Opinion ID: 2626200
Heading Depth: 2
Heading Rank: 2

Heading: Were Simpson's Causes of Action Exempted from the Anti-SLAPP Statute by Section 425.17(c)?

Text: As noted, section 425.17(c) provides, in pertinent part: Section 425.16 does not apply to any cause of action brought against a person primarily engaged in the business of selling or leasing goods or services . . . arising from any statement or conduct by that person if both of the following conditions exist: [¶] (1) The 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 sales or leases of, or commercial transactions in, the person's goods or services, or the statement or conduct was made in the course of delivering the person's goods or services. [¶] (2) The intended audience is an actual or potential buyer or customer, or a person likely to repeat the statement to, or otherwise influence, an actual buyer or customer . . . . There are no disputed issues of fact here. We review the applicability of the commercial speech exemption independently. ( Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3 [46 Cal.Rptr.3d 638, 139 P.3d 30].) The Court of Appeal held, and the parties' initial briefing assumed, that section 425.17(c)(1) prescribes a content exemption and a delivery exemption and that these exemptions have distinctly different elements. The content exemption shields a cause of action from the anti-SLAPP statute if the cause of action arises from a statement or conduct that 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 sales or leases of, or commercial transactions in, the person's goods or services. (§ 425.17(c)(1).) The delivery exemption provides a similar shield for any statement or conduct made in the course of delivering the person's goods or services. ( Ibid. ) In other words, this approach divided the first 47 words of subdivision (c)(1) from the last 17 to create two independent and parallel theories of exemption from the anti-SLAPP law. Although section 425.17(c)(1) is grammatically susceptible to such a construction, that construction was not necessarily the only plausible one. Gore had observed, in a footnote in its initial briefing, that the statute might also be read to exempt a cause of action arising from a statement or conduct that consists of representations of fact about that person's or a competitor's business operations, goods, or services that 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. (§ 425.17(c)(1).) We granted the parties the opportunity to file supplemental briefing as to which construction was the correct one and, as will appear, agree with Gore's construction. (7) As in any case involving statutory interpretation, our fundamental task is to determine the Legislature's intent so as to effectuate the law's purpose. ( People v. Lewis (2008) 43 Cal.4th 415, 491 [75 Cal.Rptr.3d 588, 181 P.3d 947].) We begin with the text of the statute as the best indicator of legislative intent ( Tonya M. v. Superior Court (2007) 42 Cal.4th 836, 844 [69 Cal.Rptr.3d 96, 172 P.3d 402]), but we may reject a literal construction that is contrary to the legislative intent apparent in the statute or that would lead to absurd results ( Ornelas v. Randolph (1993) 4 Cal.4th 1095, 1105 [17 Cal.Rptr.2d 594, 847 P.2d 560]). Simpson's argument, at least at the outset, relies on the plain language of section 425.17(c)(1) and the canon of construction of avoiding surplusage. According to Simpson, section 425.17(c)(1) creates two independent commercial speech exemptions, each introduced by the phrase the statement or conduct, and to hold otherwise would render the second iteration of the statement or conduct in the subdivision redundant. In Simpson's view, therefore, the delivery exemption encompasses a cause of action arising from  any statement or conduct made in the course of delivering the person's goods or services. Gore argues that such a construction would contravene the legislative intent and lead to absurd results. The Legislature's findings supporting the enactment of section 425.17 are set forth in subdivision (a), which states that there has been a disturbing abuse of Section 425.16, the California Anti-SLAPP Law, which has undermined the exercise of the constitutional rights of freedom of speech and petition for the redress of grievances, contrary to the purpose and intent of Section 425.16. The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process or Section 425.16. The construction favored by Simpson does not effectively fulfill the statute's purposes. Under that construction, the Legislature can be seen to have carefully devised specific requirements in order to exempt a cause of action under the content prongi.e., the statement or conduct underlying the cause of action must (1) consist of representations of fact (2) about that person's or a business competitor's business operations, goods, or services, and (3) have been made for the purpose of obtaining approval for, promoting, or securing transactions in the person's goods or services. Yet, under Simpson's construction of the delivery prong, the Legislature apparently imposed no particular requirementsi.e., a cause of action arising from any statement or conduct on any subject for any purpose is exempted from the anti-SLAPP statute, as long as it was made in the course of delivering goods or services. Simpson has not offered any rationale for why the stage of the transaction should play such a critical factor in determining whether to exempt a cause of action from the reach of the anti-SLAPP law. Moreover, under Simpson's approach, a business that was sued because of political or religious statements made by an employee in the course of delivering the product or service to a customer would be deprived of the protection of the anti-SLAPP law, but that same business would be able to invoke the anti-SLAPP law if the same statements were made for the purpose of obtaining approval for, promoting, or securing transactions in its products. Neither the Legislature's findings nor common sense endorses or justifies such a result. Simpson effectively concedes that such a result would be problematic, but argues that the statements in these hypotheticals are not a part of the delivery of goods or services and thus fall outside the delivery exemption as Simpson would interpret it. But, as we recently observed, `[d]uring' means `at some point in the course of.' ( People v. Lewis, supra, 43 Cal.4th at p. 514.) Statements or conduct made during the delivery of goods or services thus would qualify as statements or conduct made in the course of delivering the goods or services. (Cf. § 425.17(c)(1).) Simpson attempts to narrow the definition of the delivery exemption by combining language that appears in two different sentences in Brill, supra, 132 Cal.App.4th at page 341, to argue that the exemption extends only to `statements . . . made and conduct engaged in as part of the type of business transaction engaged in by defendants.' But this formulation does not appear anywhere in the text of section 425.17(c)(1). If, as Simpson effectively concedes, the delivery prong requires an interpretive gloss to avoid absurd results, it seems more consonant with legislative intent to adopt the restriction the Legislature articulated earlier in the sentence setting forth the exemption rather than to rummage about elsewhere for new limitations arising out of whole cloth. Moreover, Simpson's construction of the delivery prong would render the first part of section 425.17(c)(1)the so-called content and purpose prongsurplusage. Statements or conduct that are `part of . . . the type of business transaction engaged in by defendants' would necessarily encompass representations of fact about that person's . . . business operations, goods, or services, that [are] 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 (§ 425.17(c)(1)) inasmuch as every business engages in efforts to obtain approval for, promote, or secure sales or transactions in its goods or services. Indeed, Simpson concedes that a grocer's advertisement in advance of intended sales falls within its broad definition of the delivery prong to the extent the advertising informs the public about the availability of the product for delivery or to the extent the advertising keeps the product in the public eye and bolsters its prestige. With such a broad definition of the delivery prong, there would be no need for the content and purpose prong. The legislative history further undermines Simpson's interpretation of the statute. Summaries of the bill prepared for various legislative committees consistently stated that section 425.17(c) would prohibit the anti-SLAPP motion from being used in specified causes of action against businesses sued for statements or conduct consisting of representations of fact about their goods, services or business operations, or those of a competitor, when those statements or conduct were for the purpose of obtaining approval for, promoting, or securing sales or leases of the person's goods or services, or in the course of delivering the person's goods or services, if the 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 . . . . (Legis. Analyst, 3d reading analysis of Sen. Bill No. 515 (2003-2004 Reg. Sess.) as amended July 8, 2003, p. 1, italics added; Assem. Com. on Judiciary, Analysis of Sen. Bill No. 515 (2003-2004 Reg. Sess.) as amended June 27, 2003, p. 3, italics added; Assem. Republican Caucus, analysis of Sen. Bill No. 515 (2003-2004 Reg. Sess.) as amended June 27, 2003, p. 1, italics added; see also Sen. Sheila Kuehl, letter to Governor Gray Davis, Sept. 3, 2003, p. 2.) In addition, an analysis prepared for the Senate Committee on the Judiciary noted that Senate Bill No. 515 was consistent with the recommendation of the Senate Judiciary Committee analysis last year on [Senate Bill No.] 1651[,] which urged the sponsors to look at the content and context of the statement or conduct when crafting an exemption, rather than enacting a wholesale exclusion of a class of defendants[,] which had been proposed in [Senate Bill No.] 1651. (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 515, supra, at p. 9, italics added.) Simpson offers no explanation why the Legislature would have been so concerned about the content of the statement or conduct in the first part of section 425.17(c)(1) but would have abandoned any such concern in the remainder of the sentence. (8) For these reasons, we interpret section 425.17(c) to exempt from the anti-SLAPP law 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 for the statement or conduct meets the definition set forth in section 425.17(c)(2). Gore does not dispute that he is in the business of selling legal services, that Simpson's causes of action arise from Gore's advertisement, that the purpose of the advertisement was to promote Gore's legal services, or that the advertisement was addressed to a qualifying audience under section 425.17(c)(2). The point of contention concerns whether the causes of action aris[e] from . . . [¶] . . . representations of fact about [Gore's] . . . business operations, goods, or services. (§ 425.17(c)(1).) We find that they do not. (9) Simpson's complaint asserts claims for defamation, trade libel, false advertising, and unfair business practices. The common theme among these causes of action is the allegation that the advertisement communicates that Simpson's galvanized screws are defective. The complaint alleges in particular that the advertisement is libelous on its face in that it falsely communicates to the reader that Simpson's products are defective; that the advertisement disparaged Simpson's goods in that the Advertisement falsely communicates to the reader that Simpson's galvanized screws are defective; that these assertions in the advertisement are false and misleading; and that using the false and misleading Advertisement to recruit potential plaintiffs to participate in an unjustified class action lawsuit against Simpson was an unfair business practice. We will assume arguendo that the advertisement implies that Simpson's galvanized screws are defective. As the Court of Appeal recognized, however, even an implication that Simpson's screws are defective is not `about' Gore's or a competitor's `business operations, goods, or services . . . .' (§ 425.17(c)(1).) It is, rather, a statement `about' Simpson or, more precisely, Simpson's products. It therefore falls squarely outside section 425.17(c)'s exemption for commercial speech. Simpson contends that the advertisement does nonetheless satisfy the commercial speech exemption in that it expressly states that `an attorney' will `investigate whether you have a potential claim' and that it also supports the inference that Gore has investigated the named companies and has discovered that they are selling defective screws. Both of these statements are about Gore's business operations, but neither satisfies the elements of the commercial speech exemption to the anti-SLAPP law. (10) Simpson's causes of action plainly do not arise from (§ 425.17(c)) the representation that an attorney will investigate whether you have a potential claim. Simpson's complaint does not allege that this statement is false or even that it is defamatory. In addition, a promise of what an attorney will do if the reader were to respond to the advertisement is not a representation of fact, but an agreement to take certain actions in the future. ( Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834, 841 [36 Cal.Rptr.3d 385].) Consequently, it does not constitute representations of fact about that person's . . . business operations, goods, or services. (§ 425.17(c)(1).) The alleged inference that Gore has investigated Simpson and discovered that the galvanized screws are defective is not obvious from the advertisement itself, which asserts only that users of these fasteners may have certain (but unspecified) legal rights and that an attorney would need to investigate whether you have a potential claim. Even if one were to draw this inference, however, it would be no more than an attempt to layer the allegedly defamatory inference itselfi.e., that Simpson's galvanized screws are defectivewith an alleged inference that Gore had discovered the defect. Simpson cites no authority for expanding the scope of the commercial speech exemption in this manner. (Cf. Stewart v. Rolling Stone LLC (2010) 181 Cal.App.4th 664, 676 [105 Cal.Rptr.3d 98] [the commercial speech exemption did not apply to a claim that the defendant magazine wrongfully used plaintiffs' names for a Camel advertisement; as plaintiffs concede, the goods they sell are copies of Rolling Stone magazine, not Camel cigarettes. More significantly, the statement or conduct at issue here did not consist of `representations of fact about the business operations, goods or services' of Rolling Stone or of any of defendants' business competitors. Instead, the representation at the center of this lawsuit is the representation that plaintiffs and their fellow musicians endorse the sale and use of Camel cigarettes.]; accord, New.Net v. Lavasoft (C.D.Cal. 2004) 356 F.Supp.2d 1090, 1104 [the commercial speech exemption did not apply because the purportedly offending statements are not statements made about Defendant's product, but rather statements about Plaintiff and its products and the two were not competitors]; see also Troy Group, Inc. v. Tilson (C.D.Cal. 2005) 364 F.Supp.2d 1149, 1151, 1155 [defendant investment adviser's e-mail asking whether plaintiff corporation is one of the biggest crooks on the planet or what? is clearly not about [the defendant]'s business, rather it is about [the plaintiff], which, as [the plaintiffs] admit, is not a business competitor of [the defendant]].) We are reluctant to allow plaintiffs to evade the limitations of the statutory text by mere wordplay, especially given our obligation to construe the commercial speech exemption narrowly. Moreover, Simpson has not attempted to recover damages here because of any implied representation that Gore allegedly discovered that Simpson's products were defective, but because Gore allegedly implied that they were defective. Whether the Simpson products are in fact defective is beyond the scope of this proceeding, but the inference that they are defective is not a representation of fact about Gore's business operations, goods, or services. The Court of Appeal stated the issue succinctly: To the extent that Gore's advertisement `consists of' representations about his services, Simpson's action does not `aris[e] from' it; to the extent that Simpson's action `aris[es] from' a representation by Gore, the representation was not `about' Gore's or a competitor's services or business operations. [4] Simpson argues next that the commercial speech exemption from dismissal under the anti-SLAPP statute should not require that the statement itself giving rise to the cause of action 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. The statute's plain language, however, is otherwise. The commercial speech exemption applies only to a cause of action arising from a statement (or conduct) that consists of representations of fact about that person's or a business competitor's business operations, goods, or services . . . . (§ 425.17(c)(1).) (11) Simpson complains, with rhetorical flourish, that the advertisement defam[es] Simpson in order to tout Gore and his services. . . . The tout and the defamation were of an inseparable whole, with the defamation serving as bait for the tout. The Court of Appeal's approach is as if to parse cheese from a mousetrap. But this is merely another way of saying that the speaker made a representation of fact about a noncompetitor's goods for the purpose of promoting the speaker's own services. Had the Legislature intended the commercial speech exemption to encompass representations of fact about any business operations, goods, or services made for the purpose of promoting sales, leases, or transactions in the speaker's own goods or services, then it would not have limited the exemption to statements or conduct consisting of representations of fact about that person's or a business competitor's business operations, goods, or services . . . . (§ 425.17(c)(1); see Mendoza v. ADP Screening & Selection Services, Inc. (2010) 182 Cal.App.4th 1644, 1652 [107 Cal.Rptr.3d 294] [the Legislature appears to have enacted section 425.17, subdivision (c), for the purpose of exempting from the reach of the anti-SLAPP statute cases involving comparative advertising by businesses].) The legislative history accords with the statute's plain language. As stated earlier, committee reports summarized the bill as [p]rohibit[ing] the anti-SLAPP motion from being used in specified causes of action against businesses sued for statements or conduct consisting of representations of fact about their goods, services or business operations, or those of a competitor, when those statements . . . were for the purpose of obtaining approval for, promoting, or securing sales or leases of the person's goods or services, or in the course of delivering the person's goods or services . . . . (Assem. Com. on Judiciary, Analysis of Sen. Bill No. 515, supra, at p. 3, italics added.) The plain language and the legislative history each confirm that the statement or conduct giving rise to the cause of action must consist of factual representations about the speaker's (or a competitor's) goods, services, or business operations. Nothing in the plain language or the legislative history suggests it would be enough to protect against dismissal under the anti-SLAPP statute if the factual representations about the speaker's or a competitor's business simply appeared in the same publication as the statements actually giving rise to the cause of action. [5] Indeed, Simpson's proposed construction would seriously undermine the anti-SLAPP statute itself. As Gore points out, a press release critical of a political candidatei.e., core political speechwould lose the protection of the anti-SLAPP statute if the press release also mentioned the products sold by the business. We therefore reject Simpson's expansive construction of the commercial speech exemption and conclude, in accordance with the trial court and the Court of Appeal, that Simpson's complaint was not exempted from the anti-SLAPP statute by section 425.17(c)(1). The trial court went on to consider Gore's special motion to strike the complaint under section 425.16, determined that Simpson had failed to establish a probability of prevailing on the merits, and granted the special motion to strike. The Court of Appeal affirmed. The correctness of those rulings is beyond the scope of our grant of review, which was limited to the applicability of the commercial speech exemption to the anti-SLAPP statute set forth in section 425.17(c)(1).