San Diego Hosp. Based Physicians v. El Centro Reg. Med. Center CA4/1

Filed 8/1/13 San Diego Hosp. Based Physicians v. El Centro Reg. Med. Center CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

SAN DIEGO HOSPITAL BASED D061740
PHYSICIANS et al.,

Plaintiffs and Respondents,
(Super. Ct. No. ECU06760)
v.

EL CENTRO REGIONAL MEDICAL
CENTER,

Defendant and Appellant.

APPEAL from an order of the Superior Court of Imperial County, Jeffrey B.

Jones, Judge. Affirmed.

Dicaro, Coppo & Popcke, Carlo Coppo, Michael R. Popcke and Shelley A. Carder

for Defendant and Appellant.

The Mathews Law Group, Charles T. Mathews, George S. Azadian, Zack I.

Domb, Jeffrey Nakao; Pine & Pine, Norman Pine and Janet Gusdorff for Plaintiffs and

Respondents.
 San Diego Hospital Based Physicians (SDHBP) and its two owners, Dr. Maria

Ramirez and Dr. Dalia Strauser, (collectively plaintiffs) sued El Centro Regional Medical

Center (the Hospital), alleging the Hospital retaliated against plaintiffs for complaining

about patient care practices and breached numerous provisions of the parties' agreement.

Plaintiffs' complaint asserted statutory and contract claims. Shortly after, the Hospital

moved to dismiss the complaint under the anti-SLAPP statute. (Code Civ. Proc.,

§ 425.16 (§ 425.16).) The court denied the motion, finding plaintiffs' claims were not

governed by this statute.

We affirm, although for different reasons. We determine plaintiffs' statutory

retaliation claims against the Hospital are subject to the anti-SLAPP statute, but plaintiffs

met their burden to show a probability of prevailing on each of the causes of action. We

conclude plaintiffs' contract claims are not subject to the anti-SLAPP statutes and in any

event plaintiffs showed a probability of prevailing on the merits of these claims.

FACTUAL AND PROCEDURAL SUMMARY

Factual Summary

We state the facts in the light most favorable to plaintiffs, the parties opposing the

anti-SLAPP motion. (See Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260,

269, fn. 3.)

The Hospital is a municipal agency owned by the City of El Centro and is

governed by a seven-person Board of Trustees (Board). The Board members are

appointed by El Centro's mayor with the consent of the city council.

2
 SDHBP is an entity that provides hospitalist personnel and services. Hospitalists

are generally internal medicine doctors who treat hospitalized patients to ensure they

receive proper care, including diagnosis and appropriate specialty referrals. SDHBP is

owned by Dr. Strauser and Dr. Ramirez, who both specialize in internal medicine and

hospital medicine. Dr. Strauser has practiced medicine for more than 20 years and Dr.

Ramirez has practiced medicine for more than 15 years.

In July 2009, the Hospital entered into a contract with SDHBP in which SDHBP

agreed to provide hospitalist services for unassigned patients (patients who do not have a

personal physician). Under the contract, SDHBP was responsible for providing the

services of nine hospitalist physicians, including Dr. Ramirez and Dr. Strauser. About

one year later, Hospital officials praised SDHBP's work and presented statistics showing

that SDHBP had reduced mortality rates and average Hospital lengths of stay. Hospital

administrator Tomas Virgen said that " 'nobody works as hard' " as Dr. Strauser and Dr.

Ramirez, and that they " 'raised the bar for patient care.' " Virgen also said that Dr.

Ramirez and Dr. Strauser "were the reason why [patient care had] improved so much [at

the Hospital]."

When their first contract expired in late June 2010, the Hospital and SDHBP

entered into a new contract for hospitalist services (Amended Agreement). The

Amended Agreement was for a two-year term with extensions by the parties' agreement.

The Amended Agreement provided that after the "Initial Term" (defined as July 1, 2010

through June 30, 2012) either party "may, in its sole discretion, terminate this Agreement

without cause by giving the other party at least ninety (90) days' prior written notice."

3
The Amended Agreement further provided that either party could terminate the

agreement for a material breach "provided such breach continues for fifteen (15) days

after receipt by the breaching party of written notice of such breach from the non-

breaching party." The Amended Agreement additionally provided that the Hospital could

terminate the contract "immediately by written notice" upon the occurrence of certain

specific events.

Less than two months after the parties entered into the Amended Agreement, in

August 2010, the Hospital hired Team Health, Inc. to manage and operate the Hospital's

emergency department. Shortly after, SDHBP became concerned about Team Health's

practices and the nature of the contract between the Hospital and Team Health, which

SDHBP believed negatively affected patient care. SDHBP doctors found that Team

Health physicians frequently admitted patients into the Hospital (or sought to compel

SDHBP physicians to do so) despite the fact that these patients were not properly

stabilized, diagnosed, or treated in the emergency room and/or that they should have been

transferred to other hospitals with available surgeons and/or necessary medical

equipment.

Shortly after, Dr. Ramirez and Dr. Strauser reported to Hospital administrators "at

the highest levels" their concerns about patient care arising from Team Health practices

and operations. The doctors identified approximately 35 specific cases of inadequate

patient care.

On November 22, 2010, SDHBP sent an email to Dr. George Hancock, the

Hospital's chief of medicine (who became medical chief of staff on January 1, 2011),

4
detailing 19 separate cases in which Team Health and Hospital practices allegedly

negatively affected patient care in a substantial manner. SDHBP did not provide any

patient-identifying information, but briefly described each situation and explained the

perceived problem with the medical treatment. SDHBP also sent the email to several

other Hospital officials, including the Board president, the Hospital's chief of staff, and

the Hospital's quality committee chair.

Shortly after, Dr. Hancock dismissed all of the complaints as being

" 'unsubstantiated,' " despite the fact that he had access to patient charts that would have

supported SDHBP's claims.

About one month later, on December 20, 2010 and December 28, 2010, Dr.

Ramirez and Dr. Strauser sent two lengthy emails complaining about Team Health's

policies and practices and asserting that these practices were hindering SDHBP's work

and detrimentally affecting patient care. Plaintiffs sent the emails to various Hospital

officials, including David Green, the Hospital's chief executive officer (CEO); Virgen,

the chief of physician relations; and Debra Driskill, the Board's quality committee chair.

At a meeting held shortly after, on January 3, 2011, Dr. Hancock reneged on a

prior agreement to appoint (or recommend for appointment) Dr. Strauser as vice-chief of

medicine. During the same January 3 meeting, Dr. Hancock said to Dr. Strauser, " 'I will

walk out of this meeting if you make another complaint regarding patient care.' "

Two days later, on January 5, the Hospital's peer review committee, known as the

Medical Executive Committee (MEC), sent written notices to Dr. Ramirez and Dr.

Strauser stating that it had "initiated an investigation regarding your communication . . .

5
to parties outside the acceptable channels . . . ." The notices were signed by Dr. Hancock

as MEC chair. The notices stated that the MEC would be investigating whether the

doctors' two December emails: (1) violate rules requiring medical staff members to work

together "in a cooperative professional, non-disruptive manner"; (2) violate

confidentiality rules; and (3) constitute "unauthorized peer review" outside of organized

medical staff procedures. The notices concluded: "We will inform you of the outcome

of this investigation and our recommendations for appropriate corrective action. You

will be given an opportunity to provide information in a manner and upon such terms as

we deem appropriate before our final action. If this action constitutes grounds for

hearing, you will be so informed at the appropriate time."

Shortly after, Dr. Hancock told Dr. Strauser and Dr. Ramirez that they should not

complain in emails because " 'the Feds would have access to those emails.' " Dr. Ramirez

and Dr. Strauser were instructed to use specific " 'Q&A forms' " to document claims of

inadequate patient care.

During the next several months, Dr. Ramirez and Dr. Strauser completed

approximately 12 Q&A forms describing specific patient care issues and they submitted

the forms to the assigned Hospital employee, Andrea Hammond. However, Hammond

never responded to these complaints. Hospital official Virgen told Dr. Ramirez and Dr.

Strauser that " 'the stack of complaints is on Andrea Hammond's desk but nothing will

ever be investigated.' "

On March 22, 2011, the Hospital's Board held its monthly public meeting. During

a closed (nonpublic) portion of this meeting, the Board voted to terminate the Amended

6
Agreement "without cause." The official meeting minutes state that the Board

unanimously "[a]pproved [a] 90 Day Notice of Termination of Agreement with

[SDHBP]."

The next day, on March 23, Hospital CEO Green told Dr. Ramirez and Dr.

Strauser that the Board had decided to terminate SDHBP's Agreement "and that the

contract had already been terminated." (Italics added.) Green said the Board had made

this decision because Dr. Ramirez and Dr. Strauser did not " 'know how to play nice in

the sandbox.' " When they asked what Green meant, he referred to their complaints

regarding inadequate patient care by the Hospital and Team Health. Dr. Ramirez and Dr.

Strauser asked whether there was anything they "could do to remedy the situation," and

Green said " 'no, the decision has already been made to terminate the contract.' " Green

also said that Dr. Ramirez and Dr. Strauser had the option "to resign or be fired."

Later that morning Hospital official Virgen told Steven Ramirez (SDHBP's chief

financial officer (CFO)) that the Amended Agreement "had already been terminated."

(Italics added.) Virgen also told Ramirez that " 'if SDHBP, Dr. Strauser, and Dr. Ramirez

did not resign, they would be fired.' " Virgen said these doctors "would have to resign in

writing if they did not want to be fired."

Fearing the risks to SDHBP and to Dr. Ramirez and Dr. Strauser, CFO Ramirez

"panicked" and immediately sent a letter addressed to Hospital CEO Green, stating

" '[b]ased on recent discussion with you and the decision of the Board . . . , we agree to

resign from our hospitalist service at [the Hospital].' " The letter contained spaces for the

signatures of Dr. Strauser and Dr. Ramirez. There is a factual issue regarding whether

7
the two doctors signed this letter before it was sent to the Hospital. In their declarations,

Dr. Ramirez and Dr. Strauser said they did not sign the letter and did not want to resign

or terminate the Amended Agreement.

Two days later, on March 25, Hospital CEO Green sent a letter to Dr. Ramirez and

Dr. Strauser, stating: "This letter follows-up on our conversations and correspondence

over this past week during which we mutually agreed to terminate the Agreement. To

confirm the foregoing, we have signed below and request that you also sign the enclosed

copy of this letter and return the same to us at your earliest convenience. . . . [¶] By

signing this letter [Hospital] hereby mutually agrees with [SDHBP] to agree to terminate

the Agreement effective as of June 30, 2011, notwithstanding the provisions thereof."

Dr. Ramirez and Dr. Strauser refused to sign this letter because they did not wish to

resign.

When Dr. Strauser asked Hospital official Virgen why the Amended Agreement

was terminated, he said " 'you turned on the light and all the cockroaches ran away

scared.' " During the next several months, Dr. Strauser and Dr. Ramirez continued

working at the Hospital until the end of June 2011. On July 1, 2011, their membership

and privileges on the Hospital's medical staff expired, and they did not reapply to

continue practicing at the Hospital.1

1 Under the Hospital bylaws, a physician with staff privileges must submit an
application for reappointment every two years.

8
 Complaint and Anti-SLAPP Motion

Several months later, plaintiffs filed their lawsuit against the Hospital and Team

Health.2 Plaintiffs alleged five causes of action against the Hospital. In the first three,

plaintiffs alleged the Hospital violated statutes prohibiting retaliation against physicians

for complaining about, or advocating for, patient care. (Health & Saf. Code, § 1278.5;

Bus. & Prof. Code, §§ 2056, 510.) In the remaining two claims, plaintiffs alleged the

Hospital's conduct constituted a breach of the Amended Agreement and a breach of the

implied covenant of good faith and fair dealing.

Shortly after, the Hospital moved to strike the complaint under the anti-SLAPP

statute. (§ 425.16.) The Hospital argued that plaintiffs' complaint arose from

constitutionally protected activity because it was based on the Board's contract

termination decision, which it said was a "quasi-legislative" act made at an "official

proceeding." (See § 425.16, subd. (e)(2).) With respect to the merits of plaintiffs'

statutory retaliation claims, the Hospital argued that plaintiffs would be unable to prove

their claims because the Hospital's decision to terminate the contract without cause was

"quasi-legislative" and thus entitled to substantial deference. The Hospital asserted that

its termination decision "involved managerial and policy issues relating to the general

management of the hospital's business" and "did not involve" a peer review determination

by the medical staff. (Italics added.) On plaintiffs' contract claims, the Hospital argued

primarily that the decision to terminate was mutual and thus no breach could be proven.

2 Team Health did not file an anti-SLAPP motion and is not a party to this appeal.
We thus omit further discussion of plaintiffs' claims against Team Health.
9
 In support of its anti-SLAPP motion, the Hospital submitted declarations of Dr.

Hancock (the Hospital's chief of medical staff), CEO Green, and Hospital official Virgen.

Dr. Hancock stated in relevant part: "I can state with certainty, that the Medical

Staff membership and privileges of both [Dr. Strauser and Dr. Ramirez] were unaffected

by the termination of the agreement between [Hospital and SDHBP]. Both retained their

membership and privileges and remained able to admit and care for patients at [the

Hospital]." But Dr. Hancock also claimed that various actions taken by Dr. Ramirez and

Dr. Strauser violated applicable rules and standards. He also discussed at length the

reasons that the Board terminated the Amended Agreement, including that Hospital

resources were improperly diverted to the need to "educate [the two physicians]

regarding the real and potential harm they were causing" by sending the detailed patient-

care complaint emails, and that the emails reflected only plaintiffs' attempt to "minimize

their own obligations and duties" and to "limit their responsibilities."

In his declaration, CEO Green confirmed that the Board "voted to terminate the

[Amended Agreement] without cause" and that this decision "had no effect on the

membership and [medical staff] privileges enjoyed by" Dr. Ramirez and Dr. Strauser.

(Italics added.) Green explained that the termination decision was "undertaken . . . to

improve the cost-effective and smooth running of the organization" and that the decision

"involved managerial and policy issues relating to the general management of the

hospital's business." Green said the termination was a "business decision . . . which we

believed would be in the best interests of [the Hospital] and its patients." However,

Green also identified numerous "deficiencies" in the services provided by Dr. Ramirez

10
and Dr. Strauser and stated that "SDHBP's failure to fulfill its obligations under the

Amended Agreement impeded [Hospital's] obligation to provide high quality patient

care." Green also claimed that Dr. Ramirez "and/or" Dr. Strauser orally "confirmed their

voluntary agreement to mutually terminate the Amended Agreement."

In his declaration, Hospital administrator Virgen stated that Dr. Ramirez and Dr.

Strauser were constantly "disruptive" and that between 2009 and 2011, he was required to

devote "an increasing percentage of [his] work time" in "dealing with hospitalist issues"

that were "burdensome and drained resources from the hospital . . . ." Virgen also stated

that the Board terminated the Amended Agreement because the Hospital made the

"managerial" decision that SDHBP's services were "impeding the efficient and smooth

management" of the hospital. Virgen also repeated statements by Dr. Hancock and CEO

Green that the termination of the Amended Agreement "had no effect on the individual

physicians providing care and treatment pursuant to the Amended Agreement, including

the Plaintiff physicians. Each physician remained on the Medical Staff, with their

established privileges."

In opposition to the Hospital's anti-SLAPP motion, plaintiffs argued their claims

did not arise from the Hospital's constitutionally protected speech or conduct, and instead

concerned only the improper termination of the Amended Agreement and the Hospital's

retaliatory actions in response to plaintiffs' complaints about patient care. Plaintiffs

submitted their lengthy supporting declarations, in which they disputed each of the

Hospital's allegations that they breached the Amended Agreement and/or that they were

unnecessarily disruptive of Hospital services. In this regard, they explained in detail the

11
distinction between the duties of an emergency room doctor and a hospitalist, and

claimed that Team Health's emergency room services were substantially deficient and

detrimentally affected patient care and their own ability to perform under the Amended

Agreement. They asserted that in their December 20 and 28 emails, they "demanded that

[the Hospital] take immediate action to stop the inadequate patient care delivered by

Team Health" and identified the specific nature of their complaints regarding patient care.

Dr. Ramirez and Dr. Strauser also stated that they distributed their December 2010

emails only to appropriate Hospital personnel and did not disclose any patient identifying

information that would breach privacy laws. They further discussed the various actions

taken against them for asserting their complaints, including the implementation of

policies prohibiting the emergency room doctors from writing "holding orders" and the

policy pertaining to the pronouncement of death for do-not-resuscitate patients. They

stated that they "refused to resign . . . to expose the life-threatening care that [was]

resulting in needless deaths and suffering." They denied signing the March 25 letter sent

by SDHBP's CFO, and stated that they "did not want to resign and wanted to help the

patients at [the Hospital] receive the adequate care they deserved."

In their reply papers, the Hospital claimed for the first time that plaintiffs' claims

were barred by the administrative and judicial exhaustion doctrines. The Hospital also

submitted Green's supplemental declaration, stating in relevant part: "The Board . . . was

made aware corrective action had been initiated [by the Hospital's peer review board]

against Plaintiffs and if a termination 'for cause' was sought, rather than a termination

'without cause' under the Agreement, the [H]ospital would face certain costs as well as

12
the potential for litigation. Facing such potential litigation, it was the recommendation of

the [Hospital] administration that seeking a termination of the Agreement, without cause,

would be the most efficient and reasonable option. The Board . . . voted to follow this

recommendation after deliberation of the issue on March 22, 2011."

Court's Order

After a hearing, the court denied Hospital's anti-SLAPP motion, concluding that

the Hospital did not meet its burden to show plaintiffs' claims arose out of

constitutionally protected activity under section 425.16. The court found the gravamen of

the complaint did not arise from the peer review process or any other constitutionally

protected activity, and instead arose from a policy or business decision by the Board to

terminate the contract. The court thus did not reach the issue whether plaintiffs met their

burden to show a probability of prevailing on their claims.

DISCUSSION

I. Generally Applicable Legal Principles

Section 425.16 (the anti-SLAPP statute) states: "A cause of action against a

person arising from any act of that person in furtherance of the person's right of petition

or free speech under the United States Constitution or the California Constitution in

connection with a public issue shall be subject to a special motion to strike, unless the

court determines that the plaintiff has established that there is a probability that the

plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1).) The Legislature has

mandated that courts construe this statute "broadly" in favor of the moving party.

(§ 425.16, subd. (a).)

13
 The analysis of an anti-SLAPP motion involves two steps.

First, the defendant has the burden to show the defendant's allegedly wrongful

conduct was "in furtherance of " its free speech or petition rights and that the cause of

action arose from this protected conduct. (§ 425.16, subd. (b)(1), italics added.) The

anti-SLAPP statute identifies four categories of actions that are "in furtherance of" a

defendant's free speech or petition rights. (§ 425.16, subd. (e); see City of Cotati v.

Cashman (2002) 29 Cal.4th 69, 78.) In the proceedings below, the Hospital relied solely

on the second statutory category to show its alleged wrongful acts were in furtherance of

its constitutional rights: "any written or oral statement or writing made in connection

with an issue under consideration or review by a legislative, executive, or judicial body,

or any other official proceeding authorized by law." (§ 425.16, subd. (e)(2).)

In determining whether a claim arises from the protected activity, a court must

"disregard the labeling of the claim . . . and instead 'examine the principal thrust or

gravamen of a plaintiff's cause of action to determine whether the anti-SLAPP statute

applies' and whether the trial court correctly ruled on the anti-SLAPP motion. [Citation.]

We assess the principal thrust by identifying '[t]he allegedly wrongful and injury-

producing conduct . . . that provides the foundation for the claim.' [Citation.]" (Hylton v.

Frank E. Rogozienski, Inc. (2009) 177 Cal.App.4th 1264, 1271-1272, italics added; see

also Tuszynska v. Cunningham (2011) 199 Cal.App.4th 257, 269-270.) "The anti-SLAPP

statute's definitional focus is [on] the defendant's activity that gives rise to his or her

asserted liability—and whether that activity constitutes protected speech or petitioning."

(Navellier v. Sletten (2002) 29 Cal.4th 82, 92.)

14
 If the court finds the defendant met its burden to show the cause of action arose

from protected activity, it then must proceed to the second step of the analysis: whether

the plaintiff has established a probability of prevailing on the claim. In this step, the

burden shifts to the plaintiff to " ' "demonstrate that the complaint is both legally

sufficient and supported by a sufficient prima facie showing of facts to sustain a

favorable judgment if the evidence submitted by the plaintiff is credited." ' " (Oasis West

Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820 (Oasis West); ComputerXpress, Inc.

v. Jackson (2001) 93 Cal.App.4th 993, 1010 (ComputerXpress.) " 'Only a cause of action

that satisfies both prongs of the anti-SLAPP statute—i.e., that arises from protected

speech or petitioning and lacks even minimal merit—is a SLAPP, subject to being

stricken under the statute.' " (Oasis West, supra, 51 Cal.4th at p. 820.)

We review a trial court's anti-SLAPP order de novo. "We consider 'the pleadings,

and supporting and opposing affidavits . . . upon which the liability or defense is based.'

(§ 425.16, subd. (b)(2).) However, we neither 'weigh credibility [nor] compare the

weight of the evidence. Rather, [we] accept as true the evidence favorable to the plaintiff

[citation] and evaluate the defendant's evidence only to determine if it has defeated that

submitted by the plaintiff as a matter of law.' [Citation.]" (Soukup, supra, 39 Cal.4th at

p. 269, fn. 3.) We are not bound by the court's findings and conduct an independent

review of the entire record. (Ibid.) "If the trial court's decision is correct on any theory

applicable to the case, we affirm the order regardless of the correctness of the grounds on

which the lower court reached its conclusion." (Robles v. Chalilpoyil (2010) 181

Cal.App.4th 566, 573.)

15
 Under these principles, we examine the Hospital's contentions that the court erred

in refusing to strike: (1) plaintiffs' statutory retaliation claims; (2) plaintiffs' contract

claim; and (3) plaintiffs' claim for breach of the implied covenant of good faith and fair

dealing.

II. Retaliation Claims

A. First Step: Protected Activity

In their complaint, plaintiffs alleged the Hospital engaged in retaliatory actions in

violation of three statutes: Health and Safety Code section 1278.5, Business and

Professions Code section 510, and Business and Professions Code section 2056.

Health and Safety Code section 1278.5 states: "No health facility shall . . .

retaliate, in any manner, against any . . . member of the medical staff . . . because that

person has . . . [¶] . . . [p]resented a grievance, complaint, or report to the facility . . . or

the medical staff of the facility, or to any other governmental entity." Business and

Professions Code sections 2056 and 510 prohibit parties from terminating a contractual

relationship with a physician in retaliation for the physician's advocating for medically

appropriate health care on behalf of a patient.

In their causes of action under these statutes, plaintiffs alleged the Hospital

engaged in several distinct retaliatory actions after plaintiffs complained about the

Hospital's substandard health care practices. These retaliatory actions included: (1) the

Hospital's implementing a policy prohibiting emergency room doctors from writing

holding orders on patients being admitted to the hospital, allegedly making it

"impossible" for SDHBP to properly perform its work and fulfill the requirements of the

16
Amended Agreement; (2) the Hospital's implementing a policy regarding "do-not-

resuscitate" patients for the "sole purpose of making the SDHBP hospitalists' job

unbearable"; (3) the Hospital's peer review committee's January 5, 2011 letter to Dr.

Ramirez and Dr. Strauser, notifying them of the commencement of a peer review

investigation based on their alleged improper communications concerning patient care;

(4) the Board's March 22 "no-cause" termination of the Amended Agreement; (5)

statements by Hospital officials that based on the Board vote, Dr. Ramirez and Dr.

Strauser had " 'already' " been terminated but also had the option to "resign or be fired";

and (6) CEO Hancock's withdrawing his offer of a vice-chief position to Dr. Strauser.

The third allegation above—that the Hospital unlawfully retaliated against

plaintiffs by initiating a peer review investigation—clearly arises from protected activity.

Under section 425.16, subdivision (e)(2), the anti-SLAPP statute applies to a cause of

action arising from "any written or oral statement or writing made in connection with an

issue under consideration or review by . . . [an] official proceeding authorized by law."

The California Supreme Court has held a hospital peer review proceeding qualifies as an

" 'official proceeding authorized by law' " under this subdivision. (Kibler v. Northern

Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192, 199 (Kibler).) In their

complaint, plaintiffs alleged that the Hospital's peer review committee (the MEC) sent the

January 5, 2011 letter notifying plaintiffs of the initiation of a peer review investigation

in retaliation for their expressing concerns about substandard patient care at the Hospital.

This allegation of wrongful conduct is based on the Hospital's "writing made in

connection with an issue under consideration or review" by an official proceeding (the

17
peer review proceeding) and thus arises from protected activities within the meaning of

the anti-SLAPP statute. (§ 425.16, subd. (e)(2).)

Plaintiffs argue that even if this allegation arose from protected activity, "it is only

one of five alleged separate retaliatory acts, and does not transform the gravamen or

principal thrust of the statutory retaliation claims into one arising from peer review."

(Italics omitted.)

We agree that several of the Hospital's other alleged retaliatory actions did not

arise from the Hospital's constitutionally protected activity. However, where, as here, a

cause of action is based on several distinct factual circumstances, a defendant meets its

burden to show a claim is subject to the anti-SLAPP statute if one of these factual

circumstances supports the application of the statute, unless the protected conduct is

" ' "merely incidental" ' " to other alleged unprotected conduct. (Haight Ashbury Free

Clinics, Inc. v. Happening House Ventures (2010) 184 Cal.App.4th 1539, 1551;

Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133

Cal.App.4th 658, 672; Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th

90, 103 (Mann).) If there are multiple factual grounds underlying a cause of action, the

court must examine whether the claim is at least partially independently based on

protected activity that is not incidental. (Haight Ashbury, supra, 184 Cal.App.4th at pp.

1550-1553; Salma v. Capon (2008) 161 Cal.App.4th 1275, 1287 ["mixed cause of action

is subject to section 425.16 if at least one of the underlying acts is protected conduct,

unless the allegations of protected conduct are merely incidental to the unprotected

activity"]; Mann, supra, 120 Cal.App.4th at p. 103.) "[W]here the defendant shows that

18
the gravamen of a cause of action is based on nonincidental protected activity as well as

nonprotected activity, it has satisfied the first prong of the SLAPP analysis." (Haight

Ashbury, supra, at p. 1551, fn. 7.)

The protected activity—the commencement of the peer review proceedings and

the communications regarding these proceedings—is not merely an incidental component

of the retaliation claims. By notifying plaintiffs of the peer review investigation, the

Hospital allegedly sought to silence plaintiffs and to pressure plaintiffs to resign and thus

avoid a legal retaliation claim asserted against the Hospital. This is a significant

predicate allegation underlying plaintiffs' retaliation claims, and cannot be considered an

incidental allegation. Accordingly, the Hospital met its burden to show the retaliation

claims were governed by the anti-SLAPP statute.

B. Second Step: Probability of Prevailing

Because we have found the Hospital met its burden to show the retaliation claims

are governed by the anti-SLAPP statutes, we proceed to the second step of the analysis.

Although the trial court did not reach this step, we may consider this issue because our

review is de novo.

In this step, the burden shifts to the plaintiff to show a probability of prevailing on

its claims. In meeting this burden, the plaintiff cannot rely solely on the allegations in the

complaint and must present evidence that would be admissible at trial.

(Stewart v. Rolling Stone LLC (2010) 181 Cal.App.4th 664, 679; ComputerXpress, supra,

93 Cal.App.4th at p. 1010.) However, the plaintiff's burden to show a "probability of

prevailing is not high: We do not weigh credibility, nor do we evaluate the weight of the

19
evidence. Instead, we accept as true all evidence favorable to the plaintiff and assess the

defendant's evidence only to determine if it defeats the plaintiff's submission as a matter

of law." (Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 151 Cal.App.4th 688,

699-700.)

A plaintiff meets its burden to show a probability of prevailing on a cause of

action if any part of a claim has merit. (Oasis West, supra, 51 Cal.4th at p. 820; Mann,

supra, 120 Cal.App.4th at pp. 105-106.) "If the plaintiff 'can show a probability of

prevailing on any part of its claim, the cause of action is not meritless' and will not be

stricken; 'once a plaintiff shows a probability of prevailing on any part of its claim, the

plaintiff has established that its cause of action has some merit and the entire cause of

action stands.' " (Oasis West, supra, 51 Cal.4th at p. 820, quoting Mann, supra, 120

Cal.App.4th at p. 106; Burrill v. Nair (2013) 217 Cal.App.4th 357, 379-382.)3

The Hospital contends plaintiffs did not satisfy their burden to show a probability

of prevailing on their statutory retaliation claims because: (1) plaintiffs failed to exhaust

their administrative remedies; (2) plaintiffs failed to sufficiently rebut the Hospital's

proffered legitimate reasons for its actions; (3) there is no private right of action on

plaintiffs' Business and Professions Code section 510 and 2056 claims; and (4) plaintiffs'

3 Although we are aware of authority suggesting a SLAPP motion may be granted if
a portion of a cause of action has no merit (see City of Colton v. Singletary (2012) 206
Cal.App.4th 751, 772-775), we choose to continue to follow our court's rule in Mann as
recently endorsed by the California Supreme Court (Oasis West, supra, 120 Cal.App.4th
at p. 820) and other Courts of Appeal (see Burrill v. Nair, supra, 217 Cal.App.4th at pp.
379-382).
20
claims are barred by governmental immunities. For the reasons explained below, we find

these arguments to be without merit at this stage of the proceedings.

1. Administrative Exhaustion

" 'It is the general and well established jurisdictional rule that a plaintiff who seeks

judicial relief against an organization of which he [or she] is a member must first invoke

and exhaust the remedies provided by that organization applicable to his grievance.' "

(Westlake Community Hosp. v. Superior Court (1976) 17 Cal.3d 465, 474-475

(Westlake); see also Campbell v. Regents of University of California (2005) 35 Cal.4th

311, 321-322; Kaiser Foundation Hospitals v. Superior Court (2005) 128 Cal.App.4th

85, 99-100.) Under this doctrine, " ' "a party must go through the entire proceeding to a

'final decision on the merits of the entire controversy' before resorting to the courts for

relief." ' " (Eight Unnamed Physicians v. Medical Executive Committee (2007) 150

Cal.App.4th 503, 511 (Eight Unnamed Physicians).)

The administrative exhaustion doctrine applies in medical disciplinary proceedings

by a hospital's peer review committee or governing board. (Westlake, supra, 17 Cal.3d at

p. 469; Eight Unnamed Physicians, supra, 150 Cal.App.4th at p. 511.) " '[T]he

Legislature has granted to individual hospitals, acting on the recommendations of their

peer review committees, the primary responsibility for monitoring the professional

conduct of physicians licensed in California.' " (Kibler, supra, 39 Cal.4th at p. 201; Eight

Unnamed Physicians, supra, 150 Cal.App.4th at pp. 510-511; see also El-Attar v.

Hollywood Presbyterian Medical Center (2013) 56 Cal.4th 976, 988-989.)

21
 However, the existence of an administrative remedy does not bar an action if the

remedy was unavailable to the plaintiff. (See SJCBC LLC v. Horwedel (2011) 201

Cal.App.4th 339, 346.) In this case, the Hospital failed to identify an available

administrative remedy for plaintiffs' claims that the Hospital retaliated against them by

initiating peer review proceedings and terminating the Amended Agreement. The

Hospital argues that plaintiffs had the right to challenge the adverse determinations

through an internal quasi-judicial process. In support, they point to the Hospital bylaws

providing a doctor with the right to a hearing to challenge an adverse peer review

determination related to "the practitioner's staff membership, staff status, or clinical

privileges." (Italics added.) The bylaws provide that this internal appeal process must be

exhausted before a lawsuit may be filed.

However, there is no showing that this internal remedy was available to plaintiffs.

The evidence showed the Hospital did not make any adverse ruling with respect to the

doctors' "staff membership, staff status, or clinical privileges" for which they were

entitled to invoke their rights to a quasi-judicial hearing. On January 5, 2011, the

Hospital's peer review committee notified Dr. Ramirez and Dr. Strauser that it was

initiating an investigation regarding their December 2010 emails and stated that the

doctors would be informed of the outcome of the investigation and would be given the

opportunity to provide information at the appropriate time. According to plaintiffs'

evidence, the Hospital then elected to terminate this peer review investigation and to

instead seek to force the doctors' resignations by terminating the SDHBP contract

through the Board's no-cause contract termination. At that point, there were no

22
administrative remedies to exhaust because the Hospital decided not to proceed with the

peer review proceeding.

The Hospital argues that plaintiffs should have exhausted their administrative

remedies because "[l]aymen are simply 'ill-equipped' to assess the judgment of qualified

physicians on matters requiring study and extensive training" and thus "it is especially

important for issues regarding quality of care to be addressed within the bounds of peer

review committees." We agree with these general principles, but they are inapplicable

here. Plaintiffs presented evidence that the Hospital made an explicit decision to

withdraw the issue of plaintiffs' alleged rule violations from its established peer review

process and instead to treat the issue as a Hospital management concern. Consistent with

this evidence, in its anti-SLAPP moving papers, the Hospital specifically stated that its

decision to terminate the contract was not related to a peer review determination

concerning the plaintiff doctors' fitness to practice medicine at the Hospital and instead it

was a "quasi-legislative" managerial decision motivated in part by the Board's desire to

avoid the cost of litigation that could arise from a "for-cause" decision or from the peer

review process. On this record, we find unpersuasive the Hospital's argument that

plaintiffs are challenging a "peer review" determination that should have been resolved

first through the internal peer-review administrative process.

In a similar contention, the Hospital asserts that by failing to exhaust their

administrative remedies and failing to file a writ of mandate challenging the

administrative decision, plaintiffs are attempting to make an "end-run" around the

Hospital's established peer review process. However, it was the Hospital and not the

23
plaintiffs that made the decision to avoid the peer review process. The Hospital cannot

have it both ways. If the Hospital wanted to submit the issue of plaintiffs' alleged rule

violations to its own peer review process and seek to terminate or limit plaintiffs' medical

staff privileges, it was required to respect those processes and allow those processes to

operate according to the established rules. However, by allegedly seeking to avoid that

administrative process for the alleged purpose of avoiding an eventual lawsuit, it cannot

now complain that the plaintiffs were at fault for not exhausting administrative remedies.

In its reply brief, the Hospital suggests plaintiffs could have challenged the

contract termination through an internal administrative process, even if the termination

was unrelated to a peer review matter. The argument is waived because it was raised for

the first time in the Hospital's reply brief. Further, there are factual issues regarding the

availability and applicability of such remedies to challenge the Board's management

decision and factual issues regarding whether plaintiffs were properly notified of the

existence of such administrative appeal procedures at the time of the contract termination.

Because the administrative exhaustion doctrine is an affirmative defense, the Hospital

had the burden to present this evidence in the anti-SLAPP proceedings below.

(Peregrine Funding, Inc. v. Shepard Mullin Richter & Hampton LLP, supra, 133

Cal.App.4th at p. 676; accord, Premier Medical Management Systems, Inc. v. California

24
Ins. Guarantee Assn. (2006) 136 Cal.App.4th 464, 477; Seltzer v. Barnes (2010) 182

Cal.App.4th 953, 969.)4

In support of its administrative exhaustion arguments, the Hospital relies primarily

on Nesson v. Northern Inyo County Local Hospital Dist. (2012) 204 Cal.App.4th 65

(Nesson). In Nesson, a hospital peer review committee voted to summarily suspend a

radiologist's medical staff privileges, citing " 'recent incidents of substandard and

dangerous patient care' and 'abrupt change in your behavior characterized by volatile and

erratic actions.' " (Id. at pp. 73-74.) Based on the peer review's summary suspension

decision, the hospital's governing board then voted to terminate the contract under which

the radiologist had agreed to provide radiology services (including personnel) at the

hospital. (Id. at p. 74.) The evidence showed the radiologist agreement was conditioned

on the radiologist maintaining his medical staff privileges. (Id. at p. 72.) Under the

hospital bylaws, the radiologist had a right to an administrative hearing to challenge the

peer review committee's summary suspension of his staff privileges, but neither he nor

his attorney timely requested this hearing. (Id. at pp. 74-75.)

The radiologist then sued the hospital, asserting various claims including that the

hospital had breached the radiology agreement by not giving him sufficient notice of the

contract termination and retaliated against him for his complaints about patient safety.

4 Some courts have suggested the plaintiff has the burden to counter an affirmative
defense in the anti-SLAPP context. (See No Doubt v. Activision Publishing, Inc. (2011)
192 Cal.App.4th 1018, 1029; Birkner v. Lam (2007) 156 Cal.App.4th 275, 285.)
However, under the circumstances here, we adhere to the prevailing view that it is the
defendant's burden. (See Peregrine Funding, supra, 133 Cal.App.4th at p. 676.)
25
(Nesson, supra, 204 Cal.App.4th at p. 75.) After finding the claims were subject to the

anti-SLAPP statute, the Nesson court addressed the issue whether the radiologist could

show a probability of prevailing on his claims despite that he did not exhaust his

administrative remedies. (Nesson, supra, 204 Cal.App.4th at pp. 84-88.) The radiologist

argued the exhaustion doctrine was inapplicable because the administrative process was

" 'only available to challenge the suspension of [his] medical privileges,' " and not the

termination of his radiology agreement by the hospital board. (Id. at p. 85.)

The Nesson court accepted the argument that there were no specific administrative

remedies to challenge the hospital board's contract termination decision, but rejected the

contention that the radiologist lacked any administrative remedy under the circumstances.

(Nesson, supra, 204 Cal.App.4th at pp. 85-87.) The court reasoned that the hospital

board had terminated the radiology agreement because the radiologist had lost his

medical privileges and thus the termination of the radiology agreement and the loss of the

plaintiff's medical privileges were "inextricably intertwined." (Id. at p. 85.) The court

explained: "Had [the radiologist] pursued and completed his internal administrative

remedies, leading to a lifting of the summary suspension, he could have sought

reinstatement of the [radiology agreement]. This would have cured [the radiologist's]

material breach of the Agreement when he was suspended." (Ibid.) In other words,

although there was no specific administrative remedy to challenge the hospital board's

contract termination decision, the administrative exhaustion doctrine barred the action

because if the radiologist had successfully exercised his administrative right to challenge

26
the peer review committee's determination, the board's contract termination decision

would have been overturned. (Id. at pp. 85-86.)

This case is materially different. Other than initiating the investigation, the peer

review committee did not take any adverse actions, or reach any conclusions, about the

medical staff privileges of Dr. Ramirez or Dr. Strauser. Thus, there were no final peer

review actions for plaintiffs to challenge. Additionally, the Board's decision in this case

was wholly unrelated to any peer review proceedings or determinations about the doctors'

privileges. As the Hospital's chief of medical staff stated: "I can state with certainty, that

the Medical Staff membership and privileges of both [Dr. Strauser and Dr. Ramirez] were

unaffected by the termination of the agreement between [Hospital and SDHBP]. Both

retained their membership and privileges and remained able to admit and care for patients

at [the Hospital]." This case is thus unlike Nesson where the Board's termination of the

agreement and the suspension of staff privileges were "inextricably intertwined."

(Nesson, supra, 204 Cal.App.4th at p. 85.)

The Hospital also contends that plaintiffs should have sought renewal of their

membership and privileges and filed an action to compel the Hospital to renew those

privileges. In support, it cites the general rule that once appointed to a hospital medical

staff, a physician "may not be denied reappointment to the medical staff absent a hearing

and other procedural prerequisites consistent with minimal due process protections."

(Anton v. San Antonio Community Hospital (1977) 19 Cal.3d 802, 824.) This rule is

inapplicable here. In their lawsuit, the plaintiff physicians were not challenging the

Hospital's termination of their staff privileges or its refusal to renew the privileges.

27
Instead, plaintiffs were challenging the Hospital's termination of the Amended

Agreement without cause and the Hospital's conduct improperly seeking to pressure them

to resign for retaliatory purposes.

We also find unavailing the Hospital's argument that "[p]laintiffs chose to abandon

available administrative and judicial remedies by allowing their privileges to lapse and

walk away from the hospital and the Contract in or about July 2011." Although a

factfinder may view plaintiffs' actions as an abandonment of their remedies, a factfinder

could also conclude that plaintiffs did not voluntarily terminate their relationship with the

Hospital and instead they were improperly coerced to leave the hospital by the Hospital's

actions allegedly making their work conditions intolerable and by the Board's termination

vote and the statements of the various Hospital officials pressuring them to resign.

The Hospital briefly mentions that plaintiffs could have pursued a writ of mandate

under Code of Civil Procedure section 1085 to compel the Hospital to take

" 'nondiscretionary action to comply with a contractual obligation.' " However, this code

section provides a remedy when the plaintiff is seeking to compel a public defendant to

exercise a ministerial, nondiscretionary task. On the record before us it is not clear that

28
the Hospital's obligations with respect to the Amended Agreement were ministerial and

nondiscretionary.5

We conclude the administrative exhaustion defense does not bar this action at this

stage of the proceedings.

2. Retaliatory Motive

The Hospital also contends plaintiffs did not meet their burden to show a

probability of prevailing on their retaliation claims because they presented insufficient

evidence to show the Hospital acted with a retaliatory motive, a necessary element of the

statutory claims. (See Health & Saf. Code, § 1278.5; Bus. & Prof. Code, §§ 510, 2056.)

In asserting this argument, the Hospital concedes that plaintiffs' evidence establishes a

prima facie case of retaliation under these statutes, including that plaintiffs reported

inadequate patient care to Hospital officials, and the alleged retaliatory actions occurred

shortly after those complaints. (See Health & Saf. Code, § 1278.5, subd. (d)(1)

[rebuttable presumption of retaliatory conduct if the adverse actions occur within 120

days after physician files a complaint].)

5 At oral argument, the Hospital's counsel noted the judicial exhaustion defense as
an alternative reason that plaintiffs cannot prevail on their claims. However, by failing to
assert and develop this argument in its appellate briefs, the Hospital waived the argument.
(See T.P. v. T.W. (2011) 191 Cal.App.4th 1428, 1440, fn. 12.). A case pending before the
California Supreme Court concerns the issue whether a physician must exhaust judicial
remedies before pursuing whistleblower retaliation action under Health and Safety Code
section 1278.5. (See Fahlen v. Sutter Central Valley Hospitals (2012) 208 Cal.App.4th
557, review granted Nov. 14, 2012, S205568.) Because the Hospital has not raised
contentions relating to the judicial exhaustion defense, we need not reach this issue.
29
 The Hospital nonetheless argues that this evidence did not satisfy plaintiffs' anti-

SLAPP burden to show a retaliatory motive because the Hospital presented evidence

showing "multiple legitimate, nondiscriminatory reason[s]" for initiating the peer review

investigation and for terminating the Amended Agreement. The Hospital says these

reasons include the fact that SDHBP was "impeding the efficient and smooth

management of the Hospital," and that SDHBP failed to fulfill its contract obligation to

provide high quality patient care. The Hospital further states it "made a rational decision

to seek an 'amicable' resolution with Plaintiffs, short of continuing down the path of

corrective action. Plaintiffs agreed and abandoned their administrative and judicial

remedies which would have been afforded had they continued with the corrective action

and tried to sustain the Contract."

A factfinder could be persuaded by the Hospital's arguments that its conduct was

motivated solely by proper objectives and that plaintiffs agreed voluntarily to resign.

However, a trier of fact could also decline to credit the Hospital's proffered justifications

and find that the Hospital improperly coerced the resignations. Plaintiffs presented

evidence that the alleged retaliatory acts occurred very shortly after they asserted their

complaints about patient care and they also presented evidence of specific statements

made by Hospital officials reflecting a retaliatory intent. Whether plaintiffs will

ultimately prove their factual claims is not the question before us. The only issue is

whether plaintiffs satisfied their minimal anti-SLAPP burden to present evidence

supporting the retaliatory motive element of their retaliation claims. On the record before

us, plaintiffs met this burden.

30
 3. Private Right of Action on Plaintiffs' Business and Profession Code Claims

The Hospital also contends plaintiffs did not meet their burden to show a

probability of prevailing on their Business and Professions Code sections 510 and 2056

claims because there is no private right of action under these statutes. In support of this

assertion, the Hospital cites only to footnote 11 in Khajavi v. Feather River Anesthesia

Medical Group (2000) 84 Cal.App.4th 32 at page 52. In this footnote, the Khajavi court

observed that "we have no need to consider, and do not address" whether Business and

Professions Code section 2056 "creates a separate statutory claim for wrongful

termination . . . ." (Ibid.)

The Khajavi court's statement that it has no need to consider this issue does not

support the Hospital's argument that there is no private right of action under Business and

Profession Code sections 2056 and 510. By failing to cite relevant authority supporting

its argument or to explain or develop its argument, the Hospital has waived the argument

for purposes of this appeal. (See Sabey v. City of Pomona (2013) 215 Cal.App.4th 489,

499.)

4. Governmental Immunities

The Hospital contends governmental immunities bar plaintiffs' retaliation claims

as a matter of law. In support of this argument, the Hospital cites Government Code

sections 821.6, 815.2, and 820.2. None of these statutes preclude plaintiffs' retaliation

claims at this stage of the litigation.

Government Code sections 821.6 and 820.2 bar actions against individual public

employees; plaintiffs sued only the Hospital and not any individuals. Additionally, under

31
Government Code section 815.2, subdivision (b), the immunity provision applies "Except

as otherwise provided by statute . . . ." Because plaintiffs' retaliation claims are based on

specific statutes prohibiting retaliation (Health & Saf. Code, § 1278.5; Bus. & Prof.

Code, §§ 2056, 510), plaintiffs' claims fall within the "[e]xcept as otherwise provided by

statute" clause.

III. Breach of Contract Claim

We next address the Hospital's contention the court erred in rejecting its argument

that plaintiffs' breach of contract claim arises from protected activity under section

425.16, subdivision (e)(2).

In their complaint, plaintiffs allege the Hospital breached the Amended Agreement

by: (1) implementing a policy prohibiting SDHBP doctors from providing telephone

orders to Hospital nurses regarding new admissions; (2) refusing to retain services and

personnel to transfer patients from the emergency room to other hospitals with

appropriate surgical care and/or medical equipment; and (3) terminating the contract

without cause and without notice.

The first two allegations do not involve protected activity under section 425.16,

subdivision (e)(2) because there is no showing the implementation of these policies

occurred in connection with a "legislative, executive, or judicial body, or any other

official proceeding authorized by law." The alleged improper conduct occurred before

any peer review process was initiated, and constituted business decisions by the Hospital

unrelated to any official proceeding. These allegations thus do not trigger anti-SLAPP

protection.

32
 The third allegation challenges the Board's termination of the contract during a

closed session of a public Board meeting. Relying on Kibler, supra, 39 Cal.4th 192, the

Hospital argues the contract claim based on this conduct arose from an "official

proceeding." The Hospital maintains that the contract termination was related to the

Hospital's decision as to how best to deliver patient care and thus broadly concerned a

"peer review" matter under Kibler, supra, 29 Cal.4th 192.

Even assuming we agree the Board meeting was an "official proceeding

authorized by law" under section 425.16, subdivision (e)(2) (either as the functional

equivalent of a "peer review" proceeding or as an "official" meeting of a governmental

agency), section 425.16 also requires a showing that the cause of action arose from a

statement or writing "made in connection with an issue under consideration or review" by

the "official" body. (Young v. Tri-City Healthcare Dist. (2012) 210 Cal.App.4th 35, 58

(Young); Graffiti Protective Coatings, Inc. v. City of Pico Rivera (2010) 181 Cal.App.4th

1207, 1218.) A hospital's action taken at an official proceeding does "not necessarily

amount to its own exercise of free speech or petition rights." (Young, supra, 210

Cal.App.4th at p. 57; see San Ramon Valley Fire Protection Dist. v. Contra Costa County

Employees' Retirement Assn. (2004) 125 Cal.App.4th 343, 354 (San Ramon).) Instead,

there must be a showing that the challenged action itself implicated the defendant's free

speech or petition rights. (Young, supra, 210 Cal.App.4th at pp. 56, 58; Graffiti

Protective Coatings, supra, at pp. 1218-1225; San Ramon, supra, 125 Cal.App.4th at pp.

353-357.)

33
 In this case, there is nothing about the contract termination that implicated the

Hospital's free speech or petition rights. The breach of contract claim arose from the

contract termination decision and not on any communicative conduct pertaining to that

decision. As such, it is not protected SLAPP activity.

As explained in San Ramon, " '[t]he [anti-SLAPP] statute's definitional focus

is . . . [whether] the defendant's activity giving rise to his or her asserted

liability . . . constitutes protected speech or petitioning. [Citation.]' [Citation.] . . . Thus,

the fact that a complaint alleges that a public entity's action was taken as a result of a

majority vote of its constituent members does not mean that the litigation challenging that

action arose from protected activity, where the measure itself is not an exercise of free

speech or petition. Acts of governance mandated by law, without more, are not exercises

of free speech or petition. '[T]he defendant's act underlying the plaintiff's cause of action

must itself have been an act in furtherance of the right of petition or free speech.

[Citation.]' [Citation.]" (San Ramon, supra, 125 Cal.App.4th at p. 354.)

Even if the Hospital made the decision to terminate the Amended Agreement at an

"official proceeding," the record does not support that the substance of that decision

constituted the exercise of the Board's right of speech or petition. The court thus did not

err in concluding the breach of contract claim was not governed by the anti-SLAPP

statute.

In any event, even if we were to find the breach of contract claim arose from

protected activity, the court's ruling denying the Hospital's anti-SLAPP motion on this

claim was proper on the second prong of the statutory test. Plaintiffs easily satisfied their

34
burden to demonstrate a probability of prevailing on its contract claim. Plaintiffs

submitted evidence showing the existence of a contract, SDHBP's performance of the

agreement, and the Hospital's breach of several contractual provisions.

The Hospital summarily argues that plaintiffs will be unable to prove their breach

of contract claim because it had legitimate justifications for the termination. However,

the issue of whether the justifications were legitimate or retaliatory are factual issues not

properly resolved at this stage of the proceeding. Moreover, even if the Hospital can

identify proper reasons to terminate the contract for cause, plaintiffs' evidence shows the

Hospital elected to terminate the contract without the required notice and without cause.

IV. Breach of Implied Covenant of Good Faith and Fair Dealing

Plaintiffs also alleged a breach of the implied covenant of good faith and fair

dealing against the Hospital. In this cause of action, plaintiffs claimed the Hospital's

retaliatory conduct deprived SDHBP of the benefits to which it was entitled under the

Amended Agreement. On appeal, the Hospital does not specifically challenge the court's

anti-SLAPP ruling with respect to this cause of action. We thus find any argument

regarding this claim is waived. In any event, we conclude that even assuming the anti-

SLAPP statute applied to this claim, plaintiffs presented sufficient evidence to show a

probability of prevailing on the merits of this claim. As explained in the retaliatory claim

section, there are factual issues regarding whether the Hospital terminated the contract for

retaliatory reasons and thus improperly deprived plaintiffs of the benefits of the contract.

35
 DISPOSITION

Order affirmed. Appellant to pay respondents' costs on appeal.

HALLER, J.

WE CONCUR:

HUFFMAN, Acting P. J.

AARON, J.

36