Statements that your competitor is dishonest and unethical are not protected speech as commercial speech and do not serve the public interest. Consequently, publishers of such accusations cannot move to dismiss defamation suits by filing anti-SLAPP motions. Anti-SLAPP motions claim that the lawsuit was brought against them based on an exercise of their First Amendment rights and, therefore, should be dismissed.

In Xu v. Huang, the California Second Appellate District Court was confronted with an appeal by Xu of a trial court order that dismissed Xu’s defamation action against Huang based on Huang’s, an insurance agent, claims that her statements to others that Xu, also an insurance agent, was “dishonest and unethical in her business practices and falsifies insurance documents” on the basis that such statements were protected commercial speech. The Appellate Court reversed the trial court order.

The Appellate Court held:

Contrary to the trial court’s ruling, the anti-SLAPP statute does not protect Huang’s statements because they squarely fall within the commercial speech exemption set forth in [CCP} section 425.17, subdivision (c). Courts are admonished to examine section 425.17 as a threshold issue before proceeding to an analysis under section 425.16. Section 425.17 expressly provides that speech or conduct satisfying its criteria is entirely exempt from anti-SLAPP protection even if “the conduct or statement concerns an important public issue.” (  425.17, subd. (c)(2).)

Not only do we find Huang’s statements covered by the commercial speech exemption, but the trial court also erred in finding that Xu’s claims arose from protected activity under section 425.16, subdivision (e)(4). The context in which statements are made holds significant sway in terms of whether they are considered to be in furtherance of free speech in connection with a public issue under subdivision (e)(4) of section 425.16. Huang’s alleged slander of a competitor in a private setting to solicit business is neither speech in furtherance of the exercise of the constitutional right of petition nor the constitutional right of free speech in connection with a public issue.

If you come upon information that leads you to believe your competitor is engaged in unethical or illegal conduct, do not repeat that information to others. Bring your concerns to your legal counsel for advice as to where you can safely report your suspicions, to verify the veracity of your beliefs and to pursue any remedies you may have. If, on the other hand, you are subjected to false allegations of unethical or illegal conduct by a competitor, contact your legal counsel who can help you protect your reputation, and business, from the damage caused by false accusations.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.