California Supreme Court Decision Might Result In More Advertising By Attorneys Seeking Plaintiffs To Participate In Class Action Lawsuits

On May 17, 2010, in Simpson Strong Tie Co., Inc. v. Pierce Gore, the California Supreme Court held that a manufacturer could not maintain a lawsuit against an attorney based on allegedly defamatory advertisements by the attorney seeking plaintiffs to participate in a potential class action lawsuit against the manufacturer on the ground that those advertisements were protected by California's anti-SLAPP statute.

After learning that some metal fasteners used in wood frame construction can be susceptible to corrosion and a shortened life when used with pressure treated lumber, containing certain chemicals, an attorney published in two newspapers an advertisement stating as follows:

ATTENTION:

WOOD DECK OWNERS

If your deck was built after January 1, 2004 with galvanized screws manufactured by Phillips Fastener Products, Simpson Strong-Tie or Grip-Rite, you may have certain legal rights and be entitled to monetary compensation, and repair or replacement of your deck.

Please call if you would like an attorney to investigate whether you have a potential claim:

After conducting a survey showing that shoppers who read the advertisement were significantly more likely to believe Simpson's galvanized screws were defective or of low quality and were significantly less likely to purchase galvanized screws manufactured by Simpson, Simpson filed suit alleging, among other things, that the advertisement falsely implied that Simpson's products were defective and that the attorney used "'the false and misleading Advertisement to recruit potential plaintiffs to participate in an unjustified class action lawsuit against Simpson.'"

The attorney defended the lawsuit by invoking California's anti-SLAPP (Strategic Lawsuit Against Public Participation) statute. That statute requires courts to dismiss a lawsuit if: (1) the defendant (i.e., the speaker or advertiser) shows that the "'cause of action . . . aris[es] from' an act by the defendant 'in furtherance of the [defendant's] right of petition or free speech . . . in connection with a public issue'" and (2) the plaintiff (i.e., the complaining party) does not "establish 'a probability that the plaintiff will prevail on the claim.'"

The trial court and the court of appeal both concluded that the attorney met his burden of showing the advertisement was an act in furtherance of his right of free speech about a public issue, and Simpson did not meet its burden of establishing a probability of prevailing on its claims based on the advertisement.

The issue decided by the California Supreme Court was whether the narrow exception to the anti-SLAPP statute for "commercial speech" applied. The Court held that Simpson failed to meet its burden of showing the exemption applied to defeat the attorney's anti-SLAPP defense. Construing the "commercial speech" exemption narrowly, the Court held that even if the advertisement did imply that Simpson's galvanized screws are defective, the "commercial speech" exception to the anti-SLAPP statute did not apply because the advertisement was not about the attorney's business or about a competitor's 'business operations, goods, or services.'"

We believe this decision may result in more frequent and perhaps bolder advertising by plaintiff's attorneys hoping to recruit plaintiffs for potential class action lawsuits against manufacturers, retailers, home builders, and other businesses, including class action wage and hour lawsuits.

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