In Doe v. Olson, No. S258498 (decided 1/13/2022), the California Supreme Court allowed a victim of alleged civil harassment to pursue a second civil action arising from the same wrongdoing asserted in a prior settled action despite the fact the victim dismissed the prior action without prejudice and agreed not to make any further disparaging statements.  In so ruling, the Court reversed an order denying in part an anti-SLAPP motion, finding that defendant could not establish breach of the nondisparagement provision. The Court declined to hold the litigation privilege applied to bar the breach of contract claim.  

Facts

Olson may be limited to its unique facts. Jane Doe filed a civil complaint and sought an anti-harassment restraining order pursuant to Code of Civil Procedure section 527.6. Doe alleged that Curtis Olson, president of the HOA and part-time resident in an 8-unit condominium development, engaged in sexual battery, peeping, harassment, and threats to her life and property. The court granted Doe’s request for a personal conduct order against Olson and issued a temporary restraining order, but the court denied her request for a stay-away order in advance of a hearing.

The parties were ordered to mediation, where they reached an agreement. Under the mediation agreement, Doe’s request for a civil harassment restraining order was dismissed without prejudice, and the parties agreed to resolve their dispute in pertinent part as follows: “(1) [Olson] denies each and every allegation made by [Doe] in the dispute. (2) This agreement is made voluntarily by mutual agreement of the parties, and nothing contained herein is to be construed as an admission of any wrongdoing of the parties. (3) The parties agree not to contact or communicate with one another or guests accompanying them, except in writing and/or as required by law. (4) Should the parties encounter each other in a public place or in common areas near their residences, they shall seek to honor this agreement by going their respective directions away from one another. (5) The parties agree not to disparage one another. (6) The term of this agreement shall be three (3) years.” Importantly, Doe did not sign a release of claims or 1542 waiver.

Within nine months of signing the agreement, Doe filed a complaint with the United States Department of Housing and Urban Development (HUD). Doe alleged the same grievances as were claimed in the settled civil action, that defendant, while acting as landlord, engaged in stalking, sexual harassment, and violations of privacy. HUD referred the matter to the California Department of Fair Employment and Housing (DFEH), which agreed to investigate. Doe also brought a second civil action for damages making allegations similar to those in the previously settled and dismissed action.

Olson filed a general denial and a cross-complaint. The cross-complaint alleged that Doe breached the mediation agreement’s nondisparagement clause by filing her administrative complaint and civil complaint for damages, and it requested contract damages and an order for specific performance requiring Doe “to withdraw and dismiss all claims in this case, the HUD Complaint, and the DFEH Complaint against Olson or that otherwise disparage Olson.”

Olson’s cross-complaint triggered an anti-SLAPP motion, which the trial court granted. Regarding the second prong, whether there was minimal merit, the court found the litigation privilege barred the non-disparagement claim as a matter of law.

Court of Appeal

The court of appeal affirmed in part and reversed in part. The court followed Vivian v. Labrucherie (2013) 214 Cal.App.4th 267, concluding that the litigation privilege applied to bar any complaint arising from the administrative complaint Doe filed. The privilege was necessary to promote full and candid disclosure to a public agency whose purpose is to protect the public from illegal activity and thus absolved Doe of any liability. With respect to Doe’s civil complaint, however, the court disagreed with the trial court, concluding that the public policy underlying the litigation privilege did not support its application to a civil complaint for damages. The court found that Olson had demonstrated the minimal merit needed to pass the second prong of the anti-SLAPP inquiry with respect to his breach of contract claim for damages.

Supreme Court

The Supreme Court accepted review but side-stepped the broader questions of whether and to what extent the litigation privilege barred Olson’s cross-complaint against Doe. Instead, the Court decided the narrow question of whether Doe’s civil lawsuit violated the nondisparagement clause in the mediation agreement reached in Doe’s prior civil harassment action.

The Court acknowledged a statement in Navellier v. Sletten (2002) 29 Cal.4th 82, 94 that generally speaking “a defendant who in fact has validly contracted not to speak or petition has in effect ‘waived’ the right to the anti-SLAPP statute’s protection in the event he or she later breaches that contract.” The Court also agreed with Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781 that the settlement agreement as a whole, together with extrinsic evidence, can support a breach of contract claim. But the party suing for breach cannot rely solely on the language of the nondisparagement clause divorced of its context or extrinsic circumstances.

To start, Olson conceded that Doe’s administrative and civil complaints—the conduct that gave rise to Olson’s actions for breach of contract and specific performance—constitute petitioning activity protected by the anti-SLAPP statute, Code Civ. Proc. § 425.16. Thus, the only issue to be decided was whether Olson has shown a probability of success, that is, whether Doe breached the mediation agreement. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821 [setting forth elements of breach of contract claim].)

The Court first looked to the language. Under the clause, the parties agreed “not to disparage one another.” “Read in isolation, this language is vague as to its scope and conceivably could be understood to sweep broadly as Olson suggests.” But the Court must construe the language in the context of the entire agreement and the circumstances under which it was made.  (See Civ. Code, § 1647 [“A contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates.”]; id., § 1648 [“However broad may be the terms of a contract, it extends only to those things concerning which it appears that the parties intended to contract.”].)

The section 527.6 proceeding is statutorily designed to narrowly focus on interpersonal conflict. Its purpose, when warranted by the circumstances, is to prevent threatened future injury through a resulting “order enjoining a party from harassing, intimidating, molesting, attacking, striking, stalking, threatening, sexually assaulting, battering, abusing, telephoning, including, but not limited to, making annoying telephone calls, as described in Section 653m of the Penal Code, destroying personal property, contacting, either directly or indirectly, by mail or otherwise, or coming within a specified distance of, or disturbing the peace of, the petitioner.” (Code Civ. Proc. § 527.6, subd. (b)(6)(A).)

“A petitioner seeking a civil harassment restraining order and a court reviewing such a request are confined by the limited nature of section 527.6 proceedings. Tort and other actions seeking retrospective relief by way of damages for the conduct underlying a petition are not cognizable. It is clear from the statute and legislative history that section 527.6 proceedings are not intended to provide a forum for a global resolution of a petitioner’s potential claims related to the underlying conduct at issue. Rather, section 527.6 provides an expedited procedure . . . to provide quick relief to harassed persons, not to the exclusion of a petitioner’s right to seek other relief through traditional civil litigation and at a much slower pace (see § 527.6, subd. (w)). Like the workers’ compensation scheme in [Claxton v. Waters (2004) 34 Cal.4th 367[1], section 527.6 procedures are relatively informal, proceeding by “simple and concise” forms that parties are required to use (§ 527.6, subd. (x)(1)) and “with the expectation that victims often . . . seek relief without the benefit of a lawyer,” as was the case here with Doe proceeding in propia persona.”

Due to the limited scope of the section 527.6 proceeding, Doe did not release Olson from any and all claims, past and future, known or unknown. In fact, there was no release at all.

Second, to recognize Olson’s broad construction of the nondisparagement clause in the mediation agreement would impair Doe’s exercise of constitutional rights to petition for redress of grievances. Such waiver must be freely given and shown by clear and convincing evidence. (Janus v. American Federation of State, County & Mun. Employees, Council 31 (2018) 138 S.Ct. 2448, 2486] [waiver of 1st Amend. rights “cannot be presumed” and, “to be effective, . . . must be freely given and shown by ‘clear and compelling’ evidence”].)

“In sum, the mediation agreement as a whole, the statutory context in which it was negotiated, and the fact that it implicates constitutionally protected petitioning activity lead us to conclude that the nondisparagement clause does not apply to the circumstances here. Under the reading Olson urges, the clause would seem to constrain Doe’s ability to further avail herself of the very protections provided by section 527.6, including filing another petition or utilizing the “other existing civil remedies” that the statute expressly preserves. (§ 527.6, subd. (w).) Under Olson’s interpretation of the agreement, the nondisparagement clause would even apply to statements the parties make in litigation involving third parties or about conduct occurring after Doe and Olson entered into the agreement. We see no indication that the parties understood the nondisparagement clause to sweep so broadly. Olson’s reliance on the bare text of the clause, devoid of context and without more, is insufficient to proceed on a breach of contract claim in the face of an anti-SLAPP motion.”

Conclusion

Olson is not a blockbuster decision applying the litigation privilege of Civil Code section 47(b) to bar subsequent civil actions that allegedly violate the nondisparagement provision of a settlement agreement. Rather, Olson is a narrow decision applying common principles of contract interpretation. The terms of a contract cannot be read in isolation, but instead must be construed as part of the entire agreement and in the context of the circumstances under which it was made. Thus, a sexual harassment victim who, in the context of settling a narrow civil harassment restraining order proceeding, agrees not to disparage the other party, can nonetheless pursue a subsequent civil action arising from the same wrongdoing alleged in the prior settled case.

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[1] Despite the broad language of the release at issue in Claxton—“releasing and forever discharg[ing] said employer and insurance carrier from all claims and causes of action, whether now known or ascertained, or which may hereafter arise or develop as a result of said injury”—the Court that it “releases only those claims that are within the scope of the workers’ compensation system, and does not apply to claims asserted in separate civil actions.” (Claxton, at pp. 371, 376.)