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Dillon v. Seattle Deposition Reporters, LLC

Court of Appeals of Washington, Division 1

January 21, 2014

JASON DILLON, an individual, Appellant,
v.
SEATTLE DEPOSITION REPORTERS, LLC, a Washington company; DAVIS WRIGHT TREMAINE, LLP, a Washington company; JAMES GRANT and Jane Doe Grant, individually and the marital community composed thereof if any, Defendants.

DWYER, J.

Washington's anti-SLAPP[1] statute protects persons who engage in "action[s] involving public participation and petition" from having to defend against a claim based on those actions.[2] The recording of telephone conversations is not such an action. This is so even when such recording is designed to gather evidence for a lawsuit between private parties. The anti-SLAPP statute does not operate to transform unprotected activity into protected activity simply because it is undertaken during the course of a lawsuit.

In the matter before us, Jason Dillon filed suit against Seattle Deposition Reporters, LLC, Davis Wright Tremaine, LLP, and James Grant (collectively SDR), alleging certain violations of the privacy act[3] for having recorded Dillon's telephone conversations with Grant and Cassandra Kennan without his knowledge. SDR moved for dismissal on summary judgment, asserting that the conversations were not private and that Dillon's claims were barred by collateral estoppel. SDR also moved to strike the claims pursuant to the anti-SLAPP statute. The trial court ruled that Dillon had no expectation of privacy in the telephone conversations and granted the motion for summary judgment. The trial court further found that the anti-SLAPP statute applied, and awarded to SDR statutory damages of $10, 000 per defendant plus attorney fees of $40, 000. Judgment in the total amount of $70, 000 was entered against Dillon.

Dillon contends that the trial court erred by granting summary judgment, asserting that genuine issues of material fact exist as to whether the telephone conversations he had with Grant and Kennan were private. Dillon also avers that the anti-SLAPP statute does not apply to his claims. Because Dillon presented triable issues of fact, and collateral estoppel does not apply to preclude his privacy act claims, the trial court erred by entering summary judgment in favor of SDR. Furthermore, the anti-SLAPP statute does not apply to Dillon's claims, as SDR's actions did not involve public participation or petition. Thus, we reverse the judgment and remand the cause for further proceedings consistent with this opinion.

I

Dillon is the former vice-president of NetLogix, a company headed by Scott Akrie and based in San Diego, California. NetLogix contracted with T-Mobile to "perform services in connection with the build out of [T-Mobile's] cellular phone network in California." In 2010, NetLogix sued T-Mobile in the United States District Court, Western District of Washington, for breach of contract. Grant and Kennan represented T-Mobile in the federal court lawsuit. On August 24, 2011, Dillon e-mailed Grant and Kennan at their law firm, Davis Wright Tremaine (DWT), stating that he would like to "talk about the facts" in the pending federal court action. Kennan arranged for Dillon to call the next day.

Dillon telephoned DWT offices as planned on August 25, 2011. At the start of the conversation, Grant told Dillon,

I wanted to point out something before we get started because we have you on the speaker phone because Cassi and I are both here. And I've got my assistant Thad, who's writing stuff down so that we don't have to worry about taking notes while we're talking to you.

Thad Byrd was not, in actuality, Grant's assistant. Rather, he was a certified court reporter employed by Seattle Deposition Reporters. DWT had previously made arrangements with Seattle Deposition Reporters to have a court reporter sit in on and transcribe the telephone conversation. Byrd set up his stenographic equipment in the room with Grant and Kennan and transcribed their conversation with Dillon. Neither Grant, Kennan, nor Byrd apprised Dillon of this information.

Before revealing any information, Dillon told Grant,

You know, my only concern is I just need to make sure that I'm protected as well if Scott tries to come after me, or I don't want you guys trying to come after me or T-Mobile. I want to make sure I'm protecting myself, but I did want to speak with you guys.

Grant responded, "Okay, understood. At this time, we just want to hear what you have to say." Dillon also stated, "Just so I protect myself, maybe it's better that I actually just get my own attorney, talk to them about kind of what-you know, about the information and get some advice from them, and then call you guys back."

Nonetheless, Dillon continued the conversation with Grant and Kennan. Dillon proceeded to describe various instances of misconduct by both parties to the federal court action, including a kickback scheme instituted by T-Mobile employees, falsification of records committed by NetLogix employees, and willful destruction of unfavorable evidence committed by Akrie or at Akrie's direction. Dillon also stated that Akrie "offered me 10 percent of the profit of this lawsuit to support him, " and that he did not "have a problem writing a declaration for you guys."

Dillon telephoned DWT again on September 16, 2011. This telephone call was also transcribed by an employee of Seattle Deposition Reporters.[4] Again, Dillon was not apprised of the presence of the court reporter, or even of anyone there to "take notes" during this call. During this call, Dillon confirmed, with one small change, the written declaration Grant and Kennan had previously prepared and sent to him. The following exchange occurred between Grant and Dillon during the call:

Q. [Grant]. I had thought of actually putting something in the declaration saying that that's your concern and that's why you approached us, that your concern is that you had been told, instructed to provide information that was inaccurate. Is that something that you'd be comfortable saying, or that just between us at this point? A. [Dillon]. Sure. Q. Okay.
A. Well, actually I talked with a friend who's an attorney, and he said just to protect myself from Scott is-Scott and Bill, I guess, mainly, is, you know, for you guys to take my deposition again and ask these questions, so I'm under oath and they can't come back and say that, you know, that I'm trying to maliciously hurt Scott. I'm not.

Dillon also elaborated on information he had revealed during the first call, and informed Grant and Kennan that Akrie had coached NetLogix employees on what to say in connection with the lawsuit. However, 10 days later, Dillon e-mailed Grant and Kennan stating that he was "unable to sign" the declaration they had prepared.[5]

On October 6, 2011, T-Mobile filed a motion for dismissal in the federal court action alleging spoliation of evidence, based largely on statements uttered by Dillon in the telephone conversations. Given that Dillon refused to sign the proffered declaration, T-Mobile filed portions of the transcripts of both calls in support of the motion. After Dillon learned of this, he sent an e-mail to Grant and Kennan expressing his "outrage" at them for having "deceivingly record[ed]" the conversations. NetLogix and Dillon then requested copies of the transcripts in their entirety. DWT refused NetLogix's request, asserting that the transcripts were protected by the work product privilege.[6]

On February 2 and February 16, 2012, [7] the federal court held an evidentiary hearing to determine whether NetLogix had willfully destroyed evidence and if dismissal was warranted as a result. The court called Dillon to testify as a witness at that hearing. Dillon disavowed a number of statements from both the August 25 and September 16 telephone calls, and repeatedly testified that he had made various previous statements "out of frustration." The court requested briefing from both parties prior to making a credibility determination as to Dillon's testimony.

The federal court issued its ruling on March 14, 2012. The court found that Dillon's statements in the telephone conversations were credible, and that Dillon's testimony at the evidentiary hearing was "wholly incredible." The court further found that the transcripts presented "overwhelming evidence of spoliation, " and concluded that dismissal of the case was "the only appropriate remedy" given the egregious misconduct committed by the plaintiffs. In its written opinion, the court stated, "[T]he Court does not believe that Defendant's counsel violated Washington law by recording their discussions with Dillon." Volcan Grp- Inc. v. T-Mobile USA. Inc., 940 F.Supp.2d 1327, 1338 (W.D. Wash. 2012). In a footnote to its opinion, the court stated:

Although Dillon clearly did not consent to a transcription of his conversation with Defendant's counsel, that is not to say that he intended the call to be "private." On the contrary, Dillon clearly understood that Defendant's counsel intended to use the information he was providing in connection with these proceedings, and Dillon even offered to provide them with a sworn declaration regarding his statements. As such, those statements were not intended to be, and were not in fact, "private." Volcan Grp., 940 F.Supp.2d at 1338 n.7. The court granted the motion to dismiss, but not before admonishing both parties and their counsel for their unprofessional behavior.[8]

Dillon filed suit against SDR in King County Superior Court, alleging that the various defendants violated the privacy act by recording the telephone conversations of August 25 and September 16. SDR moved for summary judgment, asserting that the conversations were not private and that collateral estoppel barred Dillon's claims. SDR also moved to strike Dillon's claims pursuant to Washington's anti-SLAPP statute. In opposition to SDR's motions, Dillon submitted a declaration, wherein he asserted that he "specifically told [Kennan] that I did not want anything I told them in the telephone conversations to be part of the public record" and that he agreed to speak with Grant and Kennan only after they assured him that the conversations would be kept private.[9] Dillon moved to bifurcate the anti-SLAPP hearing in order to address the two steps of the statutory inquiry separately, [10] and moved to compel outstanding discovery. The trial court denied both of Dillon's motions.

The trial court heard both of SDR's motions on June 15, 2012. The trial court heard argument and issued its ruling on the summary judgment motion before it considered the anti-SLAPP motion. In ruling on the summary judgment motion, the trial court declined to apply collateral estoppel to preclude Dillon's claims. However, relying on State v. Townsend, 147 Wn.2d 666, 57 P.3d 255 (2002), State v. Clark, 129 Wn.2d 211, 916 P.2d 384 (1996), and State v. Mankin, 158 Wn.App. 111, 241 P.3d 421 (2010V review denied. 171 Wn.2d 1003 (2011), the trial court ruled that Dillon had no subjective expectation of privacy when he telephoned Grant and Kennan. This was so, the trial court explained, because:

Now, he may have had an . . . expectation of privacy that his words would not be transcribed word by word, but he certainly knew that he was talking to lawyers who would be taking notes. There's no reason why he didn't think otherwise.
And he also had reason to believe that the lawyers would be talking to other people about what they had heard in the meeting, that they would be drafting a declaration. And ... so there was no expectation of privacy with respect to what was said in that meeting.
Mr. Dillon had indicated to others that he was going to have the meeting. He, in fact, told others after the meeting . . . what had occurred.

The trial court then went on to consider the anti-SLAPP issue. The trial court began by saying, "It seems like the Court's already ruled on the second part of that, because . . . at this point, Mr. Moran[11] won't be able to show ... by clear and convincing evidence a likelihood of prevailing on the merits . . . ." After argument by both parties, the trial court asked counsel for SDR whether "the fact that this Court has already made a ruling on the summary judgment motion enter[s] into" the analysis of whether SDR could show that its conduct fell under the ambit of the anti-SLAPP statute. SDR's counsel replied,

Yes, because I've shown you by a preponderance of the evidence and, indeed, more than by. I've shown you as a matter of law in the undisputed facts that the activity that gave rise to this claim is other lawful conduct in furtherance of this right to participate in governmental functions.
The trial court agreed, deciding the anti-SLAPP issue as follows:
[T]he issue before the Court is whether or not the petitioner under the SLAPP statute has shown by a preponderance of the evidence that this action or this lawsuit is based on an action involving public participation.
And ... it seems clear to the Court that the meeting that took place in Mr. Grant's office was certainly in connection with a judicial proceeding. And so . . . that brings us to the next question, which is[, ] was this lawful conduct[?] And . . . that's where we get to I think the California case where we had a rogue investigator who had been found to have engaged in criminal conduct in wiretapping numerous telephones.[12]
And the California Court said - first they pointed out - that these activities were found to be criminal extortion as a matter of law, and then they go on to say when a defendant's assertedly protected activity may or may not be criminal activity, the defendant may invoke the anti-SLAPP statute unless the activity is criminal as a matter of law.
Well, this Court has already found as a matter of law that the activity was not criminal, and therefore, the Court finds that the Gerbosi case is distinguishable.
And ... I do agree with Mr. Cromwell[13] that the analysis is fairly straightforward here. The Court needs to only find that the activity that is the subject of the privacy act claim was lawful activity in connection with a judicial proceeding, and that was, I think, quite clearly the case. And .. . this only needs to be established by a preponderance of the evidence, and I think that the petitioners have satisfied that burden.
And the burden, then, of course shifts to the other side to show by clear and convincing evidence that they're likely to prevail on the merits. And since I've already granted summary judgment for the SLAPP petitioners on that issue, I find that that burden cannot be met. And therefore, I conclude that the SLAPP petition should be granted.

Dillon filed a motion for reconsideration, which the trial court denied in all substantive respects.[14] Pursuant to the anti-SLAPP statute, the trial court awarded to SDR the statutory damage amount of $30, 000 ($10, 000 for each defendant) and $40, 000 in attorney fees and costs.

Dillon appeals.

II

Dillon first contends that the trial court erred by granting summary judgment in favor of SDR on his privacy act claims. This is so, he asserts, because triable issues of fact exist as to whether the telephone conversations between Dillon, Grant, and Kennan were private. We agree.

In considering this contention, we employ a familiar standard of review.

We engage in a de novo review of a ruling granting summary judgment. Anderson v. Weslo. Inc., 79 Wn.App. 829, 833, 906 P.2d 336 (1995). Thus, we engage in the same inquiry as the trial court. Wilson Court Ltd. P'ship v. Tony Maroni's. Inc., 134Wn.2d 692, 698, 952 P.2d 590 (1998). Summary judgment is properly granted when the pleadings, affidavits, depositions, and admissions on file demonstrate that there is no genuine issue of material fact and that the moving party is entitled to summary judgment as a matter of law. CR 56(c): Hutchins v. 1001 Fourth Ave. Assocs., 116 Wn.2d 217, 220, 802 P.2d 1360 (1991). All reasonable inferences from the evidence must be construed in favor of the nonmoving party. Lamon v. McDonnell Douglas Corp., 91 Wn.2d 345, 349, 588 P.2d 1346 (1979).

Green v. Normandy Park Riviera Section Cmty. Club, 137 Wn.App. 665, 681, 151 P.3d 1038(2007).

Washington's privacy act provides, in relevant part:
(1) Except as otherwise provided in this chapter, it shall be unlawful for any individual, partnership, corporation, association, or the state of Washington, its agencies, and political subdivisions to intercept, or record any:
(a) Private communication transmitted by telephone, telegraph, radio, or other device between two or more individuals between points within or without the state by any device electronic or otherwise designed to record and/or transmit said communication regardless how such device is powered or actuated, ...

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