C.A. 2nd;

The Second Appellate District affirmed a trial court order. The court held that a breach of contract action did not arise from protected activity for purposes of the anti-SLAPP statute.

In 2009, Pabst Brewing Company, LLC entered into a written distributor agreement) with Mission Beverage Company. Pabst granted Mission the exclusive right to distribute many of its beers within certain areas of Los Angeles County. In late 2014, Pabst came under new ownership. In early 2015, it notified Mission of the termination of their agreement and of the names of the new distributors so that Mission could negotiate with them to determine the fair market value of its distributorship rights. The new distributors attempted to negotiate with Mission, as required under Bus. & Prof. Code, §25000.2. When that failed, they sent Mission a letter initiating arbitration. Mission sued Pabst for breach of contract and declaratory relief, arguing Pabst had no right to terminate their agreement. While that action was pending, the arbitrator issued an award fixing the value of Mission’s distributorship rights. The new distributors paid Mission that amount.

Pabst then filed a motion to strike Mission’s lawsuit under the anti-SLAPP statute. Pabst argued that the “linchpin” of Mission’s lawsuit was Pabst’s “invocation of the statutorily-mandated arbitration process under §25000.2,” which Pabst asserted was “protected activity” under the anti-SLAPP statute. The trial court denied Pabst’s motion, finding Mission’s lawsuit was separate and distinct from the protected arbitration activity.

The court of appeal affirmed, holding that Mission’s claims did not arise from protected activity. Pabst argued Mission’s claims were based on Pabst’s termination letter, which invoked §25000.2’s procedures, and thus arose from protected activity. Not so. Mission’s claims challenged Pabst’s decision to terminate the agreement. Further, although §25000.2’s mandatory arbitration undoubtedly qualifies as an official proceeding for purposes of the anti-SLAPP statute, Pabst’s letter was not preparatory to such an arbitration. Section 25000.2 contemplates that an existing distributor and successor brewer’s designated distributors will negotiate in good faith before resorting to arbitration. At the time it sent Mission its letter, Pabst had no reason to believe that arbitration would follow from its letter because Mission and the new distributors could well have negotiated a settlement and obviated any need for arbitration. The anti-SLAPP statute thus did not apply. The court found further that §25000.2 does not independently confer upon brewers the right to cancel their existing distributorship contracts and does not immunize them from liability for any wrongful cancellation of those contracts. Finally, Missions’ receipt of payment from the new distributors did not bar it from seeking damages against Pabst.