Unreported / Non-Citable
Background
Four Dimensions, Inc. is a Bay Area company that produces semiconductor probing systems used to test electronic components. After founder James T.C. Chen died in February 2021, the board authorized management in 2023 to explore a sale. Louis Wang was a partner in and director of Singapore-based Asia-IO Partners International Pte., Ltd.; Asia-IO signed a nondisclosure agreement with Four Dimensions in June 2023 and a non-binding letter of intent in October 2023, but withdrew in December 2023 over export-classification and CFIUS concerns. Wang’s wife, Sherry Li, and her LLC Omni Ventures Partners, LLC then pursued the acquisition, but Four Dimensions terminated those negotiations in March 2024 after Wang contacted employee-shareholders without authorization; a later May 2024 term sheet did not revive the deal.
In June 2024 Four Dimensions began discussing a sale with Wuxi Zhuohai Technology Co. Ltd. (WZH), a Chinese company. In July 2024 WZH sent a draft letter of intent, and that same month Wang spoke with WZH representatives. Wang later declared that the discussions were strictly limited to publicly available information about general CFIUS scrutiny and regulatory compliance, without explicit mention of Four Dimensions, though he admitted commenting on WZH’s regulatory risks in acquiring a U.S. semiconductor company. The following month WZH withdrew, citing among other things Wang’s numerous comments against the transaction and his sharing of Four Dimensions’ confidential information. In October 2024 Four Dimensions sued Wang, Li, and Asia-IO for breach of the nondisclosure agreement, breach of the implied covenant, intentional and negligent interference, and aiding and abetting a breach of fiduciary duty. Wang and Li, but not Asia-IO, filed a special motion to strike under Code of Civil Procedure section 425.16, arguing that Wang’s warnings were protected speech about national-security risks and regulatory compliance. The trial court denied the motion because defendants failed to show that the claims arose from protected activity, and Wang and Li appealed.
The Court’s Holding
The Court of Appeal reviewed the denial de novo and affirmed. It agreed that national security and regulation of foreign acquisition of U.S. semiconductor technology are matters of public interest, but held that the catchall provision in section 425.16, subdivision (e)(4), requires more than a reference to such a subject. The movant must show a functional relationship between the speech and public conversation: the statement itself must participate in or further public debate. Wang’s declaration was cursory; it described general CFIUS scrutiny, regulatory compliance, and acquisition risks without indicating exactly what he said, identifying an existing public conversation, or showing criticism, proposed changes, or other participation in public discourse. The court found no evidence that the warnings entered the public sphere or contributed to public discussion.
The private context reinforced that conclusion. The warnings were privately made for private purposes by a private investor to limited business audiences, and remained private. The court rejected the arguments that informing decisionmakers or people capable of acting on a risk necessarily furthers public discourse, and it found the speaker, audience, and purpose factors unpersuasive under FilmOn and Wilson. The court also held subdivision (e)(2) inapplicable: WZH abandoned the acquisition and never entered a letter of intent, so possible CFIUS review remained contingent rather than an ongoing or immediately pending official proceeding. Because defendants failed their threshold burden of showing protected activity, the court did not decide whether particular claims arose from protected activity, the requested claim-by-claim analysis, or the related forfeiture arguments. The order denying the motion to strike was affirmed; respondent’s frivolous-appeal sanctions request was treated as a sanctions motion and denied as untimely, while respondent was entitled to reasonable costs on appeal.
Key Takeaways
- Speech about a matter of public interest is not automatically protected by the anti-SLAPP catchall provision; the movant must connect the speech to actual public discourse or resolution of the issue.
- General descriptions of regulatory warnings may be insufficient when they do not reveal content capable of participating in or furthering public debate.
- Private business communications can qualify in some circumstances, but a private speaker, limited audience, commercial purpose, and absence of public dissemination can defeat protection.
- A contingent possibility of CFIUS review did not satisfy the pending-official-proceedings provision after the proposed acquisition was abandoned and no letter of intent was executed.
- The court treated Four Dimensions’ frivolous-appeal sanctions request as a sanctions motion and denied it as untimely, while awarding the prevailing respondent reasonable costs on appeal.
Why It Matters
The decision applies California Supreme Court authority on public discourse and official proceedings to unsuccessful acquisition negotiations. It distinguishes influencing a private company’s transaction decision from contributing to public discussion, even when the subject involves national security and foreign-investment regulation, and it shows that private warnings to a rival bidder do not become protected anti-SLAPP activity merely because they touch on a public issue.
The affirmance leaves Four Dimensions’ claims undecided on the merits and resolves only that Wang and Li failed to establish the protected activity needed to shift the anti-SLAPP burden. The opinion is not certified for publication under California Rules of Court, rule 8.1115.