Daily Journal

December 3, 2003

Measure Revives Original Intent of Anti-SLAPP Law

Forum Column

By Mark Goldowitz

            On Sept. 6, Gov. Gray Davis signed into law SB515, which amends California's anti-SLAPP law, Code of Civil Procedure Section 425.16. The anti-SLAPP ("Strategic Lawsuit Against Public Participation") law was enacted to protect people from lawsuits brought against them because they exercised their constitutional rights of petition or speech.

            Sen. Sheila Kuehl, D-Los Angeles, wrote SB515 in response to the increasing use of the anti-SLAPP law by corporations to obstruct or delay public-interest and consumer lawsuits against them. It passed the Senate 21-15 and the Assembly 44-30.

            In a letter to Davis urging that he sign the bill, Kuehl wrote, "SB515 prevents the anti-SLAPP law from being used as a sword instead of a shield. The law was meant to be a shield to protect an ordinary person's right of free speech, but its most common use has now become an offensive weapon to deny access to the judicial system by an injured party."

            The new law, Code of Civil Procedure Section 425.17, creates exemptions from Section 425.16 for two types of lawsuits: public-interest lawsuits brought solely for the benefit of the general public (Section 425.17(b)); and lawsuits 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)).

It also makes a trial court's denial of an anti-SLAPP motion on the grounds of one of these two exemptions not immediately appealable. Section 425.17(e). Such orders are otherwise immediately appealable. Section 425.16(j). These two exemptions do not apply to lawsuits against the media or nonprofit organizations that get more than half their funding from the government. Section 425.17(d).

            The new law overturns a controversial opinion, DuPont Merck Pharmaceutical Co. v. Superior Court, 78 Cal.App.4th 562 (2000), which permitted DuPont Merck to use the anti-SLAPP law to attack a class action based in part on its false statements regarding a competitor's product to the medical profession and to the public. Since DuPont Merck was published, corporations increasingly have invoked the law.

Indeed, last year, the Practicing Law Institute conducted a seminar in San Francisco that taught corporate lawyers how to invoke the anti-SLAPP law against consumer lawsuits brought under Business and Professions Code Section 17200.

            Professor Penelope Canan, whose research and writing on SLAPPs (with professor George Pring) led to the enactment of the anti-SLAPP law, explained the need for SB515 in a letter to the Senate Judiciary Committee: "How ironic and sad ... that corporations in California have now turned to using meritless anti-SLAPP motions as a litigation weapon. This turns the original intent of one of the country's most comprehensive and effective anti-SLAPP laws on its head."

Canan noted, "Corporate defendants have far greater resources to defend themselves when sued, and as a group are far less likely - or not likely at all - to be chilled in the exercise of their First Amendment rights. Wealthy corporate defendants, some with their own legal departments, simply do not suffer the chilling effect on their rights when faced with a lawsuit claiming, for example, false advertising or fraud or illegal business practices, that common citizens suffer when sued for speaking out."

            The Consumer Attorneys of California sponsored SB515, and the California Anti-SLAPP Project supported the bill. After the bill was signed, James C. Sturdevant, president-elect of the Consumer Attorneys of California, said, "SB515 represents landmark reform of a statute which in recent years has been used by large corporations and other business entities to derail legitimate lawsuits filed to protect and advance the rights of consumers faced with gross misrepresentations about the products or services. This law will restore the statute to its original intent to protect consumers and consumer organizations from intimidating lawsuits filed to chill their First Amendment rights."

            Opponents included the California Chamber of Commerce, the Association of California Insurance Companies, the California Building Industry Association, the California Realtors Association, the Civil Justice Association of California, the American Civil Liberties Union and the California First Amendment Coalition.

            Opponents argued that the bill would encourage frivolous or malicious lawsuits targeting business and trying to force nuisance settlements or block legitimate business activities. The building industry argued that SB515 would encourage unmeritorious NIMBY ("not in my back yard") litigation by granting opponents of new development projects immunity from the anti-SLAPP motion.

            The Civil Justice Association of California stated that the bill "attempts to enact a wholesale denial of the ability of an entire class of defendants to protect themselves against a harassing lawsuit intended to attack those defendants' constitutional rights of freedom of speech and petition for the redress of grievances."

            However, as the state Supreme Court affirmed in Kasky v. Nike, 27 Cal.4th 939 (2002), cert. granted, 537 U.S. 1099, cert. dismissed, 123 S.Ct. 2554 (2003), commercial speech does not enjoy the same level of constitutional protection as political speech: "Commercial speech, because it is both more readily verifiable by its speaker and more hardy than noncommercial speech, can be effectively regulated to suppress false and actually or inherently misleading messages without undue risk of chilling public debate." SB515 borrows to a great extent the definitions of commercial speech set forth in Kasky in defining the speech to which its limitation applies.

SB515 takes effect Jan. 1 and will apply to all cases, both in the trial court and on appeal. Robertson v. Rodriguez, 36 Cal.App.4th 347 (1995) (anti-SLAPP law is procedural statute applicable regardless of whether facts in underlying cause of action arose or were pleaded before law was enacted); Gregory v. City of San Juan Capistrano, 142 Cal.App.3d 72 (1983).

            In fact, one could make a reasonable argument that Section 425.17 is effective now, retroactively, because the Legislature enacted it to correct, clarify or render explicit the original legislative intent. City of Redlands v. Sorenson, 176 Cal.App.3d 202 (1985).

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

Measure Revives Original Intent of Anti-SLAPP Law

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