawsuit designed to chill their exercise of First Amendment rights. The Supreme Court has recognized that a party claiming an adversary is pursuing litigation for an improper purpose "
need not rely on a court of appeals for protection
."
DigitalEquip. Corp. v. Desktop Direct, Inc.
,
Federal district courts have a long and storied history of safeguarding constitutional rights and a bevy of procedural tools in their arsenal to combat abuses of the judicial process that threaten the exercise of those rights. For example, the Federal Rules of Civil Procedure provide for expedited proceedings in federal court. See Fed. R. Civ. P. 16(a). These same rules, together with various statutes and the district court's inherent authority, permit the imposition of fees and costs as a sanction on those responsible for filing SLAPP lawsuits. See, e.g. , Fed. R. Civ. P. 11. Experience suggests federal courts will not hesitate to utilize one or more of these tools to punish and deter unwarranted litigation of any sort, and many litigants and lawyers can grudgingly testify to the same.
If the first amended complaint's allegations challenging Defendants' speech-related activities are as frivolous as Defendants insist, then they do not need to rely in the first instance on the court of appeals for protection. 2 And this means- wholly consistent with Supreme Court precedent-that the collateral order doctrine has no application here *676 . Accordingly, I respectfully but strongly dissent from the Court's holding that we have jurisdiction over this appeal pursuant to the collateral order doctrine.
Plaintiffs' first amended complaint alleges breach of contract, breach of covenants of good faith and fair dealing, prima facie tort, tortious interference with business relations, and negligent misrepresentation. Plaintiffs seek damages, indemnification, a declaratory judgment, specific enforcement of the JFOA, and injunctive relief against Defendants.
Subsections D, E, and F of
Justice Stevens' concurrence in
Shady Grove
provides the controlling analysis in the Tenth Circuit.
See
James River Ins. Co. v. Rapid Funding, LLC
,
Notably, the anti-SLAPP statute recognizes that not
every
lawsuit arising out of a defendants participation in proceedings before a quasi-judicial governmental body is baseless.
The
Noerr-Pennington
doctrine provides a qualified immunity from liability under antitrust laws for political activities associated with attempts to influence legislation having an anticompetitive effect.
Eastern R.R. Presidents Conf. v. Noerr Motor Freight, Inc.
,
We note here that the
original
version of New Mexico House Bill 241-a Bill the State of New Mexico never enacted into law-clearly sought to grant an immunity from SLAPP suits, albeit a limited or qualified one. H.B. 241, 45th Leg., 1st Sess. (N.M. 2001) (reproduced as Appendix A in Frederick M. Rowe and Leo M. Romero,
Resolving Land-Use Disputes by Intimidation: SLAPP Suits in New Mexico
,
Defendants' faulty reasoning finds its genesis (not surprisingly) in the Ninth Circuit's decision in
Batzel v. Smith
,
The
Erie
analysis called for in more nuanced cases, if properly undertaken, makes no difference to a correct resolution of this case. First, whether the New Mexico anti-SLAPP statute can logically operate alongside the Federal Rules of Civil Procedure without conflict is very much debatable. Rules 11 (sanctions), 12(b) (motions to dismiss), 12(c) (motions for judgment on the pleadings), 16(a) (expedited proceedings), and 56 (motions for summary judgment) seem to cover all the bases, leaving little room for § 38-2-9.1 to operate in federal court. But even assuming for the sake of brevity that the anti-SLAPP statute can exist alongside the Federal Rules, the twin aims of
Erie
-"discouragement of forum-shopping and avoidance of inequitable administration of the laws"-do
not
render the state statute substantive for
Erie
purposes.
Hanna v. Plumer
,
The Court correctly points out that in applying the collateral order doctrine we decide appealability for categories of orders rather than individual orders. Interestingly, the Supreme Court has never identified the category of appealable order under which its decision in
Cohen
falls. In
Cohen
, the state statute at issue in a stockholder's derivative action made the plaintiffs, if unsuccessful, liable for all expenses, including fees, of the defense and required security for their payment as a condition for prosecuting the action. The Supreme Court concluded that upon final judgment, it would "be too late effectively to review the present order and the rights conferred by the statute, if applicable."
Cohen
,
Another factor working against Defendants is that at one point they had the district court's blessing to request our discretionary review. The Supreme Court has noted that "litigants confronted with a particularly injurious or novel ... ruling have several potential avenues of review apart from collateral order appeal."
Mohawk Indus.
,
Reference
- Full Case Name
- LOS LOBOS RENEWABLE POWER, LLC, and Lightning Dock Geothermal, HI-01, LLC, Plaintiffs-Appellees, v. AMERICULTURE, INC., and Damon Seawright, Defendants-Appellants.
- Cited By
- 71 cases
- Status
- Published