Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—CalCtApp: Unfair Competition Suit Based on Community Group’s Lawyer Referrals Rejected, (May 23, 2013)

By William Zale, J.D.

A suit by a group of lawyers—alleging that a community group violated the California Unfair Competition Law by engaging in false advertising and improper lawyer referrals in connection with litigation against a public utility—was a strategic lawsuit against public participation under the California anti-SLAPP statute, a California appellate court has ruled (San Diego Fire Victims Lawyers v. Community Assistance Recovery, Inc., May 21, 2013, Irion, J.). The court reversed a denial of the community group’s anti-SLAPP motion to strike, and directed the trial court to grant the motion and to entertain a motion for fees and costs.

The 2007 San Diego wildfires gave rise to litigation against San Diego Gas & Electric Company (SDG&E), with numerous lawyers involved in the litigation on behalf of different fire victim clients. The lawyer-plaintiffs in this case alleged that the defendants, Community Assisting Recovery, Inc. (CARe) and George Kehrer, in the guise of providing the wildfire victims with information about the SDG&E litigation, CARe and Kehrer were actually soliciting business for an attorney in exchange for a referral fee or payment.

CARe and Kehrer filed a special motion to strike the complaint under the anti-SLAPP statute, Cal. Code Civ. Proc., §425.16. A suit that (1) arises from protected speech or petitioning and (2) lacks even minimal merit—is a SLAPP, subject to being stricken under the statute.

Protected speech—statements about performance of counsel. The lawyers’ UCL claims were based on statements that CARe and Kehrer made about the performance of the attorneys in the SDG&E Litigation. Whether those statements were made as part of a scheme to steal clients was irrelevant, the court said. The exception to the anti-SLAPP statute for activity illegal as a matter of law did not apply because the complaint does nothing more than allege improper activity by CARe and Kehrer, and the facts were heavily disputed. CARe and Kehrer have met their burden to make a threshold showing that the each cause of action in the complaint arose from activity protected under the anti-SLAPP statute—“any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law” (§ 425.16, subd. (e)(2)).

Plaintiffs’ probably of prevailing. To meet the burden to demonstrate a probability of prevailing on the merits in an action brought under the UCL, a plaintiff opposing an anti-SLAPP motion must submit admissible evidence to establish standing by showing that it suffered injury in fact and lost money or property as a result of the unfair competition. The plaintiff-lawyers, however, submitted no evidence to support their allegations that they suffered economic injury due to CARe and Kehrer's purported solicitation of clients on behalf of another attorney. Because the plaintiffs did not demonstrate the standing necessary to pursue and prevail on any of their causes of action under the UCL, they did not meet their burden under the anti-SLAPP statute to demonstrate a probability of prevailing on their claims.

The case is No. D061182.

Attorneys: G. Patrick Connors III (Connors & Associates) for Community Assistance Recovery, Inc. Dabney Finch for San Diego Fire Victims Lawyers.

Companies: San Diego Fire Victims Lawyers; Community Assistance Recovery, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews