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May 17, 2010

Simpson Strong-Tie Company, Inc. v. Gore (2010) 49 Cal.4th 12

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The California Supreme Court holds that claims premised on an attorney’s advertisement implying that a product is defective and offering to investigate is protected by California’s anti-SLAPP statute. 

Attorney Pierce Gore placed a newspaper advertisement stating that consumers may have certain legal rights if they had a wooden deck built with galvanized screws manufactured by Simpson Strong Tie.

Simpson filed an action for defamation, trade libel, false advertising, and unfair business practices.  Gore moved successfully in the trial court to strike the complaint under California Code of Civil Procedure § 425.16, the anti-Strategic Lawsuit Against Public Participation (anti-SLAPP) statute.

The Supreme Court considered whether the complaint was exempt from the statute under C.C.P.  § 417c, the commercial speech exemption.  This statute excludes from anti-SLAPP protection causes of action arising from representations of fact about the speaker’s or a competitor’s “business operations, goods, or services …  made for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person’s goods or services” or “made in the course of delivering the person’s goods or services.”

Analysis of an anti-SLAPP motion involves a two-step process.  First, the defendant must make a prima facie showing that the plaintiff’s cause of action arises from an act by the defendant in furtherance of the defendant’s right of petition or free speech in connection with a public issue.  Second, if a defendant meets this threshold showing, plaintiff must demonstrate a probability of prevailing to avoid dismissal.

The exemption for commercial speech is narrowly construed and applies only when the entire action is brought in the public interest.  The court posited the question as whether the exemption applied to an attorney as a person primarily engaged in the business of selling services and the statements consists of representations of fact about business operations, goods, or services to promote the attorneys’ own business, and the intended audience is an actual or potential client.  Under traditional rules of statutory construction Simpson bore the burden of proof to show that the commercial speech exemption applied.

The Court held that the exemption applies where a cause of action arising from commercial speech when (1) the cause of action is against a person primarily engaged in the business of selling or leasing goods or services; (2) the cause of action arises from a statement or conduct by that person consisting of representations of fact about that person’s or a business competitor’s business operations, goods, or services; (3) the statement or conduct was made either for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person’s goods or services or in the course of delivering the person’s goods or services; and (4) the intended audience is an actual or potential customer or client.

Gore conceded that he is in the business of selling legal services, that the causes of action arose from his advertisement, that the purpose of the advertisement was to promote his legal services, and that the advertisement was addressed to a qualifying audience .  He did not agree that the causes of action arose from representations of fact about his business operations, goods, or services.

The theme of Simpson’s complaint was that the advertisement falsely communicated that Simpson’s galvanized screws were defective so that Gore could recruit potential plaintiffs for an unjustified class action lawsuit against Simpson.  The statement about Simpson’s galvanized screws is not about Gore’s or a competing attorney’s business operations, goods, or services.  It is, rather, a statement about Simpson’s products and therefore falls squarely outside the commercial speech exemption.

The statements imply that that Gore will investigate a potential claim.  A promise of what an attorney will do if the reader were to respond to an advertisement is not a representation of fact, but an agreement to take certain actions in the future..  Thus the statements are not misrepresentations of fact about Gore’s business operations, goods, or services.

The Court disagreed that the advertisement inferred that Gore has investigated Simpson and discovered that the galvanized screws were defective.  The advertisement stated that users of these fasteners may have legal rights and that an attorney would need to investigate.  Even if you could draw the inference suggested by Simpson, it would be an attempt to layer the inference with a further inference that Gore had discovered the defect.  This would be an unwarranted expansion of the scope of the commercial speech exemption.  The court would not allow Simpson to evade the limitations of the statutory text by wordplay, especially since the exemption is to be narrowly construction

Simpson argued that the exemption should not require that the statement include factual representations about the defendant’s or a business competitor’s business operations, goods, or services, as long as the statement giving rise to the cause of action is accompanied by factual representations about the defendant’s or a business competitor’s business operations, goods, or services.  This is contrary to the plain language of the statute.  The commercial speech exemption applies only to a cause of action “arising from” a statement that consists of representations of fact about that person’s or a business competitor’s business operations, goods, or services.

Essentially Gore made a representation about a non-competitor’s (Simpson’s) goods for the purpose of promoting Gore’s own services.  However, the Legislature limited the exemption to statements or conduct consisting of representations of fact about Gore‘s or his competitor’s business operations, goods, or services.  This
interpretation is supported by the legislative history.

The court did not consider whether Simpson had met the second prong of the anti-SLAPP analysis, whether Simpson could establish a probability of prevailing, as that issue was not on appeal.

Comment: The court will protect attorney advertisements to solicit class action plaintiffs from challenges by angry targets.

 

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