BILL ANALYSIS                                                                                                                                                                                                    






                             SENATE JUDICIARY COMMITTEE
                              Martha M. Escutia, Chair
                              2003-2004 Regular Session


          SB 515                                                 S
          Senator Kuehl                                          B
          As Amended May 1, 2003
          Hearing Date: May 6, 2003                              5
          Code of Civil Procedure                                1
          GWW                                                    5
                                                                 

                                        SUBJECT
                                           
          Anti-SLAPP (Strategic Lawsuit Against Public Participation) Law:  
                                           
                   Restrictions on Use of Special Motion to Strike

                                      DESCRIPTION  

            This bill would make the SLAPP motion (special motion to strike  
          a cause of action arising from any act of the defendant in  
          furtherance of that person's right of petition or free speech)  
          inapplicable to: a) public interests and class action lawsuits  
          when specified conditions are met; and b) lawsuits brought  
          against a business that arises from commercial statements or  
          conduct of that business, as specified.

          This bill would also provide if the trial court denies a SLAPP  
          motion because of the new exemptions, the stay of discovery and  
          the right to an immediate appeal provisions of the anti-SLAPP  
          law do not apply.

          The bill would also make legislative findings relating to the  
          disturbing abuse of the anti-SLAPP law, and stating that  
          continued participation in matters of public significance should  
          not be chilled through abuse of the judicial process or the  
          anti-SLAPP law.

                                      BACKGROUND  

          Strategic Lawsuits Against Public Participation, or SLAPP suits,  



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          as they have become popularly termed, were first defined by  
          University of Denver Law School Professor George Pring and  
          University of Denver Sociology Professor Penelope Canan in their  
          seminal article, Strategic Lawsuits Against Public Participation  
          (1988) 35 Social Problems 506, as "civil lawsuits ... that are  
          aimed at preventing citizens from exercising their political  
          rights or punishing those who have done so."

          While SLAPP suits "masquerade as ordinary lawsuits" such as  
          defamation and interference with prospective economic advantage,  
          they are generally meritless suits brought primarily to chill  
          the exercise of free speech or petition rights by the threat of  
          severe economic sanctions against the defendant, and not to  
          vindicate a legally cognizable right.  (See, Pring and Canan,  
          SLAPPS:  Getting Sued for Speaking Out  (Temple University  
          Press, 1996).)

          In 1992, Code of Civil Procedure Section 425.16 was enacted by  
          SB 1264 (Lockyer), Ch. 726, Stats. of 1992, to provide a  
          "special motion to strike" for use by defendants in SLAPP  
          lawsuits to obtain an early judicial ruling and termination of a  
          meritless claim arising from a person's exercise of the  
          constitutional rights of petition and free speech in connection  
          with a public issue.  In passing the Anti-SLAPP law, the  
          Legislature found that "there has been a disturbing increase in  
          lawsuits brought primarily to chill the valid exercise of the  
          constitutional rights of freedom of speech and petition for the  
          redress of grievances . . . 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."  (Emphasis added.) 

          In 1997, this preamble of the anti-SLAPP law was amended to  
          provide that the Section 425.16 shall be broadly construed.  (SB  
          1296 (Lockyer), Ch. 271, Stats. of 1997.)    

          Since becoming law in 1993, there have been at least 100  
          reported appellate opinions construing Section 425.16, including  
          13 federal appellate decisions and 6 California Supreme Court  
          decisions, providing 33 pages of annotations to the West codes.   


                                           



                                                                      



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                               CHANGES TO EXISTING LAW
           
          1.  Existing law  provides that a cause of action against a person  
            arising from any act of that person in furtherance of the  
            person's right of petition or free speech under the United  
            States or California Constitution, as specified, is subject to  
            a special SLAPP motion to strike, unless the court determines  
            there is a probability that the plaintiff will prevail on the  
            claim.  This SLAPP motion is not applicable to any enforcement  
            action brought in the name of the people of the State of  
            California by the Attorney General, district attorney, or city  
            attorney, acting as a public prosecutor.  (Code of Civil  
            Procedure Section 425.16.  All references are to this code  
            unless stated otherwise.) 

             This bill  would further provide that the following claims or  
            actions are not subject to a special motion to strike:

                 Any action brought solely in the public interest or on  
               behalf of the general public when all three following  
               conditions are met:  
                 a)  The plaintiff does not seek any relief greater than or  
                 different from the relief sought for the general public  
                 or a class of which the plaintiff is a member.  A claim  
                 for attorney's fees, costs, or penalties would not  
                 constitute greater or different relief.  
                b) The action, if successful, would enforce an important  
                 right affecting the public interest, and would confer a  
                 significant benefit on the general public or a large  
                 class of persons.
                c)        Private enforcement is necessary and places a  
                 disproportionate financial burden on the plaintiff in  
                 relation to the plaintiff's stake in the matter. 

                 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 of that person when both the following  
               conditions are met:
                a) 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  



                                                                      



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                 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 good's  
                 or services; and,
                b) either i) is aimed at an actual or potential buyer, or  
                 person likely to repeat the statement to, or otherwise  
                 influence the buyer, or ii) arose out of or within the  
                 context of a regulatory approval process, proceeding or  
                 investigation, even if that statement or conduct concerns  
                 an important public issue. 

         2.  Existing law  provides that an order denying a special motion to  
            strike is appealable to the court of appeal.  (Section  
            425.16(j).)   Existing law  generally provides that the  
            perfecting of an appeal stays proceedings in the trial court  
            upon the judgment or order appealed from or upon the matters  
            embraced therein or affected thereby.  (Section 916.)   
             Existing law  also provides for a stay of discovery when a  
            SLAPP motion is filed, but allows the court to allow specified  
            discovery for good cause shown. (Section 425.16(g).)

             This bill  would make those stay and appeals provisions  
            inapplicable when a trial court denies a special motion to  
            strike on the grounds that a cause of action is exempt  
            pursuant to this bill. 

           3.The bill  would make legislative findings and declarations  
            decrying the disturbing abuse of the anti-SLAPP law, which has  
            undermined the exercise of constitutional rights of freedom of  
            speech and petition for redress of grievances, and stating  
            that public participation in matters of public significance  
            should not be chilled through abuse of the judicial process or  
            the anti-SLAPP law.
               
                                        COMMENT
           
          1.  Stated need to prevent Anti-SLAPP law from being abused as a  
            litigation weapon 

             The Consumer Attorneys of California (CAOC), sponsors of SB  
            515, assert that SB 515 is needed to stop corporate abuse of  
            the statute and to return Section 425.16 to its original  



                                                                      



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            purpose of protecting a citizen's rights of petition and free  
            speech from the chilling effect of expensive retaliatory  
            lawsuits brought against them for speaking out.  They note  
            that in recent years, a growing number of large corporations  
            have invoked the anti-SLAPP statute to delay and discourage  
            litigation against them by filing meritless SLAPP motions,  
            using the statute as a litigation weapon.  

            As evidence of their claim, CAOC points to the raising number  
            of SLAPP motions filed in the superior courts of Sacramento,  
            Los Angeles, and San Francisco where total SLAPP motions in  
            those courts have jumped from 93 in the year 2000 to 200 in  
            the year 2002.  CAOC argues that  seminars such as those  
            promoted by the Practicing Law Institute, "Challenging a 17200  
            Claim as a 'SLAPP' Suit," are encouraging corporations to use  
            the SLAPP motions as new litigation weapon to slow down and  
            perhaps even get out of litigation.

            Asserts the Consumer Justice Center, a simple pro bono public  
            interest case that should be completed in six months with  
            $5,000 in expenses becomes a costly and financially risky  
            ordeal when the anti-SLAPP law is misused.  The filing of the  
            meritless SLAPP motion by the defendant, even if denied by the  
            court, is instantly appealable, which allows the defendant to  
            continue its unlawful practice for up to two years, the time  
            of appeal.           

            Proponents assert that the increased use by corporations of  
            meritless SLAPP motions subverts the purpose of the anti-SLAPP  
            law to protect citizens from expensive retaliatory lawsuits  
            brought to chill their valid exercise of constitutional  
            rights.  In Wilcox v. Superior Court (1994) 27 Cal. App. 4th  
            809, 815-816, the court set forth a description of the  
            quintessential SLAPP suit:

               The favored causes of action in SLAPP suits are defamation,  
               various business torts such as interference with  
               prospective economic advantage, nuisance and intentional  
               infliction of emotional distress. [Citations.]  Plaintiffs  
               in these actions typically ask for damages which would be  
               ruinous to the defendants. [Citations.] SLAPP suits are  
               brought to obtain an economic advantage over the defendant,  
               not to vindicate a legally cognizable right of the  



                                                                      



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               plaintiff. [Citations.] . . . . [t]hey are generally  
               meritless suits brought by large private interests to deter  
               common citizens from exercising their political or legal  
               rights or to punish them for doing so. [Citation.]

            Proponents argue that this chilling effect does not apply when  
            a large corporate defendant has massive resources that it may  
            rely upon in litigation, unlike the private citizen.   In  
            support of SB 1651, last year's vetoed bill, University of  
            Denver Professor, Dr. Canan, co-author of the seminal research  
            on SLAPP suits, writes:

               Anti-Slapp legislation is intended ? to provide citizens  
               who are sued for speaking out with a speedy and relatively  
               inexpensive defense mechanism against attacks on their  
               First Amendments rights by SLAPPs?. 

               How ironic and sad, then, that corporations in California  
               have now turned to using meritless anti-SLAPP motions as a  
               litigation weapon.  This turns the original intent of one  
               of the country's most comprehensive and effective  
               anti-SLAPP laws on its head. 

               Corporate defendants have far greater resources to defend  
               themselves when sued, and as a group are far less likely -  
               or not likely at all - to be chilled in the exercise of  
               their First Amendment rights.  Wealthy corporate  
               defendants, some with their own legal departments, simply  
               do not suffer the chilling effect on their rights when  
               faced with a lawsuit claiming, for example, false  
               advertising or fraud or illegal business practices, that  
               common citizens suffer when sued for speaking out.  

         2.  Asserted SLAPP motion abuse stems from recent court cases  
            broadly interpreting anti-SLAPP law in response to recent  
            legislation 
              
            The increased use of the SLAPP motion appears to coincide with  
            the California Supreme Court's decision in Briggs v. Eden  
            Council for Hope and Opportunity (1999) 
            19 Cal.4th 1106, in which the court followed the Legislature's  
            direction and broadly construed the anti-SLAPP law to find  
            that any statement made in any legislative, judicial or other  



                                                                      



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            official proceeding was protected under the anti-SLAPP law,  
            even if the statement did not concern a public issue or issue  
            of public interest.  

            In 1997, this Legislature enacted SB 1296, which directed that  
            the anti-SLAPP statute shall be construed broadly to  
            effectuate its purposes.  That measure sought to overturn  
            cases that were thought by its supporters to be unduly  
            limiting the reach of the anti-SLAPP law.   One such  
            specifically identified case was Zhao v. Wong (1996) 48  
            Cal.App.4th 1114, which was abrogated by the Supreme Court in  
            Briggs.  However, as Justice Baxter noted in his dissenting  
            opinion on this point:  "[t]he anti-SLAPP statute is a  
            powerful tool to be broadly construed to promote '?the open  
            expression of ideas, opinions and the disclosure of  
            information.' (Citation omitted.)  It is not, however,  
            generally available to the parties in any civil action, but is  
            instead expressly limited to lawsuits 'brought primarily to  
            chill the valid exercise of the constitutional rights of  
            freedom of speech and petition for the redress of grievances'  
            'in connection with a public issue' (Citations omitted.)  The  
            majority's holding in this case belies that carefully  
            delineated legislative purpose and will authorize use of the  
            extraordinary anti-SLAPP remedy in a great number of cases to  
            which it was never intended to apply.  "  (Emphasis added.)    

             More recently, relying on Briggs and the Legislature's express  
            command that the anti-SLAPP law "shall be construed broadly,"  
            (Section 425.16, subd. (a).), the Supreme Court in Navellier  
            v. Sletten (2002) 29 Cal.4th 82, held that the plaintiff's  
            breach of contract claim was subject to a SLAPP motion.   
            Justice Brown, dissenting (with Justices Baxter and Chin  
            concurring), wrote:  "?the majority appears willing to  
            consider any suit a SLAPP, based largely on when it was  
            filed?.  The cure has become the disease-SLAPP motions are now  
            just the latest form of litigation abuse.  "  (Id., at p. 96.   
            Emphasis added.)     

            While this Committee might someday wish to engage in a  
            lengthier debate on whether the anti-SLAPP law has become a  
            rotting tree or a tree with a few rotten branches, or is just  
            fine as is, before us for consideration in SB 515 is a measure  
            that seeks to trim off a few bad branches as argued and  



                                                                      



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            identified by the CAOC.        

          3.  SB 515's exemptions would overturn DuPont Merck case
           
            Proponents assert that SB 515's exemptions are necessary  
            following an appellate court's expansion of the law to allow a  
            SLAPP motion in a class action lawsuit  alleging that the  
            defendant's public false statements and conduct before a  
            regulatory agency and to the general public violated  
            California's Consumer Legal Remedies Act and Unfair Business  
            Practices Act.  (DuPont Merck Pharmaceutical Co. v. Superior  
            Court (2000) 78 Cal. App. 4th 562.) 

            In ruling that the anti-SLAPP statute applied, the court  
            stated that the allegations relating to the defendant's FDA  
            activities were lobbying activities and fell squarely within  
            the "petitioning" prong of the statute.  Additionally, the  
            court held the false  advertising related allegation involved  
            free speech rights and also constituted a matter of public  
            concern because the complaint itself admitted that the  
            advertising involved 1.8 million users of the drug and  
            involved very serious conditions.  (Since DuPont, the  
            California Supreme Court in Kasky v. Nike (2002) 27 Cal.4th  
            939, after noting that commercial speech is subject to limited  
            first amendment protection, said:  
            "statements may properly be categorized as commercial  
            'notwithstanding the fact that they contain discussions of  
            important public issues,' and that 'advertising which link a  
            product to a current public debate is not thereby entitled to  
            the constitutional protection afforded non-commercial speech,  
            ?.'" (Id., at p. 957.)   

            Proponents argue that the Merck decision is a very dangerous  
            precedent for eroding the ability of citizens to bring private  
            lawsuits to correct public or private wrongs.  SB 515 seeks to  
            "correct" DuPont  by enacting the proposed exemptions to the  
            anti-SLAPP law. 

          4.  SB 515 would make SLAPP motion inapplicable to cases against a  
            business where cause of action arises from the business's  
            commercial speech or activity 
           
            This bill would effectively overturn the DuPont case by making  



                                                                      



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            Section 425.16 inapplicable 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 of that person when both the  
            following conditions are met:
             a) 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 good's or services; and,
             b) either i) is aimed at an actual or potential buyer, or  
              person likely to repeat the statement to, or otherwise  
              influence the buyer, or ii) arose out of or within the  
              context of a regulatory approval process, proceeding or  
              investigation, even if that statement or conduct concerns an  
              important public issue. 

            CAOC argues that this restriction is necessary in light of the  
            abuses of the statute by corporate defendants who are  
            routinely bringing SLAPP motions in ordinary personal injury  
            and products liability cases to increase the time and expense  
            for plaintiff's attorneys to handle these cases.  As an  
            example, CAOC points to Nutter v. Metabolife, (Superior Court  
            of San Diego County), in which the plaintiff had to argue  
            against SLAPP motions filed against the plaintiff's cause of  
            action for strict liability, breach of implied warranty,  
            negligence, and fraud.  (However, a fifth motion against an  
            Unfair Competition claim was granted and was appealed.)    

            CAOC writes that this formulation is consistent with the  
            recommendation of the Senate Judiciary Committee analysis last  
            year on SB 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 SB 1651.

            Under this approach, lobbying activities to gain regulatory  
            authority to market a product, or speech intended to persuade  
            an audience to buy one product instead of another, can be  
            viewed in the context of its offering, just as a speech by a  



                                                                      



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            person against the building of a waste facility in the  
            neighborhood.  The latter can clearly be seen to have been  
            made in the context of exercising the person's constitutional  
            right of speech and petition of government and is fully  
            protected speech, while the content and context of the former  
            activities are clearly more in furtherance of business  
            considerations and may be characterized as commercial speech  
            which does not enjoy full constitutional first amendment  
            protection.  SB 515 indeed borrows from the Kasky v. Nike  
            formulation of commercial speech in the provision stating that  
            a statement or conduct consisting of representations of fact  
            about the person's business or its operations that arose out  
            of or within the context of a regulatory approval process,  
            proceeding or investigation, is deemed commercial speech and  
            activity, and outside the protections of the anti-SLAPP law,  
            even if that conduct or statement concerns an important public  
            issue.  (Kasky v. Nike, supra.) 

            CAOC argues that this latter exemption is particularly  
            important in light of the fact that false and misleading  
            statements are often made by companies seeking approval of  
            their products in the regulatory process.  Subjecting these  
            statements to the SLAPP process would, in CAOC words, engulf  
            every product defect in a morass of satellite SLAPP  
            litigation, adding years and potentially tens of thousands of  
            dollars to the cost.   

            a)    Opposition to commercial speech exemption
             
               CJAC argues that "SB 515 attempts to enact a wholesale  
               denial of the ability of an entire class of defendants to  
               protect themselves against a harassing lawsuit intended to  
               attack those defendants' constitutional rights of freedom  
                of speech and petition for redress of grievances?. Nothing  
               can justify the total denial of the Anti-SLAPP suit  
               protections to every statement by every entity regarding  
               its products, services, or business operations."

               CJAC contends that SB 515's carte blanche denial of the  
               ability to protect one's free speech rights against  
               intentionally chilling litigation is an affront to the  
               courts and to the spirit of Section 425.16.




                                                                      



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               The California Healthcare Institute (CHI) asserts that "the  
               essence of SB 515 is a wholesale denial of a special  
               procedural tool developed by the Legislature in the early  
               1990's to provide early, pre-discovery dismissals of  
               lawsuits premised on the defendant's exercise of some form  
               of protected speech - even commercial speech.  CHI asserts  
               that SB 515 is extremely unfair in its denial of the  
               anti-SLAPP protections to businesses for their commercial  
               speech and argues that the measure "would likely fail a  
               constitutional challenge."  

               Opponents also point out that when Kasky was recently  
               argued before the United States Supreme Court, several  
               justices questioned the ease with which a bright line can  
               be drawn, so that protected speech is not chilled, under  
               the California Supreme Court's conclusion that Nike's  
               speech was commercial speech even when that speech touched  
               upon issues that was part of a public debate or was  
               intermingled with noncommercial speech.   
               CAOC responds that this measure is a more measured approach  
               than that considered by this Committee last year in SB  
               1651.  That bill proposed a wholesale exclusion of  
               defendants who were product sellers from the anti-SLAPP  
               law.  The failure of that proposal to distinguish between  
               conduct that may well fall within the paradigm of a SLAPP,  
               as opposed to simple commercial speech intended to further  
               the speaker's business interest, was also troubling.  

               Thus, the proposal was recrafted to take a different tack  
               and instead looks at the conduct and context of the  
               statement in order to determine if the underlying statement  
               should be protected by the anti-SLAPP law.  This new  
               approach also avoids the problem of over-inclusiveness when  
               all speech and conduct by a class is excluded from  
               protection, regardless of its content or context.  CAOC  
               contends that SB 515 would withstand a constitutional  
               challenge.   

             b)    Constitutional considerations 
                
               As proposed Section 425.17(c ) would exempt lawsuits based  
               on defendant's acts that would be categorized as commercial  
               speech, the proposed exception to the anti-SLAPP law would  



                                                                      



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               not be unconstitutional.  The provision does not prohibit  
               the commercial speech, and the bill does not punish it with  
               penal sanctions or the like.  Nor does the bill regulate or  
               impinge that commercial speech.  However, the bill would  
               provide that the anti-SLAPP special protections, intended  
               to weed out frivolous lawsuits that chill the valid  
               exercise of first amendment rights of speech or  
               participation in matters of public significance, are not  
               applicable to the specified type of commercial speech.  As  
               stated in Virginia Pharmacy Board v. Virginia Consumer  
               Council (1975) 425 U.S. 748, at 772, fn. 24, commercial  
               speech is "less likely to be chilled by proper regulation."  
                Moreover, commercial speech to be protected by the First  
               Amendment must concern lawful activity and not be  
               misleading.  (Central Hudson Gas & Elec. V. Public Service  
               Comm. (1980) 447 U.S. 557.)  Thus, it is within the full  
               power of the Legislature to punish false speech, to  
               distinguish commercial speech from non-commercial speech,  
               and provide less protection, or even no protection, for  
               false or commercial speech in the procedural protections of  
               the anti-SLAPP statute.   

               Even if the United States Supreme Court were to toss out  
               Kasky's broad definition of commercial speech, that event  
               would not be necessarily fatal to SB 515.  At its core, the  
               anti-SLAPP law is a procedural device crafted by the  
               Legislature to weed out certain frivolous lawsuits arising  
               out of the defendant's valid (and thus protected) first  
               amendment conduct.  The classifications enacted by the  
               Legislature, such as an existing exemption for actions  
               brought by public prosecutors, may be justified when  
               supported by a rational basis.  (See People v. Health  
               Laboratories (2001) 87 Cal.App.4th 442, 448,449, which  
               upheld public prosecutor exemption against equal protection  
               attack: "  Section 425.16 is tangentially related to the  
               constitutional right of free speech, insofar as it was  
               enacted to prevent unscrupulous plaintiffs from filing  
               meritless lawsuits in order to stymie a person's exercise  
               of free speech or petition for redress of grievances  ?.   
               Rather, section 425.16 is merely "a procedural screening  
               mechanism for determining whether a plaintiff can  
               demonstrate sufficient facts to establish a prima facie  
               case to permit the matter to go to a trier of fact."  



                                                                      



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               (Citations.) Emphasis added.) 

               In People v. Health Laboratories, a rational basis was all  
               that was necessary to sustain the exemption for actions  
               brought by public prosecutors.  Even if the statute is  
               determined to be a content-based regulation of commercial  
               speech, the courts would apply an intermediate scrutiny  
               test and upheld the statute if there is a reasonable fit  
               between the government's purpose and the means chosen to  
               achieve it.  (Central Hudson, supra.) 

          5.  Making the anti-SLAPP motion inapplicable to certain class  
            actions and public interest lawsuits
             
            SB 515 would make the SLAPP motion inapplicable to public  
            interest and class action lawsuits "brought solely in the  
            public interest or on behalf of the general public" when three  
            specified conditions are met.  In general, the qualifying  
            language would clearly encompass claims brought under the  
            Unfair Competition Law (Business and Professions Code Section  
            17200 et. seq.), the Unfair Practices Act (Business and  
            Professions Code Section 17500 et. seq.), the Consumer Legal  
            Remedies Act (Civil Code Section 1750 et. seq.), as well as  
            any other public interest  or class actions lawsuits where the  
            three specified conditions are met.        

            The three conditions have been carefully crafted so that not  
            all public interest or class actions would be automatically  
            exempt from the anti-SLAPP law.  This is necessary, according  
            to CAOC, because there are some abusive uses of the unfair  
            competition law that should be subject to the SLAPP motion.   
            CAOC asserts that cases that are motivated by personal gain,  
            such as the recent Trevor Law Group unfair competition  
            actions, would not be covered by the exemption.  

            In specific support of this exemption, the California  
            Anti-SLAPP Project writes: "The reason this exemption is  
            needed and appropriate is as follows: 'There are certain  
            statutes that protect public health or consumers that allow  
            for enforcement by private attorneys general, without an  
            injured plaintiff.  Conceptually, these are virtually  
            identical to when the D.A. or Attorney General enforces those  
            same statutes.  (Citations omitted.) Since the statute already  



                                                                      



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            exempts actions filed by public prosecutors, it should provide  
            a parallel protection when people are acting only in the  
            public interest as private attorneys general, and are not  
            seeking any special relief for themselves."
            Opponents assert that there is no reason to grant what is  
            effectively a presumption of validity to cases purportedly  
            brought on behalf of the general public or in the public  
            interest.  While the public prosecutor exemption has been  
            justified on the grounds that public prosecutors may be  
            rationally presumed by the Legislature to act in the public  
            interest, opponents contend that such a presumption or  
            rationale cannot be applied to private litigants who have  
            shown much more regard to the collection of outlandish  
            attorneys' fees awards than a decent recovery for the class of  
            plaintiffs purportedly represented by the attorney.  Opponents  
            point out that it has not been uncommon for plaintiffs  
            attorneys in these cases to collect millions in attorneys fees  
            while the plaintiff class gets a minor rebate or a coupon  
            towards the purchase of the next product.  
           
           6.  Exemption from exemption for media and motion picture  
            defendants

            Proposed subdivision (d) of newly added Section 425.17 would  
            exempt the news media and other media defendants (such as the  
            motion picture industry) from the bill when the underlying act  
            relates to news gathering and reporting to the public with  
            respect to the news media or to activities involving the  
            creation or dissemination of any works of a motion picture or  
            television studio.  For claims arising from these activities,  
            the current SLAPP motion would remain available to these  
            defendants.

            CAOC argues that the reason for these exemptions is simple.   
            "Newspapers and other media are in the business of  
            disseminating information to the public."  

            Opponents object to this selective exclusion from SB 515 and  
            argue that it is not justified. 
           
           7.  Right to immediate appeal and automatic stay provisions of  
            existing law would not apply if trial court denies SLAPP  
            motion because of SB 515 exemption  



                                                                      



          SB 515 (Kuehl)
          Page 15




            On page 3, lines 31 to 34, SB 515 provides: "If any trial  
            court denies a special motion to strike on the ground that the  
            cause of action is exempt pursuant to this section, the stay  
            and appeal provisions of subdivisions (g) and (j) of Section  
            425.16 do not apply."

            As to nullifying the right to an immediate appeal in these  
            cases, CAOC asserts that current law is being used by  
            defendants to unreasonably delay a case from being heard on  
            the merits, thus adding litigation costs and making it more  
            cumbersome for plaintiffs to pursue legitimate claims. As  
            noted earlier, the Consumer Justice Center argued that a  
            simple pro bono public interest case that should be completed  
            in six months with $5,000 in expenses becomes a costly and  
            financially risky ordeal when the anti-SLAPP law is misused.   
            The filing of the meritless SLAPP motion by the defendant,  
            even if denied by the court, is instantly appealable, which  
            allows the defendant to continue its unlawful practice for up  
            to two years, the time of appeal.           

            SB 515 would make the right to an immediate appeal  
            inapplicable to SLAPP motions that are denied by the trial  
            court based upon one of the new grounds.

            SB 515 would also make the provisions of subdivision (g) of  
            Section 425.16, relating to a stay of discovery upon the  
            filing of a SLAPP motion, inapplicable to SLAPP motions that  
            are denied by the trial upon one of the new grounds.

            How this proposed provision is supposed to work is not clear.  
            The confusion arises because existing subdivision (g) dictates  
            an action when the SLAPP motion is filed and does not address  
            the circumstance when a motion is denied.  In contrast, CCP  
            Section 916 provides for that the perfecting of an appeal  
            stays the proceedings in the trial court. 

            In SB 1651, CAOC had asserted that Section 916's mandatory  
            stay of proceedings is severely damaging to a plaintiff's  
            case, and that the mandatory stay creates an incentive for a  
            defendant to file a meritless special motion and then appeal a  
            denial, because that process ensures a delay of at least two  
            years in the court's hearing of the claim.  In the meantime,  



                                                                      



          SB 515 (Kuehl)
          Page 16



            costs are incurred, discovery is stalled and critical evidence  
            can be lost or destroyed.  Moreover, the inability to conduct  
            discovery pending the appeal may prejudice the plaintiff in  
            his or her argument on appeal.  Even if the plaintiff prevails  
            on appeal, and the motion is denied, the passage of time may  
            have irreparably damaged the plaintiff's case.    
             
            SHOULD THIS PROVISION BE CLARIFIED?  SHOULD, INSTEAD, THE  
            PROVISIONS OF SECTION 916, PROVIDING FOR AUTOMATIC STAY UPON A  
            PERFECTED APPEAL, BE REFERENCED? 

          8.  Other opposition arguments

             Novartis Pharmaceuticals Corporation argues that SB 515 would  
            significantly the protections against frivolous litigation  
            which are now provided by the anti-SLAPP statute.  It asserts  
            that it was able to obtain a quick dismissal in a purported  
            class action lawsuit that attacked Novartis' actions in taking  
            positions on scientific issues.  Without the special motion,  
            Novartis writes that it would have had to spend years and  
            hundreds of thousands of dollars or more in attorneys fees to  
            defend the action.  

            The building industry coalition also opposes SB 515, concerned  
            that it would grant absolute protection to and encourage  
            unmeritorious NIMBY (Not in My Back Yard) litigation by  
            granting opponents of new development projects immunity from  
            the SLAPP motion.  They note that such litigation often takes  
            the form of a CEQA (California Environmental Quality Act)  
            challenge.  These opponents argue that California cannot  
            afford more NIMBY lawsuits.  

            The California Dental Association (CDA) also opposes, noting  
            that the SB 515 would eliminate the only legal tool the CDA  
            has been able to employ to avoid fully litigating Unfair  
            Competition nuisance lawsuits filed against them for their  
            public statements about dental filling materials.  
           
            The Association of California Insurance Companies writes that  
            "SB 515 is a transparent and unwarranted attempt to eviscerate  
            the anti-SLAPP procedure by expanding the exceptions so  
            broadly that the exceptions will inevitably swallow the rule."  
             



                                                                      



          SB 515 (Kuehl)
          Page 17





           Support: California Anti-SLAPP Project 

          Opposition: California Dental Ass'n,; Civil Justice Association  
                    of California; California Healthcare Institute;  
                    California Association of Realtors; California  
                    Building Industry Ass'n.; California Business  
                    Properties Ass'n.; California Chamber of Commerce;  
                    Consulting Engineers and Land Surveyors of California;  
                    Home Ownership Advancement Foundation; Novartis;   
                    Association of California Insurance Companies
                                           

                                       HISTORY
           
          Source: Consumer Attorneys of California 

          Related Pending Legislation: None Known

          Prior Legislation:SB 789/SB 1651 (Kuehl) - Vetoed, 2002
                         AB 1675 (Asm. Judiciary Committee), Ch. 960,  
                    Stats. of 1999
                         SB 1296 (Lockyer), Ch. 271, Stats. of 1997
                         SB 1264 (Lockyer), Ch. 726, Stats. of 1992 
           
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