Opinion
Case No. 21-cv-02884-JSW
2021-11-19
GLOBAL PLASMA SOLUTIONS, INC., Plaintiff, v. IEE INDOOR ENVIRONMENTAL ENGINEERING, Defendant.
Jenny Yi, McGuireWoods LLP, San Francisco, CA, Amanda DeFord, Pro Hac Vice, Lucy Jewett Wheatley, Pro Hac Vice, McGuireWoods LLP, Richmond, VA, Corinne Stone Hockman, Pro Hac Vice, McGuireWoods LLP, Raleigh, NC, Robert Ashley Muckenfuss, Pro Hac Vice, McGuireWoods LLP, Charlotte, NC, for Plaintiff. Arif Virji, James V. Sansone, Carle, Mackie, Power & Ross LLP, Santa Rosa, CA, Jessica Catherine Shafer, Jackson Lewis P.C., San Francisco, CA, for Defendant.
Jenny Yi, McGuireWoods LLP, San Francisco, CA, Amanda DeFord, Pro Hac Vice, Lucy Jewett Wheatley, Pro Hac Vice, McGuireWoods LLP, Richmond, VA, Corinne Stone Hockman, Pro Hac Vice, McGuireWoods LLP, Raleigh, NC, Robert Ashley Muckenfuss, Pro Hac Vice, McGuireWoods LLP, Charlotte, NC, for Plaintiff.
Arif Virji, James V. Sansone, Carle, Mackie, Power & Ross LLP, Santa Rosa, CA, Jessica Catherine Shafer, Jackson Lewis P.C., San Francisco, CA, for Defendant.
ORDER DENYING MOTION TO STRIKE COMPLAINT (ANTI-SLAPP)
Re: Dkt. No. 30
JEFFREY S. WHITE, United States District Judge
Now before the Court for consideration is the motion to strike the complaint as a Strategic Lawsuit Against Public Participation ("SLAPP") brought pursuant to California Code of Civil Procedure section 425.16 (" Section 425.16") filed by Defendant IEE Indoor Environmental Engineering ("Defendant" or "IEE"). The Court has considered the parties’ papers, relevant legal authority, and the record in the case, and it finds this matter suitable for disposition without oral argument. See N.D. Civ. L.R. 7-1(b). For the following reasons, the Court HEREBY DENIES Defendant's motion.
BACKGROUND
Plaintiff Global Plasma Solutions, Inc. ("GPS") provides consumers with air purification products. (Compl. ¶ 1.) GPS invented Needlepoint Bipolar Ionization (NPBI) air purification technology. (Id. ¶ 2.) NPMI cleans the air by introducing ions in the space via airflow in the ventilation system and improves the air by reducing airborne particulate, odors, and pathogens. (Id. ¶ 21.)
Defendant IEE advertises itself to consumers as a "a building science consulting firm" that provides customers with "diagnostic, consulting, and similar services designed to promote air quality in the consumers’ desired space." (Id. ¶ 4.) On November 5, 2020, the president of IEE, Francis Offermann, authored and published on IEE's website an article titled Beware: The COVID-19 Snake Oil Salesman Are Here. (Id. ¶¶ 5, 47; Ex. A.) GPS alleges that the article, which specifically mentions GPS and GPS products, "defame[s], disparage[s], and irreparably ruin[s]" the reputation of GPS because it warns consumers that air cleaners promising to eliminate the SARS-CoV-2 airborne virus provide little or no removal of airborne virus and may actually produce dangerous chemicals, such as ozone and formaldehyde. (Id. ¶¶ 3, 6-7.) As a result, GPS alleges that the article conveys that its products are untrustworthy and ineffective. (Id. ¶ 7.) GPS alleges that IEE is intentionally disparaging and defaming GPS to discredit it within the industry and take GPS's place in the air purification industry. (Id. ¶ 9.)
According to GPS, the article makes the following defamatory statements: (1) GPS's products provide little to no removal of airborne virus and may actually produce dangerous chemicals"; (2) "these air cleaners are not new and have been reincarnated many times since the early 1990s"; (3) that consumers should not "expect these ionization devices to have a significant effect on airborne concentrations"; (4) that GPS's product testing is improper, false, inaccurate, unreliable, or otherwise in error; (5) that products like GPS's "do not have test data showing they provide any significant removal of air contaminants"; and (6) that GPS is a "snake oil salesman." (Id. ¶ 39.) GPS further alleges that Mr. Offermann appeared in a publicly available video and made an additional defamatory statement claiming that GPS's products "at best do nothing" and "perhaps, like, create things that you don't want to breathe, like formaldehyde." (Id. ¶ 40.) GPS alleges that the article has disrupted its business and led to the loss of customers. (Id. ¶¶ 49, 50.)
GPS therefore brings this case alleging violations of: (1) Federal False Advertising, Product Disparagement, and Unfair Competition, in violation of the Lanham Act, 15 U.S.C. section 1125(a) ; (2) trade libel; (3) libel in violation of Cal. Civ. Code section 45, et seq. ; (4) slander, in violation of Cal. Civ. Code section 46, et seq. ; and (5) violation of California Business and Professions Code section 17200 et seq.
On August 13, 2021, IEE filed the present motion to strike GPS's complaint pursuant to California's anti-SLAPP statute on the basis that this lawsuit seeks to silence IEE. GPS opposed the motion, and IEE submitted a reply. ANALYSIS
A. Applicable Legal Standard.
California's anti-SLAPP ("Strategic Lawsuit Against Public Participation") statute provides a mechanism for a defendant to strike civil actions brought primarily to chill the exercise of free speech. Cal. Civ. Proc. Code § 425.16(a). Section 425.16 permits defendants (or counterclaim defendants) to bring a "special motion to strike" if a cause of action against them arises "from any act ... in furtherance of the person's right of petition or free speech ... in connection with a public issue[.]" Id. § 425.16(b)(1), (h). A special motion to strike under Section 425.16 is commonly referred to as an anti-SLAPP motion.
In order to prevail on an anti-SLAPP motion, the movant must first make a prima facie showing, through the pleadings themselves and supporting affidavits, that the statement or conduct underlying the legal claims against it qualifies for protection under the anti-SLAPP statute. Id. section 425.16(b) ; Vess v. Ciba–Geigy Corp. USA , 317 F.3d 1097, 1110 (9th Cir. 2003). The burden then shifts to the non-moving party to demonstrate a probability of prevailing on the challenged claims. Cal. Civ. Proc. Code § 425.16(b)(1) ; Vess , 317 F.3d at 1110.
The California Legislature expressly intended that Section 425.16 "be construed broadly" in protection of the public interest. Cal. Civ. Proc. Code § 425.16(a). Although it is a state statute, a party may bring an anti-SLAPP motion to strike state law claims in federal court. Vess , 317 F.3d at 1109 (citing United States ex rel. Newsham v. Lockheed Missiles & Space Co. , 190 F.3d 963, 970-73 (9th Cir. 1999) (holding that there is no direct conflict between the Federal Rules and sections 425.16(b) and (c), and that adopting California procedural rules serves the purposes of the Erie doctrine)).
The statute establishes four categories of protected speech or conduct: (1) "any written or oral statement or writing made before a legislative, executive, or judicial proceeding"; (2) "any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body"; (3) written or oral statements made "in a public forum in connection with an issue of public interest"; and (4) any other conduct furthering a right of petition or free speech in connection with a public issue. Cal. Civ. Proc. Code § 425.16(e).
An anti-SLAPP motion involves a two-step analysis. First, the court must decide whether the defendant has made a threshold showing that the challenged cause of action is one "arising from" protected activity. See, e.g. , City of Cotati v. Cashman , 29 Cal. 4th 69, 76, 124 Cal.Rptr.2d 519, 52 P.3d 695 (2002). The defendant may meet this threshold burden by showing that the act which forms the basis for the plaintiff's cause of action was a written or oral statement made before a judicial proceeding. See Church of Scientology of California v. Wollersheim , 42 Cal. App. 4th 628, 646, 49 Cal.Rptr.2d 620 (1996). If the defendant establishes a prima facie case that the claims arise from protected activity, the burden then shifts to the plaintiff to establish a probability that the plaintiff will prevail on the claim. Id. ; see also Cotati , 29 Cal. 4th at 76, 124 Cal.Rptr.2d 519, 52 P.3d 695.
B. The Anti-SLAPP Statute Does Not Apply to GPS's Lanham Act Claim.
GPS asserts a Lanham Act claim, which IEE moves to strike. However, California's anti-SLAPP statute is inapplicable to federal claims brought in federal court. Smith v. Levine Leichtman Cap. Partners, Inc. , 723 F. Supp. 2d 1205, 1218 (N.D. Cal. 2010) (citing Hilton v. Hallmark Cards , 580 F.3d 874, 881 (9th Cir. 2009) ). IEE does not dispute that this is true, but it argues that when a federal law cause of action is based on the same set of facts as the state law claims, an exception should be made. IEE provides no authority in support of its argument for an exception, and the Court finds this argument unpersuasive. Accordingly, IEE's motion to strike Plaintiff's Lanham Act claim is DENIED on this basis.
C. IEE's Speech is Not Subject to the Commercial Speech Exemption.
GPS first opposes IEE's motion on the basis that the article is subject to the commercial speech exemption. Under Section 425.17(c)’s "commercial speech" exemption, causes of action arising from commercial speech are exempt from the anti-SLAPP law when: (1) the cause of action is against a person primarily engaged in the business of selling or leasing goods or services; (2) the cause of action arises from a statement or conduct by that person consisting of representations of fact about that person's or a business competitor's business operations, goods, or services; (3) the statement or conduct was made either for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person's goods or services or in the course of delivering the person's goods or services; and (4) 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 potential buyer or customer. Weiland Sliding Doors & Windows, Inc. v. Panda Windows & Doors, LLC , 814 F. Supp. 2d 1033, 1037 (S.D. Cal. 2011). The burden of proof as to the applicability of the commercial speech exemption falls on the party seeking the benefit of it—here, GPS. Simpson Strong Tie Co. v. Gore , 49 Cal. 4th 12, 26, 109 Cal.Rptr.3d 329, 230 P.3d 1117 (2010). If the Court finds the article is subject to the commercial speech exemption, the anti-SLAPP analysis ends; if not, the Court will proceed with the Section 425.16 analysis.
With regard to the first factor, it is undisputed that IEE, which provides building science consulting services, is primarily engaged in the business of selling services. (See Dkt. No. 33-3, Declaration of Charles Waddell ("Waddell Decl.") ¶ 39, Ex. U.) The first factor is satisfied.
To satisfy the second factor, GPS must show that IEE's statements refer to its own product or services or a competitor's operations, goods, or services. Here, the challenged statements concern GPS and GPS's products; the statements do not concern IEE's services. Accordingly, to satisfy the second factor, GPS must show that IEE and GPS are business competitors. GPS alleges that it operates in the "air purification/quality industry and provides[s] customers ... with accurate recommendations and products that meet each individual customer's air quality and purification needs." (Compl. ¶ 19.) GPS alleges that IEE is a "building science consulting firm ... that provides customers with a variety of diagnostic, consulting, and similar services designed to promote air quality in the consumers’ desired space ..." (Id. ¶ 4.) According to GPS, the companies compete because GPS's products reduce the need for IEE's consulting services. (Waddell Decl. ¶ 40.) Customers concerned with the safety and effectiveness of GPS's products will turn to IEE instead of GPS to meet their air purification needs. (Compl. ¶ 46.) However, IEE contends that it is not a competitor of GPS because it does not manufacture or distribute air cleaning devices, and it does not profit from recommending or endorsing air cleaning products. (Dkt. No. 30-2, Declaration of Francis Offermann ("Offermann Decl.") ¶¶ 1. 20).
Neither party provides authority discussing the meaning of "competitor" in Section 425.17. However, based on the allegations in the complaint and the evidence in the record, the Court finds that GPS and IEE are not competitors under Section 425.17. The record shows that GPS operates primarily as a purveyor of air purification products while IEE operates primarily as a consulting firm addressing air quality concerns. IEE does not sell air purification devices. Although GPS attests that IEE is a competitor because GPS's products reduce the need for IEE's consulting services, the record does not support this statement. There is nothing in the record to support the conclusion that the entities are rivals competing for the same customers. Indeed, it appears that the services might in fact complement one another—that is, a customer who purchases GPS products might still engage IEE to diagnose certain air quality products and vice versa. Accordingly, although both entities operate in the air quality and purification industry, they offer different services within that broader industry. GPS has failed to meet its burden to establish that IEE is a business competitor as required under Section 425.17(c).
Because GPS has failed to show that IEE is a business competitor, the commercial speech exemption does not apply, and the Court will not address the other two factors of the analysis. Accordingly, the Court will proceed to Section 425.16 ’s two-step analysis.
GPS objects to evidence in Mr. Offermann's reply declaration concerning the nature of IEE's services, which IEE offers to support its argument that IEE is not a competitor of GPS. (See Dkt. No. 39, Objections to Reply Evidence at 4.) However, the Court did not rely on this evidence in reaching its conclusion, and so it DENIES AS MOOT GPS's objection on this basis.
D. Whether IEE's Statements are Protected Speech.
"The first step in analyzing an anti-SLAPP motion is determining whether the defendant successfully made ‘an initial prima facie showing that the plaintiff's suit arises from an act in furtherance of the defendant's rights of petition or free speech.’ " Piping Rock Partners, Inc. v. David Lerner Assocs., Inc. , 946 F. Supp. 2d 957, 967 (N.D. Cal. 2013) (quoting Vess , 317 F.3d at 1110 ) (further citations omitted). The defendant's burden on this step "is not a particularly demanding one." Daniel v. Wayans , 8 Cal. App. 5th 367, 387, 213 Cal.Rptr.3d 865 (2017). A protected act includes "any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest." Cal. Code Civ. Proc. § 425.16(e). IEE asserts that the challenged statements are protected under Section 425.16(e)(3), which protects statements "made in a place open to the public or a public forum in connection with an issue of public interest." Cal. Civ. Code § 425.16(e)(3).
1. Public forum
The article was posted on IEE's public website. GPS does not dispute that IEE's website is a public forum for purposes of the anti-SLAPP statute. Barrett v. Rosenthal , 40 Cal. 4th 33, 41, 51 Cal.Rptr.3d 55, 146 P.3d 510 (2006) ("Web sites accessible to the public ... are public forums for purposes of the anti-SLAPP statute."). Accordingly, IEE has met its burden on this issue. 2. Public interest
The anti-SLAPP statute does not define "public interest," but "its provisions ‘shall be construed broadly’ to safeguard ‘the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.’ " Summit Bank v. Rogers , 206 Cal. App. 4th 669, 693, 142 Cal.Rptr.3d 40 (2012) (quoting Cal. Code Civ. Proc. § 425.16(a) ). In FilmOn.com v. DoubleVerify, Inc. , 7 Cal. 5th 133, 246 Cal.Rptr.3d 591, 439 P.3d 1156 (2019), the California Supreme Court held that the "public interest" inquiry "calls for a two-part analysis rooted in the statute's purpose and internal logic." Id. at 149, 246 Cal.Rptr.3d 591, 439 P.3d 1156. First, a court must ask what issue of public interest is implicated by the speech in question. Id. Second, the court must "ask what functional relationship exists between the speech and the public conversation about some matter of public interest." Id. at 149-50, 246 Cal.Rptr.3d 591, 439 P.3d 1156. "[I]t is not enough that the statement refer to a subject of widespread public interest; the statement must in some manner itself contribute to the public debate." Id. at 150, 246 Cal.Rptr.3d 591, 439 P.3d 1156 (internal quotation marks and citation omitted). When determining whether the statement contributes to the public debate, the court must consider the "context – including audience, speaker, and purpose." Id. at 152, 246 Cal.Rptr.3d 591, 439 P.3d 1156. The burden is on the party bringing the motion to identify allegations of protected activity. Medical Marijuana, Inc. v. ProjectCBD.com , 46 Cal. App. 5th 869, 260 Cal.Rptr.3d 237 (2020).
The Court's analysis in FilmOn.com addressed the "public interest" language of Section 425.16(e)(4), which protects "any [ ] 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." Cal. Civ. Code § 425.16(e)(4). However, the analysis in FilmOn.com appears to apply with equal force to the language of Section 425.16(e)(3).
a. Issue of public interest
IEE asserts that that statements at issue concern a matter of public interest because they question whether GPS ionizers work as advertised in school districts across the country that are hoping to allow kids to return safely to classrooms amid COVID-19. (Mot. at 10; see also Offermann Decl. ¶ 15, 20; Exs. D-F.)
There are generally three categories of statements that constitute a public issue: (1) statements concern a person or entity in the public eye; (2) statements that could directly affect a large number of people beyond the direct participants; or (3) a topic of widespread, public interest. Rivero v. Am. Fed'n of State, Cty., & Mun. Emps., AFL-CIO , 105 Cal. App. 4th 913, 924, 130 Cal.Rptr.2d 81 (2003). GPS argues that the speech did not involve an issue of public interest because GPS, a private company, is not in the public eye, and there has been no ongoing controversy about its products. This argument focuses on the first category, but it ignores that the article addresses a topic of widespread, public interest—the removal of airborne viruses from indoor environments during the COVID-19 pandemic. GPS may dispute whether it was in the public eye or whether it was involved in ongoing controversy, but it does not dispute that the issue of air purification in indoor environments, specifically school districts, is an issue of public interest. Indeed, GPS alleges that the article was particularly damaging because it makes an "express reference to the COVID-19 pandemic, which at the time IEE disseminated this article was of increasing concern nationwide (and worldwide)." (Compl. ¶ 37.) The issue of the removal of airborne viruses from indoor environments, specifically schools, and the efficacy of products marketed as achieving that objective is of interest to the public particularly in light of the impact of COVID-19 on public health. See Manzari v. Associated Newspapers Ltd. , 830 F.3d 881, 887 (9th Cir. 2016) (in defamation action, article on the topic of public health aspects and safety of large California industry were a topic of public interest). Accordingly, the Court concludes that the challenged statements concern a topic of public interest.
GPS objects to evidence in Mr. Offermann's reply declaration regarding the issue of public interest. (See Dkt. No. 39, Objections to Reply Evidence at 2-4.) However, the Court did not rely on this evidence in reaching its conclusion, and so it DENIES AS MOOT GPS's objection on this basis.
b. Functional relationship
GPS next argues that even if the article addresses a topic of public interest, no functional relationship exists between IEE's speech and the public interest in warning school districts and parents about GPS's products. GPS argues this is the case because IEE did not direct the statements to an audience of school districts and parents, did not have the piece reviewed for accuracy, and posted the piece on its commercial website. The Court finds GPS's arguments unpersuasive.
In determining whether the article furthered the conversation on an issue of public interest, the Court looks to the broader context in which IEE issued the article. FilmOn.com , 7 Cal. 5th at 153. Here, an examination of the article's context shows that it contributed to the discussion on an issue of public interest. The article was published on IEE's public website. GPS alleges that it reached members of the public along with the air quality industry; it was not confidential or accessible only to paying clients. GPS alleges that the article was motivated by IEE's desire to increase its business opportunities. However, the article on its face does not support this contention. Other than the link to IEE's website, the article does not promote its services or encourage readers to contact it with air quality concerns. Moreover, Mr. Offermann, the president of IEE, attests that he wrote the article with the goal of educating parents and school administrators on the issue of using certain air purifiers to reduce indoor concentrations of air contaminants and had no profit motive. (Offermann Decl. ¶¶ 15, 20.) Even if Mr. Offermann had some profit motive in writing the article as GPS argues, the article on its face does not read as an advertisement for IEE's services so much as an attempt to provide information to the reader.
Additionally, in the consumer context, courts have found that challenged speech relates to a matter of public interest when it does not just present negative commentary about a certain business or business practice but provides information to aid consumers in choosing which businesses to patronize. For example, in Wilbanks v. Wolk , 121 Cal. App. 4th 883, 17 Cal.Rptr.3d 497 (2004), the defendant, a consumer advocate with an expertise in viatical settlements, posted negative comments on her website about the plaintiff, a broker of such settlements. Id. at 890, 17 Cal.Rptr.3d 497. The court held that the defendant's statements were protected under the anti-SLAPP statute because they were "consumer protection information." Id. at 900, 17 Cal.Rptr.3d 497. The court reasoned that the statements made by the defendant "were not simply a report of one broker's business practices, of interest only to that broker and to those who had been affected by those practices." Id. Rather, the "statements were a warning not to use plaintiff's services." Id. Because the statements were made "in the context of information [ ] provided to aid consumers choosing among brokers, the statements [ ]were directly connected to an issue of public concern." Id.
Similarly, in Wong v. Jing , 189 Cal. App. 4th 1354, 117 Cal.Rptr.3d 747 (2010), the defendant posted an internet review criticizing a dentist's use of silver amalgam in dental fillings and use of nitrous oxide on children. Id. at 1367, 117 Cal.Rptr.3d 747. The court found the review involved an issue of public concern and discussion—the use of silver amalgam—and raised issues beyond a private dispute about a particular dental appointment. Rather, it addressed general issues like the use of nitrous oxide in children and informed readers that other dentists do not employ such practices. Id. As such, the court determined that the review was "part of a public discussion and dissemination of information on issues of public interest" because it was more than just a highly critical opinion of the dentist's performance. Id.
The Court finds the statements here similar to those in Wilbanks and Wong .. The article was available to and contains information that aids potential customers in choosing which air purification products to purchase. Moreover, the article explicitly warns against using air filters and portable air cleaners that utilize the technology present in GPS's products. The Court finds this sufficient to bring the statements within the scope of anti-SLAPP protection.
The cases GPS cites in support of its argument that the challenged statements do not have a functional relationship to an issue of public interest are distinguishable. In FilmOn.com , the challenged statements appeared in confidential reports available exclusively to paying clients who used the information for business purposes alone. 7 Cal. 5th at 167, 246 Cal.Rptr.3d 591, 439 P.3d 1156. The information was intended to be private and was not provided to the wider public unlike the statements at issue here.
Bikkina v. Mahadevan , 241 Cal. App. 4th 70, 193 Cal.Rptr.3d 499 (2015), is also distinguishable. In Bikkina , the defendant made statements about alleged faulty data in the plaintiff's carbon sequestration-related research at a small lecture. Id. at 81, 193 Cal.Rptr.3d 499. The defendant contended that his criticism of the data concerned an issue of public interest because it related to climate change and greenhouse gases. Id. The court disagreed finding that the defendant's statements were "specific complaints about contaminated quartz samples and plagiarism" and reasoned that the fact that carbon sequestration is related to climate change did not convert the defendant's "technical objections into a topic of public interest." Id. at 83, 193 Cal.Rptr.3d 499. The speech was a "private campaign to discredit another scientist ... and not part of a public debate on a broader issue of public interest." Id. Unlike in Bikkina , the article here was not a private campaign to discredit GPS; it was part of a broader conversation on an issue of public interest directed to members of the public.
For these reasons, the Court concludes that IEE has met its burden on the first step to show that the challenged statements arise from protected activity.
E. GPS Has Established a Probability of Prevailing on its Claims.
Because IEE has met its burden on the first step, the burden shifts to GPS to demonstrate a probability of prevailing on its claims. Metabolife Int'l, Inc. v. Wornick , 264 F.3d 832, 840 (9th Cir. 2001). At the second step, the plaintiff must demonstrate that "each challenged claim based on protected activity is legally sufficient and factually substantiated." Baral v. Schnitt , 1 Cal. 5th 376, 396, 205 Cal.Rptr.3d 475, 376 P.3d 604 (2016).
In the second step of the anti-SLAPP analysis, federal courts apply "different standards depending on the motion's basis." Planned Parenthood Fed'n of Am., Inc. v. Ctr. for Med. Progress , 890 F.3d 828, 833 (9th Cir. 2018). If a defendant's anti-SLAPP motion is founded purely on legal arguments, then the court should apply the Rule 8 and Rule 12. Id. If a defendant's motion makes a factual challenge, then the motion must be treated as though it were a motion for summary judgment under Rule 56, and discovery must be permitted. Id. For purely legal challenges, there is no need for the party opposing the motion "to submit evidence showing the merit of their claims." Id. at 834. For factual challenges, "discovery must be allowed, with opportunities to supplement evidence based on the factual challenges, before any decision is made by the court." Id.
IEE does not address whether it raises a legal or factual sufficiency challenge. However, in its opening motion, IEE primarily attacks the sufficiency of Plaintiff's claims on the basis that the challenged statements are nonactionable opinions, and IEE characterizes this question as a question of law for the court. (Mot. at 11.) Accordingly, because IEE's motion appears to challenge the legal sufficiency of GPS's claims, the Court will apply the standard set forth in Rule 12(b)(6) to consider whether GPS has established a probability of prevailing on its claims.
1. Defamation and trade libel claims
Under California law, a defamation claim, which may be asserted as a claim for slander (oral) or libel (written), includes the following elements: "(1) a publication that is (2) false, (3) defamatory, (4) unprivileged, and (5) has a natural tendency to injure or causes special damage." Gallagher v. Philipps , 563 F.Supp.3d 1048, 1079 (S.D. Cal. 2021) (internal citations and quotation marks omitted). An essential element of defamation is that the publication be of a false statement of fact rather than opinion. Id. (internal citations and quotation marks omitted). "The dispositive question for the court is whether a reasonable factfinder could conclude that the published statements imply a provably false factual assertion." Id.
Under California law, "trade libel is defined as ‘an intentional disparagement of the quality of property, which results in pecuniary damage.’ " Aetna Cas. & Sur. Co. v. Centennial Ins. Co. , 838 F.2d 346, 351 (9th Cir. 1988) (quoting Erlich v. Etner , 224 Cal. App. 2d 69, 73, 36 Cal.Rptr. 256 (1964) ). "A trade libel claim requires: (1) a publication, (2) which induces other not to deal with plaintiff, and (3) special damages." Id. (citing Polygram Records, Inc. v. Superior Court , 170 Cal.App.3d 543, 548-49, 216 Cal.Rptr. 252 (1985) ). Moreover, "a plaintiff must allege: (1) who made the statements, (2) to whom the statements were made, (3) the time and place of publication, and (4) the substance of the statements." NPK Indus. v. Hunter , No. 15-cv-00811-SI, 2015 WL 5461667, at *4 (N.D. Cal. Sept. 6, 2015) (citations omitted).
The First Amendment limits California state law claims "whose gravamen is the alleged injurious falsehood of a statement." Films of Distinction Inc. v. Allegro Film Prods., Inc. , 12 F. Supp. 2d 1068, 1082 (C.D. Cal. 1998) (internal quotation marks and citations omitted). Claims which are similar to defamation, such as trade libel "are subject to the same [F]irst [A]mendment requirements that govern actions for defamation." Unelko Corp. v. Rooney , 912 F.2d 1049, 1058 (9th Cir. 1990) ; Films of Distinction , 12 F. Supp. 2d at 1082 (dismissing trade libel claims because disputed statements were opinions protected under the First Amendment).
Although the defamatory torts of slander and libel are similar to what is known in California as "trade libel," the torts are distinct and must be treated individually. Thus, "an ‘action for defamation is designed to protect the reputation of the plaintiff, and the judgment vindicates that reputation, whereas the action for disparagement is based on pecuniary damages and lies only where such damage has been suffered.’ " Leonardini v. Shell Oil Co. , 216 Cal.App.3d 547, 573, 264 Cal.Rptr. 883 (1989) (quoting 5 Witkin, Summary of Cal. Law, Torts, pp 661–62 (9th ed.1988)).
GPS's defamation claims are based on statements in the article and a statement allegedly made by Mr. Offermann regarding the efficacy of GPS's products in a video. IEE challenges the sufficiency of Plaintiff's defamation claims on the basis that they are non-actionable opinions or true statements.
a. Statements of opinion containing provably false factual assertions
IEE primarily argues that the statements are Mr. Offermann's opinions based on data provided by GPS and thus are not actionable. IEE asserts that its statements that fall within the following categories are non-actionable opinions: (1) air cleaners, including ionizers, in general provide little or no removal of airborne virus and may produce dangerous chemicals such as ozone or formaldehyde; and (2) the test results posted by GPS on its website prove that the GPS devices provide little removal/inactivation of harmful air particles from rooms, including airborne bacteria and virus. GPS contends that the statements imply a false assertion of fact because they are unequivocal on their face and are capable of being proved false or misleading.
Rather than address the specific statements alleged in the complaint, IEE groups the challenged statements into categories. (Mot. at 11-12.) IEE identifies two other categories of statements in addition to those identified above. However, those categories are not statements challenged in the complaint, and as such, they are not relevant to the Court's analysis on this issue. (Mot. at 11-12.) With regard to the other statements alleged in the complaint but not specifically addressed by IEE in its motion, IEE's failure to address these statements is construed as a concession that Plaintiff has met its burden as to these statements.
Statements of opinion do not enjoy blanket protection from defamation claims. Gallagher , 563 F.Supp.3d at 1086, 1087. "The issue is whether the statement of opinion implies a statement of fact. Statements of opinion that imply a false assertion of fact are actionable." Id. (citing Dickinson v. Cosby , 17 Cal. App. 5th 655, 685, 225 Cal.Rptr.3d 430 (2017) ). "The crucial question of whether challenged statements convey the requisite factual imputation is ordinarily a question of law for the court." Id. at 1086. The Ninth Circuit has adopted a three-part test for assessing whether allegedly defamatory statements imply an assertion of objective fact and therefore do not receive First Amendment protection: "(1) whether the general tenor of the entire work negates the impression that the defendant [is] asserting an objective fact, (2) whether the defendant used figurative or hyperbolic language that negates that impression, and (3) whether the statement in question is susceptible of being proved true or false." Gardner v. Martino , 563 F.3d 981, 987 (9th Cir. 2009) (citing Unelko , 912 F.2d at 1053 ). The Court will apply this test to the statements at issue here.
First, the Court looks at the general tenor of the article. The article provides Mr. Offermann's analysis of GPS test data and provides recommendations based on that analysis. Additionally, in the article, Mr. Offermann highlights his credentials and his experience conducting performance tests of air cleaning devices. Accordingly, the article conveys the tone of an investigative research report; it was not "an anonymous posting on an Internet message board where unsupported rants and raves are expected." Dickinson , 17 Cal. App. 5th at 689, 225 Cal.Rptr.3d 430. The overall tone of the article does not negate the impression that IEE is asserting an objective fact. Second, apart from the phrase "snake oil salesman," most of the article is free from figurative or hyperbolic language. The majority of the article contains unequivocal statements about the effectiveness of GPS's products. The statements are not cautiously phrased in terms of opinion or in conditional language. The absence of figurative or hyperbolic language weighs against finding First Amendment protection. Third, almost all the challenged statements are susceptible of being proved true or false. For example, the extent to which GPS products provide removal of airborne virus and whether GPS products may actually produce dangerous chemicals are assertions of fact susceptible of being proved true or false.
IEE also argues that the statements of opinion are based on fully disclosed facts and cannot be punished as a result. A statement of opinion which presents the facts upon which it is based does not imply a false assertion of fact, and it is therefore entitled to protection. Partington v. Bugliosi , 56 F.3d 1147, 1153 (9th Cir. 1995). "A statement of opinion based on fully disclosed facts can be punished only if the stated facts themselves are false and demeaning." Standing Comm. on Discipline of U.S. Dist. Court for the Central Dist. of Cal. V. Yagman , 55 F.3d 1430, 1439 (9th Cir. 1995). IEE argues that the challenged statements are the opinions of Mr. Offermann based on his evaluation of non-defamatory data provided by GPS. GPS disputes the completeness of the test results underlying Mr. Offermann's statements. GPS argues that IEE's opinions are not based on fully disclosed facts because IEE chose not to review GPS's test data for COVID-19, and it submits evidence of test results not considered by IEE in the article. (Waddell Decl. ¶ 25(a); Exs. A, F, P.) Accordingly, GPS has submitted sufficient evidence to raise a dispute regarding whether IEE's article was based on fully disclosed facts. As such, IEE's reliance on this rule as a defense at this stage fails. Overhill Farms, Inc. v. Lopez , 190 Cal. App. 4th 1248, 1264, 119 Cal.Rptr.3d 127 (2010) (finding rule inapplicable where there was sufficient evidence to demonstrate that defendants’ disclosure of facts was incomplete and misleading).
For these reasons, the Court concludes that a reasonable fact finder could conclude that the statements imply provably false assertions of fact and are actionable.
b. Whether the challenged statements are substantially true
IEE also asserts that certain of the challenged statements are true. Substantial truth is a defense to defamation and trade libel claims. Karimi v. Golden Gate Sch. of L. , 361 F. Supp. 3d 956, 977 (N.D. Cal. 2019), aff'd , 796 F. App'x 462 (9th Cir. 2020). Generally, the substantial truth of a statement is a question of fact for the jury. Maheu v. Hughes Tool Co. , 569 F.2d 459, 465-66 (9th Cir. 1977) (concluding, in defamation action, that there was a jury question as to whether allegedly defamatory utterances were substantially true); D.A.R.E. America v. Rolling Stone Magazine , 101 F. Supp. 2d 1270, 1288 (C.D. Cal. 2000) (holding that "substantial truth is a jury question" so long as "substantial truth is not evident to the court").
The only statement it specifically identifies as "true" is the statement that GPS is a "snake oil salesman." IEE contends this is a true statement because GPS falsely advertised its products as a "panacea" for air quality and ventilation concerns even though GPS's test data revealed its products were ineffective at removing harmful products from the air. (Mot. at 8.) It is not clear from its motion if IEE believes the substantial truth defense applies to any other challenged statements.
Although IEE's truth defense could be considered a factual challenge to the sufficiency of GPS's claims, IEE focuses its arguments on the pleadings. IEE's opening motion provides little support for its truth defense apart from plainly asserting the statements are false because they are true. It does not provide evidence in support of its argument. IEE's failure to submit evidence in support of its substantial truth defense suggests that this argument should be evaluated under the Rule 12(b)(6) standard rather than under Rule 56. See Planned Parenthood , 890 F.3d at 834 ("In defending against an anti-SLAPP motion, if the defendants have urged only insufficiency of pleadings, then the plaintiff can properly respond merely by showing sufficiency of pleadings, and there's no requirement for a plaintiff to submit evidence to oppose contrary evidence that was never presented by defendants"). In any event, the Court need not decide that question because under either standard GPS has met its burden to show that its claims have minimal merit.
The Court finds that GPS's allegations of falsity are sufficient. Additionally, GPS presents evidence supporting the falsity of the statements in the article in the form of test results which appear to indicate that its products are effective at removing airborne viruses. (See Waddell Decl. ¶ 25(a), Exs. C, P, F.) In reply, IEE responds by raising factual disputes with some of the evidence provided by GPS. However, these arguments, at best, indicate that a dispute regarding the truth or falsity of the statements exists. The Court cannot as a matter of law determine the substantial truth of the statement based on the record before the Court. Accordingly, the Court finds that under either the Rule 12(b)(6) standard or the Rule 56 standard, IEE's asserted truth defense is insufficient to defeat GPS's defamation claims at this stage. Because GPS has established that the defamation claims may have merit with regard to the Article's statements, the defamation claims may proceed, and the Court DENIES IEE's motion to strike on this basis.
GPS objects to the evidence in Mr. Offermann's reply declaration concerning these third-party test results. (See Dkt. No. 39, Objections to Reply Evidence at 1-2.) However, even if the Court considers this evidence, it does not alter the Court's conclusion that the substantial truth of the statements is not evident to the Court on this record.
2. Product disparagement and Section 17200 claims
IEE argues that GPS's product disparagement and unfair trade practices causes of action arise from the same defamatory communications underlying the claims of libel, slander, and trade libel. IEE argues that GPS's product disparagement claim fails along with the claims for libel, slander, and trade libel because GPS cannot show the element of falsity. However, as discussed above, GPS's Lanham Act product disparagement claim is not subject to California's anti-SLAPP statute, and so the Court need not address that claim as part of this analysis.
Section 17200 prohibits "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." Cal. Bus. & Prof. Code § 17200. GPS argues, and IEE does not contest, that truth is not a viable defense to Plaintiff's unfair trade practices claims, which can also encompass unfair, misleading, and deceptive statements. Indeed, IEE does not meaningfully address GPS's Section 17200 claim or challenge the probability that GPS will prevail on the merits of this claim. Accordingly, the Court DENIES the motion to strike on this basis.
F. IEE's Request for Attorneys’ Fees.
Because the Court denies IEE's motion to strike, IEE is not entitled to its attorneys’ fees and costs for this motion. IEE's request for attorneys’ fees is DENIED.
CONCLUSION
For the foregoing reasons, the motion to strike the complaint is DENIED.