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CALIFORNIA DAILY OPINION SERVICENinth Circuit Court of Appeals | California Supreme Court | California Court of Appeals

Bankruptcy Appellate Panel | California Attorney General | US Supreme Court

Volume 32, Number 48 Full Case Listings updated daily at www.therecorder.com/cdos Monday, March 12, 2018

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NINTH CIRCUIT COURT OF APPEALS

Dai v. Sessions BIA Immigration Law 2299Absence of adverse credibility determination by IJ or BIA mandated that petitioner’s testimony be deemed credible (Reinhardt, J.)

Webb v. SolarCity Corporation N.D. CA Securities Litigation 2318Allegations of financial mismanagement failed to establish fraud (M.D. Smith, J.)

CALIFORNIA COURTS OF APPEAL

Dean v. Friends of Pine Meadow C.A. 1st Litigation 2326Community group’s statements opposing proposed development not commercial speech (Ruvolo, P.J.)

Chaney v. Netterstrom C.A. 2nd Family Law 2333Failure to file signed marriage certificate with county did not invalidate marriage (Perren, J.)

Klean W. Hollywood, LLC v. Superior Court (Jackson) C.A. 2nd Personal Injury 2336Drug rehab facility not liable for failing to prevent patient from obtaining drugs (Manella, J.)

March 12, 2018 CALIFORNIA DAILY OPINION SERVICE SummARIES 2296

SUMMARIESFamily LawFailure to file signed marriage certificate with county did not invalidate marriage (Perren, J.)

Chaney v. NetterstromC.A. 2nd; March 8, 2018; B282120

The Second Appellate District affirmed a judgment. The court held that neither the parties’ failure to file their signed marriage license with the county nor their occasional pretense that they were not married rendered their marriage invalid.

In the fall of 2011, after dating for several years and co-habiting for several months, Michael Chaney and Leanne Netterstrom personally appeared before a county clerk to ob-tain a confidential marriage license. On November 11, 2011, the parties participated in a solemnization ceremony. After the ceremony, the officiant signed the marriage license and gave it to the parties, who promised to file it with the coun-ty. They never did so. For the next several years, the parties sometimes referred to themselves as married, and sometimes claimed to be unmarried, as it best suited their financial inter-ests. In 2015, Chaney petitioned for dissolution of marriage. Netterstrom moved to quash the summons and dismiss, de-claring that she and Chaney were not married.

The family court denied Netterstrom’s motion to quash, finding that the parties were married.

The court of appeal affirmed, holding that the failure to file the signed marriage license did not invalidate the par-ties’ marriage. Under Family Code §306, although the law requires an officiant to return a signed marriage license to the county, his or her noncompliance with that requirement does not invalidate an otherwise lawful marriage. Further, the parties’ conduct in not filing the license and in claiming “single” status on tax returns and other financial documents also did not undermine the validity of their marriage. Once the parties secured a license from the county and exchanged vows at a solemnization ceremony, and the marriage license was authenticated, they were married.

Immigration LawAbsence of adverse credibility determination by IJ or BIA mandated that petitioner’s testimony be deemed credible (Reinhardt, J.)

Dai v. Sessions

9th Cir.; March 8, 2018; 15-70776The court of appeals granted a petition for review of an

order of the Board of Immigration Appeals (BIA). The court held that the REAL ID Act of 2005 did not change the long-standing rule that, in the absence of an adverse credibility finding by an immigration judge (IJ) or the BIA, a petition-er’s testimony must be deemed credible.

Chinese citizen Ming Dai applied for asylum, withhold-ing of removal, and CAT protection. He testified at hearing that he was beaten, arrested, jailed, and denied food, water, sleep, and medical care because he tried to stop the police from forcing his wife to have an abortion. The IJ denied Dai’s application, finding he failed to meet his burden of proof for relief. The IJ did not make an adverse credibility finding.

The BIA affirmed the IJ’s denial of relief, also without making an adverse credibility finding.

The court of appeal granted Dai’s petition for review, holding that the absence of an adverse credibility finding mandated that Dai’s testimony be treated as credible. The REAL ID Act did not change the longstanding rule that, in the absence of an adverse credibility finding by the IJ or the BIA, the petitioner’s testimony is deemed credible. Although the REAL ID Act states that, in the absence of an adverse credibility finding, “the applicant or witness shall have a rebuttable presumption of credibility on appeal,” the only “appeal” in immigration proceedings is to the BIA. Judicial review of an order of removal is by petition for review, not further appeal. Accordingly, a provision that applies “on ap-peal” does not apply to review by the court of appeals, but solely to the BIA’s review on appeal from the IJ’s decision. Accordingly, the court had to treat Dai’s testimony as cred-ible. Because Dai’s testimony was also sufficient to establish past persecution and persuasive, he had to be deemed eligible for asylum. Because Dai further demonstrated that it was more likely than not that he would be subject to persecution if removed to China, he was also eligible for withholding of removal. The court remanded to the BIA to grant with-holding of removal and to exercise its statutory discretion as to whether Dai should also be granted asylum. Judge Trott dissented, finding that the majority erred in concluding that, in the absence of an adverse credibility determination, Dai’s testimony had to be deemed credible.


LitigationCommunity group’s statements opposing proposed development not commercial speech (Ruvolo, P.J.)

Dean v. Friends of Pine Meadow

C.A. 1st; February 8, 2018; A149735The First Appellate District affirmed a trial court judgment

of dismissal. The court held that a community’s group’s state-ments opposing a planned development did not constitute commercial speech.

The owners of a private golf course entered into a con-tract to sell the golf course to developers. Sellers and buyer then worked together to file an application for development with the city. Individuals identifying themselves as “Friends of Pine Meadow” steadfastly opposed the application. They spoke in opposition to the proposed development at more than 20 public meetings. When the application was approved, they circulated a referendum petition seeking to reverse the city’s decision. The owners and developers filed suit, alleg-ing interference with prospective economic advantage and defamation.

The trial court granted defendants’ special motion to strike the complaint as a SLAPP suit, rejecting plaintiffs’ conten-tion that the commercial speech exception to the anti-SLAPP statute applied.

The court of appeal affirmed, holding that all of plaintiffs’ claims arose out of protected speech. The complaint sought to punish and suppress speech and petitioning activity related to defendants’ opposition to the construction of a housing development on a golf course. Since all the challenged con-duct was speech or petitioning activity relating to an issue of public interest, it was protected activity under the anti-SLAPP statute. Further, the speech at issue was not commer-cial speech. Plaintiffs did not allege facts to show that (1) any defendant was engaged in or affiliated with someone engaged in the production distribution or sale of goods or services, (2) the challenged speech was directed at actual or poten-tial buyers or customers of some good or service, or (3) the content of defendants’ speech was commercial in character. To the contrary, the complaint sought redress for speech and petitioning activity by individuals who formed a community group in order to oppose the city’s approval of a development application and concurrent amendment of the city’s general plan to accommodate that development. On its face, this type of speech was political rather than commercial in nature.

Personal InjuryDrug rehab facility not liable for failing to prevent patient from obtaining drugs (Manella, J.)

Klean W. Hollywood, LLC v. Superior Court (Jackson)C.A. 2nd; March 8, 2018; B283816

The Second Appellate District granted a petition for writ of mandate. The court held that a drug rehabilitation facility was not liable for failing to prevent a patient from obtaining drugs and overdosing.

Langston Jackson checked himself into a drug abuse treat-ment facility operated by Klean W. Hollywood, LLC. Within a month, Jackson had tired of sobriety and arranged to have a drug dealer deliver heroin and syringes to him. Jackson ob-tained delivery of the drugs and paraphernalia late at night by lowering a plastic bag from his second story window. Jack-son and his roommate waited until a 3:00 a.m. room check had been completed by a staff member, and then injected the drugs. Jackson’s roommate awoke at 7:15 a.m. and found Jackson asleep on the couch, where he usually slept. Unable to rouse Jackson, he alerted staff. Jackson was taken to a hospital, where he allegedly remained in a coma for 37 days. Jackson allegedly suffered both cognitive and physical in-jury as a result of the incident. He sued Klean for negligence based on its failure to prevent Jackson from acquiring and ingesting drugs.

Klean moved for summary judgment, contending that the common law doctrine of unclean hands precluded Jackson, or anyone who engages in the illegal acts of buying and using illicit drugs, from pursuing a negligence claim. Klean further contended that the Drug Dealer Liability Act (DDLA), which permits users of certain illegal controlled substances to pur-sue claims against the providers of such substances, prohibits drug users from pursuing claims against parties other than the drug dealers described in the Act. The trial court denied summary judgment. Klean petitioned for a writ of mandate challenging that ruling.

The court of appeal greanted Klean’s writ petition, hold-ing that although that the DDLA does not categorically pre-clude claims against third parties, on the undisputed facts of this case, Jackson had no basis to pursue a negligence claim against Klean. The DDLA did not supplant or displace the common law. Thus, although the DDLA restricted the types of claims that might be brought under its provisions, it did not restrict non-DDLA claims. Nonetheless, Jackson had no grounds for a negligence claim against Klean. Klean was an unlocked substance abuse facility whose clients voluntarily sought non-medical treatment. It neither guaranteed its pro-gram’s success nor promised residents that it would prevent them from finding inventive ways to procure drugs and to relapse. Klean could not be held liable for failing to stop Jackson from obtaining and using drugs.


Securities LitigationAllegations of financial mismanagement failed to establish fraud (M.D. Smith, J.)

Webb v. SolarCity Corporation

9th Cir.; March 8, 2018; 16-16440The court of appeals affirmed a district court judgment.

The court held that a class plaintiff’s allegations of corporate financial mismanagement failed to establish fraud.

James Webb filed a class action lawsuit against SolarCity Corporation and its CEO, Lyndon Rive, and CFO, Robert Kelly. Suing on behalf of a class of plaintiffs who bought SolarCity shares between December 12, 2012, the date of the company’s initial public offering (IPO), and March 18, 2014, Webb alleged that defendants violated §10(b) and §20(a) of the Securities Exchange Act of 1934 when they changed the company’s accounting formula prior to the IPO in order to misrepresent SolarCity’s profitability. Defendants allegedly intentionally changed SolarCity’s burden ratio in order to make the sales division and company as a whole appear more profitable than it actually was, and thereby maximize their gains from the company’s IPO. Webb’s claims were sup-ported by the declarations of 11 confidential witnesses who described flaws in the company’s accounting and financial systems and also attested to their knowledge of the compa-ny’s negative gross sales margins.

The district court dismissed the complaint with prejudice for failing adequately to plead scienter.

The court of appeals affirmed, holding that none of Webb’s allegations was sufficient to establish scienter. Even considered in combination, Webb’s allegations did no more than paint a picture of a mismanaged organization in need of closer financial oversight that made a minute error at a critical stage in its development. Webb’s confidential wit-ness statements established that Rive and Kelly knew that So-larCity was generally unprofitable, that they were hands-on managers who generally understood the company’s account-ing obligations, and that they had reason to suspect that the company’s internal accounting controls were imperfect. They also established the existence of a strong incentive to pres-ent an appearance of profitability and to keep stock prices high in the months immediately preceding and following the IPO. However, these facts did not give rise to an inference of scienter that was at least as compelling as the inference of an honest mistake. On the whole, Webb’s narrative of fraud was simply not as plausible as a nonfraudulent alternative.

March 12, 2018 CALIFORNIA DAILY OPINION SERVICE NINth CIRCuIt COuRt OF APPEAL 2299

bound to follow it. We might add, though it does not affect our holding in this case, that we approve of it. We think it not too much to ask of IJs and the BIA that they make an explicit adverse credibility finding before deporting someone on that basis. In any event, under our well-established rule, Dai is unquestionably entitled to relief.

BACKGROUND

I. DAI’S PERSECUTION IN CHINA1

Dai has been married for twenty years to Li Ping Qin. Dai and Qin have a daughter, who was born in 2000. In April 2009, Qin discovered that she was pregnant again. Dai and Qin were “very happy” about the pregnancy and believed they would be able to keep the child if they paid a fine, de-spite China’s One Child policy.

However, the month after Qin found out she was pregnant, she was visited at work by a “family planning officer” who told Qin that she was required to have an abortion. Qin told the officer that she would need to think about it. Two months later, five family planning officers came to Dai and Qin’s house early in the morning from “the local family planning office and also the police station.” The officers were there to take Qin to the hospital for a forced abortion. Qin told the of-ficers that she didn’t want to go and Dai attempted to stop the officers from taking Qin against her will. Dai and the officers began arguing, with the officers telling Dai that Qin had to have the forced abortion as a matter of “Chinese policy” and Dai saying “you can’t take my wife away.”

When Dai continued resisting the officers’ efforts to take Qin for the forced abortion, two of them pushed him to the ground. Dai got up and tried again to stop the officers, so they pushed him to the ground again. This time, the officers handcuffed Dai and repeatedly beat him, causing substantial injuries. While Dai was handcuffed and being beaten, the other officers dragged Qin out of the house.

The police took Dai to the Zha Bei detention center. There, they ordered Dai to confess to resisting arrest. Dai initially refused to confess and insisted that he had the right to protect his family. The officers continued to interrogate him over the next number of days. At times he was deprived of sleep because he was interrogated in the middle of the night. Dur-ing the ten days he spent in detention, Dai was interrogated approximately seven times. He was fed one meal a day and often denied water. Dai characterized his treatment as “men-tal[] torture.” Dai ultimately confessed to resisting arrest and fighting with the officers. He was released about two days after his confession.

Dai’s injuries occurred when the officers beat him at his home. Despite telling the police about his injuries, he re-ceived no medical attention while in custody. When he was released he went to the hospital for x-rays, which showed

1. This factual summary is drawn primarily from Dai’s testimony before the IJ. As we discuss in more detail below, we treat Dai’s testi-mony as credible because neither the IJ nor the BIA made an adverse credibility finding.

FULL TEXT OPINIONNinth Circuit Court of Appeals

Cite as 18 C.D.O.S. 2299

MING DAI, Petitioner, v.JEFFERSON B. SESSIONS III, Attorney

General, Respondent.

No. 15-70776United States Court of Appeals for the Ninth CircuitAgency No. A205-555-836On Petition for Review of an Order of the Board of Immigration Appeals Submitted October 13, 2017* San Francisco, California Filed March 8, 2018 Before: Sidney R. Thomas, Chief Circuit Judge, and Stephen Reinhardt and Stephen S. Trott, Circuit Judges. Opinion by Judge Reinhardt; Dissent by Judge Trott

* The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).

COUNSELDavid Z. Su, Law Offices of David Z. Su, West Covina,

California, for Petitioner. Aimee J. Carmichael, Trial Attorney; Mary Jane

Candaux, Assistant Director; Office of Immigration, Civil Division, United States Department of Justice, Washington, D.C.; for Respondent.

OPINIONREINHARDT, Circuit Judge:

Ming Dai is a citizen of China. He testified that he was beaten, arrested, jailed, and denied food, water, sleep, and medical care because he tried to stop the police from forcing his wife to have an abortion. The Board of Immigration Ap-peals (BIA) nevertheless found that Dai was not eligible for asylum or withholding of removal.

There is one clear and simple issue in this case: neither the Immigration Judge (IJ) nor the BIA made a finding that Dai’s testimony was not credible. Under our well-established precedent, we are required to treat a petitioner’s testimony as credible in the absence of such a finding. We adopted this rule before the REAL ID Act and reaffirmed it after its passage. The dissent clearly disapproves of our rule. We are, however,


that his right arm was dislocated and the ribs on his right side were broken. The doctor put Dai’s arm back in place and wrapped it to keep it still for six weeks. Dai did not receive any treatment for his broken ribs.

When Dai returned home he found Qin crying. Qin told him that she had been taken to the Guang Hua hospital in the Chang Ning district, where a doctor made her get undressed and then sedated her. When she woke up, she learned that her pregnancy had been terminated and that an IUD had been implanted, all without her consent.

In addition to Qin’s forced abortion and Dai’s arrest, de-tention, and physical and mental abuse, Qin, Dai, and their daughter each suffered other repercussions arising out of Qin’s unauthorized pregnancy and Dai’s resistance to her forced abortion. Dai was fired from his job, while Qin was demoted and her salary was reduced by thirty percent. Their supervisors specifically informed them that they were fired and demoted because of the above events. Their daughter was also denied admission to more desirable schools despite good academic performance. Her teacher told Qin that this was likewise because of the events resulting from the illegal pregnancy.

On or about January 27, 2012, Dai, Qin, and their daugh-ter arrived in the United States on tourist visas, with autho-rization to remain until July 26, 2012. Qin and their daugh-ter returned to China in February while Dai remained in the United States. In the time since Qin and their daughter have returned to China, the Chinese police have come looking for Dai multiple times. Dai is afraid that if he returns to China he will be forcibly sterilized.

II. ASYLUM APPLICATION

Approximately eight months after arriving in the United States, Dai filed an affirmative asylum application. The next month, he was interviewed by an asylum officer. The asylum officer took notes during the interview, but did not prepare a verbatim transcript.

During the interview, Dai was not asked whether his wife and daughter had accompanied him to the United States. Rather, the asylum officer inquired whether they ever trav-eled anywhere outside of China. He told the asylum officer that both his wife and his daughter had been to Taiwan and Hong Kong and that his wife had been to Australia. When asked if they had traveled anywhere else, he said they had not. However, when told that government records showed that his wife and daughter had traveled to the United States with him, he agreed that they had done so. When asked why he did not initially disclose this, Dai said (through an inter-preter and according to the non-verbatim notes of the inter-view), “I’m afraid you ask why my wife and daughter go back.” Dai explained that his wife and daughter went back to China “[s]o that my daughter can go to school and in the US you have to pay a lot of money.” Finally, Dai was asked, “Can you tell me the real story about you and your family’s travel to the US?” Dai responded, “I wanted a good environment

for my child. My wife had a job and I didn’t and that is why I stayed here. My wife and child go home first.”

The asylum officer denied Dai’s asylum application.

III. REMOVAL PROCEEDINGS

The Department of Homeland Security (DHS) then issued Dai a Notice to Appear. Dai conceded that he was removable and sought asylum, withholding of removal, and CAT protec-tion. At a hearing before the IJ, Dai testified about the events in China we have described. When asked why he came to the United States, he said, “[b]ecause I was persecuted in China and my wife, my wife was forced to have an abortion and I lost my baby. I was arrested. I was beaten[]. I lost my job. America [ ] is a free country and it’s [ ] a democratic country. I want to come here [ ] and have my very basic human rights. I really, really hate Chinese dictatorship.”

During cross-examination, the government asked Dai about his initial failure to disclose his wife and daughter’s travel to the United States. Dai testified that “I was very ner-vous” and “because I was already in the U.S. and they [ ] came with me to the U.S. . . . I thought that you were ask-ing me anywhere other than the U.S.” In response to further questioning by the government, Dai testified that his wife and daughter returned to China so that his wife could care for his father-in-law and his daughter could attend school. When asked why he didn’t keep them in the US to protect them from forced IUDs or abortions, Dai reminded the govern-ment that his wife’s IUD was already inserted before she left China and that his daughter was only 13.

When the government asked Dai if there were any other reasons he was afraid to return to China, Dai said, “if I return to China, it’s impossible for me to get another job. . . . Just the sterilization and that.” Finally, when asked why he remained in the U.S. when his wife returned to China he responded, “Because at that time, I was in a bad mood and I couldn’t get a job, so I want to stay here for a bit longer and another friend of mine is also here.” At the time in question (when Qin returned to China in February 2012), Dai did not know about asylum. He first learned about the existence of that process in March of that year.

The IJ did not make an adverse credibility finding. In-stead, the IJ found that Dai failed to meet his burden of proof for asylum, withholding of removal, and CAT protection.

IV. BIA DECISION

The BIA affirmed the IJ’s denial of relief. The BIA first found that Dai “failed to disclose both to the [DHS] asylum officer and the [IJ] that his wife and daughter had traveled with him to the United States and voluntarily returned to China shortly after”2 and that Dai’s reason for concealing

2. The record clearly demonstrates that Dai did not conceal this information from the IJ. If he concealed it at all, it was only from the asylum officer. To the extent the government defends this finding by the BIA, it simply notes that Dai “did not raise the information during direct examination before the Immigration Judge.” However, Dai was


this information was that “he believed that the true reasons for their return . . . would be perceived as inconsistent with his claims of past and feared persecution.”3

The BIA acknowledged that the IJ did not make an ad-verse credibility finding and also did not make one itself. Instead, the BIA held that “the [IJ] need not have made an explicit adverse credibility finding to nevertheless determine that the respondent did not meet his burden of proving his asylum claim.” The BIA found that Dai’s family returning to China and “his not being truthful about it” were “detrimental to his claim and [ ] significant to his burden of proof.” The BIA concluded that Dai failed to establish eligibility for asy-lum, withholding of removal, or CAT protection. Dai filed a timely petition for review challenging the BIA’s denial of relief.

SCOPE AND STANDARD OF REVIEW

“[W]e cannot deny a petition for review on a ground [upon which] the BIA itself did not base its decision.” Hernandez-Cruz v. Holder, 651 F.3d 1094, 1110 (9th Cir. 2011). We re-view the agency’s factual findings for substantial evidence. Hamazaspyan v. Holder, 590 F.3d 744, 747 (9th Cir. 2009).

The scope of review in this case is unclear. While the BIA stated that it “adopt[ed] and affirm[ed] the Immigration Judge’s decision,” it then went on to discuss and agree with most of the IJ’s specific reasons while omitting any discus-sion of one of them.

On the one hand, we have held that when “the BIA adopts the decision of the IJ and affirms without opinion, we re-view the decision of the IJ as the final agency determina-tion.” Smolniakova v. Gonzales, 422 F.3d 1037, 1044 (9th Cir. 2005); see also Matter of Burbano, 20 I. & N. Dec. 872, 874 (BIA 1994). In this case, however, the BIA did not affirm “without opinion.”

On the other hand, we have also held that when “the BIA relie[s] upon the IJ’s opinion as a statement of reasons” but “state[s] with sufficient particularity and clarity the reasons for denial of asylum and d[oes] not merely provide a boiler-plate opinion,” we “look to the IJ’s oral decision [only] as a guide to what lay behind the BIA’s conclusion.” Tekle v. Mu-kasey, 533 F.3d 1044, 1051 (9th Cir. 2008) (quotation marks and alterations omitted). “In so doing, we review here the reasons explicitly identified by the BIA, and then examine the reasoning articulated in the IJ’s oral decision in support of those reasons. . . . Stated differently, we do not review those parts of the IJ’s . . . finding that the BIA did not identify as ‘most significant’ and did not otherwise mention.” Id.; see

not asked about his family’s travel to the United States and return to China during direct examination, and when he was asked during cross examination he answered truthfully.

3. The BIA also found that “the respondent’s contention that his wife and daughter returned to China before he became aware of the possibility of asylum is not supported by the record.” In fact, Dai’s testimony on this point was unchallenged and uncontradicted and the government does not defend this erroneous finding before this court.

also Lai v. Holder, 773 F.3d 966, 970 (9th Cir. 2014). How-ever, in those cases the BIA did not say that it was adopting the decision of the IJ.

Finally, this is not a case in which “the BIA adopt[ed] the immigration judge’s decision and also add[ed] its own reasons.” Nuru v. Gonzales, 404 F.3d 1207, 1215 (9th Cir. 2005). The BIA did not “add[] its own reasons;” rather, it identified and expressly agreed with some (but not all) of the IJ’s reasons.

We need not, however, resolve the precise scope of review in this case because none of the reasons advanced by the IJ, including the one omitted by the BIA, provides a sufficient basis for the BIA’s decision.

DISCUSSION

I. ASYLUM Asylum is available to refugees—that is, anyone who is

“‘unable or unwilling to avail himself or herself of the protec-tion of [his or her native] country because of persecution or a well-founded fear of persecution on account of race, reli-gion, nationality, membership in a particular social group, or political opinion.’” Baghdasaryan v. Holder, 592 F.3d 1018, 1022–23 (9th Cir. 2010) (quoting 8 U.S.C. § 1101(a)(42)(A)).4

If a noncitizen establishes past persecution, “a rebuttable presumption of a well-founded fear arises, and the burden shifts to the government to demonstrate that there has been a fundamental change in circumstances such that the applicant no longer has a well-founded fear.” Tawadrus v. Ashcroft, 364 F.3d 1099, 1103 (9th Cir. 2004) (quotation marks and citations omitted). “An applicant alleging past persecution has the burden of establishing that (1) his treatment rises to the level of persecution; (2) the persecution was on account of one or more protected grounds; and (3) the persecution was committed by the government, or by forces that the gov-ernment was unable or unwilling to control.” Baghdasaryan, 592 F.3d at 1023.

This case is governed by the REAL ID Act of 2005, Pub. L. No. 109-13, Div. B, 119 Stat. 231, 302–23. Under the stan-dards established by that Act, an applicant’s testimony alone is sufficient to establish eligibility for asylum if it satisfies three requirements: the “testimony is credible, is persuasive, and refers to specific facts sufficient to demonstrate that the applicant is a refugee.” 8 U.S.C. § 1158(b)(1)(B)(ii). In deter-mining whether the testimony is persuasive, “the trier of fact may weigh the credible testimony along with other evidence of record.” Id. If the applicant’s testimony satisfies all three requirements, then it “alone meets the applicant’s burden of proof.” Ren v. Holder, 648 F.3d 1079, 1093 (9th Cir. 2011). If, however, the applicant’s credible testimony alone is not sufficiently persuasive, “the IJ must give the applicant notice of the corroboration that is required and an opportunity either

4. By “native country” we mean a person’s country of nationality “or, in the case of a person having no nationality, . . . [the] country in which such person last habitually resided.” 8 U.S.C. § 1101(a)(42)(A).


to produce the requisite corroborative evidence or to explain why that evidence is not reasonably available.” Id.5 No notice regarding corroboration was given to Dai. We will next ex-amine the three requirements under the Act for meeting the burden of proof, though not in the order listed in the statute.

A. Credibility

Dai testified at his removal hearing and the IJ made no adverse credibility finding. When this was called to the BIA’s attention, it also made no adverse credibility finding. Al-though the BIA identified one time that Dai allegedly failed to disclose a fact and indicated that it did not believe Dai’s explanation for not doing so, “this sort of passing statement does not constitute an adverse credibility finding.” Kaur v. Holder, 561 F.3d 957, 962–63 (9th Cir. 2009). The BIA may find that an applicant lied about one particular fact without making a general adverse credibility finding. Even a “state-ment that a petitioner is ‘not entirely credible’ is not enough” to constitute an adverse credibility finding, Aguilera-Cota v. I.N.S., 914 F.2d 1375, 1383 (9th Cir. 1990), and the BIA’s finding that Dai “failed to disclose” a single fact does not even rise to the level of a finding that a petitioner is “not entirely credible.” In short, the adverse credibility finding must be explicit.

Large portions of the dissent are devoted to elaborating on the deference that we owe to credibility findings by the IJ and the BIA. We agree that such findings are entitled to defer-ence, but we cannot defer to a finding that does not exist. The bulk of our dissenting colleague’s concerns can therefore be reduced to his objection to the rule that adverse credibility findings must be explicit. It is difficult to identify, however, a more well-established rule in the review of immigration cas-es.6 The dissent offers no reason to overturn our longstand-ing requirement that adverse credibility findings be explicit and, in fact, the REAL ID Act codifies the principle that such findings must be “explicitly made.” 8 U.S.C. § 1158(b)(1)(B)(iii). Therefore, “[t]he IJ’s decision not to make an explicit

5. The IJ must also provide notice and an opportunity to produce corroboration or explain its absence if an adverse credibility finding will be based on a lack of corroborating evidence. Lai, 773 F.3d at 975–76.

6. See, e.g., She v. Holder, 629 F.3d 958, 964 (9th Cir. 2010); Tijani v. Holder, 628 F.3d 1071, 1080 (9th Cir. 2010); Edu v. Holder, 624 F.3d 1137, 1143 n.5 (9th Cir. 2010); Karapetyan v. Mukasey, 543 F.3d 1118, 1123 n.4 (9th Cir. 2008); Meihua Huang v. Mukasey, 520 F.3d 1006, 1007–08 (9th Cir. 2008) (per curiam); Singh v. Gonzales, 491 F.3d 1019, 1025 (9th Cir. 2007); McDonald v. Gonzales, 400 F.3d 684, 686 n.2 (9th Cir. 2005); Mansour v. Ashcroft, 390 F.3d 667, 671–72 (9th Cir. 2004); Zhang v. Ashcroft, 388 F.3d 713, 718 (9th Cir. 2004) (per curiam); Lopez-Alvarado v. Ashcroft, 381 F.3d 847, 851 (9th Cir. 2004); Kalubi v. Ashcroft, 364 F.3d 1134, 1137–38 (9th Cir. 2004); Mendoza Manimbao v. Ashcroft, 329 F.3d 655, 658–59 (9th Cir. 2003); Shoafera v. I.N.S., 228 F.3d 1070, 1074 n.3 (9th Cir. 2000); Navas v. I.N.S., 217 F.3d 646, 652 n.3 (9th Cir. 2000); Prasad v. I.N.S., 101 F.3d 614, 616 (9th Cir. 1996); Hartooni v. I.N.S., 21 F.3d 336, 342 (9th Cir. 1994).

adverse credibility finding,” Dissent at 30, means that there is no finding to which we can defer.7

Given that there is no adverse credibility finding from the agency, the next question is whether we can nostra sponte decide that Dai’s testimony is not credible. Prior to the REAL ID Act, we held that in the absence of an explicit adverse credibility finding by the IJ or the BIA we are required to treat the petitioner’s testimony as credible. Kalubi v. Ash-croft, 364 F.3d 1134, 1137 (9th Cir. 2004); Navas v. I.N.S., 217 F.3d 646, 652 n.3 (9th Cir. 2000). The REAL ID Act enacted a variety of changes to the standards governing cred-ibility determinations, including—as noted by the dissent—a provision that “if no adverse credibility determination is ex-plicitly made, the applicant or witness shall have a rebuttable presumption of credibility on appeal.” 8 U.S.C. § 1158(b)(1)(B)(iii).

Neither this provision nor anything else in the REAL ID Act explicitly or implicitly repeals the rule that in the absence of an adverse credibility finding by the IJ or the BIA, the pe-titioner is deemed credible. To the contrary, in a post-REAL ID opinion we stated and applied that rule. See Zhiqiang Hu v. Holder, 652 F.3d 1011, 1013 n.1 (9th Cir. 2011); see also Kazemzadeh v. U.S. Attorney Gen., 577 F.3d 1341, 1354 (11th Cir. 2009) (W. Pryor, J.) (post-REAL ID application) (“Where an [Immigration Judge] fails to explicitly find an applicant’s testimony incredible and cogently explain his or her reasons for doing so, we accept the applicant’s testimony as credible.”) (quotation marks omitted). Hu controls here, a fact the dissent entirely fails to acknowledge. However, in Hu we did not explain why our rule was unaffected by the new language in the REAL ID Act. We take this opportunity to do so now.

Properly understood, the rebuttable presumption provi-sion of the REAL ID Act applies only to appeals to the BIA, not to petitions for review in our court.8 This is demonstrated by the fact that the statute says there is “a rebuttable pre-sumption of credibility on appeal.” 8 U.S.C. §§ 1158(b)(1)(B)(iii), 1229a(c)(4)(C) (emphasis added). In immigration cases, we do not exercise appellate jurisdiction. Rather, de-cisions by the finder of fact, the IJ, may be appealed to the

7. The dissent places great weight on Ling Huang v. Holder, 744 F.3d 1149 (9th Cir. 2014). The distinction between that case and this could not be clearer: “[T]he IJ found that Huang’s testimony was not credible.” Id. at 1151.

8. The proper application of the rebuttable presumption provision is apparent in She v. Holder, 629 F.3d 958 (9th Cir. 2010). In that case, we quoted a different pre-REAL ID rule: that “[a]bsent an adverse credibility finding, the BIA is required to ‘presume the petitioner’s testimony to be credible.’” Id. at 964 (quoting Mendoza Manimbao v. Ashcroft, 329 F.3d 655, 662 (9th Cir. 2003)). In a footnote, we ac-knowledged that the REAL ID Act prospectively altered this rule so that the BIA must only afford “a rebuttable presumption of credibil-ity” when the IJ does not make an adverse credibility finding. Id. at 964 n.5. Thus, while the dissent is correct that the REAL ID Act af-fected our precedent, it did not disturb the distinct rule upon which we rely in this case: that in the absence of an adverse credibility finding by either the IJ or the BIA, we are required to treat the petitioner’s testimony as credible.


BIA. See 8 C.F.R. § 1003.1(b). We generally cannot review an order of removal unless the non-citizen has exhausted his appeal to the BIA. 8 U.S.C. § 1252(d)(1); see Ren, 648 F.3d at 1083–84. The “sole and exclusive means for judicial re-view of an order of removal” is by “a petition for review,” not a further appeal. 8 U.S.C. § 1252(a)(5) (emphasis added). Moreover, unlike an appeal, which shifts an existing action to a new court, a petition for review commences a new action against the United States. 28 U.S.C. § 2344; see also 8 U.S.C. § 1252(a)(1). Thus, Dai is the petitioner, not the appellant, and the Attorney General is the respondent, not the appellee. A provision that applies “on appeal” therefore does not apply to our review, but solely to the BIA’s review on appeal from the IJ’s decision.9

The inapplicability of the rebuttable presumption provi-sion to review in this court is further confirmed by a fun-damental distinction between appellate review and review of administrative decisions that the dissent ignores. When we review a decision of a district court, we may “affirm on any ground supported by the record even if the district court did not consider the issue.” Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 794 (9th Cir. 2007). When we review an administrative decision, however, “we cannot deny a petition for review on a ground [on which] the BIA itself did not base its decision.” Hernandez-Cruz, 651 F.3d at 1110; see also Nw. Envtl. Def. Ctr. v. Bonneville Power Admin., 477 F.3d 668, 688 (9th Cir. 2007).

The dissent is therefore incorrect to say that “[w]hen it comes to our task of reviewing the credibility of witnesses in a trial court or whether a witness’ testimony suffices to carry his burden of proof [ ] there is no material difference between an appeal and a petition for review.” Dissent at 38. In an ap-peal we may, in appropriate circumstances and after afford-ing appropriate deference, reject a district court’s credibility finding (whether favorable or adverse) in order to affirm the district court on an alternative ground. However, when the BIA has on appeal neither affirmed an adverse credibility finding made by the IJ nor made its own finding after deem-ing the presumption of credibility rebutted, we may not deny the petition for review based on lack of credibility, not only because under our well-established case law we must deem the petitioner’s testimony credible but also because a denial on that ground would require us to adopt a justification not relied on by the BIA.

The plain text and context of the statute dictate the con-clusion that the REAL ID Act’s rebuttable presumption of credibility applies only on appeal to the BIA. In the absence of any other provision in the Act affecting the procedures governing credibility findings,10 our rule that we are required

9. The fact that appeals and petitions for review are treated the same for purposes of the Federal Rules of Appellate Procedure, see Fed. R. App. P. 20; Dissent at 38–39, is irrelevant. The provision in question, 8 U.S.C. § 1158(b)(1)(B)(iii), is not part of the those rules.

10. The only other significant change regarding credibility adopt-ed by the REAL ID Act is the rule that an adverse credibility finding may now be based on “an inconsistency, inaccuracy, or falsehood [that

to treat a petitioner’s testimony as credible when the agency does not make an adverse credibility finding remains appli-cable. Because neither the IJ nor the BIA made an adverse credibility determination in Dai’s case, we must treat his tes-timony as credible.

B. Sufficiency

Because Dai’s testimony must be deemed credible, we must next consider whether he testified to facts sufficient to establish eligibility for asylum. By statute, “a person . . . who has been persecuted for failure or refusal to [abort a preg-nancy or to undergo involuntary sterilization] or for other resistance to a coercive population control program, shall be deemed to have been persecuted on account of political opin-ion.” 8 U.S.C. § 1101(a)(42). The harm Dai suffered was on account of his resistance to China’s coercive population con-trol program and thus was on the basis of a protected ground. In addition, “[p]olice officers are the prototypical state actor for asylum purposes.” Boer-Sedano v. Gonzales, 418 F.3d 1082, 1088 (9th Cir. 2005). Therefore, the only question as to the sufficiency of Dai’s testimony is whether the harm rose to the level of persecution.

Dai testified that he was beaten, arrested, detained, and deprived of food and sleep because of his attempt to oppose his wife’s involuntary abortion. “It is well established that physical violence is persecution.” Li v. Holder, 559 F.3d 1096, 1107 (9th Cir. 2009). In Guo v. Ashcroft, 361 F.3d 1194 (9th Cir. 2004), this court held that facts similar to—but less serious than—the facts in this case compelled a finding of persecution. The applicant in Guo was arrested, detained for a day and a half, punched in the face, and kicked in the stom-ach. Id. at 1202–03. In contrast, Dai was forcibly pushed to the ground twice, repeatedly punched in the stomach while handcuffed, jailed for ten days, fed very little food and water, deprived of sleep through interrogation, and denied medical care. An applicant may establish persecution through physi-cal abuse even if he does not seek medical treatment, see Lopez v. Ashcroft, 366 F.3d 799, 803 (9th Cir. 2004), but Dai did seek and receive such treatment for an injured shoulder and broken ribs.

In addition to the physical harm he suffered, Dai lost his job as a result of this occurrence. Such economic harm can contribute to a finding of persecution. See Vitug v. Holder, 723 F.3d 1056, 1065 (9th Cir. 2013).

For these reasons, the harm Dai suffered rose to—and in-deed, well surpassed—the established level of persecution. The record therefore compels the conclusion that Dai’s tes-timony sets forth sufficient specific facts to constitute past persecution.

does not go] to the heart of the applicant’s claim.” 8 U.S.C. §§ 1158(b)(1)(B)(iii), 1229a(c)(4)(C). That rule is irrelevant to this case, as the IJ and BIA did not make an adverse credibility finding.


C. Persuasiveness

The BIA did not make an adverse credibility finding, but instead found that Dai had failed to “meet[] his burden of proving his asylum claim.” As we have explained, see pages 13–14, supra, an applicant’s testimony carries the burden of proof if it is credible, persuasive, and sufficient. Two of those requirements have been satisfied: we must treat Dai’s testimony as credible and his testimony clearly set out suffi-cient facts to establish past persecution. We therefore treat the BIA’s general statement about Dai’s burden of proof as relat-ing to the only remaining requirement for testimony to carry that burden: persuasiveness. However, taking into account the record as a whole, nothing undermines the persuasiveness of Dai’s credible testimony—that is, the BIA’s determination that Dai’s testimony was unpersuasive is not supported by substantial evidence.

In evaluating persuasiveness the BIA is required to “weigh the credible testimony along with other evidence of record.” 8 U.S.C. § 1158(b)(1)(B)(ii). The BIA found that Dai’s tes-timony was not persuasive for two reasons. First, the record revealed that Dai’s wife Qin and their daughter had traveled to the United States with Dai, and then voluntarily returned to China. Second, Dai initially tried to conceal this fact from the asylum interviewer until he was confronted with it. Ac-cording to the BIA, “[t]he respondent’s family voluntarily returning and his not being truthful about it is detrimental to his claim and is significant to his burden of proof.” The IJ identified a third reason for not finding Dai’s testimony persuasive: the fact that when asked for “the real story about you and your family’s travel to the U.S.,” Dai responded, “I wanted a good environment for my child. My wife had a job and I didn’t, and that is why I stayed here. My wife and child go home first.” However, none of these reasons supports the BIA’s conclusion that Dai’s testimony was not persuasive in light of the record as a whole.

We have held that a noncitizen’s “history of willingly re-turning to his or her home country militates against a finding of past persecution or a well-founded fear of future persecu-tion.” Loho v. Mukasey, 531 F.3d 1016, 1017–18 (9th Cir. 2008). The BIA relied heavily on Loho to justify its decision. However, unlike in Loho, Dai never returned to China—only his wife and daughter did.

We have also recognized that a family member’s volun-tary return—or demonstrated ability to remain in the coun-try without further injury—can be relevant in certain narrow circumstances: when the applicant’s “fear of future persecu-tion rests solely upon threats received by his family,” Tamang v. Holder, 598 F.3d 1083, 1094 (9th Cir. 2010) (emphasis added), or when the family member and the applicant are “similarly situated,” Sinha v. Holder, 564 F.3d 1015, 1022 (9th Cir. 2009).

The IJ found that “the fundamental thrust of [Dai’s] claim is that his wife was forced to have an abortion,” and Qin “therefore clearly has an equal, or stronger, claim to asylum than [Dai] himself.” The IJ also found that Qin was “the pri-

mary object of the persecution in China.” The BIA adopted this reasoning. However, the findings are contrary to the rea-soning of our case law.

It is true that Dai and Qin’s persecution arose out of the same general event, but that is not the test that Tamang and Sinha establish. Dai’s fear of persecution does not “rest solely” on Qin’s treatment, and Dai and Qin are not “simi-larly situated.” As the harms suffered by Dai and Qin in the past are qualitatively different and give rise to different fears about future persecution, we need not decide who has the “stronger” claim. Neither the statutes nor our case law en-dorses the IJ and BIA’s approach of ranking distinct harms. To the contrary, Dai’s claim is independently established by statute and is not dependent on any comparison with Qin’s.11

Qin’s hypothetical asylum claim arises out of the invasive medical procedure imposed on her against her will—she was “forced to abort a pregnancy [and] to undergo involuntary sterilization.” 8 U.S.C. § 1101(a)(42). We certainly agree with the BIA and the government that interference with a person’s reproductive freedom is a severe form of persecu-tion and in no way do we suggest that Qin would not have a strong case for asylum had she applied for it.

Dai, however, was “persecuted . . . for [ ] resistance to a coercive population control program.” Id. He was subjected to beatings, prolonged detention, and deprivation of food and sleep—none of which was experienced by Qin. After the incident, Dai was fired from his job while Qin was only demoted. In addition, Qin had already been subjected to the involuntary insertion of an IUD, whereas Dai fears future involuntary sterilization. Since Qin returned to China she has apparently not faced further persecution, but the police have come looking for Dai several times. Dai and Qin’s past expe-riences, as well as their fears about the future, are therefore not so similar as to support the BIA’s finding that Qin’s vol-untary return to China undermines Dai’s claim for asylum.

Moreover, Dai’s and Qin’s respective decisions make sense in context. Qin still had a job in China, and their daugh-ter had a place in school—albeit not in as good a school as she deserved. In this context, it was entirely reasonable to think that the family would be best off if Qin returned to Chi-na to keep her job while Dai attempted to establish himself in the United States—hoping that, once he did so, his family would be able to join him. The BIA improperly substituted its own view of what the members of the family should have done for Dai and Qin’s own reasoned judgment in a manner that is not supported by substantial evidence in the record.

The BIA’s second reason for finding Dai’s testimony unpersuasive fares no better. The BIA held that even in the absence of an adverse credibility finding, Dai “not being truthful” about his family’s travel to the United States and

11. “For purposes of determinations under this chapter, a person . . . who has been persecuted for . . . resistance to a coercive population control program, shall be deemed to have been persecuted on account of political opinion.” 8 U.S.C. § 1101(a)(42).


voluntary return to China “is detrimental to his claim and is significant to his burden of proof.”

The BIA’s framing of the issue suggests that it is relevant because it casts doubt on Dai’s credibility. However, the exer-cise in which we engage when evaluating persuasiveness re-quires that in this case we treat Dai’s testimony before the IJ as credible. Other evidence is relevant only to the extent that it affects the persuasiveness of the applicant’s testimony for reasons other than challenging his credibility. Otherwise, the statutory command to “weigh the credible testimony along with other evidence of record,” 8 U.S.C. § 1158(b)(1)(B)(ii) (emphasis added), would not make sense. Once credibility is decided—here, as we have explained, by the failure of the IJ or the BIA to make an adverse credibility finding—the issue is settled. Credibility concerns that do not justify an adverse credibility finding cannot be smuggled into the persuasive-ness inquiry so as to undermine the finding of credibility we are required to afford Dai’s testimony.12 Indeed, despite pointing out that Dai was “not [ ] truthful” about a tangen-tial point, the BIA never questioned the facts regarding Dai’s persecution in China.

Neither the IJ nor the BIA explained how Dai’s conceal-ment of his family’s travel to the United States and return to China was relevant in any way other than to undermine Dai’s credibility. The government likewise offered no such expla-nation before this court, and in any event we independently discern no relevance beyond Dai’s credibility. Therefore, neither the family’s return nor Dai’s alleged concealment of that fact can support the BIA’s finding that Dai’s credible testimony was unpersuasive.

Finally, contrary to the portion of the IJ’s opinion not men-tioned by the BIA, Dai’s statement that “My wife had a job and I didn’t, and that is why I stayed here,” does not ren-der his testimony about his past persecution unpersuasive. A valid asylum claim is not undermined by the fact that the ap-plicant had additional reasons (beyond escaping persecution) for coming to or remaining in the United States, including seeking economic opportunity. See Li, 559 F.3d at 1105 (re-versing an adverse credibility determination that was based on an applicant’s testimony that economic opportunity was an additional reason for coming to the United States). That is especially true when, as in this case, the loss of economic op-portunity in the home country is part of the overall persecu-tion. Dai testified about his reasons for coming to the United States: “I was persecuted in China . . . . I was arrested. I was beaten[]. I lost my job. . . . I want to come here [ ] and have my very basic human rights.” Although Dai acknowledged that he had additional reasons for coming to the United

12. According to the dissent, “there is barely a dime’s worth of substantive difference between ‘credible’ and ‘persuasive.’” Dissent at 45. This assertion is flatly contradicted by the text of the REAL ID Act, which requires that testimony be both “credible” and “persua-sive.” 8 U.S.C. § 1158(b)(1)(B)(ii). “It is a well-established rule of statutory construction that courts should not interpret statutes in a way that renders a provision superfluous.” Chubb Custom Ins. Co. v. Space Systems/Loral, Inc., 710 F.3d 946, 966 (9th Cir. 2013).

States, he never recanted or contradicted his assertion that he feared persecution if he returned to China, which is the only subjective requirement for an asylum claim.

* * *

The BIA did not enter an adverse credibility finding, so we are required to treat Dai’s testimony as credible. The record compels the conclusion that he testified to sufficient facts to demonstrate his eligibility for asylum: he was subjected to harm rising to the level of persecution, that persecution was on account of a protected ground, and the persecution was committed by the government. Nothing in the BIA’s burden of proof analysis raises questions about whether Dai established either of those elements. Treating that analysis instead as going to the question of persuasiveness, the BIA’s concerns are either unsupported by our case law or serve only as attempts to impermissibly undermine the credibility determination. The record therefore compels the conclusion that Dai’s testimony satisfies his burden of proof because it meets the three requirements of the statute: it is credible, per-suasive, and sets forth sufficient facts. 8 U.S.C. § 1158(b)(1)(B)(ii).

Because Dai has established that he suffered past persecu-tion, he is entitled to a presumption of a well-founded fear of future persecution. During the administrative proceedings, DHS

made no arguments concerning changed country condi-tions to the IJ or the BIA, and presented no documentary evidence for that purpose. “In these circumstances, to provide [DHS] with another opportunity to present evi-dence of changed country conditions, when it twice had the chance but failed to do so, would be exceptionally unfair.”

Ndom v. Ashcroft, 384 F.3d 743, 756 (9th Cir. 2004) (quot-ing Baballah v. Ashcroft, 367 F.3d 1067, 1078 n.11 (9th Cir. 2004)); see also Quan v. Gonzales, 428 F.3d 883, 889 (9th Cir. 2005). “In this situation, we are not required to remand for a determination of whether [Dai] is eligible for asylum. We hold that he is eligible for asylum. Because the decision to grant asylum is discretionary, however, we remand for a determination of whether [Dai] should be granted asylum.” Ndom, 384 F.3d at 756 (citations omitted).

II. WITHHOLDING OF REMOVAL

Withholding of removal is governed by the same stan-dards as asylum for demonstrating credibility, sufficiency, and persuasiveness. Compare 8 U.S.C. § 1158(b)(1)(B)(ii), (iii), with § 1229a(c)(4)(B), (C). The primary differ-ence is that, in order to be eligible for withholding, Dai must demonstrate that “it is more likely than not that he would be subjected to persecution” based on a protected ground if removed to China, a higher standard than the well-founded fear required for asylum. Zhang v. Ashcroft, 388 F.3d 713,


718 (9th Cir. 2004) (quotation marks omitted). However, as with asylum, past persecution gives rise to a presumption of a sufficient likelihood of future persecution. Mutuku v. Hold-er, 600 F.3d 1210, 1213 (9th Cir. 2010); Tamang, 598 F.3d at 1091; Mousa v. Mukasey, 530 F.3d 1025, 1030 (9th Cir. 2008); Hanna v. Keisler, 506 F.3d 933, 940 (9th Cir. 2007); 8 C.F.R. § 1208.16(b)(1)(i).

The record compels the conclusion that Dai has estab-lished past persecution for his withholding claim for the same reasons as for his asylum claim. The government presented no evidence of changed country conditions, nor did it argue that the resulting presumption has been rebutted or that Dai is barred from withholding of removal for any reason. We therefore remand with instructions to grant Dai withholding of removal. See Ndom, 384 F.3d at 756.13

CONCLUSION

The dissent is correct that our “role in an immigration case is typically one of review, not of first view.” Gonza-les v. Thomas, 547 U.S. 183, 185 (2006) (quotation marks omitted). It is the dissent, however, that violates this cardinal rule. We do not doubt that our dissenting colleague could have written a more persuasive opinion on behalf of the BIA denying relief to Dai, but that is not the role of this court. We are limited to reviewing the reasoning actually advanced by the agency and we cannot substitute our own rationales for those it relied on. Here, neither the IJ nor the BIA made an adverse credibility finding, no matter how much the dissent wishes that they had.14

Dai’s petition for review is GRANTED and this case is REMANDED to the BIA for the exercise of its statutory discretion and to grant withholding of removal.

TROTT, Circuit Judge, dissenting:

The significance of my colleagues’ opinion is not that it remands this case to the Bureau of Immigration Appeals (“BIA”) with orders favorable to Ming Dai. In the abstract, this result would be unremarkable. However, the serious legal consequences of their opinion as a circuit precedent are that it (1) demolishes both the purpose and the substance of the

13. Dai does not challenge the BIA’s denial of CAT relief here, so we do not consider it.

14. With all respect, Judge Trott’s lengthy laments regarding the need for the IJ and the BIA to state explicitly that they find a peti-tioner’s testimony not credible are wholly unwarranted. Such has been the law for at least two decades. It is not difficult for an IJ or the BIA to follow that rule: the agency need only include a few words in its deci-sion. When it fails to do so, we can only assume that the failure is de-liberate. In any event, the agency’s failure in a particular case to make a required finding would hardly warrant Judge Trott’s extraordinary discourse regarding our circuit’s immigration law in general. In short, the problem which so greatly disturbs Judge Trott is of little moment. At most, he has shown that on occasion the agency has failed to do its job properly. If he’s right, then surely it will do better in the future.

REAL ID Act of 2005 (“Act”)15, (2) disregards the appropri-ate standard of review, and (3) perpetuates our idiosyncratic approach to an Immigration Judge’s (“IJ”) determination that the testimony of an asylum seeker lacks sufficient credibility or persuasiveness to prove his case. The majority’s opinion accomplishes these untoward results by contaminating the is-sue before us with irrelevancies, the most pernicious of which is a meritless irrebuttable presumption of credibility. The sole issue should be whether Dai’s unedited presentation compels the conclusion that he carried his burden of proving he is a refugee and thus eligible for a discretionary grant of asylum. Only if we can conclude that no reasonable factfinder could fail to find his evidence conclusive can we grant his petition.

The IJ’s decision not to make an explicit adverse cred-ibility finding is a classic red herring that throws our analysis off the scent and preordains a result that is incompatible with the evidentiary record. By omitting from their opinion the IJ’s fact-based explanation of his decision, the majority elides and obscures eight material findings of fact the IJ did make, each of which is entitled to substantial deference. The ma-jority’s artificial assertion that “there is no finding to which we can defer” is false. For this reason, I quote in full the IJ’s findings and conclusions about the persuasiveness of Dai’s presentation in Part IV of my dissent. The eight findings are as follows.

First, the IJ specifically found that the information report-ed by the asylum officer about his conversation with Dai was accurate. The IJ said,

As to the contents of [the asylum officer’s notes], I give the notes full weight, insofar as the respondent has con-firmed the contents of the questions and answers given during the course of that interview. Furthermore, I note that in the sections in which the respondent equivocated, stating that he was nervous and not sure that he gave those precise answers, I nevertheless give the Asylum Officer’s notes some substantial weight, in that they are consistent with the respondent’s testimony in court.

Accordingly, the IJ accepted as a fact that Dai admitted that he did not disclose the consequential truth about his wife’s and daughter’s travels because he was nervous about how this would be perceived by the asylum officer in connec-tion with his claim.

Second, the IJ accepted Dai’s admission as a fact that he concealed the truth because he was afraid of giving straight answers regarding his wife’s and daughter’s trip to the United States.

Third, the IJ determined that Dai had deliberately omitted highly relevant information from his Form I-589 application for asylum, information that he also tried to conceal from the asylum officer.

15. Pub. L. No. 109-13, 119 Stat. 231.


Fourth, the IJ found that Dai’s omission of his informa-tion “is consistent with his lack of forthrightness before the asylum office[r] as to his wife and daughter’s travel with him. . . .”

Fifth, the IJ credited Dai’s admission that when asked by the asylum officer to “tell the real story” about his family’s travels, Dai said he “wanted a good environment for his child, and his wife had a job, but he did not, and that is why he stayed here [after his wife and daughter went back to China].

Sixth, the IJ found that Dai admitted he stayed here after they returned “because he was in a bad mood and he wanted to get a job and ‘a friend of mine is here.’”

Seventh, the IJ said “I do not find that [Dai’s] explanations for [his wife’s] return to China while he remained here are adequate.” (Emphasis added).

Finally, the IJ also credited Dai’s concessions that his wife and daughter returned to China because “his daughter’s edu-cation would be cheaper in China,” and that “his wife wanted to go to take care of her father.”

When Dai’s subterfuge got to the BIA, the BIA said in its decision that “the record reflects that [Dai] failed to disclose to both the asylum officer and the IJ” the true facts about his family’s travels. The BIA noted that Dai had conceded he was not forthcoming about this material information be-cause he believed that the truth about their travels “would be perceived as inconsistent with his claims of past and feared persecution.”

The IJ’s specific factual findings in connection with Dai’s failure to satisfy his burden of proof were not the product of inferences drawn from circumstantial evidence. These find-ings were directly based upon revealing answers Dai admit-ted he gave to the asylum officer during his interview. These facts are beyond debate, and they undercut Dai’s case.

To quote the BIA, these facts were “detrimental to his claim” and “significant to his burden of proof.” Nevertheless, the majority cavalierly brushes them aside, claiming that an immaterial presumption of credibility overrides all of them.

In this connection, I note a peculiarity in the majority’s approach to Dai’s case: Nowhere does Dai assert that he is entitled to a conclusive presumption of credibility. His brief does not contain any mention of the presumption argument the majority conjures up on his behalf. The closest Dai comes to invoking the majority’s inapt postulate is with a statement that we “should” treat as credible his testimony regarding persecution in China. He does not take issue with the IJ’s foundational adverse factual findings, choosing instead to argue that they were not sufficient in the light of the record as a whole to support the IJ’s ultimate determination.

For example, Dai acknowledges in his brief that the “IJ’s or BIA’s factual findings are reviewed for substantial evi-dence” and that the “REAL ID Act’s new standards govern-ing adverse credibility determinations applies to applications for asylum, withholding of removal, and CAT relief made on or after May 11, 2005.” Blue Br. 10 (emphasis added) (quota-tion marks omitted). Next, he notes that “an IJ cannot selec-

tively examine evidence in determining credibility, but rather must present a reasoned analysis of the evidence as a whole and cite specific instances in the record that form the basis of the adverse credibility finding.” Id. (emphasis added) (quota-tion marks omitted). Moreover, Dai notes that “[t]o support an adverse credibility determination, inconsistencies must be considered in light of the totality of the circumstances, and all relevant factors” adding that “trivial inconsistencies . . . should not form the basis of an adverse credibility deter-mination.” Id. at 10–11 (emphasis added) (quotation marks omitted). He contends that he “has provided adequate expla-nation” for his inconsistencies, i.e., the failure to disclose his family’s travels. Id. at 14. Finally, after attempting to pick apart the IJ’s adverse findings, Dai’s bottom line is that “his wife’s departure from the United States does not adversely affect his credibility at all,” an assertion that ignores his failed coverup of it. See id. at 16.

In summary, the majority choose to ignore a material part of the evidentiary record even though Dai implores us to “examine it as a whole,” as he did in his brief to the BIA. Dai accepts that the viability of his entire presentation is on the line, but the majority ignores his concession. In this connection, the Attorney General has responded only to the claims and arguments Dai included in his brief. The Attorney General has not been given an opportunity to respond to the majority’s inventive analysis, nor to the theory concocted by the majority on Dai’s behalf. Both sides will be surprised by my colleagues’ artful opinion—Dai pleasantly, the Attorney General not so much.

I will have more to say in Part V about our Circuit’s mis-informed treatment of the role, responsibility, and product of an asylum officer.

For these reasons, I respectfully dissent.

I

Backdrop Over the years, our Circuit has manufactured a plethora

of misguided rules regarding the credibility of political asy-lum seekers. I begin with this issue because the majority’s mishandling of it infects the remainder of their opinion with error. These result-oriented ad hoc hurdles for the govern-ment stem from humanitarian intentions, but our court has pursued these intentions with untenable methods that violate the institutional differences between a reviewing appellate court, on one hand, and a trial court on the other, usurping the role of the Department of Homeland Security (“DHS”) and the BIA in the process. Referring to our approach to wit-ness credibility as an “idiosyncratic analytical framework,” a previous panel of our court described this inappropriate situation as follows:

The Supreme Court has repeatedly instructed us on the proper standard to apply when reviewing an immigra-tion judge’s adverse credibility determination. Time and again, however, we have promulgated rules that tend to


obscure that clear standard and to flummox immigration judges, who must contort what should be a simple fac-tual finding to satisfy our often irreconcilable prece-dents. The result of this sly insubordination is that a panel that takes Congress at its word and accepts that findings of fact are “conclusive unless any reasonable adjudicator would be compelled to conclude the con-trary,” . . . or follows the Supreme Court’s admonition that “[t]o reverse the BIA finding we must find that the evidence not only supports that conclusion, but compels it,” . . . runs a serious risk of flouting one of our eclectic, and sometimes contradictory, opinions.

Jibril v. Gonzales, 423 F.3d 1129, 1138 (9th Cir. 2005) (al-teration in original) (citations omitted).

Many of our Circuit’s contrived rules on this subject and my colleagues’ decision are irreconcilable with the structural principle set forth in Federal Rule of Civil Procedure 52(a)(6) that “[f]indings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court’s opportunity to judge the witnesses’ credibility.” Accordingly, we are expected to apply a highly deferential standard to a trial court’s determination regarding the credibility of a wit-ness. Anderson v. City of Bessemer City, 470 U.S. 564, 573–76 (1985). In discussing this rule, the Supreme Court said that “[w]hen findings are based on determinations regarding the credibility of witnesses, Rule 52(a) demands even greater deference to the trial court’s findings; for only the trial judge can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener’s understanding of and belief in what is said.” Id. at 575. The Court added that the ap-plicable “clearly erroneous” standard of review “plainly does not entitle a reviewing court to reverse the finding of a trier of fact simply because it is convinced that it would have decided the case differently. The reviewing court oversteps the bounds of its duty under Rule 52(a) if it undertakes to duplicate the role of the lower court.” Id. at 573 (emphasis added).

The Supreme Court sharpened this point about our lim-ited role in Gonzales v. Thomas, 547 U.S. 183 (2006) (per curiam), vacating 409 F.3d 1177 (9th Cir. 2005) (en banc). In summarily vacating our obdurate en banc opinion, the Court held that we had exceeded our authority and made a deter-mination that belonged to the BIA. 547 U.S. at 185–86. The Court agreed with the Solicitor General that “a court’s role in an immigration case is typically one of review, not of first view.” Id. at 185 (emphasis added) (quotation marks omitted). To support its conclusion, the Court cited INS v. Orlando Ventura, 537 U.S. 12 (2002): a “‘judicial judgment cannot be made to do service for an administrative judgment.’” 547 U.S. at 186 (quoting Ventura, 537 U.S. at 16). More about Ventura later.

The majority’s opinion’s use of an incongruous irrebutta-ble presumption of credibility to erase the IJ’s findings of fact and the BIA’s decision and thus to make us a court of “first

view” is another example of our continuing intransigence. If, as they say, we are bound by precedent to do it their way, then its time to change our precedent.

II

A FALSE PREMISE

A.

The majority opinion’s assertion that “we must treat [Dai’s] testimony as credible” rests on a fallacious premise. Judge Reinhardt writes, “Properly understood, the rebuttable presumption provision of the REAL ID Act applies only to appeals to the BIA, not to petitions for review in our court.” From this defective premise, he concludes that we must ig-nore the IJ’s detailed analysis and findings of fact about Dai’s presentation. When it comes to our task of reviewing the cred-ibility of witnesses in a trial court or whether a witness’ testi-mony suffices to carry his burden of proof, however, there is no material difference between an appeal and a petition for review, none. Federal Rule of Civil Procedure 52(a) makes no such distinction. As Anderson said, Rule 52(a) applies to a “reviewing court,” which is what we are in this capacity. 470 U.S. at 573–74 (emphasis added); see Thomas, 547 U.S. at 185. Neither the Court nor Rule 52(a) differentiate between appeals and petitions for review. Nor would such a distinc-tion make any sense. As Anderson and Thomas illustrate, the issue is one of function, not of form or labels. The Act’s use of the word “appeal” does not dictate how we must go about our process of review. Using the standards provided by Con-gress, we are not in a position to weigh a witness’s credibility or persuasiveness.

Federal Rule of Appellate Procedure 20, “Applicability of Rules to the Review or Enforcement of an Agency Order,” illustrates the soundness of treating appeals and petitions for review with a uniform approach. Rule 20 reads, “All provi-sions of these rules . . . apply to the review or enforcement of an agency order. In these rules, ‘appellant’ includes a pe-titioner or applicant, and ‘appellee’ includes a respondent.”

Moreover, and directly to the point, the Act itself does not require an IJ to make a specific credibility finding in those precise terms. As the BIA correctly said with respect to the Act, “[c]ontrary to the respondent’s argument on appeal, the Immigration Judge need not have made an explicit ad-verse credibility finding to nevertheless determine that the respondent did not meet his burden of proving his asylum claim.” See discussion infra Section VI. If the IJ does not make such an explicit finding, all the respondent is entitled to is a “rebuttable presumption of credibility on appeal.” 8 U.S.C. § 1158(b)(1)(B)(iii) (emphasis added). By attempting to restrict this language to an appeal to the BIA, the major-ity opinion conveniently frees itself to apply derelict Ninth Circuit precedent to Dai’s testimony and automatically to deem it credible.16

16. The majority cites She v. Holder, 629 F.3d 958, 964 & n.5 (9th Cir. 2010) in support of this ipse dixit claim. However, She’s footnote


Over and over the majority incant an inappropriate and counterintuitive rule that in the absence of a formal adverse credibility finding, “we are required [blindly] to treat the pe-titioner’s testimony as credibility.” The practical effect of the majority’s rule is breathtaking: The lack of a formal adverse credibility finding becomes a selective positive credibility finding and dooms a fact-based determination by an IJ and the BIA that an applicant’s case is not sufficiently persuasive to carry his burden of proof. The majority’s bizarre cherry-picking approach violates all the rules that control our review of a witness’s testimony before a factfinder.

B.

But even if we were to assume for the sake of argument that the Act’s rebuttable presumption applies only to the BIA, by what logic, reason, or principle does it follow that we as a reviewing court are free to clothe an applicant’s testimony with a protective presumption of credibility? Are we free to turn a blind eye to conspicuous problems with his testimo-ny identified by an IJ? By the BIA? Free to brush off Rule 52(a) and the Supreme Court’s explanation of what the Rule requires?

A conclusive presumption of credibility has no valid place in our task of reviewing the persuasiveness of a witness’s testimony. Such an artifice vacuously eliminates relevant factual evidence from consideration and violates Rule 52(a)(6). The deployment of a conclusive presumption becomes a misguided way not only of putting a heavy thumb on one tray of the traditional scales of justice, but also of removing relevant evidence from the other. This approach allows us to evade our responsibilities to examine and to evaluate the entire record before an IJ, permitting us instead to disregard facts that would otherwise discredit our final determination.

Judge Reinhardt’s opinion writes the REAL ID Act and its reference to a rebuttable presumption of credibility out of existence. However, Congress specifically intended the Act to govern us, the Ninth Circuit Court of Appeals, as demon-strated in Section III of this dissent. The evidentiary record in this case devours any such presumption.

Judge Reinhardt’s claim that a petition for review is “a new action against the United States” is irrelevant. No matter what he calls it, we are reviewing a decision made by an ad-ministrative agency involving the persuasiveness of his case.

III

THE REAL ID ACT Congress enacted the REAL ID Act of 2005 because of

our Circuit’s outlier precedents on this issue and our intran-sigent refusal to follow the rules. The House Conference Committee Report (“House Report”)17 explained that “the creation of a uniform standard for credibility is needed to

5 says that because the “rebuttable presumption” provision does not apply retroactively, it had no applicability in She’s case.

17. H.R. Rep. No. 109-72 (2005) (Conf. Rep.), reprinted in 2005 U.S.C.C.A.N. 240.

address a conflict . . . between the Ninth Circuit on one hand and other circuits and the BIA.” H.R. Rep. No. 109-72 at 167. The House Report also said that the Act “resolves conflicts between administrative and judicial tribunals with respect to standards to be followed in assessing asylum claims.” Id. at 162. Nevertheless, my colleagues hold that a key part of the Act does not apply to us, only to the BIA.

As the Act pertains to this case, it established a number of key principles, all of which the majority fails to follow, perpetuating the conflicts Congress attempted to resolve.

First, “[t]he burden of proof is on the applicant to establish that the applicant is a refugee . . . .”18

Second, “[t]he testimony of the applicant may be suffi-cient to sustain the applicant’s burden without corroboration, but only if the applicant satisfies the trier of fact that the ap-plicant’s testimony is credible, is persuasive, and refers to specific facts sufficient to demonstrate that the applicant is a refugee.”19

Third,

Considering the totality of the circumstances, and all relevant factors, a trier of fact may base a credibility determination on the demeanor, candor, or responsive-ness of the applicant or witness, the inherent plausibility of the applicant’s or witness’s account, the consistency between the applicant’s or witness’s written and oral statements (whenever made and whether or not under oath, and considering the circumstances under which the statements were made), the internal consistency of each such statement, the consistency of such statements with other evidence of record (including the reports of the Department of State on country conditions), and any inaccuracies or falsehoods in such statements, without regard to whether an inconsistency, inaccuracy, or false-hood goes to the heart of the applicant’s claim, or any other relevant factor. There is no presumption of credi-bility, however, if no adverse credibility determination is explicitly made, the applicant or witness shall have a rebuttable presumption of credibility on appeal.20

We have attempted in a number of panel opinions after the Act to calibrate our approach to applicant credibility and persuasiveness issues, but as the majority opinion illustrates, “old ways die hard.” Huang v. Holder, 744 F.3d 1149 (9th Cir. 2014) captures where we should be on this issue:

[W]e have concluded that “the REAL ID Act requires a healthy measure of deference to agency credibility de-terminations.” This deference “makes sense because IJs are in the best position to assess demeanor and other credibility cues that we cannot readily access on re-view.” “[A]n immigration judge alone is in a position to

18. 8 U.S.C. § 1158(b)(1)(B)(i).19. 8 U.S.C. § 1158(b)(1)(B)(ii) (emphasis added).20. 8 U.S.C. § 1158(b)(1)(B)(iii).


observe an alien’s tone and demeanor, to explore incon-sistencies in testimony, and to apply workable and con-sistent standards in the evaluation of testimonial evi-dence.” By virtue of their expertise, IJs are “uniquely qualified to decide whether an alien’s testimony has about it the ring of truth.”

The need for deference is particularly strong in the con-text of demeanor assessments. Such determinations will often be based on non-verbal cues, and “[f]ew, if any, of these ephemeral indicia of credibility can be conveyed by a paper record of the proceedings and it would be extraordinary for a reviewing court to substitute its sec-ond-hand impression of the petitioner’s demeanor, can-dor, or responsiveness for that of the IJ.” Indeed, even before the enactment of the REAL ID Act, we recog-nized the need to give “special deference to a credibility determination that is based on demeanor,” because the important elements of a witness’s demeanor that “may convince the observing trial judge that the witness is testifying truthfully or falsely” are “entirely unavailable to a reader of the transcript, such as the Board or the Court of Appeals.” The same principles underlie the def-erence we accord to the credibility determinations of juries and trial judges.

Id. at 1153–54 (alterations in original) (citations omitted). This “healthy measure of deference” should also apply to the agency’s determination with respect to whether an applicant has satisfied the agency’s “trier of fact”—not us—that his evidence is persuasive, an issue that is in the wheelhouse of a jury or a judge or an IJ hearing a case as a factfinder.

IV

THE IJ’S DECISION The IJ in this case concluded that Ming Dai had not satis-

fied his statutory burden of establishing that he is a refugee pursuant to § 1158(b)(1)(B)(i). The IJ gave as his “principle area of concern” Dai’s implausible unpersuasive testimony, another way of saying it wasn’t credible. As Dai’s brief cor-rectly demonstrates, there is barely a dime’s worth of substan-tive difference between “credible” and “persuasive.” Here is how the IJ explained his decision in terms of § 1158(b)(1)(B)(i) and (ii):

I have carefully considered the respondent’s testimony and evidence and for the following reasons, I find that the respondent has failed to meet his burden of proving eligibility for asylum.

The principal area of concern with regard to the respon-dent’s testimony arose during the course of his cross-examination. On cross-examination, the respondent was asked about various aspects of his interview with an Asylum Officer. The Department of Homeland Security

also submitted the notes of that interview as Exhibit 5. The respondent was asked specific questions regarding several aspects of his testimony before the Asylum Of-ficer. In the course of cross-examination, the respondent was asked regarding his questions and answers as to whether his wife and daughter travelled with him to the United States. The respondent’s responses included the question of whether the asylum officer had asked him if his wife and daughter travelled anywhere other than to Taiwan and Hong Kong. The respondent conceded that he was asked this question and that he replied yes, they had travelled to Taiwan and Hong Kong. The respondent was asked whether the Asylum Officer inquired whether his wife and daughter had travelled elsewhere. The re-spondent then testified before the Court that he was asked this question, “but I was nervous.” In this regard, I note that the respondent did not directly answer the question; instead leapt directly to an explanation for what his answer may have been, namely that he was nervous. The respondent was then asked specifically whether the Asylum Officer asked him if his wife had travelled to Australia in 2007. The respondent confirmed that he had been asked this question, and he confirmed that the answer was in the affirmative. The respondent also confirmed that the Asylum Officer had asked him whether she had travelled anywhere else. He confirmed that he had been so asked. The respondent was then asked whether he answered “no,” that she had not trav-elled anywhere else. The respondent answered that he believed so, that he had so answered. The respondent was then asked, during the course of cross-examination, why he had not said to the Asylum Officer that yes, she had travelled to the United States. The respondent re-plied that he had not thought of it. He stated that they did come with him (meaning his wife and daughter) and that he thought the Asylum Officer was asking him if they had travelled anywhere other than the United States. He explained that he did so because he assumed the U.S. Government had the records of their travel to the United States. On further questioning, the respon-dent eventually hesitated at some length when asked to further explain why he did not disclose spontaneously to the Asylum Officer that his wife and daughter had come with him. The respondent paused at some length and I observed that the respondent appeared nervous and at a loss for words. However, after a fairly lengthy pause, the respondent testified that he is afraid to say that his wife and daughter came here and why they went back. The respondent was asked whether he told the Asylum Of-ficer that he was afraid to answer directly. The respon-dent initially testified that he forgot and did not remem-ber whether he said that. He again reiterated that he was very nervous. He was then asked the question again as to whether he told the Asylum Officer that he was afraid to answer why his wife and daughter had gone back. He


then conceded that maybe, yes, he had answered in that fashion. The respondent was asked whether the Asylum Officer inquired why his wife and daughter went back, and the respondent conceded that he had been so asked, and he further conceded that he replied because school in the United States cost a lot of money (referring to the schooling for his daughter). The respondent was then asked to confirm that the Asylum Officer eventually asked him to tell him the real story as to why his family travelled to the United States and returned to China. The respondent confirmed that he was asked this question and when asked, whether he replied that it was because he wanted a good environment for his child and because his wife had a job and he did not and that that is why he stayed here. He confirmed that he did, in fact, say that. The respondent was further asked, during the course of testimony in court, why his wife and daughter returned to China. In this regard, the respondent testified that they came with him, but returned to China several weeks af-ter arrival. He testified that they did so because his fa-ther-in-law was elderly and needed attention, and be-cause his daughter needed to graduate school in China.

The respondent further claimed that his wife had, in fact, suffered past persecution in the form of a forced abor-tion and the respondent confirmed that he feared his wife and daughter would suffer future persecution. In this regard, the respondent qualified his answer by say-ing that his wife was now on an IUD, apparently thereby suggesting that the risk of persecution is reduced. How-ever, the respondent did concede that the risk of future persecution also pertains to his daughter. Indeed, in this regard, the respondent testified that this is, at least in part, why he applied for asylum.

As to the contents of Exhibit 5, I give the notes full weight, insofar as the respondent has confirmed the contents of the questions and answers given during the course of that interview. Furthermore, I note that in the sections in which the respondent equivocated, stating that he was nervous and not sure that he gave those precise answers, I nevertheless give the Asylum Offi-cer’s notes some substantial weight, in that they are consistent with the respondent’s testimony in court. Specifically, I note that the Asylum Officer’s notes state that the respondent ultimately indicated that he was afraid of giving straight answers regarding his daughter and wife’s trip to the United States and return to China. And while the respondent did not confirm this in court, he did give a similar answer as to why he was testifying in this regard. In other words, the respondent appears to have stated, both before the Asylum Officer and in court that he did not spontaneously disclose the travel of his wife and daughter with him to the United States and their return because he was nervous about how this

would be perceived by the Asylum Officer in connection with his claim. I further note that the Asylum Officer’s notes are internally consistent with regard to references to earlier questions, such as whether the respondent had stated that he applied for a visa with anyone else. At page 2 of the notes contained in Exhibit 5, the respon-dent was asked whether he applied for his visa with anyone else and the notes indicated that he stated that, “no, I applied by myself.” Similarly, I note that the tes-timony before the Asylum Officer and the Court is con-sistent with the omission in the respondent’s Form I-589 application for asylum, of an answer to the question of the date of the previous arrival of his wife, if she had previously been in the United States. See Exhibit 2, page 2, part A.II, question 23. When asked about this omis-sion, the respondent expressed surprise, stating that he told the preparer about their trip and indicated that he thought it had been filled out. Notwithstanding the re-spondent’s statement in this regard, I do observe that the omission is consistent with his lack of forthrightness before the asylum office as to his wife and daughter’s travel with him to the United States and their subse-quent return to China shortly thereafter.

In sum, the respondent’s testimony before the Court and his testimony regarding the Asylum Officer notes, as well as the notes themselves, clearly indicate that the respondent failed to spontaneously disclose that his wife and daughter came with him and then returned to China. His testimony and the notes also consistently demon-strate that the respondent paused at length, both before the Court and before the Asylum Officer, when asked about this topic. His testimony and the Asylum Officer notes are also consistent in indicating that he ultimately testified that he was afraid to say that his wife came here and was afraid of being asked about why she went back. Furthermore, the respondent has conceded that he was asked to “tell the real story” about his family’s travel to the United States by the Asylum Officer, and that he replied that he wanted a good environment for his child and his wife had a job, but he did not, and that is why he stayed here.

In Loho v. Mukasey, 531 F.3d 1016, 1018–19 (9th Cir. 2008), the Ninth Circuit addressed the situation in which an asylum applicant has found safety in the United States and then returns to the country claimed of perse-cution before eventually finding asylum in the United States. The Ninth Circuit held that the applicant’s volun-tary return to the country of claimed persecution may be considered in assessing both credibility and whether the respondent has a well-founded fear of persecution in that country. Here, while the respondent himself has not returned to China, his wife and daughter did. Indeed they did so shortly after arriving in the United States,


and the respondent confirmed that they did so because the schooling is cheaper for his daughter in China, as well as because his father-in-law is elderly and needed to be cared for. The respondent also told the Asylum Officer that the “real story” about whey [sic] his family returned was that his wife had a job and he did not, and that is why he stayed here. This is consistent with re-spondent’s testimony before the Court that he did not have a job at the time he came to the United States. Fur-thermore, I note that the respondent’s claim of persecu-tion is founded on the alleged forced abortion inflicted upon his wife. That is the central element of his claim. The respondent claims that he himself was persecuted through his resistance to that abortion. Nevertheless, the fact remains that the fundamental thrust of the respon-dent’s claim is that his wife was forced to have an abor-tion. In this regard, the respondent’s wife therefore clearly has an equal, or stronger, claim to asylum than the respondent himself, assuming the facts which he claims are true. The respondent was asked why his wife did not stay and apply for asylum and he replied that he did not know they could apply for asylum at the time they departed. The respondent was then asked why he stayed here after they returned; he said because he was in a bad mood and he wanted to get a job and a friend of mine is here.

While Loho v. Mukasey applies to the applicant himself returning to China, I find that the reasoning of the Ninth Circuit in that case is fully applicable to the respondent’s situation in that his wife, who is the primary object of the persecution in China, freely chose to return to China. I do not find that the respondent’s explanations for her return to China while he remained here are adequate. The respondent has stated that he was in a bad mood and that he had found a job and had a friend here. The re-spondent has also indicated that his daughter’s educa-tion would be cheaper in China than here, and he has also indicated that his wife wanted to go to take care of her father. I do not find that these reasons are sufficiently substantial so as to outweigh the concerns raised by his wife and daughter’s free choice to return to China after having allegedly fled that country following his wife’s and his own persecution.

In view of the for[e]going, I find that the respondent has failed to meet his burden of proving eligibility for asy-lum under Section 208(a) of the Act.

(Emphasis added). To erase any doubts about Dai’s problematic testimony,

the following is an excerpt from it.

MS. HANNETT TO MR. DAI

Q. And isn’t it also true that the [asylum] officer asked why did they go back and you replied, so that my daugh-ter can go to school and in the U.S., you have to pay a lot of money?

A. Yes, that’s what I said.

Q. Okay. And isn’t it also true that the officer asked you, can you tell me the real story about you and your fami-ly’s travel to the U.S., and you replied I wanted a good environment for my child. My wife had a job and I didn’t, and that is why I stayed here. My wife and child go home first.

A. I believe I said that.

* * * Q. So, once you got to the United States, why didn’t your wife apply for asylum?

A. My wife just returned to China.

Q. Right, and my question is why didn’t she stay here and apply for asylum?

A. At that time, we didn’t know the apply, we didn’t know that we can apply for asylum.

Q. Well, if you didn’t know that you could apply for asylum, why did you stay here after they returned?

A. Because at that time, I was in a bad mood and I couldn’t get a job, so I want to stay here for a bit longer and another friend of mine is also here.

The asylum officer’s interview notes discussed by the IJ (and found to be consistent with Dai’s testimony before the IJ) read as follows:

Earlier you said your wife has only traveled to Australia, Taiwan and HK. You also said that you traveled to the US alone. Government records indicate that your wife traveled with you to the United States. Can you explain?

[long pause] the reason is I’m afraid to say that my wife came here, then why did she go back.

Your wife went back? Yes

When did she go back to China? February

Why did she go back? Because my child go to school


Earlier you said you applied for your visa alone. Our records indicate that your child also obtained a visa to the US with you. Can you explain?

[long pause]

Daughter came with wife and you in January?

Yes

Can you explain? I’m afraid

Please tell me what you are afraid of. That is what your interview today is for. To understand your fears?

I’m afraid you ask why my wife and daughter go back

Why did they go back?

So that my daughter can go to school and in the US you have to pay a lot of money.

Can you tell me the real story about you and your fam-ily’s travel to the US?

I wanted a good environment for my child. My wife had a job and I didn’t and that is why I stayed here. My wife and child go home first.

(Bracketed notations in original).

V

THE ROLE OF AN ASYLUM OFFICER

The majority’s opinion perpetuates another acute error our Circuit has made in its effort to control the DHS’s admin-istrative process. In footnote 2, the majority say that if Dai concealed relevant information “it was only from the asylum officer.” Only from the asylum officer? So Dai’s admitted concealment under oath of germane information during a critical part of the evaluation process is of no moment?

The majority’s demotion of the role of an asylum officer represents a sub silentio application of another faulty propo-sition on the books in our circuit: Singh v. Gonzales, 403 F.3d 1081 (9th Cir. 2005).

Certain features of an asylum interview make it a poten-tially unreliable point of comparison to a petitioner’s testimony for purposes of a credibility determination. Barahona-Gomez v. Reno, 236 F.3d 1115 (9th Cir. 2001), explained the significant procedural distinctions between the initial quasi-prosecutorial “informal con-ferences conducted by asylum officers” after the filing of an asylum application, and the “quasi-judicial func-tions” exercised by IJs . . . .

Id. at 1087 (emphasis added). First of all, we may not have in this case a verbatim tran-

script of Dai’s testimony, but we have the asylum officer’s notes, which the IJ explicitly found to be accurate. Moreover, when appropriately confronted under oath with the notes, Dai admitted they correctly captured what he said. Under these circumstances, any concern that the asylum interview might be a “potentially unreliable point of comparison” to Dai’s testimony is irrelevant. The record (thanks to Dai himself) eliminates any potential for unreliability.

Second, the pronouncement in Singh v. Gonzales that an asylum officer’s interview in an affirmative asylum case is “quasi-prosecutorial” in nature is flat wrong and reveals our fundamental misunderstanding of the process.21 An asylum officer in an affirmative asylum case does not “prosecute” anyone during the exercise of his responsibilities, and the process is not “quasi-prosecutorial” in nature. In fact, unlike a prosecutor, an asylum officer has the primary authority and discretion to grant asylum to an applicant should the appli-cant present a convincing case. The asylum officer’s role is essentially judicial, not prosecutorial. We miss the mark here because we see only those cases where an affirmative asylum applicant did not present a sufficiently credible persuasive case to an asylum officer to prevail, and we mistakenly con-clude from that unrepresentative sample that asylum officers tend to decide against such applicants.

The true facts emerge from DHS’s June 20, 2016 report to Congress, Affirmative Asylum Application Statistics and Decisions Annual Report, covering “FY 2015 adjudications of affirmative asylum applications by USCIS [U.S. Citizen-ship & Immigration Services] asylum officers for the stated period.”22 By way of background, the Report points out that asylum officers have a central determinative role in the pro-cess. Asylum determinations “are made by an asylum officer after an applicant files an affirmative asylum application, is interviewed, and clears required security and background checks.” Id. at 2.

The Report contains statistics about the activity of asylum officers. According to the FY2015 statistics, asylum officers completed 40,062 affirmative asylum cases. They approved 15,999 applications for an approval rate of 47% for inter-viewed cases. Id. at 3.

USCIS has a Policy Manual. Chapter 1 of Volume 1 es-tablishes its “Guiding Principles.”23 A “Core Principal” reads as follows:

21. An affirmative asylum case differs from a defensive asylum case involving someone already in removal proceedings. See Ob-taining Asylum in the United States, DEP’T OF HOMELAND SEC., https://www.uscis.gov/humanitarian/refugees-asylum/asylum/obtain-ing -asylum-united-states (last updated Oct. 19, 2015).

22. 2016 DHS Congressional Appropriations Reports, DEP’T OF HOMELAND SEC., https://www.dhs.gov/publication/2016-dhs-congressional-appropriations-reports (last published Feb. 12, 2018) (follow “United States Citizenship and Immigration Services (US-CIS) -Affirmative Asylum Application Statistics & Decisions FY16 Report” hyperlink).

23. Policy Manual, U.S. CITIZENSHIP & IMMIGRATION


The performance of agency duties inevitably means that some customers will be disappointed if their cases are denied. Good customer service means that everyone USCIS affects will be treated with dignity and courtesy regardless of the outcome of the decision.

* * * USCIS will approach each case objectively and adjudi-cate each case in a thorough and fair manner. USCIS will carefully administer every aspect of its immigration mission so that its customers can hold in high regard the privileges and advantages of U.S. immigration.

Id. Finally, we look at the training given to asylum officers

in connection with their interviews of affirmative asylum ap-plicants. In USCIS’s Adjudicator’s Field Manual, we find in Appendix 15-2, “Non-Adversarial Interview Techniques,” the following guidance.24

I. OVERVIEW

An immigration officer will conduct an interview for each applicant, petitioner or beneficiary where required by law or regulation, or if it is determined that such in-terviewed [sic] is appropriate. The interview will be conducted in a non-adversarial manner, separate and apart from the general public. The officer must always keep in mind his or her responsibility to uphold the in-tegrity of the adjudication process. As representatives of the United States Government, officers must conduct the interview in a professional manner.

* * *

Due to the potential consequences of incorrect determi-nations, it is incumbent upon officers to conduct orga-nized, focused, and well-planned, non-adversarial in-terviews . . . .

* * *

III. NON-ADVERSARIAL NATURE OF THE INTERVIEW

A. Concept of the Non-adversarial Interview

A non-adversarial proceeding is one in which the parties are not in opposition to each other. This is in contrast to adversarial proceedings, such as civil and criminal court

SERVS., https://www.uscis.gov/policymanual/HTML/PolicyManual-Volume1-PartA-Chapter1.html (Aug. 23, 2017).

24. Adjudicator’s Field Manual - Redacted Public Version, U . S . C I T I Z E N S H I P & I M M I G R A T I O N S E R V S . , https://www.uscis.gov/ilink/docView/AFM/HTML/AFM/0-0-0-1.html (fol-low “Appendices” hyperlink; then follow “15-2 Non-Adversarial In-terview Techniques” hyperlink) (last visited Feb. 15, 2018) (emphasis added).

proceedings, where two sides oppose each other by ad-vocating their mutually exclusive positions before a neutral arbiter until one side prevails and the other side loses. A removal proceeding before an immigration judge is an example of an adversarial proceeding, where the Service trial attorney is seeking to remove a person from the United States, while the alien is seek-ing to remain.

The interview is part of a non-adversarial proceeding. The principal intent of the Service is not to oppose the interviewee’s goal of obtaining a benefit, but to deter-mine whether he or she qualifies for such benefit. If the interviewee qualifies for the benefit, it is in the Service’s interest to accommodate that goal.

* * *

B. Points to Keep in Mind When Conducting a Non-adversarial Interview

The officer’s role in the non-adversarial interview is to ask questions formulated to elicit and clarify the infor-mation needed to make a determination on the petitioner or applicant’s request. This questioning must be done in a professional manner that is non-threatening and non-accusatory.

1. The officer must:

a. Treat the interviewee with respect. Even if someone is not eligible for the benefit sought based on the facts of the claim, the officer must treat him or her with respect. The officer may hear similar claims from many inter-viewees, but must not show impatience towards any in-dividual. Even the most non-confrontational officer may begin to feel annoyance or frustration if he or she be-lieves that the interviewee is lying; however, it is impor-tant that the officer keep these emotions from being ex-pressed during the interview.

b. Be non-judgmental and non-moralistic. Interviewees may have reacted to situations differently than the offi-cer might have reacted. The interviewee may have left family members behind to fend for themselves, or may be a member of a group or organization for which the officer has little respect. Although officers may feel per-sonally offended by some interviewee’s actions or be-liefs, officers must set their personal feelings aside in their work, and avoid passing moral judgments in order to make neutral determinations.

c. Create an atmosphere in which the interviewee can freely express his or her claim. The officer must make an attempt to put the interviewee at ease at the beginning of


the interview and continue to do so throughout the inter-view. If the interviewee is a survivor of severe trauma (such as a battered spouse), he or she may feel espe-cially threatened during the interview. As it is not always easy to determine who is a survivor, officers should be sensitive to the fact that every interviewee is potentially a survivor of trauma.

Treating the interviewee with respect and being non-judgmental and non-moralistic can help put him or her at ease. There are a number of other ways an officer can help put an interviewee at ease, such as:

• Greet him or her (and others) pleasantly;

• Introduce himself or herself by name and explain the officer’s role;

• Explain the process of the interview to the interviewee so he or she will know what to expect during the interview;

• Avoid speech that appears to be evaluative or that indi-cates that the officer thinks he or she knows the answer to the question;

• Be patient with the interviewee; and

• Keep language as simple as possible.

d. Treat each interviewee as an individual. Although many claims may be similar, each claim must be treated on a case-by-case basis and each interviewee must be treated as an individual. Officers must be open to each interviewee as a potential approval.

e. Set aside personal biases. Everyone has individual preferences, biases, and prejudices formed during life experiences that may cause them to view others either positively or negatively. Officers should be aware of their personal biases and recognize that they can poten-tially interfere with the interview process. Officers must strive to prevent such biases from interfering with their ability to conduct interviews in a non-adversarial and neutral manner.

f. Probe into all material elements of the interviewee’s claim. The officer must elicit all relevant and useful in-formation bearing on the applicant or beneficiary’s eli-gibility. The officer must ask questions to expand upon and clarify the interviewee’s statements and information contained on the form. The response to one question may lead to additional questions about a particular topic or event that is material to the claim.

g. Provide the interviewee an opportunity to clarify in-consistencies. The officer must provide the interviewee with an opportunity during the interview to explain any discrepancy or inconsistency that is material to the de-termination of eligibility. He or she may have a legiti-mate reason for having related testimony that outwardly appears to contain an inconsistency, or there may have been a misunderstanding between the officer and the in-terviewee. Similarly, there may be a legitimate explana-tion for a discrepancy or inconsistency between infor-mation on the form and the interviewee’s testimony.

On the other hand, the interviewee may be fabricating a claim. If the officer believes that an interviewee is fabri-cating a claim, he or she must be able to clearly articu-late why he or she believes that the interviewee is not credible.

h. Maintain a neutral tone throughout the interview. In-terviews can be frustrating at times for the officer. The interviewee may be long-winded, may discuss issues that are not relevant to the claim, may be confused by the questioning, may appear to be or may be fabricating a claim, etc. It is important that the officer maintain a neutral tone even when frustrated.

2. The officer must not:

• Argue in opposition to the applicant or petitioner’s claim (if the officer engages in argument, he or she has lost control of the interview);

• Question the applicant in a hostile or abusive manner;

• Take sides in the applicant or petitioner’s claim;

• Attempt to be overly friendly with the interviewee; or

• Allow personal biases to influence him or her during the interview, either in favor of or against the interviewee.

I hope that by exposing the particulars of the affirma-tive application process we will cease demeaning unspeci-fied “certain features” of the applicant’s interview, and that we will correct our uninformed characterization of it as “quasi-prosecutorial.”

While under oath, Dai intentionally concealed material in-formation from the asylum officer during a critical aspect of the process. To diminish the import of this potential crime25 because the government official was “only” an asylum officer is a serious mistake.

25. 18 U.S.C. § 1001 makes it a crime knowingly and willfully to make a material false statement in any matter within the jurisdiction of the executive branch of Government.


VI

THE BIA’S DECISION Dai unsuccessfully appealed the IJ’s decision denying his

application for asylum, withholding of removal, and protec-tion under the Convention Against Torture. The BIA’s deci-sion follows.

We review for clear error the findings of fact, including determinations of credibility, made by the Immigration Judge. We review de novo all other issues, including whether the parties have met the relevant burden of proof, and issues of discretion. The respondent filed his application for asylum after May 11, 2005, and thus re-view is governed by the REAL ID Act of 2005.

We adopt and affirm the Immigration Judge’s decision in this case. The Immigration Judge correctly denied the respondent’s applications for failure to meet his burden of proof. The record reflects that the respondent failed to disclose to both the [DHS] asylum officer and the Immigration Judge that his wife and daughter had traveled with him to the United States and voluntarily returned to China shortly after. The respondent further conceded that he was not forthcoming about this infor-mation because he believed that the true reasons for their return—that his wife had a job in China and need-ed to care for her elderly father, and that their daughter could attend school in China for less money than in the United States—would be perceived as inconsistent with his claims of past and feared future persecution.

The Immigration Judge correctly decided that the vol-untary return of the respondent’s wife and daughter to China, after allegedly fleeing following the persecution of the respondent and his wife, prevents the respondent from meeting his burden of proving his asylum claim. Contrary to the respondent’s argument on appeal, the Immigration Judge need not have made an explicit ad-verse credibility finding to nevertheless determine that the respondent did not meet his burden of proving his asylum claim. The respondent’s family voluntarily re-turning and his not being truthful about it is detrimental to his claim and is significant to his burden of proof.

(Emphasis added) (footnote and citations omitted).

VII

THE IJ BECOMES A POTTED PLANT My colleagues’ opinion boils down to this faulty proposi-

tion: Simply because the IJ did not say “I find Dai not cred-ible” but opted instead to expose the glaring factual deficien-cies in Dai’s presentation and to explain in specific detail and at length why Dai had not persuasively carried his burden of proving his case, my colleagues disregard the IJ’s decision altogether and claim we must selectively embrace as persua-

sive Dai’s problematic presentation regarding the core of his claim.26 Out of the blue, unpersuasive becomes persuasive. I invite the reader to review once again the IJ’s decision and to decide on the merits whether Dai’s case is persuasive. It is anything but.

My colleagues brush off the conspicuous blatant flaws in Dai’s performance involving demeanor, candor, and re-sponsiveness, claiming that “taking into account the record as a whole, nothing undermines the persuasiveness of Dai’s credible testimony. . . .” Nothing? They disregard inaccura-cies, inconsistencies, and implausibilities in his story, and his barefaced attempt to cover up the truth about his wife’s and daughter’s travels and situation. They even sweep aside Dai’s admission to the asylum officer that the “real story” is that (1) he wanted a good environment for his child, (2) his wife left him behind because she had a job in China and he did not, and (3) he was in a “bad mood,” couldn’t get a job, and wanted to stay here “for a bit longer.” In their opinion, there is not a single word regarding the factors cited by the IJ to explain his observations, findings, and decision, includ-ing the fact that Dai’s wife, allegedly the initial subject of persecution in China, made a free choice to return. The effect of the presumption is to wipe the record clean of everything identified by the IJ and the BIA as problematic.

The glaring irony in my colleagues’ analysis is that once they proclaim that Dai’s testimony is credible, they pick and choose only those parts of his favorable testimony that sup-port his case—not the parts that undercut it. If we must ac-cept Dai’s presentation as credible, then why not also his “real story” when confronted with the facts that he came to the United States because he wanted a good environment for his daughter, and that he did not return to China with his wife because she had a job and he did not? What becomes of his attempted cover up of the travels of his wife and daughter?

Furthermore, my colleagues’ backhanded treatment of the IJ’s opinion is irreconcilable with the BIA’s wholesale acceptance of it. In words as clear as the English language can be, the BIA said, “We adopt and affirm the Immigration Judge’s decision.” To compound their error, the majority then seizes upon and pick apart the BIA’s summary explanation of why it concluded on de novo review that the IJ’s decision was correct. What the BIA did say was that Dai’s failure to be truthful about his family’s voluntary return to China was “detrimental to his claim” and “significant to his burden of proof.”

VIII

ANALYSIS And so we come at last to the statutory requirement of

persuasiveness, an issue uniquely suited to be determined by the “trier of fact,” as the Act and 8 U.S.C. § 1158(b)(1)(B)(ii) dictate. The majority opinion rigs this inquiry by freighting it with an incomplete record. The opinion inappropriately

26. And if an IJ does make an adverse credibility finding, we have manufactured a multitude of ways to disregard it.


sweeps demeanor, candor, and plausibility considerations—as well as the IJ’s extensive findings of fact—off the board as though this were a parlor game. Once again, the opinion ignores Huang, a post-Act case.

The need for deference is particularly strong in the con-text of demeanor assessments. Such determinations will often be based on non-verbal cues, and “[f]ew, if any, of these ephemeral indicia of credibility can be conveyed by a paper record of the proceedings and it would be extraordinary for a reviewing court to substitute its sec-ond-hand impression of the petitioner’s demeanor, can-dor, or responsiveness for that of the IJ.”

744 F.3d at 1153 (alteration in original) (quoting Jibril, 423 F.3d at 1137).

Here, the IJ determined that Dai’s testimony was not per-suasive based on demeanor, non-verbal cues, and other ger-mane material factors that went to the heart of his case. The IJ explained his decision in exquisite detail, and our approach and analysis should be simple. In order to reverse the BIA’s conclusion that Dai did not carry his burden of proof, “we must determine ‘that the evidence not only supports [a con-trary] conclusion, but compels it—and also compels the fur-ther conclusion’ that the petitioner meets the requisite stan-dard for obtaining relief.” Garcia-Milian v. Holder, 755 F.3d 1026, 1031 (9th Cir. 2014) (alteration in original) (quoting INS v. Elias-Zacarias, 502 U.S. 478, 481 n.1 (1992)). If any-thing, this record compels the conclusion that the IJ and the BIA were correct, not mistaken. Are my colleagues seriously going to hold that an IJ cannot take universally accepted de-meanor, candor, responsiveness, plausibility, and forthright-ness factors into consideration in assessing persuasiveness, as the IJ did here? And that this detailed record, which is full of Dai’s admissions of an attempted coverup, compels the conclusion that Dai was so persuasive as to carry his burden? Dai accurately understood the damaging implications of his wife’s return to China. So did the IJ and the BIA. So would anybody not willfully blinded by an inappropriate conclusive presumption. As the BIA stated, the truth is “inconsistent with his claims of past and feared future persecution.”

IX

THE MORE THINGS CHANGE, THE MORE THEY STAY THE SAME

In Elias-Zacarias, 921 F.2d 844 (9th Cir. 1990), rev’d, 502 U.S. 478 (1992), our court substituted the panel’s inter-pretation of the evidence for the BIA’s. The Supreme Court reversed our decision, calling the first of the panel’s two-part reasoning “untrue,” and the second “irrelevant.” 502 U.S. at 481. The Court warned us that we could not reverse the BIA unless the asylum applicant demonstrates that “the evidence he presented was so compelling that no reasonable factfind-er could fail to find the requisite fear of persecution.” Id. at

483–84 (emphasis added). In our case, we again fail to follow this instruction.

In INS v. Orlando Ventura, 537 U.S. 12, 13 (2002) (per curiam), the Court noted that both sides, petitioner and re-spondent, had asked us to remand the case to the BIA so that it might determine in the first instance whether changed conditions in Guatemala eliminated any realistic threat of persecution of the petitioner. Our panel did not remand the case, evaluating instead the government’s claim of changed conditions by itself and deciding the issue in favor of the petitioner. Id. at 13–14. The Supreme Court summarily re-versed our decision, saying “[T]he Court of Appeals com-mitted clear error here. It seriously disregarded the agency’s legally mandated role.” Id. at 17.

Did we learn our lesson? Hardly. A mere two years af-ter Ventura’s per curiam opinion, we knowingly made the same mistake in Thomas v. Gonzales, 409 F.3d 1177 (9th Cir. 2005) (en banc), vacated, 547 U.S. 183 (2006). We disregard-ed four dissenters to that flawed opinion, who argued in vain that our court’s decision was irreconcilable with Ventura. In short order, the Supreme Court vacated our en banc opinion, saying that our “error is obvious in light of Ventura, itself a summary reversal” and that the same remedy was once again appropriate. 547 U.S. at 185.

With all respect, the majority opinion follows in our stub-born tradition of seizing authority that does not belong to us, disregarding DHS’s statutorily mandated role. Even the REAL ID Act has failed to correct our errors.

Thus, I dissent.


prejudice. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

I. SOLARCITY’S BUSINESS MODEL AND ACCOUNTING PROTOCOLS

During the relevant time period, SolarCity was a Delaware corporation that sells renewable energy through the leasing and sale of solar energy systems. Defendant-Appellee Rive, who cofounded SolarCity in 2006 with his brother, Peter Rive, and cousin, Elon Musk, was the company’s Chief Exec-utive Officer. Defendant-Appellee Kelly was the company’s Chief Financial Officer.

Since 2006, SolarCity has grown significantly. The com-pany went public in 2012, raising over $92 million, of which the company received $85,305,010 after expenses. SolarCity now operates in fourteen states and serves a mix of commer-cial entities, government entities, and residential users. The company claims to have “provided or contracted to provide solar systems or services to more than 50,000 customers” since its founding.

SolarCity generates its revenues by both selling and leas-ing its solar energy systems to these customers. SolarCity “offers its customers the option to either purchase and own solar energy systems, or to purchase the energy that its solar energy systems produce through various financed arrange-ments, i.e. long-term contracts structured as leases and pow-er purchase agreements.” If a customer chooses the second route, and executes a lease or power purchase agreement (PPA), SolarCity then “installs its solar energy system at the customer’s premises and charges the customer a monthly fee for the power produced.” With a lease, “the monthly pay-ment is predetermined and includes a production guarantee.” With a PPA, SolarCity charges the customer “a fee per kilo-watt hour (kWh), based on the amount of electricity actually produced by the solar energy system.” Thus, “[t]he amount of operating lease revenues depends partly on the amount of energy generated by solar energy systems under power purchase agreements, which in turn depends in part on the amount of sunlight.” The standard lease or PPA agreement term is 20 years.

The revenues generated by SolarCity’s sales and leases are accounted for differently in SolarCity’s financial records. Under generally accepted accounting principles (GAAP), “[r]evenue is comprised of the gross income generated by selling goods (sales) or by performing services (professional fees, commission income).” Accounting for sales revenues is simple: They “are generally recognized when the Company installs the solar energy system and it passes inspection by the utility or applicable authority.” All costs associated with a sale are realized at the time of the sale, and subtracted from sales revenue to calculate gross profit. These costs include both the direct costs of each individual sale or lease, such as the cost of the solar system and its installation, and the indi-


JAMES WEBB, Lead Plaintiff, Plaintiff-Appellant,

v. SOLARCITY CORPORATION;

LYNDON R. RIVE; ROBERT D. KELLY, Defendants-Appellees.

No. 16-16440United States Court of Appeals for the Ninth CircuitD.C. No. 5:14-cv-01435-BLFAppeal from the United States District Court for the Northern District of California Beth Labson Freeman, District Judge, Presiding Argued and Submitted December 4, 2017 San Francisco, California Filed March 8, 2018 Before: Milan D. Smith, Jr. and Sandra S. Ikuta, Circuit Judges, and John D. Bates,*District Judge. Opinion by Judge Milan D. Smith, Jr.

* The Honorable John D. Bates, Senior United States District Judge for the District of Columbia, sitting by designation.

COUNSELJeremy A. Lieberman (argued), Emma Gilmore, and

Jennifer B. Sobers, Pomerantz LLP, New York, New York, Plaintiff-Appellant.

Ignacio E. Salceda (argued), Benjamin M. Crosson, and Cheryl W. Foung, Wilson Sonsini Goodrich & Rosati, Palo Alto, California, for Defendants-Appellees.

OPINIONM. SMITH, Circuit Judge:

Plaintiff-Appellant James Webb brought this class action lawsuit against Defendants-Appellees SolarCity Corpora-tion (SolarCity or the company), Lyndon R. Rive, and Rob-ert D. Kelly on behalf of the class of plaintiffs who bought SolarCity shares between December 12, 2012—the date of the company’s initial public offering (IPO)—and March 18, 2014 (the Class Period). Webb claims that Defendants-Ap-pellees violated § 10(b) of the Securities Exchange Act of 1934 (the Act), 15 U.S.C. § 78j(b), and 17 C.F.R. § 240.10b-5 (Rule 10b-5), and that Rive and Kelly also violated § 20(a) of the Act, 15 U.S.C. § 78t(a), when Defendants-Appellees changed the company’s accounting formula prior to the IPO in order to misrepresent SolarCity’s profitability. After al-lowing Webb to amend his complaint three times, the district court held that Webb’s Third Amended Complaint (TAC) failed to adequately plead scienter, and dismissed it with


rect overhead costs that apply to the whole company, such as factory or facilities costs.

Accounting for lease and PPA revenues—which are treated as operating leases for GAAP purposes—is more complex. Under GAAP, SolarCity must account for these revenues ratably, on a straight-line basis, over the term of each lease. This means that notwithstanding the “typically significant” total revenues collected over a lease’s 20-year term, “SolarCity can only recognize a fraction of those rev-enues per year.” Installation and overhead costs are amortized over the lease term, while costs from the underlying solar system itself are depreciated over its longer, thirty-year life.

SolarCity uses a specific “burden ratio” (BR) to allocate its indirect overhead costs between its sales and lease divi-sions. The formula for its calculation is:

Allocable Indirect Overhead Costs BR = ———————————————————

Prior Period Direct Costs +

Current Period Direct Costs SolarCity applies this ratio to its total direct expenses to determine how much overhead to allocate to each division. The burden ratio percentage is first allocated to the Leasing Division’s total direct expenses, and then the remainder is al-located to the sales division. For example, if prior period allo-cable overhead costs were $10 million, and direct costs were $20 million, the correct burden ratio pursuant to the formula would be 50%. The Leasing Division would be allocated this percentage of the $20 million in total direct costs, resulting in an allocation of $10 million of overhead costs to leases. The $10 million remainder would be allocated to sales.

II. SOLARCITY’S ACCOUNTING ERROR AND ITS AFTERMATH

Beginning in the first quarter of 2012 and continuing for seven consecutive quarters, SolarCity failed to adhere to its GAAP-compliant protocols. During this period, the company retained prior period overhead costs in the numerator of its burden ratio formula, but omitted prior period direct costs from the denominator. As a result of that error, if $5 million of the $20 million direct costs in our example above were re-lated to the prior period, the company would have calculated its burden ratio as 66.6% ($10 million / $15 million). Apply-ing this ratio to the total direct costs of $20 million would result in an allocation of $13.3 million of overhead costs to leases, with only $6.7 million of overhead costs allocated to sales. Thus, SolarCity was able to push the costs associated with its sales from the sales’ revenue onto leases, “where they would be amortized over the 20-year lease term.”

This error inflated the gross margins of the company’s sales, which led the company to report profits inaccurately for both sales and leases. For example, while SolarCity reported gross sales margins of -19% in 2010 and -14% in 2011, be-ginning in Q1 2012, the company’s sales margin jumped, and it reported a gross sales margin of +21% in 2012. SolarCity’s

accounting error also affected the company’s reported net income and earnings per share, which led the company to materially understate net loss and report higher earnings per share.

SolarCity’s improved financial situation allowed the com-pany to expand in 2013. After its December 2012 IPO, So-larCity made two secondary offerings on October 15, 2013, which generated net proceeds of $174.2 million from the is-suance of 3,910,000 shares of stock and $222.4 million from the issuance of convertible senior notes. The company also made two major acquisitions. First, on September 6, 2013, So-larCity purchased assets from Paramount Energy Solutions, LLC, a direct-to-consumer marketer and one of SolarCity’s channel partners. This purchase enabled SolarCity to develop and offer solar energy systems directly to a broader customer base, to compete better with other energy producers, and to lower its customer acquisition costs. SolarCity paid $3.7 mil-lion in cash and 3,674,565 shares—worth $108.8 million, or 95% of the total sale price—for Paramount’s assets. Second, on December 11, 2013, SolarCity acquired Zep Solar, Inc., a manufacturer and licenser of solar system mounting appara-tuses, and one of SolarCity’s key suppliers. This acquisition enabled SolarCity to control the design and manufacture of the Zep Solar products, which are critical components in the installation of SolarCity’s solar energy systems. SolarCity paid $157.823 million for Zep Solar with $2.4 million in cash and roughly three million shares of stock—equal to 98% of the total sale price.

It was not until 2014 that SolarCity realized that it had made a serious accounting error. On March 3, 2014, the com-pany “announced that it [had] discovered tens of millions in overhead expenses that it had incorrectly classified.” The company explained that the misclassification resulted from “an error in the formula for allocating overhead expenses between operating lease assets and the cost of solar energy systems sales originating in Q1 2012.” Specifically, the com-pany had omitted prior period direct costs from the denomi-nator of the burden ratio. This error was identified by “senior management,” who noticed that gross sales margins appeared inconsistent during the course of their review of preliminary year-end financial statements and internal controls. Solar-City announced that it would “reallocate overhead expenses from leased systems to systems sales,” which it expected would increase “the cost of solar energy systems sales [by] approximately $16–$20 million on the statement of opera-tions for the nine month period [ending on] September 30, 2013” and by “approximately $20–$23 million” for the full year of 2012. In response, SolarCity’s securities declined by $1.70 per share—just over 2%—to close on the day of the announcement at $83.26 per share.

A second announcement was made on March 18, 2014. The company issued its restated financials for the year of 2012 and for each quarter of that year and 2013. “These dis-closures revealed for the first time that the Company’s solar energy systems sales unit had operated at a loss for six quar-


ters (each quarter of 2013 as well as Q2 and Q4 2012) and barely broke even in two quarters (Q1 2012 and Q3 2012).” SolarCity securities declined again, dropping $4.40 per share—nearly 6%—to close at $72.70 per share on March 19, 2014, on unusually high trading volume. Overall, Solar-City’s share price fell by $23.58, or 27.8%, between Friday, February 28 (the final close before the announcement) and Friday, March 28.

III. PRIOR PROCEEDINGS

The present suit was filed on March 28, 2014. Webb was appointed lead plaintiff on August 11, 2014. Twice Webb amended his complaint and twice his pleadings were dis-missed. The appeal now before us arises from the district court’s August 9, 2016 dismissal—its third dismissal over-all—of Webb’s TAC for failure to adequately plead scienter.

STANDARD OF REVIEW

We review de novo the district court’s dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). In re VeriFone Holdings, Inc. Sec. Litig., 704 F.3d 694, 700–01 (9th Cir. 2012). We may affirm the judgment of the district court on any ground supported by the record. Glick v. Edwards, 803 F.3d 505, 508 (9th Cir. 2015).

ANALYSIS

Webb believes that the TAC adequately alleges scienter. He contends that in miscalculating its profits during the Class Period, SolarCity sought to “have its cake and eat it too.” That is, Defendants-Appellees intentionally changed Solar-City’s burden ratio in order to make the sales division and company as a whole appear more profitable than it actually was, and thereby maximize their gains from the company’s IPO. We disagree for the reasons that follow.

I. WEBB’S § 10(B) AND RULE 10B-5 CLAIMS

A. The Applicable Pleading Requirements Under § 10(b) of the Securities Exchange Act, it is

unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securi-ties exchange . . . [t]o use or employ, in connection with the purchase or sale of any security registered on a na-tional securities exchange or any security not so regis-tered, or any securities-based swap agreement any ma-nipulative or deceptive device or contrivance in contra-vention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

15 U.S.C. § 78j (footnote omitted). Rule 10b-5, promulgated by the SEC under § 10(b), further provides that a person may not

employ any device, scheme, or artifice to defraud[;] . . . make any untrue statement of a material fact or [] omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading[;] or . . . engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person[;] in connection with the purchase or sale of any security.

17 C.F.R. § 240.10b-5. To state a claim under § 10(b) and Rule 10b-5, Webb must show “(1) a material misrepresenta-tion or omission by the defendant; (2) scienter; (3) a con-nection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the misrep-resentation or omission; (5) economic loss; and (6) loss cau-sation.” Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 37–38 (2011) (quoting Stoneridge Inv. Partners, LLC v. Sci.-Atlanta, Inc., 552 U.S. 148, 157 (2008)).

Our focus in this appeal is on scienter, the second of these elements. The standard for pleading scienter is established by the Private Securities Litigation Reform Act (PSLRA), which requires that a complaint “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2)(A). A “strong inference” that a defendant acted with scienter is not an irrefutable inference, though it “must be more than merely plausible or reasonable . . . .” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 314 (2007). A “strong inference” cannot be identified “in a vacuum,” as “[t]he inquiry is inher-ently comparative[.]” Id. at 323. Rather, a “strong inference” is an inference that is “cogent and at least as compelling as any opposing inference one could draw from the facts al-leged.” Id. at 324. To determine whether a “strong” inference has been pleaded, “the reviewing court must ask: When the allegations are accepted as true and taken collectively, would a reasonable person deem the inference of scienter at least as strong as any opposing inference?” Id. at 326; see also Matrixx Initiatives, 563 U.S. at 48–50.

We have held that plaintiffs can meet this standard by al-leging facts demonstrating an “intent to deceive, manipulate, or defraud” or “deliberate recklessness.” In re Quality Sys., Inc. Sec. Litig., 865 F.3d 1130, 1144 (9th Cir. 2017) (quot-ing Schueneman v. Arena Pharm., 840 F.3d 698, 705 (9th Cir. 2016)). “Deliberate recklessness is an extreme departure from the standards of ordinary care[,] which presents a dan-ger of misleading buyers or sellers that is either known to the defendant or is so obvious that the actor must have been aware of it.” City of Dearborn Heights Act 345 Police & Fire Ret. Sys. v. Align Tech., Inc., 856 F.3d 605, 619 (9th Cir. 2017) (alterations omitted) (quoting Schueneman, 840 F.3d at 705).

Allegations of securities fraud must also satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which requires a plaintiff to “state with par-ticularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b); see In re VeriFone, 704 F.3d at 701.


B. Webb’s Scienter Allegations

Webb alleges that Defendants-Appellees knew or were reckless not to know that SolarCity’s accounting system was at a high risk of manipulation. He alleges that Rive and Kelly were involved in the company’s accounting and finan-cial decision making, understood SolarCity’s accounting practices, and knew that the company’s sales division had been performing poorly. In light of these facts, Webb claims that Defendants-Appellees’ explanation of the accounting error—that SolarCity left prior period overhead costs in the numerator of the burden ratio and accidentally omitted prior period direct costs from the denominator after calculating the burden ratio properly in both 2010 and 2011—“strains credulity.”

Though we ultimately review Webb’s allegations holisti-cally, “it would be folly to simply skirt the major allegations.” In re VeriFone, 704 F.3d at 704. Thus, we will summarize the TAC’s primary scienter allegations individually in the sections below before addressing their legal sufficiency. Id.

1. Confidential Witness Statements Eleven confidential witnesses (CWs) who worked at So-

larCity—mostly prior to the Class Period—described flaws in the company’s accounting and financial systems, and their knowledge of the company’s negative gross sales margins.1

CW1, an Accounts Payable Specialist at SolarCity from January 2010 to July 2012, stated that the company’s ac-counting and financials were “a mess.” Specifically, CW1 indicated that SolarCity’s monthly and annual “close pro-cess,” which “required the Company to accrue all of its debt, its credit, revenue,” was “never on time.”

CW2 was a Senior Accountant at SolarCity’s San Mateo, California, headquarters from January 2012 to the end of May 2012. CW2 reported that as of his/her hiring, SolarCity “hadn’t closed the books in a year.” He also stated that Ajmer Dale, the corporate controller, had talked with Defendant-Appellee Rive and his brother regarding accounting issues, including the recognition of revenue and allocation of over-head costs.

CW3 was a Senior Manager for fund relations in Solar-City’s Structured Finance Department from September 2011 to September 2012. CW3 described the cost accounting team as “lean,” composed of six or seven people based at Solar-

1. The district court discounted many of the CWs’ statements, in part because “the majority of the CWs were not employed during the Class Period and [could] therefore offer ‘little reliable insight into what occurred during the class period.’” The court still considered the statements though, and was correct to do so. Information from before the class period is relevant because it can “confirm what a defendant should have known during the class period.” In re Scholastic Corp. Sec. Litig., 252 F.3d 63, 72 (2d Cir. 2001); see also In re Quality Sys., 865 F.3d at 1145 (crediting statements from witness who “was not at [defendant company] during the Class Period,” but who “had personal knowledge of executive-level management’s real-time access to” rel-evant reports); In re Merck & Co. Sec. Litig., 432 F.3d 261, 272 (3d Cir. 2005). Accordingly, we will consider all of the CWs’ statements in our holistic analysis.

City’s corporate headquarters, who all reported to Dale. CW3 was aware that Defendant-Appellee Kelly “was involved in financial and accounting policy decisions at SolarCity” be-cause CW3 “was responsible for providing financial infor-mation to third party vendors.”

CW4 was an Accounts Payable Specialist at SolarCity from January 2011 to August 2014. CW4 “was responsible for paying and keeping books of the invoices for subcon-tractors on solar installation projects.” CW4 observed “that a separate team of [about seven] Accounts Payable Special-ists worked on overhead cost accounting” exclusively, and submitted overhead reports to the Accounting Manager, who reported to Dale.

CW5, who the parties and court below identified as the strongest witness, was “directly involved in solar system sales during the Class Period.” Specifically, CW5 was a Project Development Manager at SolarCity from July 2011 to May 2014. CW5 stated that during his/her tenure at So-larCity, the company’s “sales segment often showed nega-tive margins.” CW5 believed Defendant-Appellee Rive was “aware of the negative margins of the cash sale projects and the costs for the projects.”

CW5’s job involved the regular sale of large solar systems to public entities. CW5 was required to charge a mark-up margin of at least 10% on all sales, though the mark-up on smaller sales was sometimes greater. Even so, at least 60% of CW5’s twelve cash sales projects “came in with a nega-tive margin at the time construction of the system was com-pleted.” CW5 knew “from talking with other sales people at SolarCity” that “cash sale projects in general at the Company were showing negative or far below expected cash margins—not just [CW5’s] own sales.” SolarCity employees shared a general understanding that the company’s cash sales were not profitable.

This understanding was shared by “everybody at the high level” as well. The sales projects’ negative margins were dis-cussed in “a number of conference calls” in which CW5, the Rive brothers, and sometimes Kelly participated. In these calls the Rive brothers questioned the negative margins, asked about timelines for revenue recognition, and evinced an awareness of both specific cost information and pur-chasing information. CW5 was aware that Rive and Kelly received reports about cash sales projects that “showed the negative and low margins of the projects,” as well as a verbal overview of the situation. CW5 believed the Rive brothers were smart, as well as “knowledgeable and adept with com-plex accounting rules and issues, such as revenue recognition requirements.” It was apparent to CW5 that the Rive broth-ers “had an understanding of what overhead is” and “kn[ew] what they [were] doing.”

CW5 reports that as of mid-2012, SolarCity’s salespeo-ple were discouraged from doing cash deals and directed to transition away from cash sales and toward leases. CW5 explained this move was made because leases “allowed So-larCity to spread costs . . . out over several years,” which


improved profits. While a PPA would allow the company “to make [a] (negative margin) up with cash flow analysis,” a cash deal would not.

CW6 was Director of Fund Accounting at SolarCity from June 2012 to September 2012. This position “involved ac-counting for the funds set up with third party investors to pay for the cost of installation of solar systems.” CW6 explained that “on the fund side” where he/she was involved, Defen-dants-Appellees Kelly and Rive were involved “[a]t a high level” in discussions and decisions about accounting policies. CW6 also reported that Rive “appeared to fully understand and grasp the accounting issues discussed.”

CW7 worked as a Project Development Associate on So-larCity’s Walmart account from June 2011 to May 2013, and worked as a B2B Marketing Manager at the company from May 2013 to April 2014. “CW7 learned from his/her con-versations with SolarCity’s Director of Corporate Finance, Carlo Woods[,] that Woods met weekly with CFO Robert Kelly, CEO Lyndon Rive and COO Peter Rive to discuss the financial health of the Company, and that Kelly and the Rive brothers were actively involved in SolarCity’s financials.” CW7 knew that sales projects had a lower margin than lease projects.

CW8 was a solar consultant for SolarCity from November 2007 to March 2010, and a Commercial Project Develop-ment Manager from March 2010 to September 2012. CW8 recalled that the Rive brothers held internal meetings once or twice each year in 2010, 2011, and 2012, where they admit-ted that SolarCity “was not profitable on a GAAP basis,” though it was if its finances were viewed in a different light. CW8 indicated that Kelly’s desk was located in the account-ing department.

CW9 was an Administrative Assistant and Sales Opera-tions Administrator at SolarCity from October 2008 to Janu-ary 2012. In this position, CW9 “was regularly involved in presenting the Rive brothers with proposals from CW9’s department that needed the Rive brothers’ approval.” CW9 believed that the Rive brothers were “intimately involved in the Company in all aspects.” Though others participated in the decision-making process, CW9 said that the Rive broth-ers made all final decisions. Thus, CW9 believed the Rive brothers “totally would have been aware of” any decision to change the company’s accounting method for overhead costs. CW9 recalled the Rive brothers discussing accounting methods at company-wide meetings, admitting that the com-pany was not profitable according to the accounting method required of a public company. And “[d]uring the last few months of CW9’s employment, CW9 said the Company was making shifts in how it was doing things in preparation for going public.”

CW10 worked as Director of Sales at SolarCity from May 2008 to January 2011. CW10 reported that the Rive brothers were very hands-on, and Defendant-Appellee Rive in par-ticular was hands-on with regard to sales, participating often in CW10’s regional sales calls. CW10 also remembered the

discussion of profitability at the company’s meetings, and the admission that the company was not profitable “in terms of GAAP accounting standards.”

CW11 was the Office Manager for SolarCity’s corporate headquarters in San Mateo, California, from June 2010 to September 2013. “From discussions CW11 had with his/her colleagues and from comments made by CEO Lyndon Rive, COO Pete Rive[,] and CFO Bob Kelly in meetings, CW11 was aware that SolarCity was not earning a profit during his/her employment,” and wondered how the company stayed in business.

2. Motive Webb alleges that a sales-division-profitability turnaround

was critical to the company’s successful IPO. The sales divi-sion’s performance was an obvious vulnerability; though it generated the majority of SolarCity’s annual revenues, the sales division had run losses in 2010 and 2011. Moreover, the TAC alleges that the company needed a successful IPO to generate badly needed cash, to allow SolarCity to attract and retain employees, and to fund capital expenditures and strate-gic acquisitions that would increase the company’s efficiency and lower its costs. Maintaining the company’s inflated stock price after the IPO was critical to these goals.

Webb also alleges motives of a more personal nature: Be-cause Rive and Kelly owned 4,160,711 and 96,840 SolarCity shares, respectively, they were incentivized to maintain the company’s stock price. Additionally, Rive and Kelly were motivated to help Elon Musk—Rive’s cousin, SolarCity’s founder and largest shareholder, and the Chairman of the company’s Board of Directors—who needed stock prices to stay high to avoid a forced sale of his shares. Six million of Musk’s 18,849,991 shares of SolarCity stock were col-lateral for $275 million in loans from Goldman Sachs, and Goldman’s loans allowed it to issue a margin call requesting that Musk provide additional collateral or sell shares if So-larCity’s stock price declined. Webb points out that the SEC frowns upon such borrowing for precisely the reason it was a problem here: namely, because it “ha[s] the potential to influ-ence management’s performance and decisions.”

3. Leadership Reshuffling Webb alleges that the shake-up of SolarCity’s leadership

adds another piece to the scienter puzzle. On February 24, 2014, a week before releasing its statement regarding the al-location error, SolarCity announced that COO Peter Rive had been replaced by Tanguy Serra. Then, on July 30, 2014, Kelly announced he would resign as CFO. He left within weeks, on August 18, 2014.

4. Sarbanes-Oxley Certifications Webb alleges cursorily that because Rive and Kelly dis-

cussed and provided Sarbanes-Oxley certifications and ex-ecuted SolarCity’s Form 10-K, they “are deemed knowledge-able” about the “cost of revenues associated with the sales


and lease systems, including the gross margins for these units . . . .”

5. Core Operations Inference Finally, Webb also invokes the “core operations” doc-

trine. This doctrine allows us to infer “that facts critical to a business’s ‘core operations’ or an important transaction are known to a company’s key officers.” S. Ferry LP, No. 2 v. Killinger, 542 F.3d 776, 783 (9th Cir. 2008). “[A]llegations regarding management’s role in a company may . . . help to satisfy the PSLRA scienter requirement in three circum-stances”: (1) “in any form,” as part of a holistic analysis; (2) on their own, “where they are particular and suggest that defendants had actual access to the disputed information”; and (3) on their own “in a more bare form, without accompa-nying particularized allegations, in rare circumstances where the nature of the relevant fact is of such prominence that it would be ‘absurd’ to suggest that management was without knowledge of the matter.” Id. at 785–86.

Here, Webb alleges that it “strains credulity that Solar-City could include the prior period overhead in the numerator but exclude the related prior period direct costs from the de-nominator, yet have no idea whatsoever that this calculation was improper.” He wonders how SolarCity could “properly place[] prior period overhead costs in the numerator and prior period direct costs in the denominator for the years of 2011 and 2010, [and] yet conveniently forget to apply such costs in the denominator for 2012 and the first three quarters of 2013.” After all, to avoid the current situation, “[a]ll Solar-City needed to do was to apply the same formula it had ap-plied in prior years.” Instead, SolarCity changed its burden ratio calculation in a way that permitted it to realize a sudden, dramatic increase of over 100% in gross margins for solar energy sales in fiscal year 2012. Thus, Webb contends that the core operations doctrine should apply because this turn-around was so dramatic that it would be absurd to think that Defendants-Appellees did not know about the burden-ratio change during the Class Period.

C. Webb’s Allegations Are Insufficient

Webb takes issue with the district court’s dismissal for several reasons; namely, the district court (1) did not con-duct a properly holistic review of his allegations; (2) rejected relevant confidential witness testimony; (3) failed to account for the TAC’s allegations regarding motive, GAAP non-com-pliance, the company’s leadership reshuffling, and Rive and Kelly’s Sarbanes-Oxley certifications; and (4) improperly analyzed Webb’s core operations theory. We reject these ar-guments. Our own holistic review of the TAC’s allegations confirms that Webb has not pleaded facts giving rise to a strong inference of scienter.

1. No Individual Allegation Was Sufficient on its Own

Webb argues that the district court erred because it un-duly focused on his allegations one-by-one. We disagree. The district court was correct that each of Webb’s allegations, considered alone, would be insufficient to establish scien-ter. See, e.g., City of Dearborn Heights, 856 F.3d at 621–23 (failure to follow GAAP, employee resignations, and mag-nitude of error); Lloyd v. CVB Fin. Corp., 811 F.3d 1200, 1207 (9th Cir. 2016) (accounting inaccuracies and failure to follow GAAP); Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1002 (9th Cir. 2009) (corporate reshuffling); Glazer Capital Mgmt., LP v. Magistri, 549 F.3d 736, 747–48 (9th Cir. 2008) (motive allegations and Sarbanes-Oxley certifica-tions). The court did not err in considering each allegation on its own before holding that they also failed to support a strong inference of scienter in combination; although we have recognized its “potential pitfalls,” In re VeriFone, 704 F.3d at 703, such an analytical process is permitted under our precedents. See City of Dearborn Heights, 856 F.3d at 620; In re VeriFone, 704 F.3d at 703–04.

2. The Allegations Were Not Sufficient in Combination

Considered holistically, we find that Webb’s scienter al-legations—consisting of the CW statements, Defendants-Appellees’ motive, the magnitude and duration of the GAAP violations, the Sarbanes-Oxley certifications, and the core operations inference—likewise are insufficient. The bar set by Tellabs is not easy to satisfy: It requires that Webb plead an inference of scienter that is “cogent and at least as compel-ling as any opposing inference one could draw from the facts alleged.” 551 U.S. at 324. Here, Webb falls short of meeting that standard. Admittedly, Webb has alleged facts that give us pause insofar as they indicate that all was not right at the helm of SolarCity during the Class Period. However, with all things relevant considered, we hold that Webb’s allegations do not support a strong inference of scienter.

At best, Webb’s allegations paint a picture of a misman-aged organization in need of closer financial oversight that made a minute error at a critical stage in its development. Confidential witness statements demonstrate that Defen-dants-Appellees Rive and Kelly knew that SolarCity was generally unprofitable, that they were hands-on managers who generally understood the company’s accounting obliga-tions, and that they had reason to suspect that the company’s internal accounting controls were imperfect. We also credit the allegation that there is a strong incentive to present an ap-pearance of profitability and to keep stock prices high in the months immediately preceding and following a company’s IPO.

However, these facts do not give rise to an inference of scienter that is at least as compelling as the inference of an honest mistake. See Tellabs, 551 U.S. at 314. For example, Webb’s allegations regarding Defendants-Appellees’ behav-


ior are not consistent with scienter. Neither Rive nor Kelly are alleged to have sold any SolarCity stock during the Class Period, and we have recognized that a lack of stock sales can detract from a scienter finding. See In re Rigel Pharm., Inc. Sec. Litig., 697 F.3d 869, 884–85 (9th Cir. 2012). To the contrary, Defendants-Appellees’ actions with regard to their stock support an inference of innocence: Rive, for ex-ample, granted a third-party entity an option to purchase over 330,000 of his shares prior to the Class Period, evidencing an expectation that stock prices would not rise. Moreover, rather than selling shares, both Rive and Musk purchased additional stock during the Class Period.

We note also that, by all accounts, Rive and Kelly were accurate when speaking about the company’s profitability. For example, confidential witnesses confirm that Rive and Kelly were forthcoming with their employees, admitting at company meetings that the sales division and the company as a whole were not profitable. In particular, Defendants-Appel-lees acknowledged that the company was not profitable under GAAP, which is compelling evidence of their expectation that GAAP-compliant protocols would be applied after the company transitioned from private to public. Moreover, and even more importantly, Defendants-Appellees were forth-coming with the public. SolarCity showed in its Prospectus for the IPO that it was not profitable. Thus, the 2014 restate-ment merely increased the company’s stated losses.

Next, we find Webb’s motive allegations unhelpful. First, Webb’s allegations regarding Defendants-Appellees’ motive to boost the company’s profitability and stock prices in the months surrounding the company’s IPO are not “specific” or “particularized,” as our precedents require. To the contrary, they speak to precisely the “routine corporate objectives such as the desire to obtain good financing and expand” that we have rejected in the past. In re Rigel Pharm., 697 F.3d at 884; see also Lipton v. Pathogenesis Corp., 284 F.3d 1027, 1038 (9th Cir. 2002). Surely every company that goes public wants to maximize its apparent profitability prior to its IPO and to maintain a high share price afterward in order to finance acquisitions and expand. Second, we are skeptical that De-fendants-Appellees were motivated to help Musk avoid a hy-pothetical margin call, concerning which we see no evidence, or that Musk would not have been able to meet such a call if it were made. Webb has not pleaded any facts that support an inference that Defendants-Appellees were at all interested in or concerned for Musk’s relationship with Goldman Sachs.

Webb’s corporate reshuffling allegations are similarly unpersuasive. Correctly, Webb points out that COO Peter Rive was replaced just before the restatement and that Kelly left five months thereafter. However, Webb pleads no facts to rebut the “reasonable assumption” that the reshuffling “occurred as a result of [the] restatement’s issuance itself.” Zucco Partners, 552 F.3d at 1002. Without such allegations, that reasonable assumption guides our analysis.

Finally, we reject Webb’s invocation of the core operations doctrine. Webb has alleged that Defendants-Appellees had a

hands-on style and general accounting acumen, but not that they were involved in accounting decisions as minute as the calculation of the burden ratio and inclusion of prior period direct costs in the ratio’s denominator. Webb has not alleged that Defendants-Appellees had actual access to the account-ing formula, but only generalized access to reports that may have documented its application. See Police Ret. Sys. of St. Louis v. Intuitive Surgical, Inc., 759 F.3d 1051, 1062 (9th Cir. 2014) (holding that proof under the core operations doctrine “is not easy,” and requires “either specific admissions by one or more corporate executives of detailed involvement in the minutia of a company’s operations, such as data monitoring, . . . or witness accounts demonstrating that executives had actual involvement in creating false reports”); see also Zucco, 552 F.3d at 1000 (finding “allegations that senior manage-ment . . . closely reviewed the accounting numbers generated . . . each quarter . . . and that top executives had several meet-ings in which they discussed quarterly inventory numbers” insufficient to establish scienter).

Webb also has not alleged facts supporting the inference that the accounting error’s impact on the company’s finan-cials was so dramatic that it would be absurd to think that Defendants-Appellees did not know that something was wrong. SolarCity’s sales division is a relatively minor por-tion of the company’s overall business. In 2012 and 2013, for example, cash sales accounted for less than 10% of installa-tions per year. Cf. Berson v. Applied Signal Tech., Inc., 527 F.3d 982, 988 & n.5 (9th Cir. 2008) (applying core operations inference because it was “hard to believe” that defendants—executives who were “directly responsible” for day-to-day operations—would not have known about stop-work orders that halted a large amount of work, including work on “the company’s largest contract with one of its most important customers”). Moreover, the accounting error was so subtle that it appears that even the company’s specialized account-ing division and professional auditors missed it: The error was not discovered for seven consecutive quarters, and the record indicates that SolarCity’s management and Board of Directors only concluded that there was an error—on the ba-sis of which the company’s financials “should no longer be relied upon”—after consultation with the company’s “inde-pendent registered public accounting firm, Ernst & Young, LLP.” True, CW statements indicate that Defendants-Ap-pellees were concerned about the performance of the sales division and encouraging employees to transition from sales to leases. However, Defendants-Appellees had no reason to suspect this strategy was not working, such that the sales di-vision’s apparently improved performance must have been the result of an accounting error. Notwithstanding that ac-counting error, the sales division was actually improving to the point of “flirting with profitability” during the Class Period. SolarCity’s restatement indicated that the sales divi-sion’s gross margins improved from -19% in 2010 to -14% in 2011 to -5% in 2012, and were positive in Q1 and Q3 of 2012. Thus, rather than projecting a “facade of profitability,”


the company’s original financials only misstated the degree of the company’s unprofitability: SolarCity reported a net loss of $91.575 million in 2012, even with the accounting error, which was later restated to $113.726 million. These facts preclude us from holding that the falsity of the erro-neous financials was necessarily “immediately obvious” to Defendants-Appellees. Zucco Partners, 552 F.3d at 1001. To be sure, Webb’s allegations regarding Defendants-Appellees’ hands-on approach to management are relevant, and we have taken them “into account when evaluating all circumstances together.” S. Ferry, 542 F.3d at 786. Independently though they are not strong enough to create an inference of involve-ment sufficient to satisfy the PSLRA. See id.

Therefore, we conclude that on the whole, Webb’s nar-rative of fraud is simply not as plausible as a nonfraudulent alternative. See ESG Capital Partners, LP v. Stratos, 828 F.3d 1023, 1035 (9th Cir. 2016). Admittedly, the magnitude of the requisite restatement—15% to 67% per quarter—and the seven-quarter duration of the alleged fraud are troubling and potentially indicative of scienter. See In re Daou Sys., Inc., 411 F.3d 1006, 1018, 1023 (9th Cir. 2005). But even those facts, cobbled together with all of the others aforemen-tioned, are not enough to satisfy the standard required by the PSLRA. Therefore, we affirm the dismissal of Webb’s § 10(b) and Rule 10b-5 claims.

II. WEBB’S § 20(A) CLAIM

Section 20(a) of the Securities Exchange Act establishes that “[e]very person who, directly or indirectly, controls any person liable under [the Securities Exchange Act and its im-plementing regulations] shall also be liable jointly and sev-erally with and to the same extent as such controlled person to any person to whom such controlled person is liable.” 15 U.S.C. § 78t(a). A plaintiff suing under § 20(a) must dem-onstrate: “(1) a primary violation of federal securities laws” and “(2) that the defendant exercised actual power or control over the primary violator.” Howard v. Everex Sys., Inc., 228 F.3d 1057, 1065 (9th Cir. 2000).

The district court dismissed Webb’s § 20(a) claim against Rive and Kelly because Webb failed to state a claim of a pri-mary violation of the securities laws. Because we also find that Webb failed to state a claim for a primary violation, we affirm the dismissal of Webb’s § 20(a) claim.

CONCLUSION

For the foregoing reasons, we affirm the district court’s dismissal of the TAC. Plaintiff-Appellant’s pending motion for judicial notice is granted. Plaintiff-Appellant shall bear the costs on appeal.

AFFIRMED.

March 12, 2018 CALIFORNIA DAILY OPINION SERVICE CALIFORNIA COuRtS OF APPEAL 2326

California Courts of Appeal


CHRISTINE DEAN et al., Plaintiffs and Appellants,

v.FRIENDS OF PINE MEADOW et al.,

Defendants and Respondents.

No. A149735In The Court of Appeal of the State of CaliforniaFirst Appellate DistrictDivision Four(Contra Costa County Super. Ct. No. MSC16-00601)Filed February 8, 2018Certified for Publication March 8, 2018

COUNSEL

Counsel for Appellant Christine Dean: Jenny & Jenny, Scott E. Jenny, Richard K. Jenny

Counsel for Appellants DeNova Homes, Inc. and Civic Martinez, LLC: Miller Starr Regalia, George B. Speir, Matthew C. Henderson

Counsel for Respondents: Strumwasser & Woocher, Fredric D. Woocher, Michael J. Strumwasser, Stuart M. Flashman

ORDERBY THE COURT:

The written opinion which was filed on February 8, 2018 has now been certified for publication pursuant to rule 8.1105(b) of the California Rules of Court, and it is ordered published in the official reports.

P. J.

OPINION

I. INTRODUCTION

Appellants Christine Dean (Dean), DeNova Homes, Inc. (DeNova), and Civic Martinez, LLC (collectively, plaintiffs) filed the underlying action for interference with prospective economic advantage and defamation against respondents Friends of Pine Meadow and several individuals (collective-ly, defendants),1 seeking damages and injunctive relief for allegedly false statements and publications regarding plain-tiffs’ plan to construct a housing development on the Pine Meadow Golf Course in Martinez. Judgment was entered

1. Defendant Kelly Calhoun was dismissed from this case and is not party on appeal.

against plaintiffs after the trial court granted defendants’ spe-cial motion to strike plaintiffs’ complaint pursuant to section 425.16 of the Code of Civil Procedure (section 425.16 or the anti-SLAPP law).2

On appeal, plaintiffs contend their claims arise out of commercial speech, which is not protected activity under the anti-SLAPP law. Our standard of review is de novo. (Sum-mit Bank v. Rogers (2012) 206 Cal.App.4th 669, 681–682.) We affirm.

II. STATUTORY OVERVIEW

“The Legislature enacted section 425.16 in 1992, noting ‘a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.’ [Citation.] The statute authorizes defendants to file a special motion to strike in order to expedite the early dismissal of unmeritori-ous claims. [Citation.] ‘[T]o encourage continued participa-tion in matters of public significance,’ and to ensure ‘that this participation should not be chilled through abuse of the judicial process,’ the Legislature has specified that the an-ti-SLAPP statute ‘shall be construed broadly.’ [Citation.]” (City of Montebello v. Vasquez (2016) 1 Cal.5th 409, 416 (Montebello).)

Section 425.16, subdivision (b) establishes a two-step process for resolving a special motion to strike.3 “First, the defendant must make a prima facie showing that the plain-tiff’s ‘cause of action . . . aris[es] from’ an act by the defen-dant ‘in furtherance of the [defendant’s] right of petition or free speech . . . in connection with a public issue.’ (§ 425.16, subd. (b)(1).) If a defendant meets this threshold showing, the cause of action shall be stricken unless the plaintiff can establish ‘a probability that the plaintiff will prevail on the claim.’ (Ibid.)” (Simpson Strong-Tie Co., Inc. v. Gore (2010) 49 Cal.4th 12, 21, fn. omitted (Simpson).)

“In 2003, concerned about the ‘disturbing abuse’ of the anti-SLAPP statute, the Legislature enacted section 425.17 to exempt certain actions from it. (§ 425.17, subd. (a).)” (Simp-son, supra, 49 Cal.4th at pp. 21–22.) Pertinent here, section 425.17, subdivision (c) creates an exemption for commercial speech, which provides: “Section 425.16 does not apply to any cause of action brought against a person primarily en-gaged in the business of selling or leasing goods or services, . . . arising from any statement or conduct by that person if both of the following conditions exist: [¶] (1) The statement or conduct consists of representations of fact about that per-son’s or a business competitor’s business operations, goods,

2. Subsequent statutory citations are to the Code of Civil Proce-dure, unless otherwise stated.

3. Section 425.16, subdivision (b)(1) 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.”


or services, that is made for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person’s goods or services, or the state-ment or conduct was made in the course of delivering the person’s goods or services. [¶] (2) The intended audience is an actual or potential buyer or customer, or a person likely to repeat the statement to, or otherwise influence, an actual or potential buyer or customer, or the statement or conduct arose out of or within the context of a regulatory approval process, proceeding, or investigation, except where the state-ment or conduct was made by a telephone corporation in the course of a proceeding before the California Public Utili-ties Commission and is the subject of a lawsuit brought by a competitor, notwithstanding that the conduct or statement concerns an important public issue.”

The commercial speech exemption set forth in section 425.17, subdivision (c) “ ‘is a statutory exception to section 425.16’ and ‘should be narrowly construed.’ [Citations.]” (Simpson, supra, 49 Cal.4th at p. 22.) “The burden of proof as to the applicability of the commercial speech exemption . . . falls on the party seeking the benefit of it—i.e., the plain-tiff.” (Id. at p. 26.)

III. FACTUAL BACKGROUND

A. The Complaint AllegationsFacts alleged in the plaintiffs’ April 2016 complaint in-

clude the following: Pine Meadow Golf Course (the golf course) is owned by individual members of the Dean and Coward families, including plaintiff Dean. In August 2011, the golf course owners executed a contract to sell the golf course to plaintiff DeNova, a “leading community-oriented, family-owned private homebuilder with deep-seeded roots in local philanthropy and community service.” The sales con-tract required the parties to work together to file an applica-tion for development with the City of Martinez (the City). In January 2015, the City approved a development applica-tion, which “allowed for the development and construction of a 99-unit single-family home subdivision, with additional community benefits, including parklands, walking trails, and other neighborhood improvements.”

Plaintiffs alleged that the individuals named as defendants in their complaint consistently “opposed any development on the Pine Meadow Golf Course property.” During the de-velopment application process, they “spoke as individuals at the more than 20 neighborhood meetings, Design Review meetings, Planning Commission meetings, and City Council hearings, always opposing development of the Pine Meadow Golf Course.” At some point during that period, they formed defendant Friends of Pine Meadow (Friends). “Immediately” after the development application was approved, defendants began circulating a petition opposing the planned develop-ment. “Using the name ‘Friends of Pine Meadow’ for the first time,” defendants sought to collect sufficient signatures to support a referendum to reverse the City’s resolution ap-

proving a general plan amendment to allow for the planned development.

Defendants allegedly used the name Friends of Pine Meadow in order to deceive fellow citizens into believing they were friends with the golf course owners, including Dean who is a prominent citizen, and that they represented the interests of these owners and the golf course. Defen-dants’ deceptive tactics included using the name Friends of Pine Meadow to: (1) create multiple websites and media sites, including a Facebook group page; (2) make “public comments,” and write “letters to the editor and other similar published editorial pieces”; (3) solicit and accept financial donations; and (4) solicit signatures for their referendum “in front of local Martinez storefronts and parking lots.” Dean and the other golf course owners attempted to inform people “about the true nature of the Friends of Pine Meadow,” but defendants responded by publishing allegedly false accusa-tions that some or all of the plaintiffs were “ ‘hassling’ the signature gatherers” and using “ ‘intimidation, threats, and obscene, derogatory name calling.’ ”

Plaintiffs further alleged that defendants made other mis-representations to the public, including: (1) telling residents that if they signed the referendum petition, the golf course “would be turned into a park”; (2) publishing a false state-ment that keeping the golf course undeveloped “ ‘honors the Coward family . . .’ ”; (3) misrepresenting to people that keep-ing the site undeveloped “ ‘continues the historic purpose of the property as open space/recreation use’ ”; (4) publishing false statements that the golf course is “ ‘open space’ and ‘no development can occur’ ”; (5) publishing false statements that DeNova purchased the golf course knowing it was open space and that houses could not be built on the property. Fur-thermore, defendants posted a statement on their website that the golf course owners had “worked diligently to try to find a community supported outcome for this property” in order to falsely imply that the golf course owners had a competing interest with DeNova and did not support the development application.

Defendants’ allegedly defamatory statements about plain-tiffs and their project included: (1) that plaintiffs are guilty of “ ‘corruption’ ”; (2) that plaintiffs’ efforts to inform the public that defendants are not friends of the golf course were “ ‘illegal,’ ” and included “ ‘hassling’ signature gatherers,” “ ‘intimidation, threats, and obscene, derogatory name call-ing,’ ” and “ ‘thuggery’ ”; (3) that the development plan is for a “288-unit development,” which has never been proposed; (4) that the “development of 288 homes is ‘just the start of their plan’ ”; (5) that the golf course owners “ ‘agreed with’ ” the idea of designating the golf course as open space; (6) that defendants have collected more than 4,000 signatures op-posing the development, when in truth more than 900 sig-natures were deemed invalid and more than 150 signatures were withdrawn.

These pleading allegations were incorporated into five (purported) causes of action, for (1) declaratory and injunc-


tive relief, (2) intentional interference with plaintiffs’ busi-nesses and development plans, (3) negligent interference with plaintiffs’ businesses and the development plans, (4) defama-tion, and (5) conspiracy. For these alleged wrongs, plaintiffs prayed for the following relief: (1) a judicial declaration that defendants’ use of the name Friends of Pine Meadow is “mis-leading, interferes with Plaintiffs’ prospective economic ad-vantage, deceives the public into taking acts against the finan-cial interests of Plaintiffs, and damages Plaintiffs’ business”; (2) a permanent injunction preventing defendants from using the name Friends of Pine Meadow, requiring them to delete their Facebook group and websites, requiring them to destroy their electronic mailings and mailing lists, and ordering them to “cease and desist with the dissemination of any unveri-fied statements or writings”; (3) general and special damages according to proof; (4) punitive damages in an unspecified amount; and (5) attorney fees and litigation expenses.

B. The Special Motion to Strike

In May 2016, defendants filed a special motion to strike the entire complaint, arguing that every cause of action arose from speech and petitioning activities protected by section 425.16, and that plaintiffs could not establish a probability of prevailing on the merits because their claims were barred by the First Amendment, the California Constitution, and the litigation privilege codified in Civil Code section 47. Defen-dants also argued that the challenged statements were not provably false or made with actual malice.

Plaintiffs opposed the motion on the ground that defen-dants were not entitled to the protections of the anti-SLAPP law because the claims against them arose out of (1) a cam-paign to spread misinformation about plaintiffs, which was not a “public issue”; and (2) commercial speech designed to give defendants a commercial advantage by devaluing the golf course property so that somebody else would purchase it. Plaintiffs also argued that their claims were not barred by the First Amendment or the litigation privilege because de-fendants’ unlawful conduct fell within the “sham exception” to those doctrines.

On August 29, 2016, the trial court granted defendants’ special motion to strike in a detailed ruling supported by extensive citations to pertinent authority. Finding that every cause of action arose from protected petitioning and speech activity, the court rejected plaintiffs’ narrow conception of what constitutes a public issue. The court also found that plaintiffs failed to carry their burden of establishing that the commercial speech exemption applied in this case. On the merits, the court concluded that plaintiffs failed to establish sufficient facts to support a favorable judgment if their evi-dence was credited. In making this determination, the court found that plaintiffs failed to produce evidence that their claims for business interference fell within the sham excep-tion to the “First Amendment right to petition the government under the Noerr-Pennington doctrine.” The court also found that plaintiffs’ defamation claim failed because they did not

demonstrate a likelihood that they could (1) establish a prima facie case for relief; and (2) prove that the absolute privilege set forth in Civil Code section 47 did not apply.4

Judgment was entered against plaintiffs on September 28, 2016. This timely appeal followed.

IV. DISCUSSION

A. All Causes of Action Arise out of Protected Activity

The first step of our review requires us to decide whether defendants made a threshold showing that the substantive causes of action in the complaint arose from protected activ-ity. (§ 425.16, subd. (b)(1).) “ ‘ “A defendant meets this bur-den by demonstrating that the act underlying the plaintiff’s cause fits one of the categories spelled out in section 425.16, subdivision (e)” [citation].’ ” (Thomas v. Quintero (2005) 126 Cal.App.4th 635, 645; see also Montebello, supra, 1 Cal.5th at p. 422.)

Under section 425.16, subdivision (e), an “ ‘act in further-ance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue’ includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial pro-ceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connec-tion with an issue under consideration or review by a legisla-tive, executive, or judicial body, or any other official proceed-ing authorized by law, (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.”

As reflected in our summary of the complaint allegations, plaintiffs’ interference and defamation claims seek to pun-ish and suppress speech and petitioning activity related to defendants’ opposition to the construction of a housing de-velopment on a golf course. Most, if not all, the material allegations pertain to statements that were made during or in connection with proceedings to amend the City’s general plan, thus falling within section 425.16, subdivision (e)(1) and/or (e)(2). Furthermore, since all the challenged conduct was speech or petitioning activity relating to an issue of pub-lic interest, it is protected activity under section 425.16, sub-division (e)(3) and/or (e)(4).

4. As the trial court also explained, the causes of action for con-spiracy and declaratory and injunctive relief were not independent claims, but were dependent on plaintiffs’ showing a probability of prevailing on their claims for the underlying torts of interference with prospective economic advantage and defamation. (See Rusheen v. Co-hen (2006) 37 Cal.4th 1048, 1062 [“a civil conspiracy does not give rise to a cause of action unless an independent civil wrong has been committed.”]; MaJor v. Miraverde Homeowners Assn. (1992) 7 Cal.App.4th 618, 623 [“a cause of action must exist before injunctive relief may be granted”].)


Plaintiffs’ primary contention below was that defendants’ statements did not pertain to a public issue or an issue of pub-lic interest. This argument was properly rejected. As the trial court observed, the plaintiffs’ complaint is a paradigm of the problem that section 425.16 was designed to address. “The typical SLAPP suit involves citizens opposed to a particular real estate development. The group opposed to the project, usually a local neighborhood, protests by distributing flyers, writing letters to local newspapers, and speaking at plan-ning commission or city council meetings. The developer responds by filing a SLAPP suit against the citizen group alleging defamation or various business torts. (Barker, Com-mon-Law and Statutory Solutions to the Problem of SLAPPS (1993) 26 Loyola L.A. L.Rev. 395, 396.) SLAPP plaintiffs do not intend to win their suits; rather, they are filed solely for delay and distraction (id. at p. 397), and to punish activ-ists by imposing litigation costs on them for exercising their constitutional right to speak and petition the government for redress of grievances. (See Comment, SLAPP Suits: Weak-nesses in First Amendment Law and in the Court’s Responses to Frivolous Litigation (1992) 39 UCLA L.Rev. 979.)” (Dix-on v. Superior Court (1994) 30 Cal.App.4th 733, 741, italics & fn. omitted.)

On appeal, plaintiffs have abandoned their argument that defendants’ speech and petitioning activity did not relate to an issue of public interest. Instead, they now contend that defendants did not carry their burden because (1) plaintiffs’ claims arise out of commercial speech, and (2) commer-cial speech does not constitute protected activity under the anti-SLAPP law. We separately address each prong of this argument.

B. Plaintiffs’ Claims Do Not Arise out of Commercial Speech

This entire appeal is premised on plaintiffs’ assumption that the allegedly unlawful speech attributed to defendants constitutes commercial speech. Remarkably, plaintiffs never define what they mean by commercial speech.

In another context, our Supreme Court has observed that three elements distinguish commercial speech from noncom-mercial speech: the speaker, the intended audience, and the content of the message. (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 960 (Kasky).) “In typical commercial speech cases, the speaker is likely to be someone engaged in commerce—that is, generally, the production, distribution, or sale of goods or services—or someone acting on behalf of a person so en-gaged, and the intended audience is likely to be actual or po-tential buyers or customers of the speaker’s goods or services, or persons acting for actual or potential buyers or customers, or persons (such as reporters or reviewers) likely to repeat the message to or otherwise influence actual or potential buy-ers or customers . . . . [¶] . . . [¶] Finally, the factual content of the message should be commercial in character. In the context of regulation of false or misleading advertising, this typically means that the speech consists of representations

of fact about the business operations, products, or services of the speaker (or the individual or company that the speaker represents), made for the purpose of promoting sales of, or other commercial transactions in, the speaker’s products or services.” (Id. at pp. 960–961, italics omitted.)

Applying the Kasky elements here, we conclude that the speech alleged in the complaint is not commercial speech. Plaintiffs did not allege facts to show that: any defendant was engaged in or affiliated with someone engaged in the production distribution or sale of goods or services, the chal-lenged speech was directed at actual or potential buyers or customers of some good or service, or that the content of defendants’ speech was commercial in character. To the con-trary, the complaint seeks redress for speech and petitioning activity by individuals who formed a community group in order to oppose an amendment to the City’s general plan. On its face, this type of speech is political rather than com-mercial in nature.

Plaintiffs do not cite a single case supporting their char-acterization of defendants’ alleged statements as commer-cial speech. Instead, they postulate that (1) defendants acted like competitors by proposing that the golf course be used for some purpose other than a housing development, and (2) once defendants “decided to compete” with DeNova, their “disparaging remarks . . . took on the character of com-mercial speech.” We are not persuaded by this reasoning. The fact that defendants opposed an official government action (i.e., approval of the general plan amendment) by proposing that someone other than DeNova purchase the golf course did not make them competitors or transform their political action into commercial speech.

C. All Commercial Speech Is Not Excluded from Anti-SLAPP Protection

Even if there was some commercial element to defen-dants’ conduct, plaintiffs fail to support their legal theory that commercial speech is categorically excluded from the protection of the anti-SLAPP law.

Plaintiffs acknowledge that protected activity is defined in section 425.16, subdivision (e), but then they proceed to ignore the language of that statute, which makes no reference to commercial speech. As discussed above, the pleading alle-gations about defendants’ speech and petitioning activity fall squarely within all four categories of section 425.16, subdivi-sion (e) because the challenged statements were made during or in connection with an official City proceeding authorized by law, in public forums, and in connection with a matter that was both a public issue and an issue of public interest.

Insisting that “[m]ultiple cases have recognized that com-mercial speech is outside the protections of the anti-SLAPP law,” plaintiffs cite four cases, the facts of which they do not discuss: Nagel v. Twin Laboratories, Inc. (2003) 109 Cal.App.4th 39 (Nagel); Jewett v. Capital One Bank (2003) 113 Cal.App.4th 805 (Jewett); Rezec v. Sony Pictures Entertain-ment, Inc. (2004) 116 Cal.App.4th 135 (Rezec); L.A. Taxi


Cooperative, Inc. v. The Independent Taxi Owners Assn. of Los Angeles (2015) 239 Cal.App.4th 918 (L.A. Taxi).

This line of authority does not support the broad rule of exclusion proposed by plaintiffs here. For one thing, all of these cases involved a very specific form of commercial speech—false or misleading advertising. (Nagel, supra, 109 Cal.App.4th 39 [class action against manufacturer and seller of diet pills]; Rezec, supra, 116 Cal.App.4th 135 [unfair busi-ness practices claims against movie studio]; Jewett, supra, 113 Cal.App.4th 805 [consumer class action against credit card company]; L.A. Taxi, supra, 239 Cal.App.4th 918 [taxi companies’ suit against competing cab companies for false internet advertising].) Equally important, in these cases the defendants failed to carry their burden under section 425.16, subdivision (e) because the plaintiffs’ false advertising claims arose from purely commercial speech that was not made in connection with an official proceeding, and that did not relate to an issue of public interest. (Nagel, at pp. 46–48; Rezec, at pp. 140, 143; Jewett, at pp. 814–816; L.A. Taxi, at p. 926.) Thus, plaintiffs’ cited authority is consistent with our conclusion that a plaintiff cannot preclude a defendant from establishing that a cause of action arises out of protected ac-tivity simply by alleging there is some commercial element to the parties’ dispute. Rather, the question whether a defendant has met its burden under section 425.16, subdivision (b) is answered by applying section 425.16, subdivision (e).

Plaintiffs’ theory that all commercial speech is excluded from anti-SLAPP protection is also inconsistent with sec-tion 425.17, subdivision (c). As discussed in our overview of anti-SLAPP law, this narrow commercial speech exemp-tion applies to speech or conduct by a person engaged in the business of selling or leasing goods or services when, among other things, that challenged conduct pertains to the business of the speaker or his or her competitor. (§ 425.17, subd. (c); see generally Simpson, supra, 49 Cal.4th at p. 21.)

Section 425.17’s legislative history indicates that this statutory exemption was drafted “to track constitutional principles governing regulation of commercial speech based upon guidelines discussed in [Kasky, supra, 27 Cal.4th 939].” (JAMS, Inc. v. Superior Court (2016) 1 Cal.App.5th 984, 994 (JAMS).) “In doing so, it followed ‘Kasky’s guidelines on commercial speech, focusing on the speaker, the content of the message, and the intended audience.’ [Citation.]” (Ibid.)5

Plaintiffs relied on section 425.17, subdivision (c) during the lower court proceedings, but the trial court found that they failed to carry their burden of proof, or to even allege facts which could show that any defendant is “primarily engaged in the business of selling or leasing goods or ser-vices.” (§ 425.17, subd. (c).) Indeed, the speech attributed to defendants in the complaint is not exempt from anti-SLAPP

5. “ ‘The legislative history [also] indicates this legislation is aimed squarely at false advertising claims and is designed to permit them to proceed without having to undergo scrutiny under the anti-SLAPP statute . . . .’ [Citation.]” (JAMS, supra, 1 Cal.App.5th at p. 994.)

protections under section 425.17, subdivision (c) for essen-tially the same reasons that it does not constitute commercial speech under the Kasky guidelines.

Implicitly conceding that section 425.17, subdivision (c) does not apply in this case, plaintiffs now argue that “com-mercial speech not otherwise covered by section 425.17 may still be excluded from anti-SLAPP protection.” They reason that (1) the Constitution treats commercial speech differ-ently than noncommercial speech, and therefore (2) the anti-SLAPP law should also be construed to treat commercial speech differently by categorically excluding it from the pro-tections afforded by section 425.16. This reasoning is flawed for at least two reasons. First, while “commercial speech receives a lesser degree of constitutional protection than many other forms of expression,” (Kasky, supra, 27 Cal.4th at p. 946), commercial speech is not completely excluded from the realm of First Amendment protection, as plaintiffs intimate. (Id. at pp. 952–953.)

Second, as our Supreme Court explained in Montebello, “[t]he Legislature did not limit the scope of the anti-SLAPP statute to activity protected by the constitutional rights of speech and petition. It went on to include ‘any act . . . in furtherance of’ those rights. (§ 425.16, subd. (b)(1), italics added.) We must give meaning to this statutory term, under settled principles of statutory construction. [Citation.] The Legislature’s directive that the anti-SLAPP statute is to be ‘construed broadly’ so as to ‘encourage continued partici-pation in matters of public significance” supports the view that statutory protection of acts ‘in furtherance’ of the con-stitutional rights incorporated by section 425.16 may extend beyond the contours of the constitutional rights themselves. [Citations.]” (Montebello, supra, 1 Cal.5th at p. 421.)

In their reply brief, plaintiffs argue that Montebello is irrel-evant because it “begs the question: what speech and petition activities does section 425.16 actually protect?” We disagree. Montebello precludes plaintiffs from using substantive First Amendment principles to limit the scope of protection af-forded by the anti-SLAPP law: “Requiring the moving party to make a constitutional case in support of every anti-SLAPP motion would be inconsistent with the Legislature’s desire to establish an efficient screening mechanism for ‘disposing of SLAPP’s quickly and at minimal expense to taxpayers and litigants.’ [Citation.] The statutory categories provided in section 425.16, subdivision (e) provide objective guidelines that lend themselves to adjudication on pretrial motion. [Ci-tation.]” (Montebello, supra, 1 Cal.5th at p. 422.)

“[C]ourts determining whether conduct is protected under the anti-SLAPP statute look not to First Amendment law, but to the statutory definitions in section 425.16, subdivision (e). [Citations.]” (Montebello, supra, 1 Cal.5th at pp. 422.) “ ‘The only means specified in section 425.16 by which a moving defendant can satisfy the requirement is to demonstrate that the defendant’s conduct . . . falls within one of the four cate-gories described in subdivision (e), defining subdivision (b)’s phrase, “act in furtherance of a person’s right of petition or


free speech under the United States or California Constitu-tion in connection with a public issue. [Citations.]” ’ ” (Ibid.) As we have already explained, the conduct alleged in this case falls squarely within all four of these categories. Plain-tiffs cannot avoid this fact by attempting to graft an additional restriction onto the anti-SLAPP law limiting the protection of that law to strict adherence to First Amendment analysis.

D. Plaintiffs Did Not Establish a Probability of Success

Under the second prong of our review, “the burden shifts to the plaintiff[s] to demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated. The court, without resolving evidentiary con-flicts, must determine whether the plaintiff[s’] showing, if accepted by the trier of fact, would be sufficient to sustain a favorable judgment. If not, the claim is stricken.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 396.) “In making this assess-ment, the court must consider both the legal sufficiency of and evidentiary support for the pleaded claims, and must also examine whether there are any constitutional or nonconsti-tutional defenses to the pleaded claims and, if so, whether there is evidence to negate any such defenses. [Citation.]” (McGarry v. University of San Diego (2007) 154 Cal.App.4th 97, 108.)

On appeal, plaintiffs contend they carried their burden of establishing that their causes of action are not barred by ei-ther of the two defenses invoked by defendants in the trial court.

First, plaintiffs argue that defendants are not protected by the litigation privilege, which states that, subject to excep-tions, a “privileged publication” includes statements made in a “legislative proceeding,” a “judicial proceeding,” “any other official proceeding authorized by law,” or “in the initia-tion or course of any other proceeding authorized by law and reviewable pursuant to” pertinent provisions of the Code of Civil Procedure. (Civ. Code, § 47, subd. (b).)

“The litigation privilege is absolute; it applies, if at all, re-gardless whether the communication was made with malice or the intent to harm. [Citation.] Put another way, applica-tion of the privilege does not depend on the publisher’s ‘mo-tives, morals, ethics or intent.’ [Citation.] Although originally applied only to defamation actions, the privilege has been extended to any communication, not just a publication, hav-ing ‘some relation’ to a judicial proceeding, and to all torts other than malicious prosecution. [Citations.] Moreover, ‘[t]he litigation privilege is not limited to the courtroom, but encompasses actions by administrative bodies and quasi-ju-dicial proceedings. [Citation.] The privilege extends beyond statements made in the proceedings, and includes statements made to initiate official action. [Citation.]’ ” (Kashian v. Har-riman (2002) 98 Cal.App.4th 892, 913, italics omitted.)

Plaintiffs contend that defendants are not protected by this broad litigation privileged because “commercial speech can-not be privileged speech as it is not subject to an anti-SLAPP

motion.” We reject this argument because, among other things, it incorporates plaintiffs’ erroneous factual theory that defendants engaged in commercial speech; it incorpo-rates plaintiffs’ unconvincing legal theory that all commer-cial speech is automatically excluded from the anti-SLAPP protection; and it is legally unsupported.

Alternatively, plaintiffs argue that defendants cannot in-voke the litigation privilege because the complaint does not seek to hold defendants liable for their speech, but rather for an unlawful course of conduct evidenced by that speech. The record shows otherwise. Every claim in the complaint seeks to punish and/or suppress speech that relates to an official proceeding about a public issue.

Plaintiffs’ second argument is that the Noerr-Pennington doctrine does not bar their claims against these defendants. “Under the Noerr-Pennington doctrine, ‘[t]hose who petition government . . . are generally immune from antitrust liability.’ [Citations.] ‘This doctrine relies on the constitutional right to petition for redress of grievances to establish that there is no antitrust liability for petitioning any branch of government, even if the motive is anticompetitive.’ [Citation.] The doc-trine further relies on principles of comity, ‘i.e., noninterfer-ence on the part of the courts with governmental bodies that may validly cause otherwise anticompetitive effects and with efforts intended to influence such bodies.’ [Citation.]” (Peo-ple ex rel. Gallegos v. Pacific Lumber Co. (2008) 158 Cal.App.4th 950, 964, fns. omitted (Pacific Lumber).)

“The Noerr-Pennington doctrine has been extended to pre-clude virtually all civil liability for a defendant’s petitioning activities before not just courts, but also before administra-tive and other governmental agencies. [Citations.]” (Pacific Lumber, supra, 158 Cal.App.4th at pp. 964–965.) “While the Noerr-Pennington doctrine was formulated in the context of antitrust cases, it has been applied or discussed in cases involving other types of civil liability [citations], including li-ability for interference with contractual relations or prospec-tive economic advantage [citations] or unfair competition [citation]. Obviously, the ‘principle of constitutional law that bars litigation arising from injuries received as a consequence of First Amendment petitioning activity [should be applied], regardless of the underlying cause of action asserted by the plaintiffs.’ [Citation.] ‘[T]o hold otherwise would effectively chill the defendants’ First Amendment rights.’ [Citation.]” (Hi-Top Steel Corp. v. Lehrer (1994) 24 Cal.App.4th 570, 577–578 (Hi-Top Steel).)

“ ‘It is only when efforts to influence government action are a “sham” that they fall outside the protection of the Noerr-Pennington doctrine . . . . [Citations.] Such efforts amount to a sham when though “ostensibly directed toward influ-encing governmental action, . . . [they are] actually nothing more than an attempt to interfere directly with the business relationships of a competitor . . . .” [Citation.] Such efforts, by contrast, do not amount to a sham when, no matter how anticompetitive in purpose or effect, they constitute a “genu-ine effort to influence [government action] . . . .” [Citation.]


In other words, efforts to influence government action are a sham only when the person or persons making such efforts “invok[es] the process of [governmental] decisionmaking for the injury that the process alone will work on competitors . . . .” [Citations.]’ ” (Pacific Lumber, supra, 158 Cal.App.4th at p. 965.)

Plaintiffs contend that the “sham” exception to the Noerr-Pennington doctrine applies to their claims because they have alleged facts to show that defendants’ petitioning activ-ity was part of a misleading campaign, pursuant to which they “deliberately” chose a deceptive name for their group, mischaracterized the “current status” of the golf course prop-erty and the plaintiffs’ development plan, and falsely accused plaintiffs’ of misconduct. First, plaintiffs fail to demonstrate that these complaint allegations are supported by evidence. Second, even if there is evidence of these alleged decep-tions, plaintiffs fail to explain how they implicate the sham exception. Indeed, it appears from this record that plaintiffs conceded from the start that defendants genuinely opposed the general plan amendment. Thus, defendants’ petitioning activity, no matter how deceptive, was not a sham, but part of a genuine effort to influence government action. (Pacific Lumber, supra, 158 Cal.App.4th at p. 965.)

Plaintiffs direct us to Hi-Top Steel, supra, 24 Cal.App.4th 570, an unfair competition case filed by steel corporations against an automobile wrecking company and its owner. The Hi-Top Steel court found that the plaintiffs stated a cause of action under the sham exception to the Noerr-Pennington doctrine by alleging the following material facts: The de-fendants attempted to prevent the plaintiffs from compet-ing in the automobile wrecking business by making false statements to public officials and interested citizens about the design of automobile shredding equipment the plaintiffs intended to install at their facility. The city unanimously ap-proved the plaintiffs’ plan, but the defendants appealed, and then offered to withdraw their appeal if the plaintiffs agreed not to use their equipment to shred automobiles. The defen-dants also threatened to cause further delay by demanding an environmental review of the plaintiffs’ design plans, knowing that such a demand was groundless. Then, during the period of delay that they caused, the defendants procured their own automobile shredding equipment. (Id. at pp. 573–574.) The Hi-Top Steel court found these allegations were sufficient to show that the “defendants undertook petitioning activity solely to delay or prevent plaintiffs’ entry into the shredded automobile body market through use of ‘the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon’ [citation.]” (Id. at p. 582–583, ital-ics omitted.)

Hi-Top Steel is inapposite. Suffice to say, the issue in this case is not only whether plaintiffs’ complaint states a cause of action under the sham exception to the Noerr-Pennington doctrine (it does not), but also whether plaintiffs carried their burden of showing that their claims were “factually substan-tiated.” (Baral v. Schnitt, supra, 1 Cal.5th at p. 396.) Plaintiffs

do not identify any evidence in this record supportive of their theory that defendants undertook their petitioning activity as an anti-competitive weapon.

V. DISPOSITION

The judgment is affirmed. Defendants are awarded costs on appeal.

RUVOLO, P. J.We concur: REARDON, J., STREETER, J.



MICHAEL CHANEY, Plaintiff and Respondent,

v.LEANNE NETTERSTROM, Defendant

and Appellant.

2d Civil No.B282120In The Court of Appeal of the State of CaliforniaSecond Appellate DistrictDivision Six(Super. Ct. No. 15FL-0528)(San Luis Obispo County)Filed March 8, 2018

COUNSEL

Banick Hodges Law Corporation and John F. Hodges for Plaintiff and Respondent.

Ogden & Fricks, Roy E. Ogden and Sue N. Carrasco for Defendant and Appellant.

OPINION

After three years of dating and cohabitation, appellant Le-anne Netterstrom and respondent Michael Chaney applied for a confidential marriage license and exchanged vows at a solemnization ceremony. After the ceremony, the officiant gave the signed license to the parties, who promised to file it with the county. For personal and financial reasons, the par-ties did not return the license to the county. Four years later, Chaney petitioned for dissolution of marriage. Netterstrom moved to quash on the ground that she and Chaney are not married. The trial court denied the motion to quash.

Rule 1: “[A] marriage shall be licensed, solemnized and authenticated, and the authenticated marriage license shall be returned to the county recorder of the county where the marriage license was issued . . . . Noncompliance with this part by a nonparty to the marriage does not invalidate the marriage.”1

Rule 2: “The person solemnizing the marriage shall return the marriage license . . . to the county recorder . . . within 10 days after the ceremony.”2

The law requires an officiant to return the license to the county; however, noncompliance by a nonparty does not nec-essarily invalidate an otherwise lawful marriage. (§ 306.) Nor was the marriage invalidated by the parties’ conduct in keep-ing the license or claiming “single” status to tax authorities and a bank. Once they secured a license from the county, exchanged vows at a solemnization ceremony and the license

1. Family Code, section 306. Unlabeled statutory references in this opinion are to the Family Code.

2. Section 423.

was authenticated, the parties were married. We affirm the trial court’s validation of the marriage.

FACTS AND PROCEDURAL HISTORY

The parties began dating in 2008 and cohabiting in 2011. In the fall of 2011, Netterstrom agreed to what was, in her mind, a “commitment ceremony.” She had reasons to avoid marriage: she had been married twice before; “I never wanted to get married again;” she did not want to lose her Social Se-curity widow’s benefits by remarrying; and Chaney gambled and was financially unstable. In Chaney’s view, he proposed marriage to Netterstrom and she accepted.

The parties obtained a confidential marriage license from the county clerk.3 Netterstrom claimed at trial that this was a ruse: the parties only wanted to appease relatives who disap-proved of unwedded cohabitation. The trial court discredited Netterstrom’s testimony, noting that the parties could have held a ceremony without a license, and her relatives would be none the wiser.

It is undisputed that the parties participated in a solem-nization ceremony in Cambria on November 11, 2011. The officiant signed the marriage license and gave it to the parties with the understanding that they would file it. The trial court found that in doing so, the officiant did not perform his duty to return the license. It concluded, however, that this derelic-tion did not invalidate the marriage.

Chaney admittedly allowed the time for returning the li-cense to lapse. Netterstrom asked him not to file it because she did not want to lose her Social Security benefits. Chaney told Netterstrom “it was her decision as to whether or not the marriage license would be returned to the county recorder’s office”; she advised him that “she decided she didn’t want to mail the certificate in.” It is undisputed that neither of the parties returned the signed marriage license to the county. Instead, it remained in Chaney’s desk, where Netterstrom found it in July 2015.

After exchanging vows, Netterstrom occasionally called herself Leanne Chaney, and the couple openly referred to each other as husband and wife. Despite telling friends and family that they were married, the parties pretended to be unmarried when it suited their financial interests. They filed tax returns as “single” people. They refinanced Chaney’s home in 2013, stating on the loan application that they are unmarried. The deed of trust securing repayment of the loan is in the names of Chaney and Netterstrom as “unmarried” individuals.

In a change of ownership document for the house, Chaney notified the assessor’s office of a transfer between “domestic partners,” not between husband and wife. Title was taken in the name of “Michael Chaney, an unmarried man, and Le-anne Netterstrom, an unmarried woman, as joint tenants.”

3. The parties must personally appear before the county clerk to obtain a confidential marriage license. (§ 501.)


In 2015, Chaney petitioned for dissolution of marriage. In response to the petition, Netterstrom declared that she and Chaney are not married. She asked the trial court to quash the summons and petition on the ground that there is no mar-riage, and to dismiss the action.

The trial court ruled that the parties are married. The state-ment of decision recites that the parties participated in a cer-emony, then wittingly kept the completed marriage license instead of returning it to the county. Family members toasted the marriage at a party after the ceremony. Netterstrom an-nounced the marriage on Facebook and thereafter referred to Chaney as her “husband.” When the relationship ended, Netterstrom lamented the end of the “marriage.”

The trial court acknowledged that the parties filed as “single” taxpayers throughout their marriage, to suit their financial interests. Nonetheless, it found that the parties con-sented to marriage by not calling off the ceremony before the exchange of vows. Though the parties agreed to retain the marriage license, the court deemed this “unconvincing” evidence that consent was lacking. The court wrote that the wedding officiant failed to perform his duty to return the li-cense, but this did not invalidate the marriage.

DISCUSSION

If either party denies a marriage, the other party may seek to have the validity of the marriage judicially determined and declared. (§ 309; Health & Saf. Code, § 103450, subd. (a) [a party may petition to judicially establish the fact of an unreg-istered marriage].) “[T]he Legislature has enacted a compre-hensive scheme regulating marriage in California . . . setting forth in detail the procedures to be followed.” (Lockyer v. City and County of San Francisco (2004) 33 Cal.4th 1055, 1079.) Our analysis requires us to review and interpret the statutes governing marriage, to determine whether the re-quirements for a valid marriage have been met. This presents a question of law. (Ceja v. Rudolph & Sletten, Inc. (2013) 56 Cal.4th 1113, 1119.)

“Marriage is a personal relation arising out of a civil con-tract between two persons, to which the consent of the parties capable of making that contract is necessary. Consent alone does not constitute marriage. Consent must be followed by the issuance of a license and solemnization.” (§ 300, subd. (a).) To solemnize the marriage, “the parties shall declare, in the physical presence of the person solemnizing the mar-riage and necessary witnesses, that they take each other as spouses.” (§ 420, subd. (a).)

Following solemnization, the marriage license “shall be returned” to the county. (§ 306.) “Returned” means presented in person or postmarked before the statutory deadline. (§ 359, subd. (f).) A confidential marriage document “is a marriage license until it is registered with the county clerk, at which time the license becomes a marriage certificate.” (§ 500.5.)4

4. Once registered, the certificate becomes part of the state’s vital statistics. (Health & Saf. Code, § 102100 [“[e]ach . . . marriage that occurs in the state shall be registered . . . on the prescribed certificate

The statutory scheme does not contemplate what happens if the wedded couple retains the signed license. The Legisla-ture did not address this eventuality because it has placed the burden of returning the license to the county for registration squarely upon the wedding officiant.

The law on this point is clear. It states that a confidential marriage license “shall be returned by the person solemniz-ing the marriage to the office of the county clerk in the county in which the license was issued within 10 days after the cer-emony.” (§ 506, subd. (c), italics added; § 423 [“The person solemnizing the marriage shall return the marriage license . . . to the county recorder . . . within 10 days of the ceremony.” Italics added]; Health & Saf. Code, § 103150 [A marriage “shall be registered by the person performing the ceremony.” Italics added].) The word “shall” means that the act is man-datory. (§ 12.)

Applying the statutes addressing the creation of marriage, we conclude that the parties in this case are married. They applied in person for a confidential marriage license at the office of the county clerk. They exchanged vows declaring each other spouses at a solemnization ceremony. After the ceremony, the officiant authenticated the marriage license; he was not told that the wedding was a ruse. At that point, the parties were married. The officiant had a legal duty to return the license to the county. His failure to perform that duty “does not invalidate the marriage.” (§ 306.)

Netterstrom relies on Estate of DePasse (2002) 97 Cal.App.4th 92 (overruled in part in Ceja v. Rudolph & Sletten, supra, 56 Cal.4th at p. 1126). DePasse is factually inappo-site. In DePasse, the parties did not obtain a marriage license before their “marriage ceremony”; therefore, there was no license to return for registration. The burden of obtaining a marriage license was on the parties, who had to prove their identity, capacity to marry, and lack of intoxication at the time of application. (Id. at pp. 98-100.) The absence of a li-cense was fatal to the claim of a valid marriage in DePasse. (Id. at p. 95.) In our case, by contrast, the parties indisput-ably secured a valid license and solemnized their vows. The burden was then on the officiant, not the parties, to return the license.

The case of In re Marriage of Cantarella (2011) 191 Cal.App.4th 916 (Cantarella) disposes of Netterstrom’s claim that no marriage was formed because the parties did not return the license. As here, the question in Cantarella was “whether a party’s failure to register a certificate is fatal to the marriage’s validity.” (Id. at p. 924, fn. 8.) Cantarella holds that failure to return the license does not invalidate the mar-riage “regardless of who bore the responsibility for the non-registration (whether a party or nonparty).” (Id. at p. 925.)

In Cantarella, the parties had a marriage ceremony before a judge in 1991; the certificate was rejected for registration due to a technical error on the document. “After the second

forms”]; § 511, subd. (d) [the county clerk must transmit a copy of the original confidential marriage certificate to the State Registrar of Vital Statistics].)


rejection, the parties decided not to submit the certificate for registration, possibly to avoid the tax consequences of marriage.” (Cantarella, supra 191 Cal.App.4th at p. 919.) A decade later, they had a second wedding ceremony. At dis-solution, in 2008, the husband claimed that the marriage was not of long duration because the unregistered 1991 marriage was invalid. (Id. at pp. 919-921.)

The appeal required the court “to determine whether the parties’ failure to register a marriage certificate invalidated the 1991 marriage.” (Cantarella, supra, 191 Cal.App.4th at p. 921.) The court emphasized that a marriage is not invalidated if the officiant fails to comply with the statutory mandate to return the license to the county. The court declined to infer that a party’s noncompliance with the same registration re-quirement necessarily invalidates a marriage. (Id. at p. 922, fn. 6.)5

The court in Cantarella reasoned that the validity of a marriage is determined by the parties’ consent to it: “a mar-riage was actually or potentially invalid if a party did not con-sent to it or lacked the ability to consent.” (Cantarella, supra, 191 Cal.App.4th at p. 923.) “Most importantly, a marriage ceremony culminated in the parties’ declaration that they accepted each other as husband and wife. Common sense and tradition tells us this is the moment at which the parties’ valid consent creates a marriage. Indeed, once solemnized, a marriage is presumed valid (Evid. Code, § 663) and a person disputing its validity bears the burden of proving it void.” (Id. at p. 924.)

The registration of the certificate does not bear on the issue of consent, and serves only a recordkeeping function “after the parties had solemnly consented to marriage in a ceremony and after the county clerk and the officiant had satisfied themselves the parties’ consent was knowing, vol-untary, and valid. Additionally, registration was the duty of an officiant . . . , i.e., of a nonparty whose noncompliance with statutory requirements did not void a marriage . . . .” (Cantarella, supra, 191 Cal.App.4th at p. 924.)

Nodding to the societal importance of recognizing the va-lidity of marriages—given the significant property and inher-itance rights marriage confers, with concurrent fiduciary and legal duties—the court concluded that the Legislature did not intend that a marriage be invalidated by the parties’ failure to register the license. (Cantarella, supra, 191 Cal.App.4th at pp. 924-925.) The court recognized that its holding “could allow a party to conceal a marriage for tax reasons, but later

5. Cantarella applied prior law, stating that a marriage “‘must be licensed, solemnized, authenticated, and the certificate of registry of marriage filed . . .; but noncompliance with its provisions by others than a party to a marriage does not invalidate it.’” (Cantarella, su-pra, 191 Cal.App.4th at pp. 921-922, citing former Civ. Code § 4200.) The Family Code superseded the Family Law Act without substantive change. (Id. at p. 919, fn. 1.) Wording changes in a statute from “shall” to “must” (or vice versa) without substantive changes means that the former and current versions are “identical, and are to be considered as having the same effect.” (Davis v. Superior Court (1921) 184 Cal. 691, 693.)

claim it for purposes of spousal support” but determined that “[t]he tax consequences of our decision, if any, are not before us.” (Id. at p. 926, fn. 12.)

CONCLUSION

Here we conclude that the parties’ retention of the license does not invalidate the marriage after the solemnization cer-emony has taken place. The “necessary step of solemnizing” the marriage makes the union valid. (Burnham v. Public Em-ployees’ Retirement System (2012) 208 Cal.App.4th 1576, 1584-1585 [contrasting domestic partnerships, in which fil-ing the declaration of partnership is the necessary step to vali-date the union].) The exchange of vows to take each other as spouses “symbolize[s] the irrevocable decision to go through with the union. In the case of solemnization, once the parties say ‘I do,’ they cannot take the statement back. . . . [I]t is the point in the process at which the parties can no longer change their minds about their decision to form a union.” (Id. at p. 1585.)

DISPOSITION

The judgment is affirmed. Respondent is entitled to re-cover his costs on appeal.

CERTIFIED FOR PUBLICATION.

PERREN, J.We concur: GILBERT, P. J., YEGAN, J.



KLEAN W. HOLLYWOOD, LLC, Petitioner,

v.THE SUPERIOR COURT OF

LOS ANGELES COUNTY, Respondent;LANGSTON JACKSON, Real Party in

Interest.

No. B283816In The Court of Appeal of the State of CaliforniaSecond Appellate DistrictDivision Four(Los Angeles County Super. Ct. No. BC544414)ORIGINAL PROCEEDINGS in mandate. Gerald Rosenberg, Judge. Petition granted.Filed March 8, 2018

COUNSEL

Beach Cowdrey Jenkins, Thomas E. Beach and Darryl C. Hottinger for Petitioner.

Hiepler & Hiepler, Mark O. Hiepler and Marc D. Anderson for Real Party in Interest.

OPINION

Petitioner Klean W. Hollywood, LLC (Klean), a volun-tary drug abuse treatment facility, was sued by real party Langston Jackson, who had enrolled at the facility to obtain treatment for drug addiction. Jackson blamed Klean for the injuries he suffered after smuggling heroin into his room and injecting it late one night. Jackson claimed that Klean was negligent in failing to prevent him from obtaining heroin and failing to discover him unconscious in his room until the next morning. Klean moved for summary judgment, contending that the common law doctrine of unclean hands precluded Jackson, or anyone who engages in the illegal acts of buying and using illicit drugs, from pursuing a negligence claim. Klean further contended that the Drug Dealer Liability Act (Health & Saf. Code, § 11700, et seq., DDLA or the Act) -- which permits users of certain illegal controlled substances, under limited circumstances, to pursue claims against provid-ers of such substances -- prohibits drug users from pursuing claims against parties other than the drug dealers described in the Act.1 Although we conclude that the DDLA does not categorically preclude claims against third parties, we hold that on the undisputed facts of this case, Jackson has no basis to pursue a negligence claim against Klean. Accordingly, we grant the writ petition.

1. Undesignated statutory references are to the Health and Safety Code.

FACTUAL AND PROCEDURAL BACKGROUND

The essential facts are not in dispute. Klean operates a residential substance abuse treatment facility as defined by Health and Safety Code section 11834.02, subdivision (a). The facility provides room, board, recreational activities, in-dividual and group therapy, and drug testing, but not medical care.

On February 25, 2013, real party Langston Jackson, then 22, voluntarily entered the treatment facility. He signed an admission agreement stating that if a resident consumed al-cohol or illicit drugs “that resident will be terminated from [the] treatment program.” “[L]eaving [the] grounds without permission” was also a basis for discharge. It was “under-stood and agreed” that residency in the program was volun-tary. The agreement stated that the facility was a “non-medi-cal treatment facility.” Psychiatric and medical services were to be contracted “independently between the participant and physicians,” and if the patient required immediate medical treatment, he or she would be transported to an emergency room.

Sometime prior to March 15, 2013, Jackson told his room-mate that he wanted to get high.2 On March 15, the roommate called a drug dealer friend, who brought heroin and syringes to the facility at approximately 10:00 p.m. Jackson and his roommate obtained the drugs and paraphernalia by lowering a plastic bag attached to shoelaces outside their second-story window. The two men waited to inject the drugs until approx-imately 3:00 a.m., after a staff member had checked on them. Jackson’s roommate injected himself in the bathroom, and went to bed. When he awoke at 7:15 a.m., he observed Jack-son, lying on the couch, where Jackson often slept. Unable to rouse Jackson, the roommate alerted staff, and Jackson was taken to the hospital, where he was eventually revived.

Jackson brought a complaint against Klean for negli-gence.3 The complaint focused on Klean’s alleged “fail[ure] to take reasonable steps to ensure residents . . . could not get drugs or other contraband while on [its] premises,” specifi-cally alleging that Klean “did not have alarms on any of the windows in any of the residential units” and “did not have cameras monitoring the publicly-accessible areas in front of the units . . . .” The complaint also alleged that Klean “failed to comply with its policies regarding cell phones,” allow-ing Jackson to retain the phone used to call the drug dealer; “failed to adequately staff the overnight shift,” although it

2. According to Jackson’s counterstatement and supporting evi-dence, he tested positive for benzodiazepines on March 11 and March 14, indicating he had previously accessed illicit drugs during his stay at the facility. This alarmed his therapist, Kim Farber, who questioned whether Jackson “really wanted to be there,” and wrote an email to his consulting psychiatrist Jason Coe., M.D. Dr. Coe decided that Jack-son’s situation should be discussed with staff at the next treatment team meeting.

3. Jackson also asserted a claim for dependent adult neglect to which a demurrer was sustained. Klean filed a cross-claim seeking payment for its services under the Agreement. Neither of those claims is before us.


“knew that a resident was more likely to relapse on the over-night shift than during the day”; “failed to take reasonable steps after [Jackson’s] two positive drug tests,” such as hav-ing him more closely monitored or supervised; and failed to conduct regular room checks which could have led to the discovery of the drugs and syringes and/or Jackson’s post-injection condition.4 According to the complaint, Jackson was in a coma for 37 days and suffered physical and cogni-tive injuries.

Klean moved for summary judgment, contending that the negligence claim was barred because “the alleged injury arose from [Jackson’s] own misconduct,” and that principles of common law precluded drug users from recovering for in-juries resulting from their use of illegal drugs. Klean further contended that the DDLA “provides the exclusive means by which a drug user (or his family) can recover damages for injuries caused by the drug user’s voluntary use of an illicit substance,” and that the Act precludes recovery unless “the defendant is the one who provided the illicit substance to the plaintiff.” (Bold omitted.) Klean relied on subdivisions (a) and (b) of section 11706 of the DDLA. Subdivision (a) provides: “An individual user of an illegal controlled sub-stance may not bring an action for damages caused by the use of an illegal controlled substance, except as otherwise provided in this section,” and proceeds to set forth the limited circumstances under which such a claim may be asserted. Subdivision (b) provides: “[An individual user of an illegal controlled substance] entitled to bring an action under this section may seek damages only from a person who manu-factured, transported, imported into this state, sold, possessed with intent to sell, furnished, administered, or gave away the specified illegal controlled substance actually used by the individual user of an illegal controlled substance.”

Jackson opposed the motion, contending that “Klean neg-ligently created an environment that led to his possession and overdose,” and failed to take “reasonable steps” to prevent him from obtaining and using drugs, such as alarming its windows, installing surveillance cameras or confiscating his cell phone, despite “numerous signs that he was likely to relapse.” Jackson further contended that Klean failed to ad-equately monitor him, leading to his lying “unresponsive, on the sofa in his unit for over four hours.”5 Jackson argued that the provisions of the DDLA allowing a drug user to pursue claims for injury against his or her supplier did not absolve

4. The complaint also cited provisions of the California Code of Regulations governing residential drug treatment facilities -- title 9, sections 10563, 10564, subdivisions (b) and (k), 10567, subdivision (e), 10569, subdivision (a)(3), 10572, subdivision (e), and 10581, sub-division (a) -- contending that Klean failed to establish or implement policies regarding the safe operation of the facility, failed to employ competent staff in adequate numbers, failed to train employees, failed to provide safe and healthful accommo-dations, and failed to limit or monitor facility access by unauthor-ized persons and persons under the influence of drugs.

5. Jackson also contended that Klean violated the regulations gov-erning residential drug treatment facilities, citing the regulations set forth in his complaint, without specifying how any had been violated.

other defendants of liability for negligence; nor, he argued, did it displace common law.

The trial court denied the motion for summary judgment. Its order stated: “Health and Safety Code Section 11706 does not preclude [Jackson] from filing a common law neg-ligence claim against [Klean]. The claim is that [Klean] did not monitor [Jackson] which led to his obtaining drugs and overdosing.”

Klean petitioned for a writ of mandate, seeking rever-sal of the trial court’s order. We issued an alternative writ of mandate and order to show cause. We now conclude that the DDLA does not preclude a user of an illegal controlled substance subject to the Act from pursuing a common law claim.6 However, on the record before us we find no basis in common law to impose liability on Klean, the unlocked drug treatment facility Jackson voluntarily entered, for failing to prevent him from consuming drugs he smuggled into the fa-cility. We further conclude that the undisputed facts establish that Klean was not negligent in failing to discover Jackson earlier, in order to seek medical treatment for him.

DISCUSSION

A. Claims Based on Failure to Prevent Jackson from Acquiring and Ingesting Drugs

Jackson contends the DDLA does not bar his common law negligence claim or “absolve Klean of liability for its negligence in creating an environment that allowed Jackson to get and use heroin, its negligence in failing to take reason-able steps to prevent Jackson from getting and using heroin, its negligence in monitoring Jackson, or its negligence in its four-hour delay before discovering him unresponsive.” We address in this section Jackson’s claims that Klean may be liable for creating an environment that allowed him to use heroin and for failing to take steps to prevent him from obtaining and using it. We thereafter address his claim that Klean was negligent in failing to monitor him or to discover he was unconscious.

1. The DDLAKlean contends the DDLA provides a basis to reject Jack-

son’s claims. Specifically, it argues that the Act occupies the field of claims permitted by drug users or those injured by drug users, leaving no opening for common law claims.7 We

6. The drugs to which the DDLA applies are described in sec-tion 11703, subdivision (l), which defines the “‘[s]pecified illegal controlled substance[s]’” to include “cocaine, phencyclidine, heroin, or methamphetamine,” as well as any of the substances that form the basis of violations of sections 11351, 11351.5, 11352, 11358 to 11360, 11378.5, 11379.5 and 11383.

7. Klean contends that section 11706 “preempts” common law. As explained in Jacobs Farm/Del Cabo, Inc. (2010) 190 Cal.App.4th 1502, “[p]reemption applies where federal law supersedes state law or state law supersedes local law.” (Id. at p. 1521.) Where the issue con-cerns “allegedly conflicting provisions of coequal state laws -- state statutes and state common law . . . the question presented is better articulated as whether the enactment of [the subject law] displaced the common law that previously governed the subject in dispute.” (Ibid.)


conclude the DDLA was not intended to displace the com-mon law in this area.

The DDLA’s genesis is the “Model Drug Dealers Liabil-ity Act” (the Model Act) presented to state legislators in the early 1990’s by the “American Legislative Exchange Coun-cil” to provide “‘a means for parents and others to obtain monetary damages from drug dealers for the injuries caused by drugs to their family and communities.’” (145 Am.Jur. (rev. 2017) Trials § 2.) More than 20 states have adopted the Model Act or a version of it. (Ibid.; see, e.g. Ark. Code Ann. § 16-124-101, et seq.; Col.Rev. Stat. Ann. § 13-21-801, et seq.; Ga. Code Ann., § 51-1-46; Haw. Rev. Stat. Ann., § 663E-1, et seq.; Mich. Comp. Laws Ann. § 691.1601, et seq.)8 The Council’s Web site currently describes the goals of the Model Act: “(1) to allow all persons and companies harmed by il-legal drugs to bring suit for damages against all persons who are part of the drug distribution network within their ‘target community’; (2) to deter people from becoming part of the drug distribution network; and (3) to encourage users to seek treatment and encourage companies to provide treatment, knowing that reimbursement may be possible from drug dealers themselves.” (http://www.modelddla.com/Impos-ing_Products_Liability_ for_Illegal_Drugs.htm.)

The DDLA was enacted by the California Legislature in 1996. (Stats. 1996, ch. 867, § 1, p. 1.) Echoing the language and intent of the Model Act, the DDLA provides that its pur-poses are to provide a civil remedy for damages to persons injured as a result of another’s use of an illegal controlled substance, such as “parents, employers, insurers, govern-mental entities, and others who pay for drug treatment or employee assistance programs, as well as infants injured as a result of exposure to controlled substances in utero”; “estab-lish the prospect of substantial monetary loss as a deterrent to those who have not yet entered into the distribution market for illegal controlled substances”; and “establish an incentive for users of illegal controlled substances to identify and seek payment for their own treatment from those dealers who have sold illegal controlled substances to the user in the past.” (§ 11701.) The aim is to “shift, to the extent possible, the cost of the damage caused by the existence of the market for illegal controlled substances in a community to those who illegally profit from that market.” (Ibid.)

Unlike the drafters of the Model Code, however, the Leg-islature did not suggest that existing California law precluded pursuit of a claim against a drug dealer. The initial Senate

8. Some commentators attribute the passage of the Model Act to the 1995 death of actor Carroll O’Connor’s son, Hugh, following a long struggle with drug addiction, and O’Connor’s unsuccessful at-tempt to recover compensation from his son’s drug dealer. (See Kevin G. Meeks, From Sindell to Street Pushers: Imposing Market Share Tort Liability on Illegal Drug Dealers (1998) 33 Ga. L.Rev. 315, 317; Joel W. Baar, Let the Drug Dealer Beware: Market-Share Liability in Mich-igan for the Injuries Caused by the Illegal Drug Market (1997) 32 Val. U. L.Rev. 139, 205, fn. 36.) Indeed, Florida’s Drug Dealer Liability Act specifically provides that it “may be cited as the ‘Hugh O’Connor Memorial Act.’” (Fla. Stat. Ann., § 772.12, subd. (1).)

Judiciary Committee report stated that “[e]xisting [l]aw” made it “illegal for a person to sell or distribute specified controlled substances,” and held “every person civilly liable for injuries proximately caused by the person’s negligence or willful acts.” (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 1754 (1995-1996 Reg. Sess.) as amended Apr. 22, 1996, pp. b, c.) In explaining the change in law anticipated, the report first described the “‘market share’ liability” theory set forth in Sindell v. Abbott Laboratories (1980) 26 Cal.3d 588, which permitted “a producer of a fungible product [to] be held civilly liable . . . for damage caused by the product sold by the defendant and several other manufacturers, without proof that the defendant’s product was a direct cause of the plaintiff’s injury,” and then stated: “[T]he proposed provision imposes ‘market liability,’ which is broader than the ‘market share’ liability doctrine of Sindell. Under the proposal, a drug dealer who is engaged in a pattern of marketing illegal drugs can be held liable for damages suffered by any person as a result of his or another person’s use of the same type of illegal drug sold by that dealer.” (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 1754, supra, at pp. c & d.) The Act’s “ex-pansion of the market share liability doctrine” was justified “in order to deter drug traffickers with potentially high civil damages awards.” (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 1754, supra, at p. e.)

To meet the Legislature’s goals, section 11704 provides that “[a] person who knowingly participates in the marketing of illegal controlled substances within this state is liable for civil damages as provided in [the DDLA].”9 Section 11705 describes the non-users who “may bring an action for dam-ages caused by an individual’s use of an illegal controlled substance.”10 (§ 11705, subd. (a).) Persons or entities coming within section 11705 may recover a full panoply of damages, including “any . . . pecuniary loss proximately caused by the use of an illegal controlled substance” and “[n]oneco-

9. As originally enacted, the phrase the “marketing of illegal con-trolled substances” was defined to mean possession for sale, sale or distribution. (Stats. 1996, ch. 867, § 1, p. 2.) To “[p]articipate in the marketing of illegal controlled substances” meant “to transport, import into this state, sell, possess with intent to sell, furnish administer, or give away, or offer to transport, import into this state, sell, furnish, ad-minister, or give away a specified illegal controlled substance.” (Ibid.) In 2005, the Act was amended to include within the definition of mar-keting “all aspects of making such a controlled substance available, including, but not limited to, its manufacture.” (Stats. 2005, ch. 88, § 1, p. 1; see § 11703, subd. (a).) In addition, “[p]articipate in the mar-keting of illegal controlled substances” was redefined to include “the manufacturing of an illegal controlled substance.” (Stats. 2005, supra, at p. 2; see § 11703, subd. (g).)

10. These include “[a] parent, legal guardian, child, spouse, or sibling of the individual controlled substance user,” “[a]n employer of the individual user of an illegal controlled substance,” “[a] medical facility, insurer, employer, or other nongovernmental entity that funds a drug treatment program or employee assistance program for the in-dividual user of an illegal controlled substance or that otherwise ex-pended money on behalf of the individual user of an illegal controlled substance,” and “[a] person injured as a result of the willful, reckless, or negligent actions of an individual user of an illegal controlled sub-stance.” (§ 11703, subd. (a)(1), (3), (4), (5).)


nomic damages, including, but not limited to, physical and emotional pain, suffering, physical impairment, emotional distress, medical anguish, disfigurement, loss of enjoyment, loss of companionship, services and consortium . . . .” (Id., subd. (d)(1), (2).) Such damages may be recovered not only from the person who “sold, administered, or furnished an il-legal controlled substance to the individual user of the illegal controlled substance,” but also from persons who “know-ingly participated in the marketing of illegal controlled sub-stances,” provided certain conditions apply. (§ 11705, subd. (b)(1), (2), (B)-(D).)11

Section 11706 governs the more limited claims available to drug users themselves under the Act. An individual ille-gal drug user may bring an action for damages caused by the use of drugs “only if all of the following conditions are met: [¶] (1) The individual personally discloses to narcotics enforcement authorities all of the information known to the individual regarding all that individual’s sources of illegal controlled substances. [¶] (2) The individual has not used an illegal controlled substance within the 30 days before filing the action. [¶] (3) The individual continues to remain free of the use of an illegal controlled substance throughout the pendency of the action.” A drug user who meets these conditions is subject to two further limitations under section 11706: he or she may seek damages “only from a person who manufactured, transported, imported in this state, sold possessed with intent to sell, furnished, administered, or gave away the specified illegal controlled substance actually used by the individual user of an illegal controlled substance” (§ 11706, subd. (b)), and may not recover non-economic dam-ages. (Id., subd. (c).)12

Notably, in securing these rights for drug users, the Leg-islature stated in the first sentence of section 11706: “An individual user of an illegal controlled substance may not bring an action for damages caused by the use of an illegal controlled substance, except as otherwise provided in this section.” Determining whether the DDLA precludes actions by drug users against non-dealer parties requires that we con-strue this sentence.13 Klean contends that our task is an easy one: the plain language does not allow an action for damages caused by the plaintiff’s use of an illegal controlled substance unless the defendant furnished the illegal substance to the plaintiff and the plaintiff otherwise meets the conditions of subdivision 11706. Jackson contends that the phrase “under this Act” or “under this division” is implied after the words

11. To ensure that damages are paid from illicit drug money, section 11707 precludes insurers or others from “pay[ing] damages awarded under this division,” or “provid[ing] a defense or money for a defense, on behalf of an insured under a contract of insurance or indemnification.” (§11707, subd. (a).)

12. In addition to the limitations imposed on drug users, section 11712 provides that for all claimants under the Act “[p]roof of liability . . . shall be shown by clear and convincing evidence.”

13. Because the trial court’s decision was based on interpretation of a statute, our review is de novo. (See Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332; Riske v. Superior Court (2016) 6 Cal.App.5th 647, 657.)

“bring an action for damages,” and that absent evidence the Legislature intended the DDLA to be the exclusive remedy for drug users and others injured by the use of an illegal con-trolled substance, the Act does not displace the common law.

The paramount rule in statutory construction requires courts to give the words of a statute their ordinary and usual meaning. (Kibler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192, 199; see People v. Johnson (2002) 28 Cal.4th 240, 244 [“[T]he Legislature is presumed to have meant what it said, and the plain meaning of the stat-ute governs”].) However, we are also obliged to construe the words in their “statutory context” (Kibler, supra, at p. 199), and “interpret the statute as a whole, so as to make sense of the entire statutory scheme. [Citation.]” (Carrisales v. De-partment of Corrections (1999) 21 Cal.4th 1132, 1135; see also In re Nolan W. (2009) 45 Cal.4th 1217, 1235 [When a statutory provision is part of a complex statutory scheme, “a single provision ‘cannot properly be understood except in the context of the entire . . . process of which it is part’”].) The rules of construction are not “mechanical rules for the determination of statutory meaning,” but “aids in support of ‘[t]he fundamental task of statutory construction,’ which is to “‘ascertain the intent of the lawmakers so as to effectuate the purpose of the law.”’” (People v. Frawley (2000) 82 Cal.App.4th 784, 789.) Statutory provisions must be accorded “‘a reasonable, commonsense construction in line with [their] apparent purpose, in order to advance wise legislative policy and avoid absurdity.’” (People v. Fairmont Specialty Group (2009) 173 Cal.App.4th 146, 153.)

Applying these principles, we conclude that the language of the first sentence of section 11706 circumscribing suits by individual users was intended to apply solely to actions for damages brought under the DDLA. Notably, the definition of an individual user set forth in subdivision (b) of section 11703 is itself limited to those suing under the Act: “‘Indi-vidual user of an illegal controlled substance’ means the in-dividual whose use of a specified illegal controlled substance is the basis for an action brought under this division.” (Italics added.) Thus, the Legislature had no cause to add the words “under this Act” or “under this division,” as that limitation was implicit in the definition of “[i]ndividual user.”

Our conclusion is further confirmed by the general rule that statutes do not supplant or displace the common law “‘unless it appears that the Legislature intended to cover the entire subject or, in other words, to “occupy the field.”’” (K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 953, quot-ing I.E. Associates v. Safeco Title Ins. Co. (1985) 39 Cal.3d 281, 285; accord, Jacobs Farm/Del Cabo, Inc. v. Western Farm Service, Inc., supra, 190 Cal.App.4th at p. 1521.) A legislative intent to “‘totally supersede and replace the com-mon law dealing with the subject matter’” does not gener-ally appear unless the legislation is “‘comprehensive’” and “‘minutely describe[s]’” such things as “‘course of conduct, parties, things affected, limitations and exceptions.’” (I. E.


Associates v. Safeco Title Ins. Co., supra, at p. 285, quoting 2A Sutherland, Statutory Construction (Sands 4th ed. 1984) § 50.05, pp. 440-441; see Gray v. Sutherland (1954) 124 Cal.App.2d 280, 290, quoting 15 C.J.S., Common Law, § 12, p. 620 [“The correct rule as to the relation of the common law and the statutory law is . . . ‘the common law is not repealed, by implication or otherwise, if there is no repugnancy be-tween it and the statute, and it does not appear that the legis-lature intended to cover the whole subject’”].) Section 11706 is part of the DDLA, an enabling statute designed to autho-rize, under certain specified circumstances, claims against those involved in the sale or marketing of illicit drugs. The DDLA provides precise rules for pursuing drug dealers and all those who sell, administer, furnish or market illegal con-trolled substances. It does not, however, purport to represent a legislative attempt to supplant common law or control the entire universe of circumstances in which parties injured by someone’s use of drugs, or the drug user himself, may pursue third parties.

Finally, we are guided by the principle that when inter-preting statutes “consideration should be given to the conse-quences that will flow from a particular interpretation.” (Dy-na-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1387.) Interpreting the DDLA as occupying the field of claims in this area could lead to unwelcome outcomes for those who might otherwise have an avenue for pursuing common law claims, as illustrated by Cook v. Kendrick (La.App. 2006) 931 So.2d 420. There, parents of a young man who died of a drug overdose while at the home of a friend obtained a recovery based in part on the failure of the friend to seek medical assistance for a significant period of time af-ter observing the young man collapse. On appeal, the friend’s homeowner insurer argued it was prohibited from defending or paying any damages under Louisiana’s “Drug Dealer Act,” which contained a provision similar to section 11707. (Cook v. Kendrick, supra, at p. 430.) The appellate court disagreed, concluding that the parents “were not legally bound to bring their claims against [the homeowner] under the [Drug Deal-er] Act” because “alternative theories of recovery . . . are not barred” under it. (Cook v. Kendrick, supra, at p. 430.) In view of our Legislature’s expressed intention to expand existing law to include a broader class of potentially culpable parties, we decline to interpret the DDLA to restrict otherwise avail-able common law remedies.

2. Common LawJackson cites no authority for the proposition that a vol-

untary drug treatment facility whose sole alleged fault was a failure to prevent him from obtaining and consuming drugs could be liable for the injuries he suffered. Nor have we found any. As Klean points out, many states preclude claims by drug users entirely, under the “wrongful conduct rule,” which embraces the policy that “courts should not lend their aid to a plaintiff who founded his cause of action on his own illegal conduct.” (Orzel v. Scott Drug Co. (1995)

449 Mich. 550, 560-563 [537 N.W.2d 208] [user’s guardian could not pursue claim against pharmacy that supplied him prescription drugs; user violated controlled substances act when he obtained drugs without valid prescription]; accord, Kaminer v. Eckerd (Fla.Dist.Ct.App. 2007) 966 So.2d 452, 453 [estate of student who died after ingesting prescription drug stolen from defendant’s pharmacy was precluded by student’s wrongful conduct from pursuing claim based on defendant’s failure to follow federal regulations and its own procedures for safeguarding controlled substances]; Prince v. B.F. Ascher Co., Inc. (Okla.Ct.App. 2004) 90 P.3d 1020, 1028 [where plaintiff sued manufacturer of nasal inhaler after her husband died while using it to get high, court held: “‘[T]he general rule is that, absent special circumstance, no duty is imposed on a party to anticipate and prevent the intentional or criminal acts of a third party’”].)

Klean contends that California common law and, in par-ticular, the doctrine of unclean hands represents an absolute bar to a claim by users of illicit substances and their survivors where injuries result from the use of such substan-ces. Our research has revealed no published California case rejecting a claim by a drug (or alcohol) user on that ground.14 However, for many years, California courts applied the rule that the sole proximate cause of injury to an intoxicated person or a third party hurt by an interaction with the intoxicated person was the latter’s voluntary decision to consume alcohol. (See Cole v. Rush (1955) 45 Cal.2d 345, 356; Lammers v. Pacific Electric Ry. Co. (1921) 186 Cal. 379, 384.) The Supreme Court abrogated that rule in a series of cases beginning with Vesely v. Sager (1971) 5 Cal.3d 153 (Vesely), in which the court held that under modern negligence law, furnishing al-cohol to an obviously inebriated person could be a proximate cause of injuries, and violate a duty of care owed to other persons injured by the intoxicated person (Vesely, supra, at p. 164; Bernard v. Harrah’s Club (1976) 16 Cal.3d 313, 324-325; Coulter v. Superior Court (1978) 21 Cal.3d 144, 152), or

14. In Whittemore v. Owens Healthcare-Retail Pharmacy, Inc. (2010) 185 Cal.App.4th 1194, a woman surreptitiously and illegally purchased prescription pain medications from an employee of the de-fendant pharmacy. After she became addicted, she and her husband sued the pharmacy on the ground that it had failed a legal duty to dis-cover and report that the medications had been stolen, and to supervise its employee. (Id. at pp. 1196-1197, 1199.) The trial court sustained the pharmacy’s demurrer without leave to amend, ruling that the doctrine of unclean hands barred plaintiffs from maintaining causes of action “‘[b]ased on plaintiff’s own illegal conduct in buying and taking medi-cations for which she had no prescription and which she was aware were stolen.’” (Id. at p. 1197.) The Court of Appeal upheld the trial court’s order applying the unclean hands doctrine, but did not publish that portion of its opinion. The published portion of the opinion ad-dressed whether the plaintiffs could amend the complaint to allege a cause of action under the DDLA. (Whittemore, supra, at p. 1197.) The appellate court held they could not, as the DDLA required knowing participation in the marketing of illegal controlled substances, and the defendant pharmacy “did not ‘knowingly’ participate in the marketing of the drugs to [the plaintiff wife].” (Whittemore, supra, at p. 1201.) As Jackson does not seek to bring his claim under the DDLA, but to establish a claim under common law, the published portion of Whit-temore is of little assistance.


to the intoxicated person himself. (Ewing v. Cloverleaf Bowl (1978) 20 Cal.3d 389, 400.) As discussed below, in response to these Supreme Court decisions, the Legislature acted to limit liability for those furnishing alcohol. Even before such legislation became effective, however, courts interpreted the principles of common law negligence to apply only to those who “‘actually furnished alcohol,’” not those who “‘permit-ted’ the [intoxicated person] to drink” or “in some unspeci-fied manner ‘aided, abetted, participated and encouraged’ the [intoxicated person] to drink.” (Sagadin v. Ripper (1985) 175 Cal.App.3d 1141, 1157, quoting Coulter v. Superior Court, supra, at p. 155; accord, Baldwin v. Zoradi (1981) 123 Cal.App.3d 275, 279, 289 [affirming dismissal of claims against university based on its having “‘knowingly permitted’” stu-dents to possess and consume alcohol, emphasizing the “ob-vious distinction” between “‘giving’” or “‘furnishing’” al-coholic beverages and “the failure to stop a drinking party or parties”]; Bennett v. Letterly (1977) 74 Cal.App.3d 901, 905 [defendant who contributed to common fund intended to be used to purchase liquor, but did not purchase liquor or exer-cise any control over it, could not be liable for injuries caused by those who consumed it]; Caltrow v. Appliance Industries, Inc. (1975) 49 Cal.App.3d 556, 569 [“Plaintiffs have cited no case and our independent research has revealed none in-dicating that mere acquiescence in another’s activity or mere failure to protest or attempt to stop another from imbibing amounts to a furnishing of an alcoholic beverage”].)

In 1978, the Legislature acted to limit liability of those who furnish alcohol by amending the Business and Profes-sions Code and the Civil Code. Business and Professions Code section 25602, subdivision (c) declares the Legisla-ture’s intent to abrogate the holdings in cases such as Vesely, supra, 5 Cal.3d 153, Bernhard v. Harrah’s Club, supra, 16 Cal.3d 313 and Coulter v. Superior Court, supra, 21 Cal.3d 144, “in favor of prior judicial interpretation finding the con-sumption of alcoholic beverages rather than the serving of alcoholic beverages as the proximate cause of injuries in-flicted upon another by an intoxicated person.” Subdivision (b) of section 25602 provides that “[n]o person who sells, furnishes, gives, or causes to be sold, furnished, or given away, any alcoholic beverage pursuant to subdivision (a) of this section shall be civilly liable to any injured person or the estate of such person for injuries inflicted on that person as a result of intoxication by the consumer of such alcoholic bev-erage.” In cases of alcohol furnished to minors, Business and Professions Code section 25602.1 provides an exception to the civil immunity conferred by section 25602: those holding liquor licenses -- or those required to hold such licenses but failing to obtain one -- may be held liable to third parties for “sell[ing], . . . furnish[ing], . . . giv[ing] . . . or caus[ing] to be sold, furnished or given away” alcoholic beverages “to any obviously intoxicated minor,” where “the furnishing, sale or giving of that beverage to the minor is the proximate cause of the personal injury or death sustained by that person.”

Civil Code section 1714, subdivision (c) similarly pro-vides immunity from civil liability to “social host[s] who furnish[] alcoholic beverages to any person,” stating that social hosts may not “be held legally accountable for dam-ages suffered by that person, or for injury to the person or property of, or death of, any third person resulting from the consumption of those beverages.” Like Business and Profes-sions Code section 25602.1, subdivision (d) of Civil Code section 1714, added in 2010, limits that immunity in cases involving minors, providing that “[n]othing in subdivision (c) shall preclude a claim against a parent, guardian, or another adult who knowingly furnishes alcoholic beverages at his or her residence to a person whom he or she knows, or should have known, to be under 21 years of age . . . .”15 (Stats. 2010, ch. 154, §1, p. 2.)

Because Business and Professions Code section 25602, subdivision (b), and Civil Code section 1714, subdivision (c), specifically confer immunity from civil liability on persons who “furnish[]” alcoholic beverages, some litigants have ar-gued that persons less directly responsible for the intoxicated state of another may be liable under nonstatutory theories. Courts have uniformly rejected this argument. For example, in Allen v. Liberman (2014) 227 Cal.App.4th 46, the deceased minor’s parents brought a wrongful death action against the owners of the home where their daughter died of alcohol poi-soning, under the theory that the homeowners had failed to supervise the girl. The defendants had not furnished alcohol to the decedent; she had obtained it from their liquor cabinet after they went to bed. The plaintiffs argued that social host immunity under Civil Code section 1714, subdivision (c), did not apply, “because there is no evidence that the [defendants] actually ‘furnished’ the alcohol to [the decedent], as required by the statutory language.” The plaintiffs contended that if the social hosts “did not furnish alcohol . . . , the social host immunity statute does not apply and they may be held liable for negligently supervising [the decedent].” (Allen v. Lieber-man, supra, at p. 55.) The court rejected this “‘“‘absurd’”’” result, refusing to impose liability on parties who had merely “fail[ed] to lock up the liquor cabinet to prevent the minor from helping herself to alcohol.” (Id. at p. 56.)

Similarly, in Elizarraras v. L.A. Private Security Services, Inc. (2003) 108 Cal.App.4th 237, the plaintiffs were the par-ents of a minor who died while riding in a car driven by an 18-year old friend. Both the decedent and her friend had become intoxicated at a club that had hired the defendant company to

15. Like Business and Professions Code section 25602, subdi-vision (c), Civil Code section 1714, subdivision (b) makes clear the Legislature’s intent to “abrogate the holdings” in cases such as Vesely, supra, 5 Cal.3d 153, Bernhard v. Harrah’s Club, supra, 16 Cal.3d 313, and Coulter v. Superior Court, supra, 21 Cal.3d 144, “and to reinstate the prior judicial interpretation of this section as it relates to proximate cause for injuries incurred as a result of furnishing alcoholic beverages to an intoxicated person, namely that the furnishing of alcoholic bever-ages is not the proximate cause of injuries resulting from intoxication, but rather the consumption of alcoholic beverages is the proximate cause of injuries inflicted upon another by an intoxicated person.”


provide security. The court found that although the defendant may have been employed in part to ensure that minors were not consuming alcoholic beverages, it owed no duty of care to the minors, as its job responsibility was “not equivalent to a legal duty of care to underage patrons to prevent them from drinking or driving while intoxicated.” (Id. at p. 244.) More-over, the court held, the exception to statutory immunity did not apply because the exception “requires malfeasance, not acquiescence or mere inaction.” (Id. at pp. 239, 243; accord, Leong v. San Francisco Parking, Inc. (1991) 235 Cal.App.3d 827, 832 [neither common law nor statute imposed liability on baseball team, parking corporation, or city and county for “simply permitting [intoxicated driver who injured plaintiff] to consume alcoholic beverages on [their] premises”]; see also Rybicki v. Carlson (2013) 216 Cal.App.4th 758, 763-764 [exception to immunity of Civil Code section 1714, subdivi-sion (d), applies only to social hosts who furnish alcohol to minors at their residence; third parties may not be held liable for injuries caused by intoxicated minors under theories of “conspiracy” or “aiding and abetting” (Rybicki v. Carlson, supra, at p. 764)].)

More recently, some federal courts have held that under limited circumstances, liability could be imposed on third parties for injuries caused to persons who consumed illicit drugs or unlawfully obtained prescription drugs. In Califor-nia, plaintiffs have been permitted to seek relief from defen-dants who supplied drugs or who abandoned a visibly inca-pacitated user. (See, e.g., Kim v. Interdent, Inc. (N.D. Cal. 2009) [2009 U.S. Dist. LEXIS 106686] [wife of dentist who died of Fentanyl overdose stated claim for negligence/wrong-ful death against company that had contracted with decedent to supply Fentanyl for use in his practice]; Easley v. 3M Co. (N.D. Cal. 2007) [2007 U.S. Dist. LEXIS 83149] [plaintiffs stated claim for negligence where defendants invited their daughter to their home to ingest inhalants, encouraged her to enter hot tub and left her there, alone and in an altered state, to drown].)16 Our research has revealed no case, how-ever, suggesting that liability could be predicated on the mere failure to undertake affirmative efforts to stop the user from ingesting drugs. Accordingly, to the extent Jackson’s claim

16. Courts in other states have reached similar conclusions con-cerning those who supply drugs or who abandon a demonstrably inca-pacitated user of drugs. (See, e.g., Tug Valley Pharmacy, LLC (2015) 235 W.Va. 283, 284-285, 297 [773 S.E.2d 627] [persons addicted to prescription drugs not barred from pursuing civil action against doc-tors, a medical center and pharmacies under theory that defendants negligently “prescribed and dispensed controlled substance causing [the plaintiffs] to become addicted to and abuse the controlled sub-stances”]); Dugger v. Arredondo (Tex. 2013) 408 S.W.3d 825, 826-827 [parents of young man who died after ingesting heroin at friends’ house stated claim for negligence where defendants (decedent’s friend and his parents) delayed calling 911 after decedent began choking and vomiting, and when paramedics finally arrived, withheld information about his use of drugs]; Cook v. Kendrick, supra, 931 So.2d 427-428 [parents of young man who died of drug overdose while at home of friend obtained recovery based in part on failure of friend to seek med-ical assistance for a significant period of time after observing decedent collapse].)

is based on Klean’s failure to monitor him more closely to prevent him from smuggling drugs into the facility and self-administering them, these authorities do not assist him.

The most recent California appellate authority in this area, Sakiyama v. AMF Bowling Centers, Inc. (2003) 110 Cal.App.4th 398 (Sakiyama), supports our view that a general failure to thwart drug use is not a basis for liability. There, the defendant landlord permitted an all night “rave” to take place on its premises. Four teenage girls attended, and at least two used Ecstasy. When they attempted to drive home, their automobile crashed into a tree, killing the driver and one of the passengers and injuring the other two girls. Applying the well-known factors described in Rowland v. Christian (1968) 69 Cal.2d 108, the court found that the defendant owed no duty of care to the injured girls or the survivors of the de-ceased girls for “promoting and producing [an] ‘all night drug infested rave to teenagers . . . .”17 (Sakiyama, supra, at p. 407.) “To impose ordinary negligence liability on a business owner that has . . . allow[ed] its facility to be used for an all-night party, even if we assume that [the defendant] knew that drugs would be used at the party, would expand the concept of duty far beyond any current models,” potentially impact-ing every business that permits late night activities, includ-ing “bars, casinos, movie theaters, restaurants, and sporting events . . . .” (Id. at pp. 406, 412.) The court stressed that there was “no evidence that [the defendant] furnished [the girls], or anyone else, with drugs.” (Id. at pp. 403, 407.) To the contrary, “[the defendant] and its security personnel took numerous steps to confiscate and remove both drugs and drug paraphernalia from the facility,” including searching attend-ees twice, confiscating known drug paraphernalia such as surgical masks and vapor rub bottles, and ejecting identified drug dealers from the premises. (Id. at p. 403.) Citing Bald-win v. Zoradi, supra, 123 Cal.App.3d 275, the court stated: “[T]he policy of preventing future harm . . . [was] not as strong [in Baldwin] because of the lack of direct involvement with the furnishing of alcoholic beverages.” [Id. at p. 290]. [¶] . . . The same analysis rings true in the instant case. There is no evidence that [the defendant] collaborated with anyone to encourage partygoers to use ecstasy or other intoxicants. Absent such evidence, and coupled with evidence that [the defendant] engaged in numerous measures to prevent drug use on its premises, the policy of preventing future harm is not strong in the instant case.” (Sakiyama, supra, at p. 411.)

A similar analysis applies here. Klean is an unlocked substance abuse facility whose clients voluntarily seek non-

17. These factors are: “‘[1] the foreseeability of harm to the plain-tiff, [2] the degree of certainty that the plaintiff suffered injury, [3] the closeness of the connection between the defendant’s conduct and the injury suffered, [4] the moral blame attached to the defendant’s conduct, [5] the policy of preventing future harm, [6] the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability breach, and [7] the availability, cost, and prevalence of insurance for the risk involved. [Citations.]’” (Sakiyama, supra, 110 Cal.App.4th at p. 405, quoting Rowland v. Christian, supra, 69 Cal.2d at p. 113.)


medical treatment. It neither guarantees its program’s success nor promises residents that it will prevent them from finding inventive ways to procure drugs and relapse. Far from war-rantying that it will make drug use by its residents impossi-ble, Klean’s terms and conditions of admission acknowledge the possibility that residents may relapse; indeed, they make drug use a ground for termination from the program. We can imagine few facilities that would be willing to offer help to those addicted to drugs if they could be held liable for their residents’ foreseeable but unpreventable predilection to ob-tain and ingest drugs.18

The record establishes that Klean undertook reasonable measures to prevent Jackson from using drugs. He was searched on arrival, his room was checked periodically, and he was encouraged to attend therapy sessions and to engage in wholesome activities. Despite Klean’s efforts, Jackson and his roommate surreptitiously smuggled drugs into their room and consumed them in the dead of night. Having them under supervision by an assigned staff member 24 hours a day or having their room under constant surveillance might have prevented this. But to impose a duty on Klean to employ extraordinary measures to prevent residents from obtaining and using drugs would, we believe, discourage it and similar facilities from undertaking the treatment of users who need it most. Jackson’s claim that Klean could be held liable for failing to stop him from obtaining and using drugs has no support in common law, California case law, or reasonable public policy.19

18. As the Sakiyama court noted, foreseeability alone is not a ground for imposing a duty of care. (See Sakiyama, supra, 110 Cal.App.4th at p. 407 [“Virtually any consequence of an all-night party attended largely by teenagers was foreseeable. It was foreseeable that attendees would attempt to sneak drugs into the facility. It was foresee-able that attendees might purchase and use drugs. It was foreseeable that the partygoers would attempt to drive home, either while impaired from drug use and/or from fatigue, if they stayed at the party all night long. [¶] . . . For that reason, foreseeability is not coterminous with duty”].)

19. Nor does Jackson’s attempt to hold Klean liable find support in administrative regulations. Jackson cited a number of regulations governing licensed substance abuse treatment facilities to argue that Klean owed him a duty of care. (See fn. 4, ante.) Proof that a defendant violated an administrative regulation may give rise to a presumption of negligence under the doctrine of negligence per se. (Evid. Code, § 669; Elsner v. Uveges (2004) 34 Cal.4th 915, 927; Ritter & Ritter, Inc. Pension & Profit Plan v. Churchill Condominium Assn. (2008) 166 Cal.App.4th 103, 119.) However, a plaintiff must, at a minimum, “pro-duce evidence of a violation of a statute [or regulation]” and evidence supporting “a substantial probability that the plaintiff’s injury was caused by the violation.” (National Council Against Health Fraud, Inc. v. King Bio Pharmaceuticals, Inc. (2003) 107 Cal.App.4th 1336, 1347, citing Haft v. Lone Palm Hotel (1970) 3 Cal.3d 756, 772.) As noted above, Jackson provided neither. Moreover, as discussed, the cause of his injury was his decision to defy the rules and procure heroin from an outside source. Accordingly, these regulations provide no support for his negligence claim.

B. Claims Based on Failure to Monitor or Obtain Medical Care

Although Jackson’s complaint focused on Klean’s fail-ure to prevent his drug use, he also alleged that Klean was negligent in failing to discover he had overdosed until the morning after, suggesting more immediate medical attention might have lessened his injuries. Some cases have held that under certain circumstances, a third party may have a duty to protect a drug user from suffering further injury after drug use has rendered him incapacitated. (See, e.g., Easley v. 3M Co., supra, [2007 U.S. Dist. LEXIS 83149]; Dugger v. Ar-redondo, supra, 408 S.W.3d 825; Cook v. Kendrick, supra, 931 So.2d 420.)

We find no basis for holding Klean liable under this theo-ry. Jackson’s roommate explained that he and Jackson waited until the late night bed check had taken place at 3:00 a.m. to inject the drugs. The evidence presented did not indicate whether staff checked on Jackson and his roommate between 3:00 and 7:00 a.m. Had a check been made, however, the monitor would have seen two men apparently asleep. A resi-dential drug treatment facility cannot be expected to employ staff to rouse its patients several times a night to ensure they are well. Jackson claims the fact that he was sleeping in the couch should have alerted staff and resulted in some action. But Dr. Coe testified that residents did not always sleep in their beds, and Jackson’s roommate confirmed that Jackson slept on the couch “almost every night.” In short, neither the failure to more aggressively monitor Jackson after 3:00 a.m., nor the failure to discover he had overdosed until his room-mate alerted the staff supports a claim against Klean. Accord-ingly, Klean’s motion for summary judgment on Jackson’s complaint should have been granted.

DISPOSITION

The petition is granted. Let a peremptory writ of mandate issue directing respondent superior court to set aside that por-tion of its order of June 23, 2017 denying Klean’s motion for summary judgment on Jackson’s complaint, and issue a new order granting such motion. Klean is awarded its costs.

CERTIFIED FOR PUBLICATION

MANELLA, J.We concur: EPSTEIN, P. J., WILLHITE, J.

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