- Author: Peter J. Gimino III
- Date:
- Category: Business Law , Constitutional Law , Defamation Law , Law
The Commercial Speech Exception to California Code of Civil Procedure §425.16
The California legislature enacted section 425.16 of the Code of Civil Procedure (the anti-SLAPP statute) to protect against the use of the actions brought to chill the valid exercise of constitutional rights of freedom of speech and the right to petition, also known as Strategic Lawsuits Against Public Participation (or SLAPP complaints). (Code Civ. Proc. § 425.16 (a)).
However, the California State Legislature recognized that, contrary to the intent of Section 425.16, a “disturbing abuse” of that section has undermined its very purpose. (Code Civ. Proc. § 425.17(a).) In response, the Legislature created an express exemption from anti-SLAPP claims for actions brought against a person engaged in the business of selling services:
(c) 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, including, but not limited to, insurance, securities, or financial instruments, 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 or potential buyer or customer, or the statement or conduct arose out of or within the context of a regulatory approval process, proceeding, or investigation, except where the statement or conduct was made by a telephone corporation in the course of a proceeding before the California Public Utilities Commission and is the subject of a lawsuit brought by a competitor, notwithstanding that the conduct or statement concerns an important public issue.
Cal. Civ. Proc. Code § 425.17(c)(1)-(2).
The California Supreme Court analyzes this exemption under the following principles:
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).
Simpson Strong-Tie Co., Inc. v. Gore, 49 Cal. 4th 12, 30 (2010).
The application of the commercial speech exemption to a special motion to strike pursuant to Code of Civil Procedure Section 425.16 requires a fact specific analysis. If applicable, this exemption may provide litigants with a means to navigate past otherwise complicated anti-SLAPP analysis.
