By
Bob Peace
Alumni
Distinguished Professor – NC State University
PO Box 8113
Raleigh, North
Carolina 27695
Phone:
919-515-4434
Fax:
919-515-4446
e-mail: Bob_Peace@ncsu.edu
Tax law
favors corporations that file SLAPP suits and creates an inequity. A developer that sues a neighborhood
activist or activist group can deduct the cost of the lawsuit for income tax
purposes while the activist, usually an individual or a non-profit organization,
cannot. Even if the developer loses the
lawsuit and pays damages to the activist the damages usually constitute a
deductible cost of doing business. This amounts to a financial subsidy for
SLAPP filers (Braun, 1999). In fact,
there are instances of activists turning the tables and SLAPPing back at the
corporation of developer, but the record shows that the corporation considers
this merely a cost of doing business, having accomplished its original
underlying purpose of silencing the activist.
The
judicial process often bullies a person with limited financial resources into
silence, and that is the motive for the lawsuit. Common problems reported by
targets of SLAPP lawsuits include depression, broken marriages, bankruptcies,
and other economic and psychological disruption (Brecher, 1988). A sample of
comments made by defendants who were sued in SLAPP lawsuits include: “I won’t
circulate another petition, and my husband wants me out of community
issues.”; “I don’t want my name on
anything”; “Supporters have disappeared into the woodwork”. (Pring & Canan,
1996).
SLAPPs have crossed the ocean, with highly publicized cases appearing in
England, Australia, and Canada and in other countries around the world. Defending against SLAPPs may be more of a
problem for defendants in countries other than the United States, particularly
those that recognize the English concept of parliamentary primacy. This is in
contrast with the United States where the courts have an equal footing with the
legislative and executive branches and the courts zealously defend the
Constitutionally protected 1st Amendment right to free speech.[ii]
A
well-pleaded SLAPP complaint, reflecting technical skill and documentation is,
at least in the preliminary stages of litigation, well protected against
allegations that the suit is not justified (Stein, 1989). So the corporate plaintiff in the U.S.
must, at the outset, file documents with the court that make a reasonable case
for relief. Consequently, the
professional skills of lawyers and accountants are required. The issue for the plaintiffs in SLAPP
lawsuits is always money, and when money is the issue we find focused legal and
financial professionals.
A
study of 228 cases found to be SLAPPs found four general motivations for their
filing (Canan, 1989). The motives are:
(1)
an
intent to retaliate for successful opposition on an issue of public interest;
(2)
the
attempt to prevent expected future, competent opposition on subsequent public
policy issues;
(3)
the
intent to intimidate and generally, to send a message that opposition will be
punished;
(4)
a
view of litigation and the use of the court system as simply another tool in a
strategy to win a political and/or economic battle.
The corporate plaintiff filing the lawsuit is vested in the
judicial process as opposed to a
judicial verdict or resolution based on the merits of the litigation (Mowrer,
1998). The SLAPP process has an average
duration of 40 months (Lowe, 1996), and most SLAPP filers lose if and when a
case comes to judgment (McBride,1993).
“Needless to say, an ultimate disposition in favor of the target often
amounts to a Pyrrhic victory”.[iii]
Although federal legislation exists to discourage SLAPP lawsuit and a number of
states have passed specific legislation to protect the public from SLAPPs the
courts are generally reluctant to silence free expression on the part of either
participant in a SLAPP circumstance.[iv]
Frivolous or meritless lawsuits are not legal court actions. The target of such a lawsuit can bring a
counter-suit for malicious prosecution or abuse of process. In addition, federal and state statutes
exist that are intended to sanction those that bring unjustified or frivolous
lawsuits to court. State legislation is
intended to stop a SLAPP early, if a determination can be made that the suit is
meritless or without justification. As
a result, a significant application of legal financial, and administrative
expertise is required in the preparation and filing of a SLAPP lawsuit by a
corporate plaintiff. This means
generally that the pleadings, the plaintiff corporation’s complaint, contain a
request for money damages together with adequate justification in order for the
court to consider silencing the out of court voice of the citizen activist
being sued. It would appear that at
this early stage of a lawsuit an accounting firm’s expertise would lend
valuable support to a corporate client’s evidence and pleadings.
Another SLAPP tactic may not involve a lawsuit and the courts at all,
but rather the taxing authority. In Gordon v. Marrone, 590 NYS 2d 649, 647 NE 2d 453, a developer brought
the proceeding against a local tax assessor to contest an exemption from
property taxes granted by the town of North Castle to the Nature Conservatory,
an environmental organization. In a
more recent example, the Kaktovik Inupiat Corporation, a supporter of Alaskan
oil drilling, filed a complaint with the Internal Revenue Service (IRS) asking
the IRS to investigate the tax exempt status of the Artic National Wildlife
Refuge (ANWR). The complaint was filed
to stifle ANWR’s grassroots and congressional lobbying activities against
Alaskan oil operations (Sarasohn, 2001).
It is
inevitable that lawyers and accountants have a substantial role in litigation
of this nature and also inevitable that the most seasoned, experienced, and
resource heavy of the professional advocates end up on the side where the money
is. In the United States, expert advice columns in professional periodicals
offer advice to lawyers on methods and procedures in bringing a SLAPP laws suit
(Moneer, 2000).
It
follows that accountants and other professionals called upon for expert advice
and testimony in these cases understand their societal implications as well as
the financial aspects. There are two sides to every lawsuit and some merit on
both sides in most circumstances, but it would seem the public activist side
could use more advice and guidance than the professionally insulated and
wealthier corporate plaintiffs that generally initiate SLAPP lawsuits.
Sovereign states remain the creators of international environmental law but do so in a manner that is influenced, enabled, and empowered by private and non-governmental organizations. Non-governmental individuals and entities have become participant observers and major actors in international environmental law (Raustala, 1997). With non-governmental entities influencing international environmental policy, it seems natural that SLAPPs would expand globally with the global economy.
SLAPPs
have found their way to the legal systems of a number of countries including
Australia, England, Canada, South Korea, Singapore, Pakistan, France, and New
Zealand (Canan, 1996). Some of the cases have gained international notoriety.
SLAPP
suit are often premised on libel, with the corporate plaintiff alleging that
the statements or publication by the citizen activist are false and injurious
to the company’s reputation and consequent business interests. Freedom of expression and freedom to
petition have always enjoyed a preferred constitutional status in the United
States, and American libel law has placed the burden of proving truth or
falsity of the defendant’s statement on the plaintiff who initiates the
lawsuit.
SLAPP
suits in the United States are usually one of two categories. SLAPPs occur in one category when an
individual or an organization petitioning the government is sued by a business
interest affected by the subject matter of the petition. SLAPPs occur in a second category when an
individual or an organization is sued by a business interest for libel, for
making untrue comments regarding the business interest. Speech that is a petition to the government,
political speech, is given the greatest protection by the United States
government. Two U.S. Supreme Court cases, Eastern
Railroad Presidents’ Conference v. Noerr Motor Transport, 365 U.S. 127
(1961) and United Mine Workers v.
Pennington, 381 U.S. 657 (1965), created the so-called Noerr-Pennington doctrine that the lower courts have understood to
establish an absolute, constitutional privilege against tort claims for bona
fide government petitioning activities.
Basically, the Noerr-Pennigton doctrine
provides that the activities of the
defendant activist must be found to be illegal for the plaintiff to prevail and
that the motives of the activist defendant are not at issue. This blunts the thrust of the plaintiff
corporatopn forcing it to do generally what it cannot do, and that is, prove
that the activist’s behavior is illegal or tortuous without using evidence of
bad motive.
With the
constitutional protection offered by the Noerr-Pennington
doctrine, the activist defendant
would appear to have a good defensive position if the proceeding ever reaches
the point where the doctrine could be
asserted. It rarely reaches that point,
however, since the whole point of the plaintiff’s lawsuit is not to win a case
in court but rather to intimidate the defendant. Intimidation occurs as the defendant’s time and money are devoted
to the defense while at the same time, the debate is changed from environmental
or societal issues to the economic loss incurred by the plaintiff attributed to
the defendant’s activism.
In
addition, U.S. libel law is very liberal in protecting individual speech, with
the burden of proving a statement to be false resting with the plaintiff
initiating the lawsuit. U.S. libel law
is also protective of a free press and media, in particular regarding so-called
public figures, politicians, celebrities and the like. In the case of New York Times Co. v. Sullivan, 376 U.S. 254 (1964), the U.S.
Supreme Court set a constitutional standard in a libel case brought by a public
figure (the Montgomery, Alabama police commissioner in a pro-civil rights
advertisement). The Court held that
public officials can only be defamed in their official capacity if the
offending statement was made with actual malice and with knowledge that it was
false. The Court also provided that the
plaintiff must prove actual malice with convincing clarity. The overriding
rationale for the decision was in recognition of the potential for a more
restrictive interpretation of libel to have a chilling effect on public speech,
“the pall of fear and timidity imposed on those who would give voice to public
criticism”.
In England
the burden of proof is reversed in a libel lawsuit and the defendant in a libel
action has the burden of proving the truthfulness of what was said or
published. Consequently, England’s
libel law is considered plaintiff-friendly, and potentially SLAPP
friendly, and multi-national
corporations have been known to bring libel suits in England to take advantage
of the libel friendly judicial atmosphere.
England’s libel laws are also seen as a tool for the privileged, used to
silence criticism despite the public interest at issue (Wells, 1998).
A
classic SLAPP lawsuit in England pitted McDonald’s as corporate plaintiff
against two activist members of London Greenpeace (not associated with
Geenpeace International). The suit was
based on an 8-page pamphlet the activists were distributing at McDonald’s
restaurants criticizing the company’s marketing methods toward children,
cruelty to animals, deforestation and other environmental abuses, and the pay
and treatment of its workers (Underhill, 1997). McDonald’s named several London Greenpeace members as defendants
and all but two settled early in the proceedings. The two who went forward and defended themselves in the court
proceedings did so without the benefit of counsel while McDonald’s retained
some of the most expensive and well trained lawyers in England (Hilborne,
1997).
The
lawsuit, the longest in duration in English history at that time, lasted for
three years (Underhill, 1997) and concluded with an ironic resolution. McDonald’s, as plaintiff, won the case, but
the defendants were without resources to pay any damages. Also, although McDonald’s proved their point
in the court victory, they lost the public relations war, and were presented in
the international press as a Goliath spending $16 million to nail two down and
out Davids who represented themselves in court.
The
legal resolution notwithstanding, this was a classic SLAPP exercise with the
corporate plaintiff aware that it had more to gain by silencing public
discourse on the particulars written in the pamphlet. They attempted this by moving the discussion to the court where
the circumstances were stacked in their favor and they could shift the debate
from one of corporate environmental and social abuse to one of libel and lost
profit.
The
British Petroleum Oil Company (BP) sued Greenpeace International in a
subsequent SLAPP lawsuit in England.
Greenpeace was involved in public efforts to stop BP’s oil exploration
activity in the North Atlantic Foinaven oil fields. BP SLAPPed Greenpeace with a lawsuit. BP sought 1.4 million pounds in damages and placed several
Greenpeace associates in danger of personal bankruptcy (Lean, 1997).
In the
end the suit was settled before trial.
Greenpeace agreed to stay out of Foinaven and BP backed away from its
demand that Greenpeace not protest other BP operations. Despite this seemingly
reasonable accommodation by the parties to the BP lawsuit the initial response
by BP to initiate a lawsuit is more evidence that British corporations see
SLAPP’s as a business option when they are exposed to unwanted public
criticism.
Canada
In 1988, the
Alberta government gave a Japanese multinational corporation called Daishowa
the right to build a pulpwood plant in the heart of territory claimed by the
Lubicon Lake Indian Nation as ancestral land.
An activist group grew up in support of the Lubicon, Friends of the
Lubicon, and started a secondary boycott of Daishowa paper products. The boycott was apparently successful in
persuading 47 companies in Canada from using packaging products from Daishowa.
Daishowa
went to court for an injunction against the boycott and in a separate lawsuit,
asking for $812 million in damages.
This was a classic SLAPP lawsuit and one of the largest SLAPP damages
requests in Canada. Daishowa, unwilling
to confront the Friends of Lubicon publicly, moved the debate to court with a
cause of action based on interference with profits (Nelson, 1996).
Another
significant SLAPP lawsuit was brought by INTEFOR, a British Columbia logging
corporation that conducts logging in territories claimed by native
inhabitants. An environmental activist
group called Forest Action Network was organized to disrupt the corporations
operations. Forest Action Network
activists blocked roads, boarded log
barges and suspended themselves above rivers used by the corporation, a
more aggressive approach than the secondary boycott used by the Friends of
Lubicon. The method of protest employed
by the Forest Action Network and the boycott used by Friends of Lubicon both
represent a kind of speech or political expression. The Forest Action Network was sued as were individual members of
the group. Several of the individual
members were unable to travel a thousand kilometers to Vancouver and were
subject to default judgments of up to $12,000.
SLAPPs
have developed as an issue in Australia (Bender, 1995). In Binalong
PTY LTD v. Council of South Australia, Inc., Fed No. 210/94 (S. Aust. April
19, 1994), local residents and environmental activists opposed the construction
of a bridge. The purpose of the bridge
was to increase tourist traffic to the area and the environmentalists objected
to the potential for environmental disruption and infringement on Aboriginal
heritage sites. When construction
started, protesters gathered at the site, disrupted the work, and spoke with
the media. In addition, the protesters
lodged complaints with the bank that was to finance the project.
The
construction company sued each of the groups involved in the protest
activities, including community groups, labor unions, and local and national
environmental groups. They also asked
for an injunction on the protest activities. The suits asking for money damages
alleged interference with business, inducement to breach contract, and
interference with performance of a contract.
In this instance, the court recognized that the purpose of the plaintiff
was to silence the defendant’s public criticism and the court did not allow
this to happen.
At
the federal level, Federal Rules of Civil Procedure 12(b)(6) grants the
defendant a motion to dismiss a lawsuit that fails to adequately state a claim
upon which relief can be granted . If
the defendant target can obtain an early or pre-trial dismissal the lawsuit
doesn’t eat the defendant’s time and resources. Federal Rules of Civil Procedure 11 provides sanctions to be
assessed against attorneys who bring a suit for an improper purpose.
Federal
rules 11 and 12 are not terribly effective against SLAPPs since judges are
loathe to stop a suit at an early stage, before all the relevant information is
before the court. In addition, SLAPPs
can be presented as ordinary tort lawsuits for interference with a contract or
libel and the plaintiff’s attorney may feel comfortable fending off any
sanctions related to an improper lawsuit.
Several
states have introduced legislation in response to SLAPPs. These laws generally define the elements of
a SLAPP, identify when the target may be entitled to damages against the filer,
and set up procedures for an early hearing and dismissal if the suit is
identified as a SLAPP. Among other
provisions, states may require that the filer be required to be more
forthcoming in detail early in the pleadings.
Then a preliminary hearing would be held to determine if there are
enough facts available for the court to continue the lawsuit and to determine
if the case is being brought in good faith.
Again, this would presumably bring accountants into the game to prepare
financial statements, financial projections and damage estimates for the
pleadings.
States
are also studying recommendations that the plaintiff corporation advance the
costs of early discovery procedures to the defendant. These costs would be refundable in the event the plaintiff
prevails on the merits of the case.
Then if the case went to trial and the plaintiff loses he would pay full
costs of the litigation to the defendant/target (Ericson-Siegel, L, 1992).
The key
to defending against a SLAPP and the attendant intimidation is time. The
best result for a target defendant is
an early dismissal, before the defendant’s financial and emotional resources
are sapped. Court interpretations in the United States are helpful here. The courts generally act in defense of the
constitutional right to free speech and in their liberal judicial
interpretation of the burden of proof in libel law.
Woolf opines
that excessive costs deter people from making or defending claims and for
individual litigants, the unaffordable cost of litigation constitutes a denial
of access to justice. When large
corporate litigants are involved (the most common SLAPP plaintiffs) Woolf finds
that costs fall ultimately on customers and shareholders, so that “deep pocket”
corporate plaintiffs who are able to pass costs to their customers impose
excessive costs on their opponents and consume the courts’ resources (Woolf,
1997).
One bright spot for SLAPP defendants in England is a procedural change adopted in 1994 in an effort to reform libel law. Changes to the Rules of the Supreme Court allow defendants to apply for a pre-trial “ruling on the meaning” hearing that allows the defendant to argue that his statements cannot have the meaning the plaintiff alleges in the pleadings. The judge can then dismiss the lawsuit if the judge agrees with the defendant (Milano, 1994).
The
Canadian Charter of Rights and Freedoms protects the freedoms of thought,
belief and expression. The Canadian
Supreme Court has interpreted this to mean a variety of forms of speech
(Tollefson, 1994). At the same time,
free speech under the Charter is only protected from government intrusion and
not speech among private parties that may have a public consequence.
Also,
most existing Canadian decision making and standard setting on environmental
matters is a discretionary matter for legislative and executive bodies. This does allow for a limited public
participation consultancy during decision-making processes but otherwise there
is very little effective recourse for an affected citizen in an environmental
issue (Hughes and Iyalomhe, 1999).
Australia does not have a specific constitutional guarantee of free
speech or a right to petition the government (Rich, 1995). Several Australian cases have, however,
established an implied right to free speech.
In Stephens v. Western Australia
Newspapers, 182 C.L.R. 211 (1994), the court provided an American
Constitutional defense to a libel lawsuit by a politician. That decision is limited and applies to
political discourse, so that SLAPP defendants would have to assert the
political nature of their critical statements in order to evoke the
constitutional protection of communication.
The protections, if available, would include a pre-trial hearing, one of
the best defenses in a SLAPP lawsuit.
One
Australian commentator on Australian civil rights states that the civil right
to free speech is something to be
decided by an elected parliament rather than an un-elected judiciary (Meagher,
1998). Meagher points to the experience
of the United States where the constitutional right to free speech is
exquisitely difficult to define with precision and productive of seemingly
endless litigation.
Endnotes
[i] See Dixon v. Superior Court, 36 Cal. Reptr. 2d 687 (1994). In this case an anthropology professor wrote letters to governmental officials protesting Cal State University’s plans to build apartments over an ancient Indian village, protesting lack of compliance with the state’s Environmental Quality Act. The University’s consulting firm sued the professor for interference with a contractual relationship, libel, slander and trade libel.
[ii] See U.S. Constitution, Amendment I “Congress shall make no law…abridging the freedom of speech”.
[iii] See Gordon v, Marrone, 590 N.Y.S. 2d 649,
656 (1992) in which the court also recognized, “This case, like other SLAPPs,
attempts to turn the petition clause on its head by using the right to petition
to indirectly punish the prior exercise of the right to petition by others.”
[iv] Federal Rules of Civil Procedure Rule 11 provides sanctions against willful abuse of the courts and include deterrent provisions including a specific review of the merits of a suit that appears SLAPP motivated and a shifting of burdens of proof on to the filer as well as a shifting of fees. At least nine states have passed legislation allowing defendants to file special motions to strike SLAPPs on the basis of the target citizen’s first amendment petition guarantees.
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