Thursday, September 10, 2015

SLAPP Exception Applies to Keyword Manipulation in Taxi Ads

L.A. Taxi Cooperative, Inc. v. The Indep. Taxi Owners Assoc. of L.A., No. B255909 (D2d4 Aug. 20, 2015)

A cooperative of taxicab companies sued another cooperative for false advertising on the Internet. Allegedly, defendants were buying keyword search terms from search engines that would return Defendants’ links when customers searched for contact information for Plaintiff’s company. Defendants filed an anti-SLAPP motion, claiming that claims arose from speech protected under Code of Civil Procedure § 425.16(b)(1). After Plaintiffs opposed, Defendants stipulated to take the motion off calendar. But they then refiled an essentially identical motion, without even trying to address the arguments Plaintiffs made in their prior opposition.

The trial court denied the motion based on the fact that the claims did not from protected activity, but denied defendants a fee award under § 426.16(c)(1) because the motion was not frivolous. It further found that the commercial speech exception under § 425.17(c) did not apply because Defendants—non-profit mutual benefit companies that provided marketing, dispatching, accounting, and other services to independent companies that own and operate cabs—were not themselves in the business of selling or buying goods or services. Defendant appealed the denial and Plaintiff appealed the denial of fees.
First things first, the advertisements at issue don’t fall into any of the enumerated categories of protected activity listed in § 425.16(e)(1)–(4).  

Although subsections (e)(3) and (4) address public statements, they require the statements to be made in connection with a matter of public interest. Some commercial speech can satisfy that standard, but speech about the specific properties and efficacy of one particular product over its competitors generally don’t cut it. Speech about the telephone numbers of particular cab companies just doesn’t rise to the occasion of a matter of public interest.

And in any event, even if the advertisements were covered under § 425.16(e), they are nonetheless excluded under the commercial speech exception under §425.17(c). The exception applies to speech by persons in the business of buy or selling goods or services, consisting of statements of fact about a business’s products, made for the purpose of promoting transactions in those services, where the intended audience is the the defendant’s customers or persons likely to influence them. Unlike protected activity under § 425.16(e), plaintiff bear the burden of showing that the exemption applies.

As to defendant’s argument that commercial exception did not apply, the court distinguished prior cases holding that cooperatives or trade associations conducting advertising campaigns were outside of the § 425.17(c) exception.  Unlike those cases, Defendants in this case were involved in activities integral to the cab operators’ business model. They are thus “persons primarily engaged in the business of selling [the] services” of these operators and therefore well within § 425.17(c).

Finally, the court reverses the trial court’s order declining to award Plaintiff fees under § 425.16(c). Both the underlying motion and the subsequent appeal were essentially frivolous. No case law merited the argument that advertising phone numbers to call taxicabs would be speech related to a issue of public interest protectable under § 425.16. Indeed, the cases all go the other way. This was all made clear when, after Plaintiff initially opposed, citing the key authorities, Defendants re-filed their motion without making any effort to address them.

Denial of motion affirmed, denial of sanctions reversed.

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