Thursday, June 27, 2007
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Company’s Remarks About Rival Held Shielded by Anti-SLAPP Law
By TINA BAY, Staff Writer
A litigation update that a company sent to customers concerning its business competitor was not commercial speech excepted from anti-SLAPP protections, the Fourth District Court of Appeal held yesterday.
Agreeing with Orange Superior Court Judge Daniel J. Didier, Div. Three upheld the dismissal of a defamation suit by Contemporary Services Corporation, in Northridge, against its Huntington Beach-based rival Staff Pro. Both compete in the business of providing staffing and crowd control services for sports and entertainment events in California.
CSC and its president, Damon Zumwalt, sued Staff Pro and president Cory Meredith last January over negative remarks Meredith made to some of its customers about CSC. The allegedly defamatory statements pertained to litigation that CSC had commenced in 2001 alleging its rival engaged in unfair business practices, including predatory pricing.
In an e-mail update sent to numerous individuals connected with the 2001 case, which was filed in the Los Angeles Superior Court, Meredith said his “personal opinion” was that “everyone knows CSC uses the courts as a weapon against its competitors.”
He also stated he “sincerely believed[d]” the record needed to be set straight concerning the “baseless accusations CSC” had made Staff Pro.
The e-mail communicated recent court rulings in the matter, including that Staff Pro was entitled to summary adjudication on CSC’s predatory pricing claim, and that CSC had engaged in discovery abuses entitling Staff Pro to sanctions.
Meredith later declared that his purpose in sending the e-mail had been to explain the status of the case, give the recipients an idea of how their testimony and records pertaining to their businesses had been used, and apologize for any disruption to their business that had occurred as a result of being “dragged into” the CSC litigation.
Defamation Claim
CSC ultimately requested dismissal of its unfair competition lawsuit, and turned its efforts to suing Staff Pro for defamation and intentional interference with economic advantage in connection with Meredith’s e-mail. CSC’s Jan. 2006 suit also included malicious prosecution and abuse of process claims relating to a countersuit that Staff Pro had filed and then dismissed in the unfair competition litigation.
The defamation claim included allegations that Meredith, in his e-mail, falsely told “mutual customers” of CSC and Staff Pro that the former had fabricated evidence and paid for perjurious testimony, and that CSC engaged in unfair business tactics designed to put Staff Pro out of business.
Staff Pro filed a special motion to strike the complaint under the anti-SLAPP statute—Code of Civil Procedure Sec. 425.16—which lets defamation defendants challenge suits attacking the exercise of their free speech or petition rights in connection with a public issue.
In granting the anti-SLAPP motion, Didier found the defendants’ statements and conduct were not commercial speech, which, pursuant to Sec. 425.17(c), would have rendered them without protection under anti-SLAPP law.
Commercial Speech Exception
Sec. 425.17(c) bars anti-SLAPP motions pertaining to statements or conduct that is directed to an actual or potential customer, and consists of representations of fact about the speaker’s or a competitor’s business operations or services.
On appeal, CSC argued it should have been “exempted” from anti-SLAPP law on the defamation claim because the defendants’ statements fell within the Sec. 425.17(c) exception.
But Div. Three said Meredith’s e-mail, though directed at actual or potential customers who had some involvement in the Los Angeles action, did not contain statements about the “business operations, goods, or services” of Staff Pro or CSC.
Writing for the panel, Justice Richard D. Fybel explained:
“The e-mail is certainly critical of plaintiffs’ litigation tactics and provides a summary of what had transpired in the Los Angeles action. But plaintiffs are ‘primarily engaged’ in the business of providing event staffing services; they are not in the ‘business’ of litigating claims against defendants.”
The e-mail was sent to “set the record straight” with regard to CSC’s allegations rather than to promote or secure business for Staff Pro, the justice said.
As a litigation update describing the parties’ contentions and court rulings, Fybel wrote, the e-mail was made “in connection with an issue under consideration or review by a . . . judicial body” within the meaning of Sec. 425.16.
The justice went on to say that CSC failed to show a probability of prevailing on its defamation claim.
Neither Meredith’s personal opinion about CSC’s litigation tactics nor sincere belief about CSC’s baseless accusations “could be construed as a declared or an implied provable assertion of fact,” the jurist reasoned.
Presiding Justice David G. Sills and Justice Richard M. Aronson concurred in the opinion.
The case is Contemporary Services Corporation v. Staff Pro Inc., 07 S.O.S. 4127.
Copyright 2007, Metropolitan News Company