`
`Filed 5/19/22 Sweetflower Pasadena v. City of Pasadena CA2/7
`NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
`
`California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
`not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
`has not been certified for publication or ordered published for purposes of rule 8.1115.
`
`IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
`
`SECOND APPELLATE DISTRICT
`
`DIVISION SEVEN
`
`
`
`Plaintiff and Respondent,
`
`SWEETFLOWER PASADENA
`LLC,
`
`
`
`
`
`CITY OF PASADENA,
`
`v.
`
` B312412
`
` (Los Angeles County
`Super. Ct. No.
`20STCP03212)
`
`
`
`Defendant,
`
`
`
`INTEGRAL ASSOCIATES
`DENA, LLC,
`
`Real Party in Interest
`and Appellant.
`
`
`
`APPEAL from an order of the Superior Court of
`
`Los Angeles County, Mitchell L. Beckloff, Judge. Affirmed.
`
`
`
`Carlson & Nicholas, Richard A. McDonald for Real Party in
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`Interest and Appellant.
`
`No appearance for Defendant.
`
`
`
`
`
`
`
`
`
`Nossaman, Artin N. Shaverdian, Gabriela S. Pérez,
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`Gregory W. Sanders and John J. Flynn III for Plaintiff and
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`Respondent.
`
`__________________
`
`SweetFlower Pasadena, LLC filed a verified petition for
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`writ of mandate and complaint seeking to compel the City of
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`Pasadena to set aside any permits the City had granted to
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`SweetFlower’s competitor, Integral Associates Dena, LLC,
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`pertaining to Integral’s operation of a retail cannabis store in the
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`City and to obtain a judicial declaration that the City had erred
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`in concluding Integral remained eligible to participate in the
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`permitting process following a material change in its ownership.
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`Integral, named in SweetFlower’s petition/complaint as real
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`party in interest, filed a special motion to strike pursuant to Code
`of Civil Procedure section 425.16.1 The trial court denied
`Integral’s motion, concluding none of SweetFlower’s claims arose
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`from protected speech or petitioning activity. We affirm.
`
`FACTUAL AND PROCEDURAL BACKGROUND
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`1. Integral’s Applications for Cannabis-related City Permits
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`According to SweetFlower’s petition/complaint, in June
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`2018 City voters approved two initiative measures to legalize and
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`regulate commercial cannabis businesses within City boundaries.
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`(See Pas. Mun. Code, §§ 5.28.010 et seq., 5.78.010 et seq.,
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`
`
`1
`Statutory references are to this code unless otherwise
`stated.
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`
`
`2
`
`
`
`
`
`8.11.010 et seq., 17.50.066.) 2 The initiative measures authorized
`the City’s manager or his or her designee to promulgate the rules
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`and procedures governing the application process for the
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`necessary City permits.
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`After a detailed vetting process that involved an
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`independent selection committee reviewing and scoring more
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`than 120 applications, in June 2019 the City selected
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`SweetFlower, Integral and four other candidates to apply for a
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`retail cannabis conditional use permit. Pursuant to the City’s
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`procedures, applicants that were successful in obtaining a
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`conditional use permit could then apply for a commercial
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`cannabis permit and related operational permits. In January
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`2020 the City approved Integral’s application for a conditional
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`use permit. Sweetflower’s application was rejected as incomplete
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`and ultimately denied after Integral and other SweetFlower
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`competitors secured the only available spots for cannabis-related
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`businesses in the City’s districts.
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`On June 18, 2020, after questions emerged whether a
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`change of ownership or control at the selected candidates’
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`businesses during the permitting process should invalidate that
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`applicant’s application and continued eligibility to obtain further
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`cannabis-related permits, the city manager, Steven Mermell,
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`issued new rules for reviewing cannabis-related permit
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`applications following a change in a candidate’s ownership or
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`management. The new rules declared that “a material change in
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`either ownership or management during the permitting process
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`
`
`2
`Some of the City’s cannabis-related ordinances were
`amended in November 2021. Those amendments, the subject of
`ongoing litigation between Integral and the City in the
`Los Angeles Superior Court, are not at issue in this appeal.
`
`
`
`3
`
`
`
`
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`would undermine the legislative intent in [Pas. Mun. Code]
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`Section 5.78.080[] where qualities specific to both were evaluated
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`and directly impacted the scoring and ranking of permitees as
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`part of the selection process. [Thus,] as a matter of equity to all
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`applicants, a material change in ownership and/or management
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`should be evaluated. [¶] A change in ownership and/or
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`management is not allowed and is considered material where it
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`constitutes a ‘change of control.’ ‘Change of control’ shall refer to
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`a transaction whereby a new party acquires a beneficial
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`ownership interest in applicant (or in an existing owner of a
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`beneficial ownership interest in applicant), or a new party is
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`identified as a manager of applicant, such that after such
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`transaction there is a change of identity of the person or entity
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`that has the power to direct or cause the direction of the
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`management and policies of applicant, and therefore would have
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`impacted the substantive scoring of the application such that a
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`different outcome would have been likely.”
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`Under the new rules, in undertaking a review of a change
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`of ownership or management the City compares the “application
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`materials regarding ownership and management submitted at
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`the beginning of the permittee selection process” with “potential
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`evidence of a change of control.” “The applicant shall have an
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`opportunity to rebut such evidence, and/or offer evidence of no
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`change of control within 10 days of written notice.” “Within
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`10 days of review of all evidence, the City Manager shall issue a
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`decision in writing as to whether or not any change in ownership
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`and/or management is a change of control and notify the
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`applicant of such conclusion. If there was a change of control, the
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`applicant shall lose the right to proceed through the cannabis
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`permitting process and its application will be rejected.”
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`
`
`4
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`
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`On June 30, 2020 SweetFlower wrote to the City alleging
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`Integral had undergone a material change in ownership and/or
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`management since it filed its screening application. In
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`particular, SweetFlower alleged (1) Alex Yemenidjian, Armen
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`Yemenidjian and Brian Greenspun had owned and/or controlled
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`various entities that, in turn, owned and controlled Integral at
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`the time Integral filed its initial application in January 2019;
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`(2) in June 2019 Green Thumb Industries, Inc., acquired the
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`Yemenidjians’ and Greenspun’s ownership interests in Integral
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`and its controlling entities; (3) following Green Thumb’s
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`acquisition of the Yemenidjians and Greenspun’s interests,
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`neither the Yemenidjians nor Greenspun remained significantly
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`involved in the operations of Integral.
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`Integral responded that the Yemenidjians were still
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`involved in the operations of Integral after the sale of their
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`interests and Greenspun remained available to Integral as a
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`consultant.
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`In July 2020 the City found no material change of control
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`at Integral and allowed Integral to continue participating in the
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`permitting process to open a cannabis retail store.
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`2. SweetFlower’s Petition/Complaint
`
`In October 2020 SweetFlower filed a verified petition for
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`writ of mandate pursuant to sections 1085 and/or 1094.5 and
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`complaint for declaratory relief. In support of its petition,
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`SweetFlower asserted the City had arbitrarily, and without
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`substantial evidence, found Green Thumb’s acquisition of the
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`Yemenidjians’ and Greenspun’s interests had not resulted in a
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`material change of control at Integral. SweetFlower asserted
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`substantially the same allegations to support its claim for a
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`judicial declaration that, based on City rules, Integral’s material
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`
`
`5
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`
`
`
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`change in ownership during the permitting process disqualified it
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`from its participation and rendered any and all cannabis-related
`permits it received null and void.3
`3. Integral’s Special Motion To Strike
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`Integral filed a special motion to strike the
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`petition/complaint under section 425.16. Integral argued
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`SweetFlower’s action arose from statements and writings made
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`by Integral in connection with its application for cannabis-related
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`City permits, protected speech or petitioning activity within the
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`meaning of section 425.16, subdivision (e)(1) and (e)(2). In
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`support Integral cited several paragraphs in the
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`petition/complaint and its attached exhibits quoting statements
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`Integral had made in its initial screening application and in its
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`
`
`3
`In addition to this lawsuit SweetFlower filed at least three
`other petitions for writs of mandate involving the City’s cannabis-
`related permit decisions. (See Super. Ct. L.A. County
`no. 20STCP00038 [challenging the City’s denial of SweetFlower’s
`own conditional use permit application] (the SweetFlower permit
`action); Super. Ct. L.A. County no. 20STCP01048 [challenging
`the City’s approval of a conditional use permit for Harvest of
`Pasadena LLC, a SweetFlower competitor] (the Harvest action);
`Super. Ct. L.A. County no. 20STCP01456 [challenging the City’s
`approval of a conditional use permit for Integral] (the Integral
`permit action).)
`
`
`
`SweetFlower dismissed its appeal from the judgment
`entered against it in the SweetFlower permit action (case
`no. B312571). Integral has appealed from the trial court’s orders
`denying the special motions to strike it filed in the Integral
`permit action (case no. B308897); and Harvest has appealed from
`the trial court’s order denying its special motion to strike in the
`Harvest action (case no. B308645).
`
`
`
`6
`
`
`
`
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`responses to City inquiries following Green Thumb’s acquisition,
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`primarily that Yemenidjians and Greenspun continued to be
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`involved in the operations of Integral in some meaningful
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`capacity even after Green Thumb’s acquisition of their interests.
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`Integral argued these statements—protected activity—formed
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`the basis of SweetFlower’s claims. Integral also argued
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`SweetFlower could not demonstrate its action had even minimal
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`merit.
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`
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`In its opposition SweetFlower argued its claims were
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`directed to the City’s arbitrary and flawed decision that no
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`material change of ownership and control at Integral had
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`occurred. The statements highlighted in its petition/complaint
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`supplied evidence relating to the City’s arbitrary and
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`unsubstantiated nature of that finding, SweetFlower argued, but
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`none of those statements was the wrong alleged.
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`The trial court denied Integral’s special motion to strike,
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`ruling the causes of action arose from the City’s decision
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`following an investigation, not protected speech or petitioning
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`activity. Because Integral failed to carry its threshold burden to
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`demonstrate the claims arose from protected speech or
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`petitioning activity, the court denied Integral’s special motion to
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`strike without addressing whether SweetFlower could
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`demonstrate its claims had minimal merit.
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`
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`Integral filed a timely notice of appeal. (§§ 425.16,
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`subd. (i), 904.1, subd. (a)(13).)
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`7
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`DISCUSSION
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`1. Governing Law and Standard of Review
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`Section 425.16, commonly known as the anti-SLAPP
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`statute, makes available a special motion to strike certain
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`meritless claims early in the litigation: “A cause of action against
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`a person arising from any act of that person in furtherance of a
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`person’s right of petition or free speech under the United States
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`Constitution or the California Constitution in connection with a
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`public issue shall be subject to a special motion to strike, unless
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`the court determines that the plaintiff has established that there
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`is a probability that the plaintiff will prevail on the claim.”
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`(§ 425.16, subd. (b)(1); see Rand Resources, LLC v. City of Carson
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`(2019) 6 Cal.5th 610, 619-620 [“[a] court may strike a cause of
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`action only if the cause of action (1) arises from an act in
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`furtherance of the right of petition or free speech ‘in connection
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`with a public issue,’ and (2) the plaintiff has not established ‘a
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`probability’ of prevailing on the claim”].)
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`Pursuant to section 425.16, subdivision (e), an “‘act in
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`furtherance of a person’s right of petition or free speech under the
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`United States or California Constitution in connection with a
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`public issue’ includes: (1) any written or oral statement or
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`writing made before a legislative, executive, or judicial
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`proceeding, or any other official proceeding authorized by law,
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`(2) any written or oral statement or writing made in connection
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`with an issue under consideration or review by a legislative,
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`executive, or judicial body, or any other official proceeding
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`authorized by law, (3) any written or oral statement or writing
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`made in a place open to the public or a public forum in connection
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`with an issue of public interest, or (4) any other conduct in
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`furtherance of the exercise of the constitutional right of petition
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`
`
`8
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`
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`
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`or the constitutional right of free speech in connection with a
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`public issue or an issue of public interest.”
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`
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`In ruling on a motion under section 425.16, the trial court
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`engages in a now-familiar two-step process. “First, the defendant
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`must establish that the challenged claim arises from activity
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`protected by section 425.16. [Citation.] If the defendant makes
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`the required showing, the burden shifts to the plaintiff to
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`demonstrate the merit of the claim by establishing a probability
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`of success.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 384 (Baral);
`
`accord, Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995,
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`1009 (Bonni); Park v. Board of Trustees of California State
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`University (2017) 2 Cal.5th 1057, 1061 (Park).) If the moving
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`party fails to demonstrate that any of the challenged claims for
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`relief arise from protected activity (the first step), the court
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`properly denies the motion to strike without addressing the
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`probability of success (the second step). (City of Cotati v.
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`Cashman (2002) 29 Cal.4th 69, 80-81; Verceles v. Los Angeles
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`United School Dist. (2021) 63 Cal.App.5th 776, 784.)
`
`“A claim arises from protected activity when that activity
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`underlies or forms the basis for the claim.” (Park, supra,
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`2 Cal.5th at pp. 1062-1063; accord, Bonni, supra, 11 Cal.5th at
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`p. 1009.) Thus, “[t]he defendant’s first-step burden is to identify
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`the activity each challenged claim rests on and demonstrate that
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`that activity is protected by the anti-SLAPP statute. A ‘claim
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`may be struck only if the speech or petitioning activity itself is
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`the wrong complained of, and not just evidence of liability or a
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`step leading to some different act for which liability is asserted.’”
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`(Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 884
`
`(Wilson); see Bonni, at p. 1009 [“[t]he defendant’s burden is to
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`identify what acts each challenged claim rests on and to show
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`
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`9
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`
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`how those acts are protected under a statutorily defined category
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`of protected activity”]; Park, at p. 1060 [same].)
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`A motion pursuant to section 425.16 need not challenge an
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`entire cause of action as pleaded in the complaint. (Bonni, supra,
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`11 Cal.5th at p. 1010; Baral, supra, 1 Cal.5th at p. 382.) Rather,
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`“courts should analyze each claim for relief—each act or set of
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`acts supplying a basis for relief, of which there may be several in
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`a single pleaded cause of action—to determine whether the acts
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`are protected and, if so, whether the claim they give rise to has
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`the requisite degree of merit to survive the motion.” (Bonni, at
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`p. 1010; accord, Baral, at p. 395; Musero v. Creative Artists
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`Agency, LLC (2021) 72 Cal.App.5th 802, 815; see Park, supra,
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`2 Cal.5th at p. 1063 [in determining whether a claim arises from
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`protected activity, “courts should consider the elements of the
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`challenged claim and what actions by the defendant supply those
`elements and consequently form the basis for liability”].)
`We review do novo an order granting or denying a special
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`motion to strike under section 425.16. (Wilson, supra, 7 Cal.5th
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`at p. 884; Park, supra, 2 Cal.5th at p. 1067.)
`
`2. The Court Properly Concluded SweetFlower’s Claims
`Did Not Arise From Protected Speech or Petitioning
`Activity
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`Integral contends SweetFlower’s claims are based on
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`documents Integral presented to the City in its initial screening
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`application or in response to the City’s requests for further
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`information concerning the change in ownership following
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`Green Thumb’s acquisition of the Yemenidjians’ and Greenspun’s
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`
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`10
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`
`
`
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`interests in Integral.4 Because those documents/statements were
`submitted to the City in connection with a matter before the City,
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`by definition, Integral argues, they constitute acts in furtherance
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`of the right to petition or free speech in connection with a public
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`issue. (§ 425.16, subd. (e)(2); see Sugarman v. Brown (2021)
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`73 Cal.App.5th 152 [documents filed with the Securities and
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`Exchange Commission were protected petitioning and speech
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`activity within the meaning of section 425.16, subdivision (e)(2).)
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`Integral’s entirely accurate characterization of the
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`documents Integral and SweetFlower submitted to the City as
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`protected within the meaning of section 425.16, subdivision (e)(2),
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`satisfies only part of the first step inquiry. As discussed, to be
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`subject to a special motion to strike, the claim must arise from
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`the protected activity. (§ 425.16, subd. (b)(1); see Wilson, supra,
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`7 Cal.5th at p. 884 [the protected activity must itself be the
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`wrong complained of and not just evidence of liability]; Park,
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`supra, 2 Cal.5th at p. 1060 [same].)
`
`SweetFlower’s petition for writ of mandate alleged the
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`City’s finding that no change of control at Integral had occurred
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`was arbitrary and unsupported by the evidence. (See § 1085,
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`subd. (a) [court issues a writ of mandate to compel compliance
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`with the law by “any inferior tribunal, corporation, board, or
`
`
`
`4
`Those documents submitted to the City, which are
`mentioned throughout the petition/complaint, include
`(1) Integral’s initial screening application; (2) a June 6, 2019
`letter from Armen Yemenidjian; (3) an April 2020 written
`statement from Integral’s counsel; and (4) statements from
`Integral on May 6, 2020, June 17, 2020 and June 23, 2020 in
`response to the City’s request for further information.
`SweetFlower alleged Integral relied on Integral’s statements
`even when confronted with evidence of their falsity.
`
`
`
`11
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`
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`person”].) Its claim for declaratory relief was essentially the
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`same. The documentation cited throughout SweetFlower’s
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`petition/complaint may well provide evidence relating to those
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`claims, but neither the documents, nor the statements Integral’s
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`agents made in them, are an element of those claims, let alone
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`the basis for the City’s liability. In short, they are not the wrong
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`alleged. (See Park, supra, 2 Cal.5th at p. 1068 [“Park’s complaint
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`is ‘based on the act of denying plaintiff tenure based on national
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`origin. Plaintiff could have omitted allegations regarding
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`communicative acts . . . and still state the same claims’”]; Area 51
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`Productions, Inc. v. City of Alameda (2018) 20 Cal.App.5th 581,
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`596 [communications from the city “that led to and that followed”
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`the alleged breach—the city’s refusal to issue a license—were
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`“merely incidental to the asserted claims” against the city for
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`breach, interference and unfair business practices]; cf. Rand
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`Resources, LLC v. City of Carson, supra, 6 Cal.5th at pp. 622-623
`
`[in claim for fraudulent misrepresentation, mayor and city
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`officials’ statements are “themselves the ‘wrong[s] complained
`
`of’”]; City of Montebello v. Vasquez (2016) 1 Cal.5th 409, 425
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`[distinguishing between complaints against a public entity for
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`“acts of governance” preceding or following statements by
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`government officials, which would not be subject to a special
`
`motion to strike, and a complaint against the officials based on
`
`their statements themselves, which could be].)
`
`Integral responds that, because SweetFlower’s
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`petition/complaint alleged the City relied on Integral’s
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`statements in reaching its decision, the City’s decision, and
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`Integral’s statements, are “inextricably intertwined.” The
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`Supreme Court has soundly rejected such attempts to conflate
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`statements preceding a government decision with the challenge
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`
`
`12
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`
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`
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`to the decision itself. (See Park, supra, 2 Cal.5th p. 1070
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`[rejecting the university’s argument that “all aspects of its tenure
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`process, including its ultimate decision, are inextricably
`
`intertwined protected activity”]; id. at p. 1060 [“a claim is not
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`subject to a [special] motion to strike simply because it contests
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`an action or decision that was arrived at following speech or
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`petitioning activity, or that was thereafter communicated by
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`speech or petitioning activity”]; see also Graffiti Protective
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`Coatings, Inc. v. City of Pico Rivera (2010) 181 Cal.App.4th 1207,
`1211 (Graffiti Protective).)5
`
`Finally, relying on language in Rudisill v. California
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`Coastal Com. (2019) 35 Cal.App.5th 1062, 1075, a case decided by
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`Division Two of this court, Integral contends that, by seeking an
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`order setting aside the cannabis-related permits it received,
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`SweetFlower’s petition/complaint is fundamentally a direct
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`attack on its petitioning activity. (See ibid. [“[n]or did Petitioners
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`seek an order directly affecting Real Parties in Interest’s
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`participation in the government process underlying the
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`government entities’ decisions (such as, for example, an order
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`precluding Real Parties in Interest from submitting any further
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`permits”].) At the threshold, SweetFlower’s request for an order
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`to set aside the issuance of a permit, without more, does not
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`make it subject to a special motion to strike. (See Shahbazian v.
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`City of Rancho Palos Verdes (2017) 17 Cal.App.5th 823, 835; cf.
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`
`
`5
`That SweetFlower alleged Integral’s responses to City
`inquiries following Green Thumb’s acquisition were false, which
`the City would have discovered had it conducted any
`investigation, also does not alter our analysis. Integral is not
`being sued for its statements. Rather, SweetFlower sued the City
`for its governmental decision, the only alleged basis for liability.
`
`
`
`13
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`
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`Graffiti Protective, supra, 181 Cal.App.4th at p. 1211.) And,
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`whatever merit there may be to the implication in the Rudisill
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`dictum that a petition’s request for an injunction preventing
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`further petitioning activity would necessarily subject the petition
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`to a special motion to strike—a proposition about which we have
`serious doubts6—that is not the request here. The
`petition/complaint challenges the City’s decision following its
`
`finding; it does not seek an order or injunction prohibiting
`Integral from engaging in future petitioning activity.7
`In sum, Integral did not carry its threshold burden to
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`demonstrate SweetFlower’s claims arose from protected activity
`
`
`6 When considering whether a claim arises from protected
`speech or petitioning activity within the meaning of
`section 425.16, the focus is on the “‘“acts on which liability is
`based”’” (Bonni, supra, 11 Cal.5th at p. 1012, italics omitted), not
`the damages suffered (Renewable Resources Coalition, Inc. v.
`Pebble Mines Corp. (2013) 218 Cal.App.4th 384, 396) or any other
`type of remedy sought, including an injunction (see Guessous v.
`Chrome Hearts, LLC (2009) 179 Cal.App.4th 1177, 1187 [anti-
`SLAPP motion is properly directed to a cause of action, not the
`relief sought; an “‘[i]njunction relief is a remedy, not a cause of
`action’”]; Marlin v. Aimco Venezia, LLC (2007) 154 Cal.App.4th
`154, 162 [same]; see generally Baral, supra, 1 Cal.5th at p. 395
`[anti-SLAPP motion is properly directed to “allegations of
`protected activity that are asserted as grounds for relief”; “[t]he
`targeted claim must amount to a ‘cause of action’ in the sense
`that it is alleged to justify a remedy,” italics omitted].)
`7
`SweetFlower’s requests for judicial notice of the operative
`complaints Integral filed in other actions and the minutes of the
`November 1, 2021 Pasadena City Council meeting are denied as
`irrelevant. (See Bacoka v. Best Buy Stores, L.P. (2021)
`71 Cal.App.5th 126, 135.)
`
`
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`14
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`under section 425.16. Accordingly, the trial court did not err in
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`denying the special motion to strike.
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`DISPOSITION
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`The trial court’s order denying Integral’s special motion to
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`strike is affirmed. SweetFlower is to recover its costs on appeal.
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`PERLUSS, P. J.
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`We concur:
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`SEGAL, J.
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`FEUER, J.
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`15
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