Sheppard

This case is one of several arising from the collapse of a large Ponzi scheme. Plaintiffs—investors who lost millions in the scheme and a bankruptcy trustee representing entities that were used to perpetrate the scheme—have sued the law firm Sheppard Mullin Richter & Hampton LLP (Sheppard), claiming its negligence and affirmative misconduct helped the perpetrators of the scheme avoid detection and prosecution by securities regulators. Sheppard filed a special motion to strike the complaint under Code of Civil Procedure section 425.16, subdivision (b)(1), which provides a means for early dismissal of unmeritorious claims that target the defendant’s constitutionally protected speech or petitioning activity. After the trial court denied its motion, the firm filed this interlocutory appeal. We conclude the motion to strike should have been granted in part because plaintiffs’ claims are partially based on protected activity and some plaintiffs did not establish the requisite likelihood of prevailing. Specifically, we conclude the bankruptcy trustee’s claims on behalf of one entity are barred by the doctrine of unclean hands and the investors’ claims are barred by the…