## Facts

- Moody’s Investors Service, Inc., Moody’s Corporation, and The McGraw-Hill Companies, Inc. (collectively, the Rating Agencies) assisted in forming three structured investment vehicles (SIVs) and were responsible for research and risk analysis concerning those SIVs.
- The Rating Agencies had an arrangement to receive fees tied to the sale of the SIV investments.
- The Rating Agencies assigned their highest credit rating, “AAA,” to the three SIVs. The ratings were published in the SIVs’ offering materials.
- The offering materials also included disclaimers by the Rating Agencies that sought to limit liability.
- Few public details were available about the composition of the SIVs, making investors more dependent on the published ratings.
- California Public Employees’ Retirement System (CalPERS), a large public pension fund, had an institutional policy limiting investments to highly rated products.
- CalPERS invested in the SIVs after they received AAA ratings.
- The SIVs later collapsed during the financial crisis, and CalPERS alleged it lost hundreds of millions of dollars.
- CalPERS sued the Rating Agencies, asserting (among other theories) negligent misrepresentation based on the AAA ratings.
- The Rating Agencies filed a special motion to strike under California’s anti-SLAPP statute, Code of Civil Procedure section 425.16. The trial court found the statute applied but denied the motion, concluding CalPERS showed a probability of prevailing.
- The Rating Agencies appealed the denial of the anti-SLAPP motion. CalPERS cross-appealed, challenging the trial court’s conclusion that section 425.16 applied and challenging the exclusion of several exhibits.

## Issues

1. Whether CalPERS’s negligent-misrepresentation claim “arose from” protected activity under Code of Civil Procedure section 425.16 because it was based on the Rating Agencies’ issuance and publication of credit ratings in connection with matters of public interest.
2. If section 425.16 applied, whether CalPERS produced sufficient evidence to show a probability of prevailing on negligent misrepresentation at the anti-SLAPP stage, including in light of arguments that credit ratings are nonactionable opinions and that disclaimers defeated reliance or liability.
3. Whether the trial court abused its discretion by excluding certain CalPERS exhibits submitted in opposition to the anti-SLAPP motion.

## Decision

- The Court of Appeal affirmed the trial court’s order denying the Rating Agencies’ special motion to strike under Code of Civil Procedure section 425.16.
- The court agreed that CalPERS’s claim arose from protected speech activity because the challenged conduct was the issuance and publication of credit ratings connected to issues of public interest in the financial markets.
- The court held CalPERS met its burden at prong two by making a prima facie showing that it could prevail on negligent misrepresentation based on the AAA ratings, so dismissal at the anti-SLAPP stage was not proper.
- The court rejected the view that credit ratings were categorically immune from suit at this stage merely because they are framed as opinions; CalPERS’s showing was enough to proceed.
- The court found no abuse of discretion in the trial court’s evidentiary rulings excluding certain exhibits and concluded CalPERS’s showing was sufficient even without the excluded materials.
- CalPERS’s cross-appeal was rejected, and the denial of the anti-SLAPP motion was left intact in all respects.

## Legal Principles

- A special motion to strike under Code of Civil Procedure section 425.16 requires a two-step analysis: (1) the defendant must show the claim arises from protected activity; (2) if so, the plaintiff must show a probability of prevailing by presenting legally sufficient claims supported by a prima facie factual showing.
- Credit ratings issued and published to investors in connection with widely marketed financial products may constitute protected speech “in connection with a public issue” for purposes of the anti-SLAPP statute.
- At prong two, the court does not weigh credibility or resolve factual disputes; it asks whether the plaintiff’s evidence, if credited, would support a judgment on the claim.
- A statement framed as an opinion may still be actionable where the plaintiff’s theory and proof support that it conveyed misleading information or implied a factual basis that was not true; whether a rating is actionable can depend on context and the plaintiff’s evidentiary showing.
- Liability disclaimers and reliance-related defenses commonly raise factual questions; they do not necessarily defeat a negligent misrepresentation claim as a matter of law at the anti-SLAPP stage.
- Trial courts have discretion over evidentiary rulings in anti-SLAPP proceedings; exclusion of evidence is reviewed for abuse of discretion.

## Conclusion

The Court of Appeal held that CalPERS’s negligent-misrepresentation claim was based on protected speech activity because it targeted the Rating Agencies’ issuance and publication of AAA ratings for SIVs, but it affirmed denial of the anti-SLAPP motion because CalPERS made a prima facie showing that it could prevail on negligent misrepresentation despite the ratings’ opinion framing and the offering-material disclaimers, and the court found no reversible error in the trial court’s evidentiary rulings.


California Public Employees' Retirement System v. Moody's Investors Service, Inc., 226 Cal. App. 4th 643, 172 Cal. Rptr. 3d 238, rev. denied, 2014 Cal. LEXIS 9404 (2014)