Daily Journal

LITIGATION • January 15, 2004

Courts Refuse to Expand Application of SLAPP Law to New Facts in 2003

Focus Column

By Mark Goldowitz

Last year saw a record number of published opinions involving California's anti-SLAPP law, Code of Civil Procedure Section 425.16, as well as a significant legislative amendment to the law. The law protects against Strategic Lawsuits Against Public Participation, lawsuits that arise from a defendant's petition or speech activity, by providing a mechanism for speedy dismissal of SLAPPs.

In 2003, state and federal courts issued 31 published opinions involving the anti-SLAPP law, including an important decision by the state Supreme Court. The appellate courts issued 160 opinions dealing with the law last year (including unpublished opinions). Many of the decisions refused to extend the anti-SLAPP law to the facts in the case.

In Jarrow Formulas Inc. v. LaMarche, 31 Cal.4th 728 (2003), the state Supreme Court unanimously held that a malicious-prosecution action was subject to the anti-SLAPP law because it was a cause of action arising from a written statement made before a judicial proceeding. The court stated that, "[u]nder the remedial scheme the Legislature crafted, the nature or form of the action is not what is critical but rather that it is against a person exercising certain rights."

The Jarrow court rejected the argument that the statute unduly burdens plaintiffs' access to the courts and noted that the ruling would not prevent meritorious malicious-prosecution claims.

The Supreme Court also affirmed the Court of Appeal's ruling that the plaintiff had not shown that it had a potentially meritorious case. Even though the plaintiff had won a defense summary-judgment motion on the underlying claim, the court held that that did not establish lack of probable cause or malice as a matter of law.

The state Supreme Court also granted review in five cases arising from the anti-SLAPP law: Kids Against Pollution v. California Dental Ass'n, S117156; Gates v. Discovery Communications, S115008; Zamos v. Stroud, S118032; Finke v. Walt Disney Co., S118936; and Smith v. M.D., S114192.

A series of five 2003 opinions and a legislative amendment essentially removed commercial speech from the protection of the anti-SLAPP law. These opinions and the new statute reversed a trend of corporations using the anti-SLAPP law to obstruct litigation based on their corporate misconduct.

This trend began with DuPont Merck v. Superior Court, 78 Cal.App.4th 562 (2000). That case allowed the pharmaceutical giant to invoke the anti-SLAPP law against a lawsuit claiming that it had made false statements to doctors and consumers about a generic alternative to one of its drugs.

In Consumer Justice Center v. Trimedica International, 107 Cal.App.4th 595 (2003), Division Three of the 4th District Court of Appeal (the same division that issued DuPont) held that a lawsuit charging that the defendant published false advertisements about its product was not subject to the anti-SLAPP law because the advertisements did not involve an issue of public interest. The product was "Grobust," a dietary herbal supplement that the defendant claimed enlarged breasts.

In Nagel v. Twin Laboratories, 109 Cal.App.4th 39 (2003), Division Three of the 4th District held that a lawsuit charging that the defendant published false advertisements about the contents of its weight-loss dietary supplements was not subject to the anti-SLAPP law because the advertisements did not involve a public issue.

In Commonwealth Energy Corp. v. Investor Data Exchange, 110 Cal.App.4th 26 (2003), Division Three of the 4th District held that a lawsuit challenging the defendant's telemarketing, which was directed to shareholders of the plaintiff, was not subject to the anti-SLAPP law because the telemarketing statements involved "merely a commercial service" and were not about an issue of widespread public interest.

In Martinez v. Metabolife International, 113 Cal.App.4th 181 (2003), Division One of the 4th District held that a lawsuit based on physical injuries that the plaintiff allegedly suffered as a result of the defendant's ephedrine product was not subject to the anti-SLAPP law. The defendant argued that it could invoke the law because the complaint contained allegations about the defendant's labeling and advertising, which constituted commercial speech.

The court rejected this argument, holding that "it is the principal thrust or gravamen of the plaintiff's cause of action that determines whether the anti-SLAPP statute applies." The court noted that the case involved conduct not covered by the statute - manufacturing and selling a defective product - that allegedly caused the plaintiff's physical injuries.

In Jewett v. Capital One Bank, 113 Cal.App.4th 805 (2003), the 2nd District held that a lawsuit based on allegedly misleading credit-card solicitations was not subject to the anti-SLAPP law. The court held that "the solicitations were designed solely for the purpose of commercial activity" and did "not implicate matters of public interest and therefore do not qualify for protection under section 425.16."

Capping this trend of refusing to apply the anti-SLAPP law to commercial activity, the Legislature passed, and the governor signed, SB515 (Kuehl). The Legislature enacted SB515 to prevent corporate abuse of the anti-SLAPP law.

Effective Jan. 1, SB515 added new Code of Civil Procedure Section 425.17, which exempts from the anti-SLAPP law public-interest lawsuits that are brought solely for the benefit of the general public (Section 425.17(b)) and claims involving false representations by a business directed at potential customers regarding the business's products or services or the products or services of a competing business (Section 425.17(c)).

In Beach v. Harco National Insurance Co., 110 Cal.App.4th 82 (2003), the 3rd District held that the anti-SLAPP law did not apply to a lawsuit alleging that an insurance company had breached its covenant of good faith and fair dealing. The court noted that the bad-faith claim "centers on defendant's conduct in handling its uninsured motorist claim," which involved nonaction and delays, and that "none of this conduct can be deemed to be in furtherance of Harco's exercise of its constitutional right of petition."

In Jespersen v. Zubiate-Beauchamp, 2003 Cal.App.LEXIS 1875 (Cal. App. Dec. 18, 2003), the 2nd District held that the anti-SLAPP law did not apply to a lawsuit for legal malpractice. The court held that the alleged malpractice did not arise out of the attorneys' First Amendment right to petition but, rather, from their alleged negligent failure to protect their clients' rights.

In Batzel v. Smith, 333 F.3d 1018 (2003), the 9th U.S. Circuit Court of Appeals held that the denial of an anti-SLAPP motion in federal court is immediately appealable, as it is in state court. See Section 425.16(j).

The Batzel court also held that, under Section 230 of the federal Communications Decency Act, 47 U.S.C. Section 230, a user or provider of an "interactive computer service," including the Internet, is immune from civil liability for publishing on the Internet a statement created by another person, as long as a reasonable person would conclude that the information had been furnished to the publisher for publication on the Internet.

Mark Goldowitz is a sole practitioner in Berkeley who specializes in defending against SLAPPs. He is the director of the California Anti-SLAPP Project, which supported SB515 and co-sponsored its predecessor bills.

**********