Employee Could Not Pursue Malicious Prosecution Action Against Former Employer

Takeaway: An investigation, including an independent one, can help build a strong defense against liability for an employee’s claims.

An employee who sued her former employer for malicious prosecution could not go forward with her lawsuit, a California appeals court ruled. The employee claimed that the employer had falsely reported her to the police, which triggered a criminal prosecution against her that she defeated.

The employer had sought to have the malicious prosecution lawsuit dismissed before trial, relying on California’s anti-strategic lawsuits against public participation (anti-SLAPP) statute, but the lower court refused to dismiss the action. The appeals court ruled that the case should have been dismissed because the employer had a winning defense to the employee’s suit: Criminal prosecutors acted only after an independent investigation.

The employer had reported the employee to the police, claiming she had quit in a huff and, on her way out, spitefully deleted the company’s valuable computer files. The employee claimed that the employer had invented specious charges, hoping to make her look bad because her whistleblowing was about to help the company’s foe in an impending dispute.

The parties agreed that the company complained to police, who arrested and charged the employee. They also agreed that the employee ultimately avoided criminal liability: The employee’s criminal defense attorney discovered that a company employee lied under oath at the preliminary hearing. This tainted witness’s testimony convinced the prosecutor to dismiss the whole case against the employee as unprovable. The trial court declared the employee factually innocent.

The employee then sued the company for malicious prosecution. The company moved to dismiss the lawsuit before trial based on California’s anti-SLAPP statute, but the lower court denied the motion. The employer appealed.  

California’s Anti-SLAPP Statute

SLAPP suits are complaints in which the alleged injury is the result of petitioning or free speech activities protected by the First Amendment of the U.S. Constitution or California Constitution. To protect petitioning and free speech, California enacted an anti-SLAPP law, allowing special motions to strike the claims early in litigation.

The appeals court ruled that the trial court rightly found the employer’s special motion to strike satisfied the first step in anti-SLAPP analysis, which is whether the employee’s lawsuit called forth the statute’s protection. The court concluded that the employee’s complaint for malicious prosecution concerned protected activity.

This correct conclusion applied the usual rule, the appeals court said, that helping to bring about a criminal prosecution is protected activity under the statute. 

However, the appeals court continued, the trial court went astray on the second step of the analysis. This second step required the employee to demonstrate a probability of success.

The employee failed to defeat the employer’s air-tight defense that, before the district attorney filed charges, police conducted an investigation that was independent of the employer. Therefore, the decision to prosecute the employee was a superseding cause that insulated the employer from liability, the appeals court said.  

A separate investigation that is independent protects a complainant from liability for malicious prosecution. Undisputed facts in the employee’s own evidence show the police investigation was fully independent, the court said.  

After the sheriff’s office received a report of criminal conduct, a detective interviewed employees at the company office where the employee had worked. The detective also served a search warrant at the employee’s home.

The detective alerted two other detectives, who arrested and booked the employee. They also seized her phone and flash drive.

The detective later obtained the employee’s work computer from a company employee and took it to a forensics lab for analysis.  

He then interviewed more company employees and authorized a search warrant of the employee’s phone and flash drive.

The detective forwarded the case to the district attorney’s office for filing consideration. That office then filed a criminal complaint against the employee for deleting data.

This investigation was independent of any claims made by the employer, the court said.  

Although the detective did receive information from the employer, investigations commonly begin by interviewing the alleged victim, because crime victims usually know something about the crime. This does not negate independence, the court said.

After the employer’s report of what it claimed was the employee’s criminal activity, the initiative and discretion governing the investigation resided entirely with the Los Angeles Sheriff’s Department, the court said. No facts showed that the detective was acting on behalf of the employer. 

The independent investigation defense completely shielded the employer from liability, meaning the special motion to strike had merit and should have ended the lawsuit, the appeals court concluded. 

Lugo v. Pixior LLC, Calif. Ct. App., No. B324368 (April 18, 2024).

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.