Case Number: EC062170 Hearing Date: June 13, 2014 Dept: NCD

TENTATIVE RULING
#17
EC 062170
LIFESOURCE WATER SYSTEMS, INC. v. MCMAHON

Defendant’s Special Motion to Strike Complaint Pursuant to CCP § 425.16

TENTATIVE:
Defendant’s Special Motion to Strike is DENIED as untimely and on its merits. Plaintiff has sufficiently established that the causes of action at issue satisfy the exception set forth in CCP § 425.17, as defendant is a person primarily engaged in the business of selling goods or services, the statements at issue consist of representations of fact about defendants and plaintiff’s business operations, goods or services, and are made for the purpose of securing sales or commercial transactions in defendant’s goods or services, and the intended audience is actual or potential buyers or customers, or persons likely to repeat the statements to, or otherwise influence, an actual or potential buyer or customer.

Plaintiff’s evidentiary objections are OVERRULED.

Defendant’s Evidentiary objections to Plaintiff’s Evidence in Support of Plaintiff’s Opposition are SUSTAINED as to Nos. 9, 10, 11, and 12. Objections are otherwise OVERRULED.

RELIEF REQUESTED:
Order striking complaint and each cause of action therein without leave to amend

CAUSES OF ACTION: from Complaint
1) Trade Libel
2) Libel Per Se
3) False Advertising
4) Unfair Competition

SUMMARY OF FACTS:
Plaintiff Lifesource Water Systems alleges that it has been developing, manufacturing and selling proprietary water filtration systems to consumers and businesses for 30 years, and that its products have been tested and certified by the Water Quality Association’s laboratory as meeting NSF/ANSI-42 standards. Plaintiff alleges that defendant James McMahon, who holds himself out as an ecologist with scientific credentials in the field of “water ecology,” and manufactures and sells water filtration systems under the trade name “Urban Defender,” published false statements about Lifesource and its products on his blog. These statements include that Lifesource makes false claims about their water systems, misrepresents the meaning of its NSF 42 certification, and has made claims that are actually injurious to health that you can drink the water from any faucet in your home and it will taste like Fiji water. The blog also states that Lifesource’s beotron technology is nothing more than a twisted copper wire surrounded by white sand inside of an entirely enclosed plastic tube sitting in carbon, and that “Anything it might do is in the realm of the mystical, i.e.: total nonsense.” Plaintiff alleges that these statements disparage Lifesource and its products, and constitute libel, and have proximately caused Lifesource damages.

ANALYSIS:
Procedural
Hearing Date:
CCP § 425.16(f) provides that a special motion to strike “shall be scheduled by the clerk of the court for a hearing not more than 30 days after service of the motion unless the docket conditions of the court require a later hearing.” This provision is held to be jurisdictional; the court may not extend the time for a reason other than the condition of the court’s docket. Decker v. U.D.Registry, Inc. (2003) 105 Cal.App.4th 1382, 1389.

In this case, the motion was served on April 28, 2014, with a hearing noticed for June 13, 2014, 45 days later. There is no declaration submitted indicating this delay was due to the condition of the court calendar, although this is possible given the limits now placed on law and motion.

Substantive
CCP sec. 425.16 provides:
“(a) The Legislature finds and declares that there has been a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process. To this end, this section shall be construed broadly.

(b) (1) A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.

(2) In making its determination, the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.”

Subdivision (e) defines “act in furtherance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue” to include statements made before an official proceeding, in connection with an issue under consideration by an official proceeding, in a “place open to the public or in a public forum” in connection with an issue of public interest, “or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.” The latter two categories require a specific showing the action concerns a matter of public interest; the first two categories do not require this showing. Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1117-1118.

The California Supreme Court in Jarrow Formulas, Inc. v. La Marche (2003) 31 Cal.4th 728 set forth the manner in which the trial court is to apply CCP § 425.16.
“Resolution of an anti-SLAPP motion (425.16 motion) requires the court to engage in a two step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. The moving defendant’s burden is to demonstrate that the act or acts of which plaintiff complains were taken ‘in furtherance of the defendant’s right of petition or free speech under the United States Constitution in connection with a public issue, as defined in the statute (425.16(b)(1). If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.”
Jarrow, quoting Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.

The court went on to state:
“We held that the plain language of the ‘arising from’ prong encompasses any action based upon free speech or petitioning activity as defined in the statute (Nevallier v. Sletten (2003) 29 Cal.4th 82, 89-95), rejecting proposals that we judicially engraft the statute with a requirement that defendants moving thereunder also must prove the suit was intended to chill their speech, or actually had that effect. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 75.”

The causes of action asserted here all arise from postings made on defendant’s blog on May 8, 2013, which were allegedly disparaging and defamatory of Lifesource. Defendant cites to authority under which websites accessible to the public are considered public forums for purposes of the anti-SLAPP statute. See Barrett v. Rosenthal (2006) 40 Cal. 4th 33, 41 n. 4. Defendant also argues that his blog, devoted to matters of health and environmental concerns, addresses matters of public interest. Defendant also argues that since the EPA is in the process of reviewing National Primary Drinking Water Regulations, the blog, discussing the toxicity of drinking water, is an issue “under consideration or review” by a public agency. The argument is that since the complaint arises out of defendant’s protected activity, it is subject to the anti-SLAPP statute, and Lifesource must meet its burden of establishing a probability of prevailing on its claims.

Lifesource argues that defendant has failed to meet his threshold burden of establishing that the subject claims arise from protected activity under the statute because the statements at issue were commercial speech, which is subject to an exception to the anti-SLAPP provisions.

Commercial Speech Exception
In 2003, the legislature carved out two exceptions with respect to the anti-SLAPP statute, including one for commercial speech. Effective January 1, 2004, CCP § 425.17 provides, in pertinent part:
“(a) The Legislature finds and declares that there has been a disturbing abuse of Section 425.16, the California Anti-SLAPP Law, which has undermined the exercise of the constitutional rights of freedom of speech and petition for the redress of grievances, contrary to the purpose and intent of Section 425.16. The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled trough abuse of the judicial process or Section 425.16.

“(c) Sections 425.16 does not apply to any cause of action brought against a person primarily engaged in the business of selling or leasing goods or services, including, but not limited to, insurance, securities, or financial instruments, arising from any statement or conduct by that person if both of the following conditions exists:

(1) The statement or conduct consists of representations of fact about that person’s or a business competitor’s business operations, goods, or services, that is made for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person’s goods or services….
(2) The intended audience is an actual or potential buyer or customer, or a person likely to repeat the statement to, or otherwise influence, an actual or potential buyer or customer…”

Lifesource argues that McMahon owns and operates a company, Sweetwater, LLC, through which he sells water filtration systems, and that the subject blog on which the materials appeared, BestWaterPurificationBlog.com (“BWPB”), is operated in connection with a companion site, CleanAirPureWater.com (“CAPW”), to which the blog directs consumers, and which advertises and sells McMahon’s products.

The issue then is whether the material which forms the subject of plaintiff’s complaint consists of representations concerning defendant’s and Lifesource’s goods that is made for the purpose of obtaining sales in defendant’s goods, and whether the intended audience of that material was actual or potential buyers or customers.

Lifesource indicates that the defamatory statements at issue are:
1) “Lifesource makes false claims about their water systems.”
2) “The fact is that Lifesource lies to the public about what it is selling…”
3) “So, how do they lie?”
4) Defendant McMahon states that LifeSource misrepresents the meaning of its “NSF42 certification” and misrepresents facts when it claims “to be able to treat 1 million gallons of water in your home.”
5) Defendant McMahon then states that “the other claim by LifeSource, and the one that is actually dangerous to your health, is that you can drink the water from any faucet in your home (and additionally that it will taste like Fiji water).”
6) “As for the infamous beotron, it’s nothing more than a twisted copper wire surrounded by white sand inside of an entirely closed plastic tube which itself is sitting in the carbon. Anything it might do is in the realm of the mystical, ie: total nonsense…”
7) “I don’t have to call out dishonest behavior within the water industry but I do. I think that we should all be making valid, honest claims about our products and I try to do that as best I can.”
8) “I won’t lie to you.”
9) “If you want to buy an effective whole house water filter then check out my Urban Defender here.”

[Opposition, 1:19-2-:12]

The opposition refers to an exhibit A to the Carlsen Declaration, but that is not the actual blog at issue. The blog at issue is attached to the McMahon Declaration at Exhibit A.

Lifesource relies on Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 104, 111, in which the court of appeal reversed an order denying a special motion to strike, holding that CCP § 425.17(c) does not apply where the portion of the cause of action possibly implicating the exception is not protected by the anti-SLAPP statute. The court of appeal rejected an argument that the disputed statements there were subject to the commercial speech exception as follows:
“WSSI contends subdivision (c) of section 425.17 provides an independent basis for upholding the trial court’s denial of the motion because defendants disseminated the alleged false statements regarding WSSI’s business practices to WSSI clients for the purpose of gaining these clients for their competing business. However, the function of section 425.17 is to exclude certain claims that would otherwise fall within the reach of the anti-SLAPP statute. (§ 425.17, subds. (b) & (c).) Here, those portions of the challenged claims implicating section 425.17 (i.e., defendants’ statements to WSSI’s customers) do not involve petitioning activity or an issue of public interest and are not protected by the anti-SLAPP statute. (§ 425.16, subd. (e).) As such, section 425.17 does not apply.”
Mann, at 112.

McMahon relies on Bernardo v. Planned Parenthood Federation of America (2004) 115 Cal.App.4th 322, in which the court of appeal affirmed orders of a trail court granting a special motion to strike, dismissing the action and awarding attorney fees, finding that the statements at issue, material published on the Planned Parenthood website, did not become commercial speech, so as to constitute advertising within the meaning of the UCL and FAL, by providing hyperlinks to Planned Parenthoods specific clinics and services and providing a toll free number.

The court of appeal did not apply section 425.17, but the test set forth by the California Supreme Court in Kasky v. Nike (2002) 27 Cal.4th 939, in response to which the section was enacted in 2003.

The court of appeal addressed arguments much like LifeSource’s arguments here, that the website included a links to websites offering Planned Parenthood services, which satisfied the definition of commercial speech:
“In support of the contention that Planned Parenthood’s statements are commercial speech, Bernardo points to the authenticated photocopies of Planned Parenthood’s Web sites that she submitted in opposition to the motion to strike, which show (1) that on “[v]irtually every web page,” PPFA provided “health info,” “health centers” and “sexual health” hyperlinks that provided Web site visitors with access to sexual health information and the locations of affiliated health centers (including PPSDRC), as well as a toll-free telephone number that visitors could call to schedule an appointment; and (2) that PPSDRC’s Web pages provided visitors with an opportunity to obtain payment information and clinic locations and to make an appointment. The brief text of the hyperlinks (such as “health info,” “health centers” and “sexual health”) on the various Web pages did not advertise or promote any services provided by clinics affiliated with Planned Parenthood. While the toll-free number provided to Web site visitors a means for scheduling an appointment for medical services, it is significant that both PPFA and PPSDRC included in their Web sites a terms-of-use page notifying visitors that Planned Parenthood was providing the Web sites subject to the visitors’ “agreement to comply with the Terms of Use.” Each terms-of-use page informed visitors that the information provided on Planned Parenthood’s Web sites was for the visitors’ “personal education, but nothing on this site constitutes a recommendation for medical care … .” (Italics added.) Each page also advised visitors to “[a]rm yourself with good information about sexual and reproductive health maintenance, and visit a qualified health care provider for personal medical evaluation, counseling, and services.”

Bernardo also relies on the fact that PPSDRC and other affiliates of PPFA provide abortion and other services from which PPFA and the affiliates derive revenue. However, any economic motivation that Planned Parenthood may have had in publishing the challenged Web site speech regarding the claimed ABC link and the safety of abortion would be insufficient by itself to turn the statements into commercial speech.
Bernardo, at 345.

The court of appeal also noted that even had the hyperlinks constituted commercial speech, the noncommercial speech would still be protected by the First Amendment:
“Even were we to assume that the toll-free number and Planned Parenthood’s hyperlinks to information about specific clinics and services constituted commercial speech, the noncommercial speech published in the various Web pages would still receive full First Amendment protection. In Pacific Gas & Elec. Co. v. Public Util. Comm’n (1986) 475 U.S. 1, 9 [89 L. Ed. 2d 1, 106 S. Ct. 903], the United States Supreme Court held that a utility’s newsletter, which was distributed to ratepayers in the monthly billing envelopes and the contents of which ranged from political editorials to energy saving tips and billing information, “extend[ed] well beyond speech that proposes a business transaction … [citations], and include[d] the kind of discussion of ‘matters of public concern’ that the First Amendment both fully protects and implicitly encourages. [Citation.]” Under similar reasoning, Planned Parenthood’s noncommercial speech in the various Web pages at issue here was fully protected under the First Amendment despite any claimed contiguous commercial speech set forth directly or indirectly in the hyperlinks or in the text accompanying the toll-free telephone number, discussed, ante.”
Bernardo, at 346.

Defendant also cites Hawran v. Hixson (2012) 209 Cal.App.4th 256, 272, in which the court of appeal reiterated that the relevant issue to establishing the commercial speech exemption is “whether the allegedly defamatory portions” of the publications are “representations of fact about..business operations, goods or services.” Hawran, at 272 (italics in original). The court of appeal noted that the California Supreme Court in Simpson Strong-Tie Co., Inc. v. Gore (2010) 49 Cal. 4th 12, had rejected arguments that the exemption should apply where “the statement giving rise to the cause of action was accompanied by factual representations about the defendant’s business operations, goods or services.” Hawran at 272 (italics in the original).

As noted above, the complaint alleges several false statements, some of which contain factual representations, including that Lifesource misrepresents the meaning of its “NSF42 certification” and misrepresents facts when it claims “to be able to treat 1 million gallons of water in your home,” the statement that “the other claim by LifeSource, and the one that is actually dangerous to your health, is that you can drink the water from any faucet in your home (and additionally that it will taste like Fiji water), ” and the statement that “As for the infamous beotron, it’s nothing more than a twisted copper wire surrounded by white sand inside of an entirely closed plastic tube which itself is sitting in the carbon. Anything it might do is in the realm of the mystical, ie: total nonsense…”

The blog itself is entitled “Best Water Purification Blog by Sweetwater LLC.” [Ex. A]. It states in closing,
“As for whether or not I think I’m right, well I see the point being made by Ken. I don’t have to call out dishonest behavior within the water industry but I do. I think that we should all be making valid, honest claims about our products and I try to do that as best I can. You need only call me to discuss a particular issue to learn this.

I won’t lie to you.

If you want to buy an effective whole house water filter then check out my Urban Defendant here.”
[Ex. A].

In sum, the Court finds that the blog makes direct statements concerning the quality of the product offered by LifeSource and expressly solicits business for defendant by stating, “If you want to buy an effective whole house water filter then check out my Urban Defender here.” The blog posts invariably end with a reference to the cleanairpurewater website to learn how to choose a correct system or to protect yourself. The website implicates issues which seem more directed toward soliciting commercial business directly than those described in connection with the Planned Parenthood website. The blog also evidently has no terms of usage, and contains no disclaimers concerning the purpose of the website, but appears to be a pretty clear forum for soliciting commercial transactions from those interested in water purification issues, potential customers. The court finds that the blog here is more in the nature of commercial speech.

Thus, the Court finds that plaintiff has satisfied its burden of establishing that the speech falls within the statutory exception, and the motion to strike is therefore denied.