Lack of SMJ won't preclude a fee award

APPELLATE ZEALOTS

When a state court lacks subject matter jurisdiction over a case, can it still award attorney fees to the defendant? In Barry v. State Bar of California, 2017 DJDAR 83 (Jan. 5, 2017), the California Supreme Court concluded that the answer to this question is yes.

Attorney Patricia Barry's history of troubles with the State Bar is detailed in an unpublished State Bar Court Review Department opinion filed on Oct. 31, 2016. In the Matter of Barry, 14-O-02579; 14-O-03165. It began with a private reproval (the lightest of disciplinary sanctions, though public despite its name) in 2005, and has been escalating ever since. In a second case, about five years after she was reproved, Barry entered into a stipulation - the bar version of a plea bargain - in which she admitted violating her reproval conditions and pursuing frivolous litigation on behalf of a client. Barry agreed to accept specified disciplinary sanctions, including a 60-day suspension. The State Bar Court approved the stipulation.

Barry then sought review in the California Supreme Court, claiming she was innocent of the charges, and had entered into the stipulation only because of financial hardship. Unsurprisingly, the court was not impressed; it denied review and imposed the stipulated discipline.

Barry's next step was to sue the bar in superior court, alleging that the disciplinary actions it had taken against her were retaliatory and discriminatory, and that it had violated her due process rights. Barry sought an order either voiding her discipline or granting her a jury trial on the charges, as well as an injunction requiring institutional reforms in the attorney disciplinary system. The bar responded with an anti-SLAPP motion.

The superior court ruled that the bar's actions constituted protected petitioning activity, and thus were subject to the anti-SLAPP law. The court also concluded that Barry had not shown a likelihood of prevailing on her claims, because (among other reasons) the California Supreme Court has exclusive subject matter jurisdiction over attorney discipline matters. Accordingly, the court granted the anti-SLAPP motion, and awarded attorney fees to the bar as the prevailing defendant, under the anti-SLAPP statute's fee-shifting provision.

Barry appealed, arguing that because the superior court lacked subject matter jurisdiction over her case, it could not award attorney fees to the bar. The Court of Appeal agreed, relying on a 2005 case in which the California Supreme Court held that an order granting an anti-SLAPP motion results in the dismissal of a case on the merits. Varian Medical Systems, Inc. v. Delfino, 35 Cal. 4th 180 (2005). The appellate court reasoned that if the superior court lacked subject matter jurisdiction over Barry's claims, it could not adjudicate her case on the merits, and therefore could not grant the bar's anti-SLAPP motion and award fees to it. The bar sought Supreme Court review.

In its Jan. 5 opinion, the Supreme Court walked its language in Varian back a bit, concluding that "while a ruling on an anti-SLAPP motion may involve a determination of the merits of the plaintiff's claim, it may in other cases involve a determination that the plaintiff's claim fails for another, non-merits-based reason" - notably, lack of subject matter jurisdiction. As the court explained, Varian did not involve the question whether a court can "strike a complaint on a non-merits basis" under the anti-SLAPP statute. The court also agreed with the bar that the purpose of the anti-SLAPP law - protecting defendants from harassing and retaliatory litigation - would not be well served by holding anti-SLAPP motions unavailable if the litigation were filed in a tribunal that had no power to entertain it.

Accordingly, the court held that an anti-SLAPP motion can properly be made and granted based on the contention that the court lacks subject matter jurisdiction over the plaintiff's claims. Moreover, a defendant that wins such a motion is entitled to attorney fees under the anti-SLAPP statute, even though the resulting dismissal is not a judgment on the merits in the defendant's favor.

Barry also argued that if the trial court lacked subject matter jurisdiction over her claims, then it must also have lacked jurisdiction to award the bar its attorney fees based on its successful anti-SLAPP motion. Not so, said the court. Because a court always has jurisdiction to determine its own jurisdiction, its ultimate decision that it does not have authority to decide the merits of a case does not prevent it from considering and ruling on "collateral issues" such as costs, sanctions and attorney fees. Thus, the Barry court held that a "trial court that strikes a cause of action arising from protected activity on the ground that the court lacks subject matter jurisdiction has the incidental power to require the plaintiff to compensate the defendant for the undue burden of defending against the non-meritorious claim."

Based on this reasoning, the Supreme Court unanimously reversed the Court of Appeal, thus reinstating the bar's entitlement to its attorney fee award for its successful anti-SLAPP motion.

Unfortunately for Barry, her troubles did not end there. In its October 2016 opinion, the State Bar Court Review Department recommended her disbarment, based on new cases charging Barry with disobeying court orders, failing to report sanctions to the bar, and continued noncompliance with discipline conditions. The recommendation was based on Barry's continued misconduct, her discipline record, her overall history of disrespect for the legal system, her lack of insight into her wrongdoing (including her belief that the State Bar had brought charges against her because she sued it), and her unwillingness to take personal responsibility for her misconduct. Supreme Court action on the disbarment recommendation is currently pending. In the meantime, under a 1996 amendment to Business and Professions Code Section 6007, subdivision (c)(4), requiring that attorneys be placed on inactive enrollment if the State Bar Court recommends their disbarment, Barry is now ineligible to practice law.

Whether the bar will be able to collect its $2,575 fee award for the anti-SLAPP motion remains an open question.