J-M Manufacturing Co. v. Phillips & Cohen LLP
247 Cal. App. 4th 87
| Cal. Ct. App. | 2016Background
- Phillips & Cohen (P&C) filed a federal qui tam False Claims Act suit alleging J‑M misrepresented that its PVC pipe met AWWA and UL strength/durability standards and was manufactured/tested uniformly. Trial was bifurcated: liability first; damages later.
- The liability jury found J‑M presented materially false claims and acted knowingly; on the special verdict the jury answered the falsity question as: J‑M falsely represented uniform compliance with AWWA C900/C905 and UL 1285.
- The day after the verdict P&C issued a 3.5‑page press release headlined that J‑M “faces billions in damages after jury finds J‑M liable for making and selling faulty water system pipes,” and described trial evidence, jury findings, possible damages exposure, and post‑verdict comments of government officials.
- J‑M sued P&C for defamation and trade libel, alleging the release falsely and misleadingly reported the jury had found J‑M’s pipes themselves were faulty/defective (an issue not adjudicated in phase one).
- P&C moved to strike under California’s anti‑SLAPP statute (Code Civ. Proc. § 425.16), asserting the statements arose from protected judicial‑proceeding speech and were privileged as a "fair and true" report (Civ. Code § 47(d)) or were nonactionable opinion.
- The trial court denied the motion, but the Court of Appeal reversed, holding the release was substantially accurate and absolutely privileged under Civ. Code § 47(d); the anti‑SLAPP motion should have been granted and the complaint dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether statements arose from protected activity under § 425.16 | P&C’s press release concerned a judicial proceeding but plaintiff focused on falsity | P&C: the release reported on litigation and thus is protected petition/speech | Court: P&C conceded protected activity; threshold met for anti‑SLAPP analysis |
| Whether the press release was privileged as a "fair and true" report (Civ. Code § 47(d)) | J‑M: release misstated the verdict by implying jury found pipes were defective; not a fair/true report | P&C: release accurately conveyed trial evidence, jury finding of false uniform‑compliance representations, and posttrial context; literary license permits characterization | Held: as a matter of law the release was substantially accurate in context and absolutely privileged under § 47(d) |
| Whether challenged language was actionable fact or protected opinion | J‑M: words like “faulty,” “shoddy,” and damage estimates implied provably false facts | P&C: many statements were opinion or fair characterizations based on disclosed facts and trial evidence | Held: challenged portions were nonactionable opinion or fair characterization supported by disclosed trial evidence; not provably false in context |
| Whether J‑M demonstrated probability of prevailing (ant i‑SLAPP second step) | J‑M: shown prima facie that the release materially misrepresented jury findings and thus can prevail on defamation/trade libel | P&C: J‑M could not show a likelihood of success because the report was privileged/accurate | Held: J‑M failed to show a probability of prevailing; anti‑SLAPP motion should have been granted and complaint dismissed |
Key Cases Cited
- Equilon Enterprises v. Consumer Cause, 29 Cal.4th 53 (2002) (framework for anti‑SLAPP two‑step analysis)
- Rusheen v. Cohen, 37 Cal.4th 1048 (2006) (interpretation of “arising from protected activity” under § 425.16)
- Kilgore v. Younger, 30 Cal.3d 770 (1982) (fair‑report privilege applies when publication conveys gist of official report)
- Reader’s Digest Assn. v. Superior Court, 37 Cal.3d 244 (1984) (literary license: minor inaccuracies allowed if gist/sting is accurate)
- Zamos v. Stroud, 32 Cal.4th 958 (2004) (standard for evaluating plaintiff’s showing at anti‑SLAPP second step)
- Burrill v. Nair, 217 Cal.App.4th 357 (2013) (fairness/truth of report can be jury question but may be decided as matter of law when undisputed)
- Balzaga v. Fox News Network, LLC, 173 Cal.App.4th 1325 (2009) (privilege applies if publication captures gist or sting of official proceeding)