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“Loser Pays” Law Limited by Public Interest Exception – Glass & Goldberg | Financing, Property & Bankruptcy Law
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“Loser Pays” Law Limited by Public Interest Exception

High Speed Rail Paused but not Stopped

In 1992 the California Legislature passed the anti-SLAPP statute to give protection to people or companies from lawsuits which are devoid of any merit. Shortly thereafter, it became clear to many members of the General Assembly that the law was being abused. There was concern that individuals or groups seeking to bring cases to advance a matter of public interest may be discouraged from doing so for fear of having to pay the attorney’s fees to the prevailing party.  So in 2003 the Legislature enacted Section 425.17 of the California Code of Civil Procedure to amend the law by listing exemptions from the anti-SLAPP law.

A recent case from the Fourth Appellate District of the California Court of Appeals shows how the amendment works to blunt the effect of the anti-SLAPP statute.  Under Section 425.16 of the law, a defendant could seek to have the court strike the complaint of a plaintiff and award the defendant attorney’s fees in cases which may chill the exercise of freedom of speech. In order to survive such a motion, the plaintiff would have to show that there is a probability that he or she will prevail on the claim,

In Tourgeman v. Nelson and Kennard, et. al., D063473 (CA Ct. App. 4th Dist. 2014), the Plaintiff brought a claim against a law firm which, he contends, sent out debt collection letters which routinely contained incorrect information. Tourgeman alleged that the attorney, who sent the letters to him and others, did not get meaningfully involved in the preparation of these letters and that the correspondence misidentified the original creditors. Tourgeman claims the persistent conduct violated the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200).  He sought injunctive relief from the Court barring the firm from engaging in unlawful, unfair, and/or fraudulent debt collection practices in the future.  The law firm responded by  asking the trial court to strike the complaint under the anti-SLAPP statute.  Before the trial court could decide on that motion, the plaintiff dismissed his own Complaint without prejudice retaining the right to refile the case at a later date.  But the Defendant then moved to recover the attorney’s fees it incurred in defending the suit. The trial court granted the motion on the grounds that the Plaintiff failed to show it could prevail on its claim and that he did not show that the claim fell within the Section 425.17 exemption to the anti-SLAPP statute.

The Court of Appeals rejected that decision finding (1) that the Plaintiff had merely sought injunctive relief not monetary compensation, (2) that the action would enforce an important right affecting the public interest – protecting consumers from unfair collection practices and (3) that private enforcement was necessary and placed a disproportionate burden on the plaintiff. Having made these findings, the Court held that Tourgeman’s case did constitute an exemption under the anti-SLAPP statute. Accordingly, the “loser pays” mandate of that statute did not apply here. Tourgeman does not have to pay the firm’s attorney’s fees and he can refile his case provided he does so within any time constraints imposed by law.

The attorneys at Glass & Goldberg in California provide high quality, cost-effective legal services and advice for clients in all aspects of commercial compliance, business litigation and transactional law.  Call us at (818) 888-2220, send an email inquiry to info@glassgoldberg.com or visit us online at www.glassgoldberg.com to learn more about the firm and to sign up for future newsletters.

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