Friday, October 11, 2013

Legal Misadventures in Social Media

GetFugu, Inc. v. Patton Boggs LLP, No. B231794 (D2d3, upon rehearing Oct. 3, 2013)

The court of appeal partially reverses a trial court's granting of a SLAPP motion because the plaintiff established a prima facie case that it could prevail on its claim of defamation against a lawyer and his firm.

The defendants in this case are the plaintiffs and their attorneys in a dismissed RICO case against a company called GetFugu* and two of its former officers. One of the attorneys representing the plaintiffs issued a press release claiming that the GetFugu officers were under investigation by various and sundry US and Danish law enforcement agencies. He later tweeted** that GetFugu was an organization run for the benefit of its management, not its shareholders, that the RICO case had merit, and that some other litigation was frivolous.*** The RICO defendants sued the attorney, his firm, and his co-counsel for defamation, amongst other things. The trial court granted a SLAPP motion striking all claims against all defendants. GetFugu appealed, but as its appeal raised only the defamation claims for the attorney’s statements, the remainder was summarily affirmed.

As to the defamation claim against the attorney and his firm, the court of appeal found that they had satisfied his initial burden of showing the causes of action arose from conduct protected by the anti-SLAPP statute. Since the statements concerned an alleged investment scam involving a public company, they were written statements in a public forum in connection with an issue of public interest. See Code of Civil Procedure § 425.16(e)(3). In its brief analysis on this point, the court does two things of note. First, it cites the SEC’s website for a statement of the importance of investor protection. California state courts are behind the curve on citing web sources, so that’s notable. And perhaps more interestingly, but with even less fanfare, the court implicitly holds that a tweet is a writing made in a place open to the public or a public forum.

Moving on to the merits, the court examined whether the release and the tweet were shielded under the Civil Code § 47(b) litigation privilege. Although the statements were made in connection with the RICO case, they were not made in it. The privilege has been read expansively, but it has not been read so far as to encompass the republication, through the press, of statements to persons who had no interest in the underlying litigation. The court thus held that § 47(b) does not cover “litigating in the press” even when the litigation purports to be a matter of interest to the general or investing public.

Finding the privilege did not apply, the court turned to the evidence of whether or not the statements were true. As to the press release, the court found that the evidence—which included declarations from the plaintiffs that they were not, in fact, under investigation—was in conflict. So as to that statement, the motion should have been denied. (The court walks this back a bit in a footnote, where it explains that some of the statements in the press release were in fact, indisputably true, and others, which reported the events in the RICO litigation, were privileged as reports of the contents of pleadings under Civil Code § 47(d)(1).) As to the tweet, an objective reader would take it as a statement of opinion, not of verifiable fact, so it was not actionable defamation.

Reversed in part.

Of note, it’s not really clear how the plaintiff’s causes of action in this case were organized. In a footnote, the court dings the plaintiffs for violating Rule of Court 2.112, which requires the labeling of causes of action. But it appears that the court found that the entire causes of action at issue “arose from” protected activity, that only part of those had a probability of success, and that only those parts would be permitted to go forward. That seems to be sideways with Mann v. Quality Old Time Service, Inc., 120 Cal. App. 4th 90 (2004), and the various cases following it, which hold that the motion should be denied if the plaintiff can show a likelihood of success on any part of the cause of action. As noted here previously, the Mann rule is currently subject to a split of authority, but the court does not expressly weigh in on the issue. This opinion is already published following a motion for rehearing, so perhaps we will see further efforts to get the opinion amended.

*Despite its name, GetFugu has nothing to do with procuring poisonous pufferfishes. It is some kind of a defunct mobile search app company.

**For the benefit of those who still live in 2005, the court drops a footnote explaining that “A Tweet is a brief message on a social networking website.”

*** The tweet at issue said:

“GetFugu runs an organization for the benefit of its officers and directors, not shareholders and employees. The RICO suit was not frivolous. The 500K lawsuit is frivolous, however, so buyer be wary.”

That’s a bit of a head-scratcher because if the text set out in the opinion is right, the tweet is 198 characters long—58 characters more than the 140 permitted by Twitter. Even the president of the U-nit-ed States has to keep it to 140.

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