Filed 8/10/17
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`IN THE SUPREME COURT OF CALIFORNIA
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`WILLIAM PARRISH et al.,
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`Plaintiffs and Appellants,
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`v.
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`LATHAM & WATKINS et al.,
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`Defendants and Respondents. )
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` ____________________________________)
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`S228277
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`Ct.App. 2/3 B244841
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`Los Angeles County
`Super. Ct. No. BC482394
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`To establish liability for the tort of malicious prosecution, a plaintiff must
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`demonstrate, among other things, that the defendant previously caused the
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`commencement or continuation of an action against the plaintiff that was not
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`supported by probable cause. We have held that if an action succeeds after a
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`hearing on the merits, that success ordinarily establishes the existence of probable
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`cause (and thus forecloses a later malicious prosecution suit), even if the result is
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`overturned on appeal or by later ruling of the trial court. (Wilson v. Parker, Covert
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`& Chidester (2002) 28 Cal.4th 811, 818 (Wilson).) This principle has come to be
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`known as the ―interim adverse judgment rule.‖
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`In this case we are asked to decide whether the interim adverse judgment
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`rule applies when a trial court had initially denied summary judgment, finding that
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`a lawsuit had sufficient potential merit to proceed to trial, but concluded after trial
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`that the suit had been brought in ―bad faith‖ because the claim, even if
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`1
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`superficially meritorious, in fact lacked evidentiary support. The Court of Appeal
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`answered that question in the affirmative. We agree and affirm.
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`I.
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`A.
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`This case arises from a trade secrets dispute over the manufacture of
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`microbolometers, devices used in thermal imaging systems to detect infrared
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`radiation. Plaintiffs William Parrish and E. Timothy Fitzgibbons served as
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`officers of Indigo Systems Corporation (Indigo), a company in the microbolometer
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`business. When FLIR Systems, Inc. (FLIR) acquired Indigo, both Parrish and
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`Fitzgibbons joined the FLIR team. Approximately two years later, Parrish and
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`Fitzgibbons left FLIR to start a new, competing venture.
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`FLIR and Indigo sued Parrish and Fitzgibbons for misappropriation of trade
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`secrets. Among other things, they alleged that Parrish and Fitzgibbons had
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`solicited venture capital for their new business by presenting a business plan that
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`Fitzgibbons had developed while still employed by FLIR. Parrish and Fitzgibbons
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`each moved for summary judgment. Among other things, they argued that
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`Fitzgibbons had developed the business plan for the new venture before he joined
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`Indigo, and that no trade secrets would be misappropriated in the plan‘s
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`implementation. In their opposition to the summary judgment motions, FLIR and
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`Indigo relied on the declarations of two experts who opined that the business plan
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`could not be implemented ―without using FLIR‘s and Indigo‘s proprietary trade
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`secrets on the design and bulk manufacture of [certain] microbolometers.‖
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`The trial court denied the summary judgment motions. The court
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`concluded that although Parrish and Fitzgibbons had ―made a compelling
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`argument that they [were] entitled to judgment,‖ in light of the ―highly technical‖
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`nature of the case, they had ―failed to sustain their burden‖ of showing that their
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`planned new business was not based on FLIR‘s and Indigo‘s intellectual property.
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`2
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`The court pointed in particular to evidence that Fitzgibbons made a presentation to
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`FLIR‘s board of directors that, FLIR and Indigo argued, overlapped with the plan
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`for his new business. The court explained that it was ―unable to find as a matter of
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`law, for purposes of this motion only, that [FLIR and Indigo] own none of the
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`concepts for [Parrish and Fitzgibbons‘s] new business, that nothing in the [new]
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`business plan made use of [FLIR‘s and Indigo‘s] proprietary confidential
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`information, intellectual property, or work product, or that all concepts in the
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`[new] plan were identical to those‖ contained in a plan drafted by Fitzgibbons
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`before he joined Indigo. The court further concluded that even if Parrish and
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`Fitzgibbons‘s business was not itself based on FLIR‘s and Indigo‘s intellectual
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`property, FLIR and Indigo had ―produced sufficient evidence, for example with
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`the [expert] declarations, to raise a triable issue as to misappropriation of trade
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`secrets‖ in the plan‘s implementation.
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`The case proceeded to a bench trial, after which the trial court denied
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`FLIR‘s and Indigo‘s requests for relief. The trial court then awarded Parrish and
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`Fitzgibbons their costs and attorney fees under the California Uniform Trade
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`Secrets Act, Civil Code section 3426 et seq., which authorizes cost and fee awards
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`to prevailing defendants ―[i]f a claim of misappropriation [was] made in bad
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`faith.‖ (Civ. Code, § 3426.4.) The trial court relied on Gemini Aluminum Corp. v.
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`California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249 (Gemini), which held
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`that ― ‗bad faith‘ for purposes of section 3426.4 requires objective speciousness of
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`the plaintiff‘s claim, as opposed to frivolousness, and [the plaintiff‘s] subjective
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`bad faith in bringing or maintaining the claim.‖ (Id. at p. 1262.) Here, the trial
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`court concluded that FLIR and Indigo had initiated and pursued the action against
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`Parrish and Fitzgibbons in both subjective and objective bad faith, ―primarily for
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`the anticompetitive motive‖ of preventing Parrish and Fitzgibbons from creating a
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`new business that would compete with that of their former employers. The court
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`determined that FLIR and Indigo had relied on a legal theory of inevitable
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`misappropriation ―not supported by California law,‖ and ―knew, or should have
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`known, that they did not have a sufficient evidentiary basis to initiate the lawsuit
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`[or] continue the lawsuit through trial.‖ The court also faulted FLIR and Indigo
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`for certain shortcomings of the expert testimony on which they relied. Although
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`the court recognized that it had denied Parrish‘s and Fitzgibbons‘s motions for
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`summary judgment, it explained that it ―had not heard all the evidence or
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`considered witness credibility‖ at that stage. The court ultimately awarded Parrish
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`and Fitzgibbons more than $1.6 million in fees and costs.
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`The Court of Appeal affirmed the award of fees and costs, upholding the
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`trial court‘s finding that the suit against plaintiffs had been prosecuted in bad faith.
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`(FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1274; see also id. at
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`pp. 1275–1276, citing Gemini.) It also, as relevant here, rejected FLIR and
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`Indigo‘s argument that the trial court was estopped from finding bad faith because
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`the trial court had earlier denied a defense motion for summary judgment. (FLIR
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`Systems, at p. 1282.) The appellate court explained that at the time the trial court
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`ruled on the summary judgment motion, that court had not yet ―heard all the
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`evidence or considered witness credibility.‖ (Id. at p. 1283.) The appellate court
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`noted that the trial court had denied the summary judgment motion in part based
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`on ―expert declarations suggesting there was a scientific methodology to predict
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`the likelihood of trade secret misuse,‖ but at trial, the ―experts admitted there was
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`no valid scientific methodology to predict trade secret misuse and agreed that no
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`trade secrets were misappropriated.‖ (Id. at p. 1282.)
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`B.
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`Parrish and Fitzgibbons later brought a malicious prosecution claim against
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`FLIR‘s and Indigo‘s lawyers in the trade secrets case: defendants Latham &
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`Watkins LLP (Latham) and Latham partner Daniel Scott Schecter.
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`4
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`Defendants filed an anti-SLAPP motion under Code of Civil Procedure
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`section 425.16 — that is, a special motion to strike a ―strategic lawsuit against
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`public participation (SLAPP).‖ (Equilon Enterprises v. Consumer Cause, Inc.
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`(2002) 29 Cal.4th 53, 57.) To prevail on such a motion, a defendant ―must
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`establish that the challenged claim arises from [protected] activity.‖ (Baral v.
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`Schnitt (2016) 1 Cal.5th 376, 384 (Baral).) If a defendant is able to do so, ―the
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`burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a
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`probability of success.‖ (Ibid.) Defendants argued that Parrish and Fitzgibbons
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`could not establish a probability of success because: (i) the malicious prosecution
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`action was untimely filed; and (ii) the order denying summary judgment in the
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`underlying trade secrets action established probable cause to prosecute that action.
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`Parrish and Fitzgibbons‘s opposition brief challenged both points, but did not
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`dispute that the malicious prosecution claim arose from protected activity; namely,
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`from Latham and Schecter‘s prosecution of the earlier lawsuit. (See Code Civ.
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`Proc., § 425.16, subd. (e); Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th
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`728, 734.)
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`The trial court granted the motion to strike, deeming the action untimely
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`under the one-year statute of limitations set out in Code of Civil Procedure section
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`340.6, subdivision (a) (section 340.6(a)). The court did not reach the probable
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`cause issue.
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`Parrish and Fitzgibbons appealed. While their appeal was pending, the
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`Court of Appeal decided Roger Cleveland Golf Co., Inc. v. Krane & Smith, APC
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`(2014) 225 Cal.App.4th 660. In pertinent part, that case held that the one-year
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`limitations period does not apply to a malicious prosecution suit filed against a
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`former litigation adversary‘s attorney. (Id. at p. 677.) Instead, the court
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`concluded, a two-year limitations period controls.
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`5
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`The Court of Appeal in this case relied on Roger Cleveland in rejecting the
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`trial court‘s conclusion that the action was untimely. ―[S]ince we have no cause to
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`reverse our holding in Roger Cleveland,‖ the court reasoned, and ―[a]s Latham
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`[and Schecter] concede[] the action is timely under [the two-year statute of
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`limitations], . . . the trial court‘s rationale for granting the anti-SLAPP motion is
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`no longer viable.‖
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`The Court of Appeal then considered whether the anti-SLAPP motion
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`should have nevertheless been granted based on the interim adverse judgment rule.
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`The court concluded that the trial court‘s summary judgment ruling in the
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`underlying action established ―probable cause in [that] action.‖ The Court of
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`Appeal relied solely on the trial court‘s determination that Parrish and Fitzgibbons
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`―had ‗failed to sustain their burden of proof on the motion‘ ‖ — not on the
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`superior court‘s conclusion that certain expert declarations gave rise to a material
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`factual dispute. The Court of Appeal further held that the trial court‘s subsequent
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`finding of ―bad faith‖ under the California Uniform Trade Secrets Act, ―based on
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`the more complete record developed at trial,‖ did not establish a lack of probable
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`cause. In so holding, the court criticized the opinion of Division Four of the same
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`district in Slaney v. Ranger Ins. Co. (2004) 115 Cal.App.4th 306.
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`Parrish and Fitzgibbons petitioned for review. While their petition was
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`pending, this court issued its decision in Lee v. Hanley (2015) 61 Cal.4th 1225,
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`which (i) held that the one-year statute of limitations in section 340.6(a) ―applies
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`to claims whose merits necessarily depend on proof that an attorney violated a
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`professional obligation in the course of providing professional services‖ (Lee, at
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`pp. 1236–1237); and (ii) ―disapprove[d]‖ Roger Cleveland ―to the extent [it was]
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`inconsistent with [our] opinion‖ (Lee, at p. 1239). In particular, Lee criticized
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`Roger Cleveland‘s premise that section 340.6(a) should be understood ― ‗as a
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`professional negligence statute‘ ‖ (Lee, at p. 1239) — without analyzing Roger
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`6
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`Cleveland‘s ultimate conclusion that section 340.6(a) is inapplicable to claims
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`filed against a former litigation adversary‘s attorney. The answer to the petition
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`argued that Lee provides an alternative basis for upholding the trial court‘s grant
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`of defendants‘ special motion to strike.
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`We granted the petition for review. We now conclude that the Court of
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`Appeal was correct to hold that the interim adverse judgment rule applies.
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`Because we conclude the malicious prosecution suit was barred on that basis, we
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`do not reach the limitations issue.
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`II.
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`A.
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`―The common law tort of malicious prosecution originated as a remedy for
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`an individual who had been subjected to a maliciously instituted criminal charge,
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`but in California, as in most common law jurisdictions, the tort was long ago
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`extended to afford a remedy for the malicious prosecution of a civil action.‖
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`(Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871 (Sheldon
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`Appel).) The tort consists of three elements. The underlying action must have
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`been: (i) initiated or maintained by, or at the direction of, the defendant, and
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`pursued to a legal termination in favor of the malicious prosecution plaintiff;
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`(ii) initiated or maintained without probable cause; and (iii) initiated or maintained
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`with malice. (Ibid.; see Zamos v. Stroud (2004) 32 Cal.4th 958, 970 (Zamos); see
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`also Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 297
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`(Soukup).)1
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`1
`A malicious prosecution claim will also lie if the defendant brought ―an
`action charging multiple grounds of liability when some but not all of those
`grounds were asserted with malice and without probable cause.‖ (Crowley v.
`Katleman (1994) 8 Cal.4th 666, 671 (Crowley).) This rule is not of consequence
`here.
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`The interim adverse judgment rule concerns the probable cause element of
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`a malicious prosecution claim. In contrast to the existence of malice — a question
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`of fact regarding ―the subjective intent or purpose with which [a litigant] acted in‖
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`prosecuting the underlying action — the existence of probable cause is a question
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`of law to be determined as an objective matter. (Sheldon Appel, supra, 47 Cal.3d
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`at pp. 874, 875.) ―[T]he probable cause element calls on the trial court to make an
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`objective determination of the ‗reasonableness‘ of the defendant‘s conduct, i.e., to
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`determine whether, on the basis of the facts known to the defendant, the institution
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`of the prior action was legally tenable,‖ as opposed to whether the litigant
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`subjectively believed the claim was tenable. (Id. at p. 878.) A claim is
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`unsupported by probable cause only if ― ‗ ―any reasonable attorney would agree
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`[that it is] totally and completely without merit.‖ ‘ ‖ (Wilson, supra, 28 Cal.4th at
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`p. 817; accord, Sheldon Appel, at p. 885; In re Marriage of Flaherty (1982) 31
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`Cal.3d 637, 650; see also Zamos, supra, 32 Cal.4th at p. 970.) ―This rather lenient
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`standard for bringing a civil action reflects ‗the important public policy of
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`avoiding the chilling of novel or debatable legal claims.‘ ‖ (Wilson, supra, at
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`p. 817.) The standard safeguards the right of both attorneys and their clients
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`― ‗ ―to present issues that are arguably correct, even if it is extremely unlikely that
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`they will win.‖ ‘ ‖ (Ibid., quoting Flaherty, supra, at p. 650.)
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`As we explained in Wilson, California courts have long embraced the so-
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`called interim adverse judgment rule, under which ―a trial court judgment or
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`verdict in favor of the plaintiff or prosecutor in the underlying case, unless
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`obtained by means of fraud or perjury, establishes probable cause to bring the
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`underlying action, even though the judgment or verdict is overturned on appeal or
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`by later ruling of the trial court.‖ (Wilson, supra, 28 Cal.4th at p. 817.) This rule
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`reflects a recognition that ―[c]laims that have succeeded at a hearing on the merits,
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`even if that result is subsequently reversed by a trial or appellate court, are not so
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`lacking in potential merit that a reasonable attorney or litigant would necessarily
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`have recognized their frivolousness.‖ (Id. at p. 818.) That is to say, if a claim
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`succeeds at a hearing on the merits, then, unless that success has been procured by
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`certain improper means, the claim cannot be ―totally and completely without
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`merit.‖ (Zamos, supra, 32 Cal.4th at p. 970.) Although the rule arose from cases
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`that had been resolved after trial, the rule has also been applied to the ―denial of
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`defense summary judgment motions, directed verdict motions, and similar efforts
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`at pretrial termination of the underlying case.‖ (Wilson, supra, 28 Cal.4th at
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`p. 819; see also id. at pp. 817–820 & fn. 4, 824; Roberts v. Sentry Life Insurance
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`(1999) 76 Cal.App.4th 375 [denial of defense motion for summary judgment];
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`Davis v. Butler (1999) 240 Ga.App. 72 [same]; Porous Media Corp. v. Pall Corp.
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`(8th Cir. 1999) 186 F.3d 1077 [denial of motion for directed verdict].)
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`In Wilson, we considered whether the interim adverse judgment rule
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`applied to the denial of an anti-SLAPP motion. In that case, school teachers and
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`administrators had sued protestors for harassment and defamation. Several of the
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`defendants filed an anti-SLAPP motion. The trial court denied the motion,
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`concluding, among other things, that the plaintiffs had demonstrated a probability
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`of prevailing on the merits. The Court of Appeal, however, vacated the superior
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`court‘s order denying the motion to strike as to certain defendants and, on remand,
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`the trial court granted the anti-SLAPP motion and dismissed the action as to those
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`defendants. Those defendants then filed a malicious prosecution action against
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`certain plaintiffs and their attorneys. (Wilson, supra, 28 Cal.4th at pp. 815–816.)
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`We concluded that the action failed because ―a trial court‘s denial of [an anti-
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`SLAPP] motion . . . on the ground that the plaintiff has established the requisite
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`probability of success, establishes probable cause to bring the action, and
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`precludes the maintenance of a subsequent malicious prosecution action, unless
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`the prior ruling is shown to have been obtained by fraud or perjury.‖ (Id. at
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`p. 820.) ―In denying a motion to strike on the ground that the plaintiff has
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`established the requisite probability of success,‖ we reasoned, a ―trial court
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`necessarily concludes that the plaintiff has substantiated a legally tenable claim
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`through a facially sufficient evidentiary showing and that the defendant‘s contrary
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`showing, if any, does not defeat the plaintiff‘s as a matter of law.‖ (Id. at p. 821.)
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`After all, ―[a] claim that is legally sufficient and can be substantiated by competent
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`evidence is . . . one that a ‗reasonable attorney would have thought . . . tenable.‘ ‖
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`(Ibid., quoting Sheldon Appel, supra, 47 Cal.3d at p. 885.)
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`We explained that it is of no moment that a trial court, in ruling on an anti-
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`SLAPP motion, ―determines only whether the plaintiff has substantiated a prima
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`facie case and does not weigh one side‘s evidence against the other in the manner
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`of a jury or court trying the merits.‖ (Wilson, supra, 28 Cal.4th at pp. 821–822.)
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`―A litigant or attorney who possesses competent evidence to substantiate a legally
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`cognizable claim for relief does not act tortiously by bringing the claim, even if
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`also aware of evidence that will weigh against the claim. Plaintiffs and their
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`attorneys are not required, on penalty of tort liability, to attempt to predict how a
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`trier of fact will weigh the competing evidence, or to abandon their claim if they
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`think it likely the evidence will ultimately weigh against them. They have the
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`right to bring a claim they think unlikely to succeed, so long as it is arguably
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`meritorious.‖ (Id. at p. 822.)
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`We also recognized that the interim adverse judgment rule has its limits.
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`The rule applies only to rulings regarding the merits of the claim, not those that
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`rest ―solely on technical or procedural grounds.‖ (Wilson, supra, 28 Cal.4th at
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`p. 823.) And even where a ruling is based on the court‘s evaluation of the merits
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`of the claim, the ruling does not establish the existence of probable cause if the
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`ruling is ―shown to have been obtained by fraud or perjury.‖ (Id. at p. 820.)
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`While plaintiffs and their attorneys have ―the right to bring a claim they think
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`10
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`unlikely to succeed, so long as it is arguably meritorious‖ (id. at p. 822), they have
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`no right to mislead a court about the merits of a claim in an attempt to procure a
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`favorable ruling, and such a ruling can provide no reliable indication that the claim
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`was objectively tenable.
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`B.
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`Parrish and Fitzgibbons do not dispute that a summary judgment order on
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`the merits can trigger application of the interim adverse judgment rule. They
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`argue, rather, that the rule should not apply here because after initially denying the
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`defense motion for summary judgment, the trial court made a posttrial finding that
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`FLIR and Indigo had brought the suit in ―bad faith‖ for purposes of the California
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`Uniform Trade Secrets Act. Even assuming that the trial court‘s bad faith ruling
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`should be imputed to defendants here, we disagree.
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`As Wilson makes clear, whether an interim ruling is ―subsequently reversed
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`by [a] trial or appellate court‖ has no bearing on the probable cause inquiry.
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`(Wilson, supra, 28 Cal.4th at p. 818; see also, e.g., Crowley, supra, 8 Cal.4th at
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`p. 692, fn. 15.) In Wilson, for example, the fact that the order denying the anti-
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`SLAPP motion was vacated — and the motion ultimately granted — posed no
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`obstacle to our concluding that the denial established probable cause to bring suit.
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`(Wilson, supra, at p. 817.) Likewise here, the summary judgment ruling in favor
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`of FLIR and Indigo establishes that their position had arguable merit, whether or
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`not, after trial, the court wished it had ruled against them.
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`Unlike a finding that the summary judgment ruling was obtained by fraud
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`or perjury, the trial court‘s posttrial finding that the suit was brought in ―bad faith‖
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`within the meaning of the California Uniform Trade Secrets Act does not vitiate
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`the trial court‘s earlier finding that FLIR‘s and Indigo‘s suit had some arguable
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`merit. The trial court‘s finding of ―bad faith‖ rested on two conclusions: that the
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`suit had been brought in ―subjective bad faith‖ — that is, for the subjective
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`11
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`purpose of preventing Parrish and Fitzgibbons from launching a competing
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`enterprise — and in ―objective bad faith,‖ meaning that the suit was objectively
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`―specious.‖ Neither conclusion is inconsistent with the court‘s earlier
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`determination that the suit had sufficient arguable merit to survive summary
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`judgment.
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`For purposes of the malicious prosecution tort, the existence of subjective
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`bad faith is relevant to the question whether the suit was brought with malice,
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`which, as our cases have made clear, concerns a litigant‘s subjective belief. (E.g.,
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`Sheldon Appel, supra, 47 Cal.3d at p. 874.) But it is a separate question whether,
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`objectively speaking, defendants‘ suit was supported by probable cause. And as to
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`that point, the trial court‘s finding of objective bad faith in the underlying action
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`was not a finding that the action completely lacked merit. The trial court and
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`Court of Appeal in the underlying action relied on the definition of bad faith set
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`out in Gemini, supra, 95 Cal.App.4th at page 1262.2 The Court of Appeal in
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`Gemini reasoned that a finding that an action was prosecuted in bad faith did not
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`require that ― ‗[a]ny reasonable attorney would agree [that the action] is totally and
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`completely without merit.‘ ‖ (Gemini, at p. 1262, quoting In re Marriage of Reese
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`& Guy (1999) 73 Cal.App.4th 1214, 1220–1221.) Instead, a court need only find
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`―objective speciousness,‖ which it may do even if an action ―may superficially
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`2
`We have no occasion to pass on the merits of the superior court‘s and Court
`of Appeal‘s understanding of the ―bad faith‖ inquiry called for by the California
`Uniform Trade Secrets Act. (Civ. Code, § 3426.4.) Nor do we express any view
`on the description of that inquiry set out in Gemini, supra, 95 Cal.App.4th at pages
`1261–1263. The issue in this case is not how the courts should have evaluated the
`issue of bad faith for purposes of the California Uniform Trade Secrets Act, but
`instead how their actual evaluation bears on the issue of probable cause for
`purposes of this malicious prosecution action.
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`12
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`appear to have merit.‖ (Gemini, at p. 1262.) By contrast, we have made clear that
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`―[o]nly those actions that any reasonable attorney would agree are totally and
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`completely without merit may form the basis for a malicious prosecution suit.‖
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`(Zamos, supra, 32 Cal.4th at p. 970.) Because the superior court‘s finding of bad
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`faith in this case did not entail a finding that ―any reasonable attorney would
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`agree‖ that the action was ―totally and completely without merit‖ (ibid.), the
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`finding of bad faith did not invalidate the trial court‘s earlier conclusion, at the
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`summary judgment stage, that the suit had at least some arguable merit.3
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`In resisting this conclusion, Parrish and Fitzgibbons rely on Slaney v.
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`Ranger Ins. Co., supra, 115 Cal.App.4th 306 (Slaney). In Slaney, the insurer had
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`denied an insurance claim for damage to an aircraft. (Id. at p. 309.) Slaney had
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`―prepared an estimate for repair of the aircraft in support of the claim.‖ (Ibid.)
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`When the insureds sued, the insurer cross-complained, alleging that the insureds
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`and Slaney had ―presented a fraudulently excessive claim.‖ (Ibid.) Slaney
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`initially moved unsuccessfully for summary judgment but successfully renewed
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`the motion after discovery revealed that the insurer had not, as it had claimed, in
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`fact relied on Slaney‘s allegedly excessive estimate. In entering judgment, the
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`court found that the insurer‘s cross-complaint was ― ‗without any substantive basis
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`3
`Because the trial court was not applying the relevant standard for probable
`cause, we do not understand it to have found FLIR and Indigo‘s action to be
`frivolous when it concluded that FLIR and Indigo ―knew, or should have known,
`that they did not have a sufficient evidentiary basis to initiate the lawsuit [or]
`continue the lawsuit through trial.‖ We also note that much of the court‘s bad
`faith analysis was based on its assessment of witness credibility, and while such
`assessments will often determine who wins a lawsuit, they ordinarily will not
`establish that litigation was untenable from the outset. (See Wilson, supra, 28
`Cal.4th at p. 822 [―Plaintiffs and their attorneys are not required, on penalty of tort
`liability, to attempt to predict how a trier of fact will weigh the competing
`evidence . . . .‖].)
`
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`

`

`in law and/or fact.‘ ‖ (Id. at p. 313, italics omitted.) ―After a jury trial, the
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`insureds prevailed and obtained an award of compensatory damages in excess of
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`$1 million for bad faith. The jury also concluded that [the insurer‘s] denial of the
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`claim, based in part upon its assertion that the insureds and Slaney were
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`attempting to defraud it, was malicious. Punitive damages in excess of $7 million
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`were assessed.‖ (Id. at p. 309.)
`
`Slaney sued for malicious prosecution. (Slaney, supra, 115 Cal.App.4th at
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`p. 309.) The insurer filed an anti-SLAPP motion, relying on the interim adverse
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`judgment rule. (Ibid.) The trial court denied the motion, and the Court of Appeal
`
`affirmed. Based on the grant of summary judgment, the jury‘s finding that the
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`insurance claim had been denied in bad faith, and the finding of malice underlying
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`the jury‘s punitive damages award, the Court of Appeal thought it ―reasonable to
`
`infer that the jury concluded [that the insurer‘s] theory of conspiracy to defraud
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`between Slaney and the [insureds] was itself fraudulent and prosecuted in bad
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`faith.‖ (Id. at p. 321.) ―This,‖ the court continued, ―along with the ultimate grant
`
`of summary judgment in favor of respondent is sufficient to offset the first denial
`
`of the motion for summary judgment and support inferences of lack of probable
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`cause and malice.‖ (Ibid.)
`
`Regardless of whether the Court of Appeal correctly interpreted the
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`meaning of the jury‘s findings in Slaney — a question on which we need take no
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`position here — the court‘s interpretation of those findings distinguishes that case
`
`from this one. In concluding that the interim adverse judgment rule did not apply,
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`the Court of Appeal in Slaney did not rely solely on the jury‘s conclusion that the
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`denial of insurance coverage demonstrated the insurer‘s bad faith or malice, but on
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`the jury‘s supposedly implicit conclusion that the insurer‘s cross-claim of
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`conspiracy to defraud was ―itself fraudulent.‖ (Slaney, supra, 115 Cal.App.4th at
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`p. 321, italics added.) We have, as noted, made clear that the interim adverse
`
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`judgment rule does not apply when the adverse judgment in question has been
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`―shown to have been obtained by fraud or perjury.‖ (Wilson, supra, 28 Cal.4th at
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`p. 820.) The Slaney decision can be understood as an attempt, right or wrong, to
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`give force to that principle. The decision does not establish, however, that a
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`finding of bad faith under the California Uniform Trade Secrets Act, standing
`
`alone, establishes a lack of probable cause.
`
`We note, however, that if Slaney were instead understood to rest solely on
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`the jury‘s finding of bad faith in the insurance bad faith case, the decision would
`
`raise significant concerns. Our cases make clear that, as a general rule, ―the
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`existence or nonexistence of probable cause is a legal question to be resolved by
`
`the court in the malicious prosecution case; litigants are thus protected against the
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`danger that a lay jury would mistake a merely unsuccessful claim for a legally
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`untenable one.‖ (Wilson, supra, 28 Cal.4th at p. 817.)4 Reliance on a jury verdict
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`to infer a lack of probable cause creates a risk of committing a similar mistake.
`
`We made clear in Wilson that a person ―who possesses competent evidence to
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`substantiate a legally cognizable claim for relief does not act tortiously by bringing
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`the claim, even if also aware of evidence that will weigh against the claim.‖
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`(Wilson, supra, at p. 822.) We stressed that litigants ―are not required, on penalty
`
`of tort liability, to attempt to predict how a trier of fact will weigh the competing
`
`evidence, or to abandon their claim if they think it likely the evidence will
`
`ultimately weigh against them.‖ (Ibid.) And we explained that, instead, litigants
`
`
`4
`This is not to suggest that a jury may never play a role in the inquiry.
`―When there is a dispute as to the state of the defendant‘s knowledge and the
`existence of probable cause turns on resolution of that dispute, . . . the jury must
`resolve the threshold question of the defendant‘s factual knowledge or belief.‖
`(Sheldon Appel, supra, 47 Cal.3d at p. 881; cf. id. at p. 874 [jury may decide
`malice element].)
`
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`―have the right to bring a claim they think unlikely to succeed, so long as it is
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`arguably meritorious.‖ (Ibid.) Reliance on a verdict to raise doubts about
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`probable cause threatens to impinge on these principles. A defense verdict may
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`reflect the weight of the evidence adduced at trial, rather than whether the
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`evidence was sufficient to support the prosecution of a claim.
`
`C.
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`Parrish and Fitzgibbons argue that even if the trial court‘s conclusion that
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`the suit was objectively specious, standing alone, does not negate the effect of the
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`interim adverse judgment rule, the underlying findings supporting that conclusion
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`demonstrate that probable cause was lacking. In particular, they contend that the
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`trial court ―concluded that sanctions . . . were not barred under the interim adverse
`
`judgment rule due to the denial of summary judgment . . . because the expert
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`declarations submitted in support of the summary judgment opposition were
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`materially false.‖ In support of this argument, they point to the Court of Appeal‘s
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`opinion in the underlying action, which states that the expert declarations
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`submitted at the summary judgment stage suggested that ―there was a scientific
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`methodology to predict the likelihood of trade secret misuse‖ — a suggestion that
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`was dispelled at trial, when the experts testified that no such methodology exists.
`
`Parrish and Fitzgibbons‘s argument rests on