Most Commercial Speech is Not Activity Protected by California’s Anti-SLAPP Statute.

On August 20, 2015, the Los Angeles Division District Court was presented with the issue of whether false advertising on the internet was subject to anti-SLAPP protection. The case is In L.A. Taxi Cooperative, Inc. v. The Independent Taxi Owners Association of Los Angeles and a copy can be found here.

Apparently rival cab companies are purchasing pay per click advertisements on leading search engines which purport to be the rival company but really redirect customers to their own websites and numbers. An example is:

Kia Tehrany, director of operations for Yellow Cab, stated that he conducted a search using the terms “‘Yellow Cab Los Angeles.’” The results included the following:

Yellow Cab Los Angeles – Call 800-521-8294 or Book Online!
Our Cabs get you there Fast & Safe.

Tehrany stated that neither the listed telephone number nor the website was owned or controlled by Yellow Cab. Instead, the website contained information related solely to taxi services provided by ITOA.

So the Yellow Cab Company and affiliates filed a lawsuit against ITOA and its affiliates alleging (1) violation of Business & Professions Code section 17500, which prohibits false or misleading statements when advertising one’s services, and (2) violation of Business and Professions Code section 17200, which prohibits unfair competition in the form of any unlawful, unfair or fraudulent business act or practice. The complaint was amended to include violations of the Lanham Act for false advertising and trade name infringement.

Eventually, the defendants filed an anti-SLAPP motion. As a reminder, there was a time in California where people would file lawsuits just to prevent the opposing side from voicing their opinions (often referred to as strategic lawsuit against public participation). The California legislature passed what are called anti-SLAPP statutes which are designed to quickly end these kinds of lawsuits and punish the party filing the SLAPP motion. Over time, it has become a powerful tool.

In this case, the defendants filed an anti-SLAPP motion alleging that the Yellow Cab Company was filing a lawsuit to prevent them from exercising their right to speech. They not only lost but the loss was affirmed by the appellate court and they are now liable for attorney fees.

The appellate court found that “It is well established that commercial speech that does nothing but promote a commercial product or service is not speech protected under the anti-SLAPP statute.” It then concluded that the particular advertisements were purely commercial speech. Hence the anti-SLAPP statutes wouldn’t even apply.

That’s not the end of the inquiry though. Commercial speech that involves a matter of public interest, however, may be protected by the anti-SLAPP statute. The appellate court found that in this particular case, the advertisements were not a matter of public interest. “The subject advertisements did not constitute participation in any public dialogue about public transportation via taxicabs, the taxicab industry, or taxicab licensing and regulation. Rather, the advertisements on their face were designed to further defendants’ private interest in increasing the use of their taxicab services.”

The appellate court seemed to espouse the view that consumer information that goes beyond a particular interaction between the parties and implicates matters of public concern that can affect many people is generally deemed to involve an issue of public interest for purposes of the anti-SLAPP statute.

As if all this was not enough, there is a commercial speech exception to the anti-SLAPP statute! As set forth in section 425.17, subdivision (a), the Legislature was concerned with the abuse of the anti-SLAPP statute. To curb such abuse, it placed limits on when an anti-SLAPP motion may be brought. One such limitation is set forth in section 425.17, subdivision (c), the commercial speech exemption, which provides that the anti-SLAPP statute does not apply to claims brought against a person primarily engaged in the business of selling goods or services, arising from any statement or conduct by that person, if two conditions exist:

  1. “[t]he statement or conduct consists of representations of fact about that person’s or a business competitor’s business operations, goods, or services, that is made for the purpose of obtaining approval for, promoting, or securing . . . commercial transactions in, the person’s goods or services,…”; and

  2. “[t]he intended audience is an actual or potential buyer or customer, or a person likely to repeat the statement to, or otherwise influence, an actual or potential buyer or customer….”

The appellate court then held that the exception applied to the facts of this case. Finally, the court found that the anti-SLAPP motion was frivolous and awarded attorney fees and costs to the Plaintiff.

Author’s comment: anti-SLAPP motions have teeth but sometimes they bite you! Attorneys have to be more diligent and aware of the possibility of being hit with an anti-SLAPP motion than ever before but they must be just as cognizant of the possibility that they will be sanctioned for filing frivolous anti-SLAPP motions.

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