June 30, 2014 Top Story

Anti-SLAPP Statute Does Not Protect Law Firm Advertisements

Marketing falls within commercial speech exception to state anti-SLAPP law

Sara E. Costello

A law firm cannot use Texas’s Anti-Strategic Lawsuit Against Public Policy (SLAPP)statute to protect its advertising campaign, the U.S. Court of Appeals for the Fifth Circuit ruled in NCDR, L.L.C. v. Mauze & Bagby, P.L.L.C. In an issue of first impression, the Fifth Circuit held that the firm’s advertising is commercial speech not covered by the statute.

Texas’s Anti-SLAPP Statute

A SLAPP is a lawsuit, often alleging defamation, aimed at dissuading speech. Approximately half of the states have enacted statutes addressing SLAPPs. In 2011, Texas enacted an anti-SLAPP statute, called the Texas Citizen’s Participation Act (TCPA), Tex. Civ. Prac. & Rem. Code Ann. §§ 27.001–27.011. The TCPA “allows a claim to be dismissed when the defendant can show that the claim was brought to chill the exercise of First Amendment rights.” The TCPA does not, however, protect all types of speech. For example, the statute includes a commercial speech exemption, § 27.010(b).

Law Firm’s Advertising Challenged 

In an attempt to solicit clients, the defendant law firm ran advertisements suggesting that a chain of dental clinics performed unnecessary and harmful procedures. The defendant’s advertising campaign involved television, radio, and Internet advertisements and the creation of a website. The dental clinics filed suit in the U.S. District Court for the Southern District of Texas, alleging that the defendant’s advertisements violated state and federal law.

The defendant moved to dismiss the complaint based on the TCPA, along with other grounds. The district court denied the motion, concluding that the advertisements and website were not covered by the statute because it does not protect commercial speech. The district court further held that the TCPA did not apply to the federal law claims. On interlocutory appeal to the Fifth Circuit, the defendant argued that the district court wrongly concluded that the TCPA’s commercial speech exemption applied. The defendant did not dispute the district court’s ruling regarding the federal law claims.

Law Firm’s Advertisements Exempted from Protection

After determining that it had jurisdiction to consider the district court’s order under the collateral order doctrine, the Fifth Circuit affirmed. In doing so, the Fifth Circuit examined the language of the TCPA’s commercial speech exemption. The court noted that the exemption applies when the challenged speech “arises out of the sale or lease of goods [or] services” and the intended audience for the speech “is an actual or potential buyer,” § 27.010(b). Because the TCPA was only recently enacted, the Supreme Court of Texas has yet to consider it. Thus, the Fifth Circuit stated that it “must make an Erie guess” and attempt to predict state law.

The Fifth Circuit’s analysis was guided by several Texas state appellate court decisions, including Newspaper Holdings, Inc. v. Crazy Hotel Assisted Living. The Newspaper Holdings court concluded that the exemption did not apply because the challenged speech did not arise out of the sale of newspapers. In contrast, the Fifth Circuit found that the defendant law firm’s advertisements and website arose directly from the solicitation of its legal services. Accordingly, the Fifth Circuit held that the first requirement of the TCPA’s commercial speech exemption was satisfied.

The Fifth Circuit also cited two cases challenging ratings by the Better Business Bureau. In those cases, the state appellate courts held that the commercial speech exemption did not apply because the intended audience for the ratings was not the Better Business Bureau’s clients. Conversely, the Fifth Circuit held that the intended audience for the law firm’s advertising campaign was its potential legal clients.

The Fifth Circuit rejected the defendant’s argument relying on Simpson Strong-Tie Co., Inc. v. Gore, in which the California Supreme Court ruled that the state’s anti-SLAPP law protected attorney advertisements. The appellate court pointed out that the commercial speech exemption in California’s law, Cal. Civ. Proc. Code § 425.17(c)(1), does not apply unless the challenged speech includes factual representations. The TCPA has no such requirement. Thus, the Fifth Circuit concluded that the TCPA’s commercial speech exemption applied, and the defendant law firm’s motion to dismiss was correctly denied.

Section Leaders’ Reaction

“Unfortunately for the defendant, its advertisements fall squarely within Texas’s anti-SLAPP’s commercial exemption because its intended audience was actual and potential clients,” says Amy M. Stewart, Dallas, TX, cochair of the ABA Section of Litigation’s Business Torts & Unfair Litigation Committee. These clients “coincidentally are also the dental clinics’ former patients,” Stewart notes. “Commercial speech is a common carve out” in anti-SLAPP statutes, explains Jason B. Tompkins, Birmingham, AL, Fifth Circuit editor of the Section of Litigation’s Appellate Practice Committee. States do not “want to allow competitors to use the statutes to disparage each other,” Tompkins adds.

How to Avoid Pitfalls When Advertising

“Prior to releasing advertising created to solicit clients from the general public who were injured by a particular action, law firms should carefully review the requisite anti-SLAPP statute, if any,” Stewart suggests. Further, “the law firms who normally implement this sort of marketing may need to consider not referencing the alleged wrongdoer’s name or likeness in its advertisements,” she advises. This may help shield the firms “from potential defamation and similar causes of action,” says Stewart.

Still, when advertising, “firms are always going to be open to defamation suits,” Tompkins predicts. “They may need to turn to tools other than anti-SLAPP statutes to fight lawsuits,” he suggests.

Sara E. Costello is an associate editor for Litigation News.

Keywords: anti-SLAPP statutes, commercial speech, advertising, Fifth Circuit

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