Thursday, December 16, 2010

You Slapp Me; I'll Slapp You Back: Free Speech or Defamation?

Overhill Farms, Inc. v. Nativo Lopez, et al. 2010 DJDAR 18717.

Overhill produces frozen food products and employs 1,000 workers in the industrial Southern California city of Vernon (Los Angeles County). The workers are unionized. Overhill received an IRS notice that a substantial number of its employees had discrepancies in their social security numbers: names and numbers did not match. Many of Overhill’s employees were Hispanic. Overhill faced as much as $80,000 in penalties. Overhill gave its employees 30 days written notice to correct the discrepancies. It continued to pay the employees during the notice period. Most of the employees getting the notice did not respond. Thirty-one employees resigned. Only one submitted a correct social security number. Overhill fired all employees failing to provide accurate social security numbers.

An activist organization, “Hermandad Mexicana Lantinoamericanca (HML) organized the affected workers into a mass protest in which the protesting workers carried signs and distributed pamphlets, and issued a press release. The essential protest message was that Overhill completed the firings for racist motives. The protest included demonstrating outside a Panda Express store, one of Overhill’s customers. The flyers urged recipients to boycott Overhill and accused Overhill of exploiting Latinos “for 30, 20, 15, and 10 years, and then threw them to the streets—many single female heads-of-household.”

Overhill’s response to these demonstration and publication tactics was to sue the Director of HML for defamation, intentional interference with prospective economic advantage, interference with contractual relations, extortion, and unfair competition. HML brought a motion to strike the allegations as attempts to silence HML’s constitutional freedom of public speech. This special motion is called an “anti-SLAPP” motion [C.C.P. Sec. 425.16—the “strategic lawsuit against public participation”]. To grant such a motion a court must first find that the defendant has proven by its evidence in support of the motion that the defendant’s activity or speech is protected by the constitution. Then, the burden of proof shifts to the Plaintiff to prove that the “protection” of the defendant’s speech should not apply because the plaintiff has proof that its case for false and defamatory statements is sufficiently strong that the plaintiff is likely to prevail on those issues.

Overhill succeeded in presenting proof that it was likely to succeed in showing that HML made knowingly false statements about Overhill’s motives in firing the employees. So, even though HML met its burden of proving that it was engaged in speech on a matter of public importance, Overhill overcame that proof with its own proof that HML abused its speech rights by engaging in deliberate falsification of the facts, with the result of injury to Overhill’s business reputation. Specifically, Overhill proved that HML’s repeated public statements that Overhill’s firing of Hispanic employees for racist motives were false. The truth was that Overhill had given the employees notice of the need to provide proof of non-discrepant social security numbers in compliance with the IRS directive. It acted only when those individuals fired failed to provide accurate information. HML failed to present any substantial evidence that the motive for the firing was racially motivated.

Two justices reached this decision. The third dissenting justice reasoned that the use of the term “racist” in a public forum by itself to describe an employer would not be “defamatory” and even the word “racist” added to the words “engaged in a mass employment termination for racist reasons” would not be defamatory, but would be simple “hyperbole” in public rhetoric, not reasonably construed by listeners as more that the speaker’s own interpretation and opinion. The dissenting justice stated: “First, my colleagues in the majority have incorrectly made this court the first state or federal appellate court in America, ever, to hold that the epithet “racist” constitutes a provably false assertion of fact as the basis of a claim for defamation.”

In my opinion, this case presents an interesting clash of interests: a society needs broad opportunity for an exchange of viewpoints and arguments, including room for exaggerated rhetorical attacks. This latitude of speech is probably most essential concerning topics of public importance and interest. Business by its nature is public, and products and services are consumed by citizens with an interest in knowing how those products and services are placed in commerce. On the other hand, if a participant in a public squabble makes statements he knows to be false and that the audience believes to be true unless provided critical unstated facts, then this kind of vile and harmful speech may not merit protection. The overall circumstances of the communications made by HML indicate to me that HML’s purpose was to “chill” a lawful activity, and to intimidate a company from following the law. HML had the opportunity in opposing the anti-SLAPP motion to present substantial evidence that Overhill’s motive was racist, but none was presented. On the contrary, Overhill acted in response to an IRS mandate, and gave its employees the opportunity to show compliance. Only when they failed, did it terminate their employment.

The unwritten “subtext” of this case was a political clash. HML sought to champion the cause of its unemployed immigrant constituency. Overhill likely hired falsely documented workers for financial reasons. Overhill most likely elected lax enforcement until challenged by the IRS. In contrast, HML apparently has an issue with the immigration laws, as indicated by its readiness to disregard the fact that all the persons fired failed to provide necessary legal documentation to work in the U.S. Firing undocumented workers for lack of valid documentation, according to the HML, was an act of “racism.” This charge didn’t convince the Court of Appeal because HML failed to produce any substantial evidence that the firings were racially motivated. The matter is made more complicated by both union and political organizations that give a concerted voice to illegal immigrants to insist upon work in the U.S. when these persons cannot produce valid documentation.

In my opinion, the Court reached the correct decision.

"If the pink slip doesn't fit, get redressed!"
Click to see my wardrobe of remedies. Link