As I mentioned in my last post, claims in litigation in the cannabis industry are evolving and expanding, and we have seen significant interest in libel claims. Below is an introduction to California’s anti-SLAPP law, codified in the Code of Civil Procedure, Section 425.16. Subsection (a) describes its purpose:
“Legislature notes and states that there has been a worrying increase in lawsuits that have primarily served to cool the valid exercise of constitutional rights to freedom of expression and requests for redress of complaints. The legislature states and declares that it is in the public interest to encourage further participation in matters of public concern and that this participation should not be chilled by abuse of judicial process. For this purpose, this section should be interpreted broadly. “
“SLAPP” stands for “Strategic Lawsuit Against Public Participation”. Anti-SLAPP filings involve a two-step process of determining whether a case or cause of action falls within the scope of the law. For a case or claim to be subject to anti-SLAPP, the claimant’s claim must (1) be derived from the defendant’s protected speech or petition and (2) have no minimum value. From a procedural point of view, it is the defendant’s duty to prove that the claim or case arises from a protected activity. When the defendant reaches this threshold, the plaintiff must demonstrate the likelihood that he will be successful in the cause of the claim or case.
These actions often disguise themselves as typical civil claims for defamation, economic harm (damage to contractual or future economic relationships), harassment, etc., but their real purpose is to deter the defendant from continuing speaking or petitioning. This process is effective in enforcing valid legal rights on behalf of the plaintiff.
On the other hand, many defendants and defendants’ attorneys also use the anti-SLAPP mechanism in an attempt to use it to intimidate the plaintiffs into an early settlement. The anti-SLAPP application is usually one of the first submissions in a case as subsection (f) provides that it must be submitted within 60 days of service of the complaint. Defending a SLAPP lawsuit is always time consuming and costly, and has additional detrimental effects on litigation that a valid plaintiff would not want to see:
- The dominant party in the anti-SLAPP application can claim the legal fees back.
- Once submitted, the discovery is generally automatically suspended (paused).
- The status quo must be maintained. This means that the plaintiff cannot change their complaint without a resolution (and without the prospect of paying mandatory legal fees), reject the complaint, etc. The court must hear the anti-SLAPP motion within 30 days of its filing, unless the minutes do not allow it, but in essence the parties stand completely still for a month.
- The court’s decision on the anti-SLAPP motion can be challenged immediately, and if an appeal is filed, all further legal proceedings will automatically be completely suspended. Appeals can last 1-2 years.
Anti-SLAPP issues are becoming more common in cannabis litigation, and in general most plaintiffs would do well to hire a skilled lawyer once they feel like a dispute is brewing. As a plaintiff, being hit by an anti-SLAPP motion for a contentious cause to get a case going is an expensive obstacle. As a defendant, if valid, it can be a great negotiator in early settlement negotiations. And since the case law on this issue seems to be constantly changing, potential litigants should keep pace – and avoid doing so at all costs.