As I mentioned in my last post, litigation claims continue to evolve and expand in the cannabis industry, and we’ve noticed substantial interest in defamation claims. In follow up, here a primer on California’s anti-SLAPP statute, codified at Code of Civil Procedure, section 425.16. Subsection (a) outlines its purpose:
“The Legislature finds and declares 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. 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. To this end, this section shall be construed broadly.”
“SLAPP” stands for “strategic lawsuit against public participation.” Anti-SLAPP motions involve a two-step process for determining whether a case or a cause of action falls within the scope of the statute. In order for a case or claim to be subject to anti-SLAPP, the plaintiff’s claim must (1) arise out of defendant’s protected speech or petitioning, and (2) lack minimal merit. Procedurally, it is the defendant’s burden to show the claim or case arises out of protected activity. If the defendant meets that threshold, then it is the plaintiff’s burden to show the probability that it will succeed on the merits of the claim or case.
These lawsuits often masquerade as your typical civil claims of defamation, economic interference (interference with contractual relations or prospective economic relations), nuisance, etc., but really, their purpose is to scare the defendant from continuing his/her free speech or petition activity. This procedure is effective in enforcing valid, legal rights on behalf of the plaintiff.
On the flip side, many defendants and defendants’ counsel also take advantage of the anti-SLAPP mechanism by attempting to use it to intimidate plaintiffs into early settlement. The anti-SLAPP motion is typically one of the first filings in a case because subsection (f) provides it must be filed within 60 days of service of the complaint. Defending a SLAPP suit is always time-consuming and costly, and has additional adverse effects on the litigation that any valid plaintiff would hate to see:
- The prevailing party in the anti-SLAPP motion gets to recover attorneys’ fees.
- Once filed, discovery is generally automatically stayed (paused).
- The status quo must be maintained. That means the plaintiff cannot amend its complaint, dismiss the complaint, etc. without a resolution (and without facing the prospect of paying mandatory attorney fees). The court must hear the anti-SLAPP motion within 30 days of filing unless their docket does not allow, but essentially the parties are at a complete standstill for one month.
- The court’s ruling on the anti-SLAPP motion is immediately appealable and, if it is appealed, that automatically stays all further trial court proceedings completely. Appeals can take 1-2 years.
Anti-SLAPP issues are becoming more and more commonplace in cannabis litigation, and generally speaking, most plaintiffs would do well to engage an experienced attorney as soon as they feel a dispute brewing. As a plaintiff, being hit with an anti-SLAPP motion on arguable grounds is an expensive roadblock in getting a case off the ground. As a defendant, when valid, it can be a huge bargaining chip in early settlement negotiations. And as the case law on this issue seems to be ever-changing, it’s something potential litigants should keep up with – and avoid at all costs.
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