Thursday, December 1, 2016

Garbage Battle Is a SLAPP.

Indus. Waste & Debris Box. Serv., Inc. v. Murphy, No A142388 (D1d2 Oct. 28, 2016)

Defendant is a waste and recycling consultant. On behalf of Client, it wrote a report about recycling rates that was positive for Client but questioned the veracity of Client’s Competitor’s statements about how much of the waste it collected was ultimately recycled. Client ultimately submitted the report to a local government in Sonoma County, resulting in Client getting a waste hauling contract that Competitor previously held. Competitor sued Defendant for defamation and other similar causes of action.

If you haven’t yet guessed where this is going, you might be new to California.

Defendant filed an anti-SLAPP motion, which the trial court denied. It ruled that although the complaint arose from protected activity, Competitor had established a probability of prevailing.

The Court of Appeal reverses. If Defendant had sent its report directly to the government, this would be an easy question as the report would be a statement made in connection with an issue under consideration by a legislative or executive body, which is protected activity under Code of Civil Procedure § 425.16(e)(2). But the fact that Defendant gave it to Client who gave it to city puts a twist on the analysis.

The court decides it doesn’t need to resolve the (e)(2) question, because it finds the report is squarely within Code of Civil Procedure § 425.16(e)(4)s catchall for other “conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.” The report was clearly addressed to an issue of public interest, including whether government contractors were meeting appropriate government standards. Moreover, there is widespread governmental and public interest in the issue of waste reduction, as evidenced by the numerous bills addressed to the topic that have been enacted by the legislature over the past few years.

Competitor, however, claims that the report is commercial speech and thus either outside the scope of §425.16(e)(4) or within the commercial speech exception in § 425.17(c). If forfeited the former by failing to raise it in the trial court. As to the latter, the commercial speech exception applies only to a business statements about its own or a “business competitor’s” products or services. The statements must also be made for the purpose of promoting the defendant’s products or services and the intended audience must be the Defendants customers.

The exception founders on the fact that Defendant is not Competitor’s business competitor. Defendant is a consultant to Competitor’s competitor. And there’s no real evidence that Defendant had any expectation that the audience for its report was anyone other than Client. So the statute facially just does not apply. 

Nor is the court inclined to expand the definition of business competitor to include a implicit “acting on behalf of a competitor” extension. On this point, the court finds a structural argument particularly persuasive. Section 425.17(c)(2) specifically expands the “audience” requirement from an actual or potential customer by adding “a person likely to repeat the statement to, or otherwise influence,” a customer. But there isn’t a similar extension for those acting on behalf of a competitor.

The court goes on to disagree with the trial court on the merits, holding that Competitor did not actually establish a probability of prevailing. So little probability, in fact, that the complaint shouldn’t have survived a demurrer. And even considering the evidence, Competitor didn’t make out a prima facie case of defamation. In particular, Competitor offered only a declaration claiming that statements in the report were “not true.” But it didn’t offer any objective evidence that actually contradicted the truth of the statements themselves to substantiate its claim.

Reversed.

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