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Appellate Court Shuts Down Oakland’s Speech Protection Suit Against Coal Exporters

A state appellate court chided the city of Oakland Thursday for bringing an anti-SLAPP motion against developers of what stands to be the largest coal export terminal on the West Coast on the site of a decommissioned army base in West Oakland.

OAKLAND, Calif. (CN) — A state appellate court chided the city of Oakland Thursday for bringing an anti-SLAPP motion against developers of what stands to be the largest coal export terminal on the West Coast on the site of a decommissioned army base in West Oakland.

The city is accused of trying to thwart the project being developed by a cadre of industry players like Phil Tagami, President of California Capital & Investment Group.

Known as the Oakland Bulk and Oversized Terminal, the site will handle millions of tons of coal and petroleum coke brought by train from nearly 1,000 miles away in Utah and destined for Asia.

But the Oakland City Council passed an ordinance prohibiting coal operations at bulk-material facilities in the city — and a resolution applying the ban to OBOT — after multiple studies found that coal dust blowing off trains can cause asthma or cancer, and that emissions from the terminal would worsen West Oakland’s already-poor air quality.

The ordinance brought the project to a halt, and Tagami sued in December 2016 to reverse the ban, claiming it violated a development agreement the city signed in 2013.

A federal judge struck down the ordinance in 2018 over insufficient evidence that the terminal would increase pollution, and the Ninth Circuit Court of Appeals upheld his ruling in May.

Tagami and OBOT also sued the city in late 2018 for obstructing the project. They claimed the city had broken lease agreements granting OBOT the right to develop the land and operate the terminal, resulting in delays that have cost $27 million.

Alameda Superior Court Judge Jo-Lynne Lee partially dismissed it earlier this year. Without waiting for an amended complaint, the city then filed an anti-SLAPP motion, seeking clarity on Tagami’s sweeping lawsuit, but Lee dismissed it as premature. 

“The complaint in the case had been this blunderbuss, throw stuff against the wall and see what sticks kind of complaint and we wanted clarity,” said James Finberg, an attorney at Altshuler Berzon who represents the city. “We wanted to know what the facts are going to be at trial.” 

Barry Lee with Manatt Phelps, lead counsel for OBOT, said the city’s anti-SLAPP motion stalled the litigation. If the city wanted clarification, he said, they would have gotten it when OBOT amended its complaint. 

"There’s nothing in my view that’s confusing in our complaint,” he said Thursday. "The city knows what our claims are. There’s no confusion about that.”

The dispute ultimately boils down to a disagreement on the proper use of an anti-SLAPP motion. The appellate court sided with OBOT.

California’s anti-SLAPP statute allows litigants to file motions to strike a complaint if it arises out of activities involving First Amendment speech on matters of public concern. 

The city’s motion accordingly claimed that OBOT’s lawsuit arose from various protected activities, like letters from Oakland Mayor Libby Schaaf and a city council member opposing funding for the terminal, and the city’s legal defense of its anti-coal ordinance. 

“It’s quintessential protected activity,” Finberg said.

But Tagami, OBOT and the other developer plaintiffs claimed their complaint arose from the city breaching its obligations under the lease agreement for the land.

Siding with OBOT, Presiding Justice James Richman wrote that the city based its position on a misstatement of OBOT’s case. 

“In other words, the city simply ignores plaintiffs’ substantiated allegations, and replaces those allegations with its own version of facts to attempt to show the claims arise out of protected activity." he wrote.

Richman found the complaint to be based on the city’s “refusal to cooperate, its stonewalling, and its tortious conduct,” adding “whatever else may be in the complaint, it is the background and context — the evidence — to support that complaint.”

Richman also devoted 10 pages of the court’s opinion to expressing his displeasure with the state of anti-SLAPP law, writing that it continues to be abused as a legal strategy despite the judiciary’s reforming efforts.

“It’s fair to say Justice Richman is not a big fan of anti-SLAPP motions,” Finberg said. 

He said the city’s motion aligns with the California Supreme Court’s ruling in Baral v. Schnitt that allows for mixed allegations of protected and unprotected activity.

I think [Richman] has certain policy views on anti-SLAPP motions but look, the statute is the statute and the California Supreme Court in Baral has interpreted the statute the way it interpreted it,” Finberg said. 

“In a case like this, what you call a mixed case, with some allegations of protected activity and some that is not protected activity, the proper procedure is for the court to look at the protected activity and go through those allegations, allegation by allegation.”

He added, “It sounds like Justice Richman doesn’t like the Baral standard.”

Lee, with Manatt Phelps, said Richman made the right call. 

“Our clients are very pleased with the decision and we think it was the correct decision,” he said. “The trial court fashioned a way to deal with these motions that is consistent with what the law requires and more importantly just makes good common sense.”

Richman — joined on the panel by Justice Therese Stewart and Justice Marla Miller — was also concerned about anti-SLAPP appeals, which stall lawsuits in state courts while the motion is sorted out at the appellate level. The justices concluded by saying "perhaps the time has come for the Supreme Court to revisit the issue of an automatic stay, at least in the situation where it is indisputable that the action will proceed."

The justices remanded the case back to the state court judge "with directions to enter an order denying the motion on the merits.”

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