Simpson Strong-tie Co. Inc v. Gore

• Decision Date: 17 May 2010
• Docket Number: No. S164174.,S164174.
• Citation: 49 Cal.4th 12,109 Cal.Rptr.3d 329,230 P.3d 1117
• Court: California Supreme Court
• Parties: SIMPSON STRONG-TIE COMPANY, INC., Plaintiff and Appellant,v.Pierce GORE et al., Defendants and Respondents.

49 Cal.4th 12

230 P.3d 1117

109 Cal.Rptr.3d 329

SIMPSON STRONG-TIE COMPANY, INC., Plaintiff and Appellant,v.Pierce GORE et al., Defendants and Respondents.

No. S164174.

Supreme Court of California

May 17, 2010.

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COPYRIGHT MATERIAL OMITTED

Shartsis Friese, Arthur J. Shartsis, Erick C. Howard, San Francisco; Eisenberg and Hancock, Jon B. Eisenberg and William N. Hancock, San Francisco, for Plaintiff and Appellant.

Davis Wright Tremaine, Thomas R. Burke, San Francisco, and Rochelle L. Wilcox, Los Angeles, for Defendants and Respondents.

Arkin & Glovsky, Pasadena, and Sharon Arkin for Consumer Attorneys of California as Amicus Curiae on behalf of Defendants and Respondents.

Levy, Ram & Olson and Karl Olson, San Francisco, for Senator Sheila Kuehl and California First Amendment Coalition as Amici Curiae on behalf of Defendants and Respondents.

BAXTER, J.

In this case we consider the scope of the commercial speech exemption to the anti-SLAPP statute. (See Code Civ. Proc., §§ 425.16, 425.17, subd. (c).) ¹

In February 2006, plaintiff Simpson Strong-Tie Company, Inc. (Simpson) filed this action for defamation and related claims against defendants Pierce Gore and The Gore Law Firm arising from a newspaper advertisement placed by Gore a few weeks earlier. The advertisement, which was directed to owners of wood decks constructed after January 1, 2004, advised readers that “you may have certain legal rights and be entitled to monetary compensation, and repair or replacement of your deck” if the deck was built with galvanized screws manufactured by Simpson or other specified entities, and invited those persons to contact Gore “if you would like an attorney to investigate whether you have a potential claim.”

Gore moved successfully in the superior court to have the entire complaint stricken under section 425.16, the anti-SLAPP statute and the Court of Appeal affirmed. We granted review to consider the limited issue whether Simpson's complaint was exempt from the anti-SLAPP statute because of section 425.17, subdivision (c) (section 425.17(c)), which excludes causes of action arising from representations of fact about the speaker's or a competitor's “business operations, goods, or services ... 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 “ made in the course of delivering the person's goods or services.” Having found that the complaint is not exempt from dismissal under the anti-SLAPP statute, we affirm.

Background

Plaintiff Simpson is a California corporation in the business of designing, manufacturing, and marketing building products, including metal connectors and other hardware for use in wood frame construction. According to Simpson, it is well known in the wood frame construction industry that pressure-treated wood, which is commonly used in outdoor decks to protect against termites and fungal decay, can have a corrosive effect on steel products, including galvanized screws. Corrosion potentially shortens the service life of these fasteners and connectors and compromises their ability to support their recommended loads or endure seismic and environmental stresses.

In early 2004, at the recommendation of the United States Environmental Protection Agency, the construction industry stopped selling lumber treated with chromium copper arsenate, due to health hazards posed by its arsenic content. Alternative lumber products, such as wood treated with alkaline copper quaternary and copper azole, were substituted, but, as Simpson explains, these chemicals are “more corrosive” to galvanized steel products. Simpson states that it communicated this potential problem to the building industry and to the public generally through its Web site, annual catalog, articles in engineering and building magazines, bulletins issued to the building industry, point-of-sale information, and annual report.

Gore, a California attorney, learned from television reports about the potential for corrosion of galvanized deck fasteners and connectors when used on wood pressure-treated with alkaline copper quaternary or copper azole and contacted Ted Todd, a senior inspector with the Contra Costa County District Attorney's Office who was featured in the television reports. At that time, the district attorney's office was conducting an investigation into the risk posed by galvanized fasteners and connectors when used with these types of pressure-treated wood. The office ultimately issued a “Consumer Alert” warning of the corrosive effect of the new pressure-treated wood products “on the metal connector brackets typically used in construction.” The alert noted that advisories had been posted in some retail stores about the potential incompatibility of the two products but cautioned that the advisories “tend to be in very small print or somewhat inconspicuously posted.”

Gore also visited the company Web site, where Simpson had advised in bold type that “[m]any of the new Pressure Treated Woods use chemicals that are corrosive to steel. By selecting connectors that offer greater corrosion resistance ... you can extend the service life of your connectors. However, corrosion will still occur. You should perform periodic inspection of your connectors and fasteners to insure their strength is not being adversely affected by corrosion. In some cases, it may be necessary to have a local professional perform the inspections. Because of the many variables involved, Simpson Strong-Tie cannot provide estimates on service life of connectors, anchors or fasteners.”

In addition, Gore discovered that a class action complaint had been filed in Massachusetts against one of Simpson's competitors, Phillips Fastener Products, Inc., which sought relief on behalf of consumers allegedly damaged by defective galvanized fasteners and connectors used with pressure-treated lumber, and that Gore's former law firm, Lieff, Cabraser, Heimann & Bernstein, LLP, was investigating claims that some of the newly designed fasteners were failing, in spite of the manufacturers' representations that the “special coatings” were intended to resist corrosion.

Based on this information, Gore arranged for an advertisement to be placed in the San Jose Mercury News in order to locate individuals who had purchased galvanized fasteners and connectors manufactured by Simpson and two other companies, which together were responsible for most of the metal fasteners sold to consumers in California. The advertisement, which commenced Christmas Day 2005 and ran four more times over a 28-day period in the Mercury News and once in the Los Gatos Weekly-Times, read as follows:

Gore has asserted that the wording of the advertisement was modeled after notices he or his cocounsel had used in this state and in others during the preceding three years in connection with potential class actions based on consumer fraud or product defects.

In a letter dated January 9, 2006, counsel for Simpson advised Gore that the advertisement falsely implied that Simpson's galvanized screws fail to meet appropriate industry standards and that a valid claim may exist against Simpson based upon negligence or product liability. The letter demanded that Gore cease publication of any further defamatory advertisements directed at Simpson and reserved Simpson's right to recover against Gore for any costs or damages that may have already resulted from this or any similar publication. Gore did not respond to the letter. In a letter dated January 27, 2006, counsel for Simpson declared that Gore's failure to respond “suggests that your claims are without merit, and that your newspaper advertisement is false, misleading, and defames Simpson.... Unless you can present specific evidence to support your charges, Simpson intends to pursue its defamation claim against your firm[ ] and vindicate its rights.” Again, Gore did not respond.

Prior to filing this action, Simpson retained an opinion survey firm to confirm that the advertisement had caused injury to Simpson's reputation. The survey firm intercepted 214 randomly selected shoppers at nine different home improvement stores in January and February 2006 and obtained their responses to a set of questions with and without exposure to the Gore advertisement. The survey revealed that the shoppers, after reading the advertisement, were significantly more likely to believe that Simpson's galvanized screws were defective or of low quality and were significantly less likely to purchase galvanized screws manufactured by Simpson.

Two days after the survey was completed, Simpson filed this action for defamation, trade libel, false advertising, and unfair business practices. The complaint sought compensatory and punitive damages as well as injunctive relief.

When Gore moved to strike the complaint under section 425.16, Simpson invoked the exemption to the anti-SLAPP law for commercial speech under section 425.17(c). The trial court granted the special motion to strike and entered a judgment of dismissal, finding Gore had made a threshold showing that the statements were made in furtherance of his right of petition or free speech on an issue of public interest (§ 425.16, subd. (e)(4)), that Simpson had failed to demonstrate a probability of prevailing on the merits (§ 425.16, subd. (b)(1)), and that the commercial speech exemption did not apply because the advertisement made no statement about a business competitor's products or services.

The Court of Appeal affirmed in a published opinion. The court first considered “who bears the burden of persuasion with respect to the applicability of [the section 425.17(c) ] exemption-the party invoking the anti-SLAPP law (i.e., the defendant), or the party invoking the exemption (the plaintiff)?” In assigning the burden to the plaintiff, the Court of Appeal disagreed with Brill Media Co., LLC v. TCW Group, Inc. (2005) 132...