Pub. Employees' Ret. Sys. v. Moody's Inv'rs Serv., Inc.

226 Cal. App. 4th 643, 172 Cal. Rptr. 3d 238 (2014)



 An actionable misrepresentation must be made about past or existing facts; statements regarding future events are merely deemed opinions. Expressions of professional opinion may be treated as representations of fact. When a statement, although in the form of an opinion, may be regarded as a positive assertion of fact. Moreover, when a party possesses or holds itself out as possessing superior knowledge his representation may be treated as one of material fact.


Defendant credit rating agencies challenged an order of the Superior Court of San Francisco County, California, which denied their special motion to strike plaintiff California Public Employees' Retirement System's (CalPERS') negligent misrepresentation claim pursuant to the anti-SLAPP statute, Code Civ. Proc., § 425.16. Defendant also challenged the trial court’s exclusion of six exhibits relating to the rating agencies' rating activities.  Specifically, the exhibits, attached to the declaration of Daniel Barenbaum, consisted of Standard & Poor's internal documents produced to the United States Senate subcommittee pursuant to its investigation into the financial crisis of years 2007 and 2008. CalPERS offered this evidence as part of its showing that the Rating Agencies lacked a reasonable basis to believe the accuracy or truthfulness of their ratings. The trial court, however, excluded it after concluding the exhibits were irrelevant and/or speculative.


Did the trial court err in excluding evidence relating to certain of the rating agencies' rating activities, because the trial court had a reasonable basis to find the evidence irrelevant or overly speculative?




Here, as the trial court noted, not one of the excluded exhibits mentioned the type of securities named in this complaint—mainly, SIVs. Rather, they appeared to relate to other types of securities such as RMBS and CDOs. While CalPERS insists the exhibits nonetheless are relevant because those other types of securities were found in the SIV portfolios, the fact remains there is nothing in the exhibits to link any particular CDO or RMBS mentioned in the exhibits to the portfolios of the SIVs identified in this lawsuit—to wit, the Cheyne, Sigma or Stanfield Victoria SIVs. Nor does CalPERS, the party with the burden to prove error, offer any evidence of an appropriate link between the securities identified in the exhibits and those identified in the complaint. As such, we conclude the trial court had a reasonable basis to exclude the exhibits as irrelevant or overly speculative.  The appellate court declined to second-guess the trial court's decision in this regard given that it appears neither arbitrary nor irrational on this record. 

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