Xu v. Huang CA2/1 ( 2021 )

Filed 12/16/21 Xu v. Huang CA2/1
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California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
TIFFANY YAN XU, B311883
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. 20PSCV00695)
v.
HAIDI WENWU HUANG et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of Los
Angeles County, Gloria White-Brown, Judge. Reversed.
Amin Talati Wasserman, William P. Cole and Matthew R.
Orr for Plaintiff and Appellant.
Gordon Rees Scully Mansukhani, Craig J. Mariam, Gregory
S. Martin and Eunice J. Liao for Defendants and Respondents.
__________________________
Plaintiff and appellant Tiffany Yan Xu, chief executive
officer of Sky Vision Insurance Company (Sky Vision), and
defendants and respondents Haidi Wenwu Huang and Auchel
World Inc. (Auchel) specialize in selling life insurance and
providing wealth management services, particularly in the
Chinese and Chinese-American communities.
In October 2020, Xu filed a defamation case against Huang,
alleging that, in an effort to promote the business interests of
Auchel and disrupt Xu’s relationship with her clients, Huang
falsely told independent insurance agents, as well as a Sky Vision
client, that Xu is dishonest and unethical in her business
practices and falsifies insurance documents.1
Huang and Auchel filed an anti-SLAPP motion under Code
of Civil Procedure section 425.16,2 arguing her statements
constituted protected speech because they served the “public
interest” of providing “consumer information” about Xu’s
fraudulent business practices. Xu argued in opposition that
Huang’s statements were far removed from any issues of public
interest and represented nothing more than one competitor
maligning another in an effort to win business. She claimed that
the commercial speech exemption, separately codified at section
425.17, removed any protection from Huang’s defamatory
statements and, in addition, that these statements did not qualify
as protected activity under section 426.16.
Wholly accepting Huang and Auchel’s theory of protected
activity, the trial court granted the anti-SLAPP motion,
1When we refer to Huang, we refer either to her
individually or to her and Auchel, as the context requires.
2Undesignated statutory citations are to the Code of Civil
Procedure.
2
emphasizing that commercial speech implicating a matter of
public interest may nevertheless be protected through an anti-
SLAPP motion. Without any discussion of the commercial speech
exemption under section 425.17, the trial court found all of the
allegations entirely to be protected under subdivision (e)(4) of
section 425.16, commonly known as the “catchall provision” of the
anti-SLAPP statute.
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 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.
Accordingly, we reverse the trial court’s order granting the
anti-SLAPP motion.
3
FACTUAL AND PROCEDURAL BACKGROUND
Sky Vision is alleged to be a leading insurance general
agency and broker of insurance policies for the Chinese and
Chinese-American communities. Sky Vision also provides wealth
management services. With offices in San Marino, Irvine, and
Diamond Bar, Sky Vision has a California network of
approximately 1,000 affiliated insurance agents.
Xu has managed Sky Vision since its inception in 2008 and
has worked in the insurance and wealth management sectors for
many years. Her professional reputation is closely intertwined
with Sky Vision’s reputation in the industry and among
insurance agents and clients.
Auchel does business as Grand Prospects Financial &
Insurance Services. Auchel competes with Sky Vision in the
market for high-wealth life insurance policies and wealth
management solutions for Chinese and Chinese-American
communities. Huang is Auchel’s president and a member of its
board of directors.
On October 16, 2020, Xu filed a complaint against Huang
and Auchel asserting two causes of action: defamation and civil
conspiracy.3 Xu alleges three occasions on which Huang made
defamatory statements about her. On the first occasion, in
March of 2020, Huang met with an insurance agent of Sky Vision
and the agent’s brother.4 The complaint alleged that during the
3As noted by Xu in her opening brief, civil conspiracy is not
a separate tort, but a theory of liability with respect to the
defamation claim. (City of Industry v. City of Fillmore (2011) 198
Cal.App.4th 191, 211.)
4The associated declarations indicate the two people who
met with Huang were Luc Bin Wang and Ke Xiao. Both are
4
meeting, Huang defamed Xu by stating Xu had forged many
documents and could not return to China due to having many
unpaid debts.
On March 16, 2020, Sky Vision sent a cease and desist
letter to Huang, urging her to stop making defamatory
statements about Xu and Sky Vision.
On the second occasion, in August of 2020, Huang made
defamatory statements about Xu to another insurance agent
working with Sky Vision, by stating that Xu does not inform
potential clients about the contents of the insurance policy, but
instead cheats clients by telling them “bullshit” about the policy
benefits.5
On the third occasion, Huang made defamatory statements
to a Sky Vision client, stating Xu’s license had been revoked, that
Xu was a financial criminal in China, and after defrauding people
independent life insurance agents and business partners. (See
Symmonds v. Mahoney (2019) 31 Cal.App.5th 1096, 1104 [in
evaluating an anti-SLAPP motion, we may consider the parties’
pleadings as well as affidavits describing the basis for liability];
Brill Media Co., LLC v. TCW Group, Inc. (2005) 132 Cal.App.4th
324, 331 [noting same in context of commercial speech
exemption], disapproved on another point in Simpson Strong-Tie
Co., Inc. v. Gore (2010) 49 Cal.4th 12, 25, fn. 3 (Simpson).)
5 Xu submitted a declaration from the agent, Justin Lin,
who declares that Huang told him that Xu does not tell potential
clients about the risks associated with the policies she sells, and
that Xu, in fact, physically alters policy illustrations by whiting
out things that she does not want clients to see. Lin understood
Huang’s statements to mean she was accusing Xu of being
unethical in her business dealings with clients.
5
in China had used that money to open Sky Vision in the United
States.6
The complaint alleges that Huang made all of the
aforementioned statements not only to slander or defame Xu, but
to interfere with her economic prospects with agents, clients and
potential clients and to promote the business interests of Auchel
through unlawful means.
Huang and Auchel filed a special motion to strike the
complaint pursuant to section 425.16. While Huang denied
making the defamatory statements, she contended the
statements qualified as protected activity under section 425.16,
subdivision (e)(4), because they served the “public interest” of
6 The associated declaration from client Christina Wang
states that she and her travel business are tenants in the same
building as Auchel, and that the statements were made to her
during multiple visits by an employee of Huang between 2019
and early 2020. The employee stated that Xu was “her boss
[Huang’s] deadly sworn enemy.” After finding all allegations in
the complaint merited anti-SLAPP protection, the trial court
proceeded to evaluate the potential merits of Xu’s action—i.e.,
step two of the anti-SLAPP analysis. At this stage, the trial court
ruled the declaration was inadmissible hearsay—since Wang
learned of Huang’s alleged statements through Auchel’s “agent
and associate.” In determining whether the speech or conduct is
protected at the initial stage, our focus is on the kind of claims
alleged and does not concern “ ‘any evaluation of the merits of
those claims, or even the adequacy of [the] . . . pleadings.’ ”
(JAMS, Inc. v. Superior Court (2016) 1 Cal.App.5th 984, 993
(JAMS); Tuchscher Development Enterprises, Inc. v. San Diego
Unified Port Dist. (2003) 106 Cal.App.4th 1219, 1236
[admissibility and competence of evidence relevant to merits
stage of anti-SLAPP inquiry].)
6
providing “consumer information.” She identified the operative
allegations in the complaint as follows:
• “[Xu] could not return to China because she had many
unpaid debts in China.”
• “[Xu] had forged many documents.”
• “[Xu’s] license was revoked.”
• “[Xu] was a financial criminal in China.”
• “[Xu] defrauded many people in China and used that
money to open Sky Vision in the United States.”
• “[Xu] was afraid to go back to China because she owes so
much money there.”
• “[W]hen [Xu] sells insurance, she does not tell the
potential client what is shown in the policy illustrations
but instead cheats clients by telling them ‘bullshit’ about
the policy benefits.”
Huang asserted that “[d]ue to her expertise, [she] is often
asked to review insurance policies issued by other companies,
and requested to provide her professional opinion on the
protections and risks associated with such insurance policies.”
Huang then argued that all of her “alleged statements regarding
[Xu’s] and Sky Vision’s fraudulent insurance practices, issuance
of sham insurance policies, and financial misconduct in China,
are at the very least, a warning of significant public interest to
the community of businesses and individuals with whom [Xu]
provides insurance and financial services.” Her statements
therefore deserved protection as a matter of public interest
impacting “ ‘a broad segment of society.’ ” Huang further argued
that Xu could not meet her burden of establishing that she would
prevail on merits of her claims. As such, the complaint should be
dismissed in its entirety.
7
On January 19, 2021, Xu opposed the anti-SLAPP motion,
arguing the commercial speech exemption, embodied in section
425.17, applied and wholly precluded anti-SLAPP protection—
even where statements concern a public issue. Xu argued that
Huang’s challenged statements also did not qualify as protected
activity under section 425.16 because they were merely examples
of one business person maligning a competitor to try to win its
business. Xu further claimed she had made a prima facie
showing of merit in that the statements were defamatory in
nature, and not privileged.
On January 25, 2021, in their reply, Huang and Auchel
stated “there is no per se rule that the anti-SLAPP statute does
not protect speech in the business context,” and then proceeded to
reassert their position that the allegations were protected under
the catchall provision of section 425.16.
On March 3, 2021, the trial court granted the special
motion to strike. The court noted that “ ‘[c]ommercial speech that
involves a matter of public interest . . . may be protected by the
anti-SLAPP statute’ ” (quoting L.A. Taxi Cooperative, Inc. v. The
Independent Taxi Owners Assn. of Los Angeles (2015) 239
Cal.App.4th 918, 927) and, without addressing any of the
statutory criteria related to the commercial speech exemption in
section 425.17, proceeded to find the alleged statements protected
under the catchall provision of section 425.16, subdivision (e)(4).7
The court concluded that “Huang’s alleged statements
relating to [Xu’s] business practice (i.e., forging documents,
license being revoked, defrauding people, or failing to inform
7 Huang and Auchel did not contend, and the court did not
find, that Huang’s alleged statements qualified as protected
activity under subdivision (e)(1)-(3) of section 425.16.
8
potential clients what is shown in the policy illustration) provides
important consumer information to the members of the
communities served by [Xu].”
Citing Huang’s declaration, the court noted that Huang has
over 30 years of experience in the insurance field, and “is often
asked by individuals in the Chinese communities to review
insurance policies issued by other companies and is often
requested to provide her professional opinion on the protections
and risks associated with insurance policies.” The court
concluded that “Huang’s alleged statements expose [Xu’s] alleged
insurance fraud, financial misconduct, lack of qualifications and
unethical behavior and directly impacts a large number of people,
including the ‘1,000 affiliated insurance agents[,] . . . clients and
insurance companies’ with whom [Xu] claims she works.”
The court also concluded Xu had not established a
probability of prevailing on the merits of her cause of action
because the statements were privileged communications under
section 47, subdivision (c).8 The court dismissed the complaint
with prejudice.
On March 5, 2021, Xu filed her timely notice of appeal from
the trial court’s order granting the anti-SLAPP motion.
8 The court concluded that the conspiracy claim failed as a
matter of law because one needs to have two persons or entities
to have a conspiracy and a corporation cannot conspire with
itself.
9
DISCUSSION
A. Anti-SLAPP Statute and Relevant Legal Principles
1. Standards of Review
“We review de novo the grant or denial of an anti-SLAPP
motion” and “exercise independent judgment in determining
whether, based on our own review of the record, the challenged
claims arise from protected activity.” (Park v. Board of Trustees
of California State University (2017) 2 Cal.5th 1057, 1067; see
also Neurelis, Inc. v. Aquestive Therapeutics, Inc. (2021) 71
Cal.App.5th 769, 784 (Neurelis).) Similarly, “[w]e review the
applicability of the commercial speech exemption independently.”
(Simpson, supra, 49 Cal.4th at p. 26; see Neurelis, supra, at
p. 786.)
“ ‘In addition to the pleadings, we may consider affidavits
concerning the facts upon which liability is based.’ ” (Symmonds
v. Mahoney, supra, 31 Cal.App.5th at p. 1104), and we accept as
true the evidence favorable to the plaintiffs. (Flatley v. Mauro
(2006) 39 Cal.4th 299, 326.)9
2. Section 425.16: The Anti-SLAPP Statute
“[S]ection 425.16 provides a procedure for the early
dismissal of what are commonly known as SLAPP suits (strategic
lawsuits against public participation)—litigation of a harassing
nature, brought to challenge the exercise of protected free speech
rights. The section is thus informally labeled the anti-SLAPP
9 Although an anti-SLAPP motion need not be directed at a
cause of action in its entirety, but “may be used to attack parts of
a count as pleaded” (Baral v. Schnitt (2016) 1 Cal.5th 376, 393),
Huang and Auchel argued that all statements were equally
protected under section 425.16, subdivision (e)(4), and the trial
court so found.
10
statute . . . .” (Fahlen v. Sutter Central Valley Hospitals (2014) 58
Cal.4th 655, 665, fn. 3.) The Legislature enacted section 425.16
in 1992 “out of concern over ‘a disturbing increase’ in [SLAPP
suits]” and, in so doing, “authorized the filing of a special motion
to strike to expedite the early dismissal of these unmeritorious
claims.” (Simpson, supra, 49 Cal.4th at p. 21.)
Under section 425.16, a special motion to strike involves a
two-step process. First, the defendant must make a prima facie
showing that the plaintiff’s “cause of action . . . aris[es] from” an
act by the defendant “in furtherance of the [defendant’s] right of
petition or free speech . . . in connection with a public issue.”
(§ 425.16, subd. (b)(1).) If the defendant satisfies this threshold
burden, the plaintiff must then demonstrate a reasonable
probability of prevailing on the merits. (Ibid.) If the defendant
fails to meet his or her burden on the first step, the court should
deny the motion and need not address the second step.
(Symmonds v. Mahoney, supra, 31 Cal.App.4th at pp. 1103-1104.)
Section 425.16 requires that courts construe the anti-SLAPP
statute broadly. (§ 425.16, subd. (a); Symmonds, supra, at
p. 1103.)
3. Section 425.17: The Commercial Speech Exemption to
the Anti-SLAPP Statute
“In 2003, concerned about the ‘disturbing abuse’ of the
anti-SLAPP statute, the Legislature enacted section 425.17 to
exempt certain actions from [protection].” (Simpson, supra, 49
Cal.4th at p. 21.) One of two such exemptions10 is commercial
speech, codified in section 425.17, subdivision (c), as follows:
10 The only other exemption in section 425.17 applies to
actions “brought solely in the public interest or on behalf of the
general public.” (§ 425.17, subd. (b).)
11
“Section 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 exist:
“(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, or
the statement or conduct was made in the course of delivering 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, . . .
notwithstanding that the conduct or statement concerns an
important public issue.” (Italics added.)
The purpose of this exemption is straightforward: A
defendant who makes statements about a business competitor’s
goods or services to advance the defendant’s business cannot use
the anti-SLAPP statute against causes of action arising from
those statements. (Simpson, supra, 49 Cal.4th at p. 30; see also
Benton v. Benton (2019) 39 Cal.App.5th 212, 217; JAMS, supra, 1
Cal.App.5th at p. 996.)11
11 As we explained in Demetriades v. Yelp, Inc. (2014) 228
Cal.App.4th 294, “Proponents of the legislation argued that
corporations were improperly using the anti-SLAPP statute to
burden plaintiffs who were pursuing unfair competition or false
advertising claims. The proponents noted that law seminars
were being conducted on the unfair competition law, ‘encouraging
12
“If a complaint satisfies the provisions of the applicable
[section 425.17] exception, it may not be attacked under the anti-
SLAPP statute.” (Club Members for an Honest Election v. Sierra
Club (2008) 45 Cal.4th 309, 316; cf. People ex rel. Strathmann v.
Acacia Research Corp. (2012) 210 Cal.App.4th 487, 498 [whether
a lawsuit falls within a [§] 425.17 exemption is “ ‘a threshold
issue’ ” to be addressed “ ‘prior to examining the applicability of
[§] 425.16’ ” and if the exemption applies, the “special motion to
strike should [be] denied without reaching the merits of the
motion”].) As a statutory exemption, it must be narrowly
construed, and the plaintiffs bear the burden of proving each of
its elements. (Simpson, supra, 49 Cal.4th at pp. 22, 26.)
In enacting section 425.17, the Legislature expressly carved
out a subset of commercial speech that is entirely exempt from
anti-SLAPP protection under section 425.16—“notwithstanding
that the conduct or statement concerns an important public issue.”
(§ 425.17, subd. (c)(2), italics added; see also Club Members for an
Honest Election v. Sierra Club, supra, 45 Cal.4th at p. 316.)12
corporations to use the SLAPP motions as [a] new litigation
weapon to slow down and perhaps even get out of litigation.’ ”
(Id. at p. 309.)
12 In proceeding directly to address whether the speech was
protected under the catchall provision of the anti-SLAPP statute,
the trial court adopted the following quote from L.A. Taxi
Cooperative, Inc. v. The Independent Taxi Owners Assn. of Los
Angeles, supra, 239 Cal.App.4th at p. 927, cited in Huang and
Auchel’s reply: “Commercial Speech that involves a matter of
public interest, however, may be protected by the anti-SLAPP
statute.” That quote, in L.A. Taxi, however, is attributed to and
derived from Consumer Justice Center v. Trimedica International,
Inc. (2003) 107 Cal.App.4th 595, 600-601, a case that preceded
enactment of section 425.17’s commercial speech exemption. (See
13
Further, even if speech does not meet all elements of
section 425.17, the commercial nature of the speech remains a
relevant “contextual cue” in determining whether it merits
protection under the catchall provision of section 425.16,
subdivision (e)(4). (FilmOn.Com Inc. v. DoubleVerify Inc. (2019)
7 Cal.5th 133, 140, 146 (FilmOn).) As such, “the identity of the
speaker, the intended audience, and the purpose of the [speech]”
informs the analysis under both section 425.17 and section
425.16. (FilmOn, supra, at p. 147.)13
L.A. Taxi, supra, at p. 927.) The L.A. Taxi court quoted this
passage solely in reference to the catchall provision of section
425.16, subdivision (e) and found the speech did not qualify for
anti-SLAPP protection. (L.A. Taxi, supra, at pp. 927-928.)
However, the court separately analyzed the commercial speech
exemption contained within section 425.17 and found that
criteria satisfied—thereby removing the claims from anti-SLAPP
protection. (L.A. Taxi, supra, at pp. 930-931.)
13 In FilmOn, the lawsuit arose out of “ ‘false and
disparaging’ ” statements made by defendant DoubleVerify in a
report to its clients about FilmOn’s digital network. (FilmOn,
supra, 7 Cal.5th at p. 142.) The parties agreed that the section
425.17 exemption was inapplicable because DoubleVerify was not
making statements about its own business and DoubleVerify was
not a competitor of FilmOn—as required under section 425.17,
subdivision (c)(1). (FilmOn, supra, at p. 147, fn. 4.) However, the
factors that made the speech commercial in nature, including the
business purpose of the speech and the intended audience,
informed the court’s determination of whether there was the
requisite “ ‘degree of closeness’ ” between the challenged
statements and the asserted public interest to warrant anti-
SLAPP protection under section 425.16. (FilmOn, supra, at
pp. 149-154.)
14
B. Xu Demonstrated the Commercial Speech Exemption
Applies to the Statements Alleged in the Complaint
In Simpson, supra, 49 Cal.4th 12, the Supreme Court
separated the statutory criteria for the commercial speech
exemption into four elements: “(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 for the
statement or conduct meets the definition set forth in section
425.17[, subdivision] (c)(2)”—i.e., 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.
(Id. at p. 30.)
On appeal, Huang argues only against application of the
third element of the four-element test delineated by our high
court in Simpson, contending that Xu failed to establish that the
alleged statements were made for the purpose of securing sales in
Huang’s “insurance products.”14 We therefore turn our attention
14 We note that the other three elements are supported by
the record. Huang is “primarily engaged in the business of
selling . . . services.” (Simpson, supra, 49 Cal.4th at p. 30.) The
statements at issue were “representations of fact about . . . a
business competitor’s business operations, goods, or services.”
(Ibid., italics added; JAMS, supra, 1 Cal.App.5th at pp. 995-996.)
Further, “the intended audience for the statement or conduct”
15
to whether the statements at issue were made for the purpose of
“promoting, or securing sales or leases of, or commercial
transactions in, [Auchel’s] goods or services.” (Simpson, supra,49 Cal.4th at p. 30 [third element].)
Xu argues that Huang made the alleged statements to
insurance agents contracted with Sky Vision “to persuade them
to do business with Auchel (i.e., to persuade them to place
policies through Auchel).” Xu points out the complaint alleges
that Huang made the statements, “in the course and scope of her
employment with[ ] Auchel” in order to “unlawfully compet[e] for
clients and agents.” Xu further notes that insurance agent Justin
Lin declared that Huang’s purpose in meeting with him was to
have him place insurance policies through her agency as an
insurance agent, and expressly told Lin that if he wanted to work
with her and Auchel, he had to terminate his relationship with
Xu and Sky Vision. Agents Luc Bin Wang and Ke Xiao declared
they also understood Huang’s purpose in meeting with them was
“to entice [them] to work with her in selling insurance products,”
and to influence them to cut off their relationship with Xu’s
business.
Huang and Auchel contend that the alleged statements
were not made for the purpose of promoting or selling their goods
or services. We address their specific contentions seriatim.
Huang and Auchel cite two paragraphs from Huang’s
declaration in which she denies making any of the statements
alleged in the complaint and denies attempting to recruit any Sky
(Simpson, supra, at p. 30) was “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.”
(§ 425.17, subd. (c)(2).)
16
Vision agents. Of course, in reviewing the grant or denial of an
anti-SLAPP motion, “we neither ‘weigh credibility [nor] compare
the weight of the evidence’ ” but “ ‘accept as true the evidence
favorable to the plaintiff.’ ” (Soukup v. Law Offices of Herbert
Hafif (2006) 39 Cal.4th 260, 269, fn. 3.) The same holds true in
reviewing whether the commercial speech exemption applies.
(See JAMS, supra, 1 Cal.App.5th at p. 996.)
Huang and Auchel next observe that “allegations that
[Huang and Auchel] attempted to recruit insurance professionals
are not the same as proving [Huang] made a statement to
promote or sell [Huang and Auchel’s] insurance products” and
then cite cases for the principle that the commercial speech
exemption should be narrowly construed.
Although we agree that the exemption should be narrowly
construed, Huang’s specific statements were allegedly false and
intended to increase sales of her services and products. On their
face, these statements satisfy the third element and plain
language of the statute. Further, in Neurelis, supra, 71
Cal.App.5th at pp. 787-790, the Court of Appeal held that the
commercial speech exemption encompassed allegedly false
statements made to investors by a pharmaceutical company
about a rival company’s pipeline drug while both companies were
competing for FDA approval. In so holding, the court emphasized
that the commercial speech exemption is not limited to cases
involving “comparative advertising” claims—an assertion made
by Huang and Auchel in their responding brief.15
15 Quoting from general discussions in Taheri Law Group
v. Evans (2008) 160 Cal.App.4th 482, 492 and JAMS, supra, 1
Cal.App.5th at p. 994, Huang and Auchel state, without
elaboration, that the commercial speech exemption was designed
for “suits arising from ‘comparative advertising’ ” and/or “is
17
Huang and Auchel also seek to support their position with
the holding of Taheri Law Group v. Evans, supra, 160
Cal.App.4th at p. 492, wherein the court concluded the
commercial speech exemption did not apply because, inter alia,
defendants did not engage in any massive advertising campaign.
However, the court’s analysis in Taheri supports, rather than
undermines, Xu’s contention that the commercial speech
exemption applies in this case.
In Taheri, a law firm alleged that another attorney
improperly solicited its client by engaging in communications
about pending litigation and subsequently seeking to enforce a
prior settlement agreement on behalf of the client. (Taheri Law
Group v. Evans, supra, 160 Cal.App.4th at p. 489.) The court
rejected application of the commercial speech exemption only
aimed squarely at false advertising claims.” However, as
observed by the Neurelis court, while many of the reported cases
involving the commercial speech exemption involved false or
misleading “advertising” claims (Neurelis, supra, 71 Cal.App.5th
at p. 788), “[s]ection 425.17, subdivision (c) does not use the word
‘advertising,’ but instead, provides its own explanation regarding
what the commercial speech exception covers.” (Ibid.) Under
section 425.17, subdivision (c)’s statutory criteria, statements
made by a defendant to a customer (or third party likely to repeat
the statements to a customer) about a competitor and its
products or services do not qualify for anti-SLAPP protection.
(§ 425.17, subd. (c); Neurelis, supra, at pp. 787-788 & fn. 5.)
In any event, the statutory criteria, as written, applies to
the type of “comparative advertising,” alleged to have occurred in
this case: A business owner, operating in a highly regulated
services industry accused her competitor of being unscrupulous in
her business dealings with clients, thereby effectively elevating
her own reputation for fair dealing above that of her competitor
in an attempt to win over her clients and/or sales agents.
18
because “construing the commercial speech exemption to
encompass a cause of action arising from advice given by a lawyer
on a pending legal matter would serve to thwart the client’s
fundamental right of access to the courts, and specifically to the
lawyer of his choice.” (Id. at p. 491.)
The situation here does not implicate the qualifications and
constitutional concerns recognized in Taheri as the reason for
protecting statements that otherwise would fall within the literal
criteria of the commercial speech exemption. (See, generally,
JAMS, supra, 1 Cal.App.5th at p. 995 [“What matters for
purposes of the commercial versus noncommercial speech
analysis is whether the speech at issue is about the speaker’s
product or service or about a competitor’s product or service,
whether the speech is intended to induce a commercial
transaction, and whether the intended audience includes an
actual or potential buyer for the goods or services”].)
Contrary to Huang and Auchel’s assertions, “[t]his is not
the type of case for which the anti-SLAPP statute was intended”
and is, instead, “the type of case to be covered by the commercial
speech exception of section 425.17, subdivision (c).” (Neurelis,
supra, 71 Cal.App.5th at pp. 790-791.) The fourth element has
been satisfied. (See, e.g., JAMS, supra, 1 Cal.App.5th at p. 998
[“[T]he statements or conduct from which [the] causes of action
arise is more ‘commercial speech’ than anything else. Whether or
not the statements may be used for other purposes does not
change the analysis”].)
C. The Trial Court Also Erred in Concluding That
Huang’s Statements Are Protected Under the Anti-
SLAPP Statute
Even were we to conclude that the commercial speech
exemption does not categorically remove the statements from the
19
protection of the anti-SLAPP statute, we would nevertheless
reverse the trial court ruling because the allegations in the
complaint do not implicate activity protected under section
425.16.16 Huang and Auchel asserted—and the trial court
accepted—a theory of protected activity in which defendants were
able to “[define] their narrow dispute by its slight reference to the
broader public [interest].” (FilmOn, supra, 7 Cal.5th at p. 152.)
However, as discussed in FilmOn, and as we explain below, such
an attenuated connection is not enough to establish protected
activity.
Section 425.15, subdivision (e)(4) defines protected activity
to include “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.” (§ 425.16, subd. (e)(4).) This inquiry requires a two-
part analysis rooted in the statute’s purpose. (FilmOn, supra, 7
Cal.5th at p. 149.)
The court must first ask what public issue or issue of public
interest the speech in question implicates—a question answered
by looking to the content of the speech. (FilmOn, supra, 7 Cal.5th
at p. 149.) The court must then ask “what functional relationship
exists between the speech and the public conversation about
some matter of public interest”—a question answered by
considering the context of the speech. (Id. at pp. 149-150.)
16 Section 425.16, subdivision (e) defines an act in
furtherance of speech or petition rights to include “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.” (§ 425.16, subd.
(e), italics added.) Subdivision (e)(4), as we have previously
noted, is referred to as the catchall provision.
20
With regard to the “functional relationship” inquiry, the
law does not “sort statements categorically into commercial or
noncommercial baskets in analyzing whether they are covered by
the catchall provision.” (FilmOn, supra, 7 Cal.5th at p. 148.)
Instead, any “contextual cues revealing a statement to be
‘commercial’ in nature—whether it was private or public, to whom
it was said, and for what purpose—can bear on whether it was
made in furtherance of free speech in connection with a public
issue.” (Ibid., italics added.) Conduct “ ‘in furtherance of
business considerations’ ” is less likely to qualify as protected
activity under the catchall provision. (Ibid.)
The decision below suffers from the same infirmities as
those identified in FilmOn, i.e., the failure to adequately consider
the speaker, the audience, and the purpose of the speech. More
specifically, the trial court identified “consumer information” as
the issue of public interest to which all of Huang’s alleged
defamatory statements related, and it found that the information
was important to “members in the communities served by [Xu].”
Yet Huang’s statements were not presented to a broader audience
of general “consumers,” but instead presented to a competitor’s
sales agents and business customer in a private setting. Whereas
the trial court found a public interest served by Huang’s
experience in reviewing insurance policies, the alleged
statements involve no analysis whatsoever of insurance policies
but were instead targeted at the business operations of Xu and
the services she provides, all while attempting to recruit Xu’s
sales agents.
As emphasized in FilmOn, “context matters.” (FilmOn,
supra, 7 Cal.5th at p. 154.) By failing to give due consideration to
“whether [the speech] was private or public, to whom it was said,
and for what purpose” (id. at p. 148), the trial court glossed over
21
such contextual cues to embrace the mistaken proposition that
maligning the honesty and integrity of a competing
businessperson is automatically “protected activity” because
consumers have a general interest in avoiding dishonest
businesspersons. The courts have repeatedly rejected such
tenuous ties to a public issue. (See, e.g., World Financial Group,
Inc. v. HBW Ins. & Financial Services, Inc. (2009) 172
Cal.App.4th 1561, 1572; Mann v. Quality Old Time Service, Inc.
(2004) 120 Cal.App.4th 90, 111, overruled on another point in
Baral v. Schnitt, supra, 1 Cal.5th at p. 396, fn. 11.)17
In concluding Huang’s challenged statements qualified as
protected activity, the trial court cited Yang v. Tenet Healthcare
Inc. (2020) 48 Cal.App.5th 939, where a licensed physician sued a
hospital and its staff members for defamation. The plaintiff
accused the defendants of “falsely stating to ‘healthcare
providers,’ ‘medical practices,’ her ‘patients,’ and ‘members of the
general public’ ” that the plaintiff lacked privileges for certain
17 The trial court also reasoned that Huang’s alleged
statements “impact[ ] a large number of people,” namely, the
other agents and clients with whom “[Xu] claims she works.”
(Italics added.) This is beside the point. As Xu observed, if
“consumer information”—regardless of context—were a sufficient
matter of “public importance,” then it would be difficult to image
any speech about any business practice that would fall outside
the anti-SLAPP statute: “The butcher, the baker, the candlestick
maker would all be fair game, even when the allegations of
tainted meat, stale bread, and cheap wicks are made privately by
a direct competitor to solicit a new sales representative or
customer.” (See Mann v. Quality Old Time Service, Inc., supra,120 Cal.App.4th at p. 111 [“the focus of the anti-SLAPP statute
must be on the specific nature of the speech rather than on
generalities that might be abstracted from it”].)
22
surgical procedures, was not qualified or competent to practice
her specialties, was dangerous to patients and members of the
hospital medical staff, and was currently under investigation for
her conduct. (Id. at p. 943.)
Distinguishing FilmOn, the appellate court concluded that
the statements were protected under section 425.16, subdivision
(e)(4), primarily because hospitals bear primary responsibility for
monitoring the professional conduct of physicians licensed in
California and, through their peer review committees, oversee
matters of public significance. (Yang v. Tenet Healthcare Inc.,
supra, 48 Cal.App.5th at p. 947.)
In contradistinction to Yang, the statements here were
made in private settings and for the purpose of increasing the
sales of the speaker, who was not a neutral or disinterested
“third party” ostensibly seeking “to aid and protect consumers”
(cf. Yang v. Tenet Healthcare Inc., supra, 48 Cal.App.5th at
p. 948), but a direct competitor with a profit motive. Thus, the
“contextual cues” clearly align with FilmOn. (FilmOn, supra, 7
Cal.5th at p. 148.)18
18 Citing Terry v. Davis Community Church (2005) 131
Cal.App.4th 1534, 1549-1550—and the “ongoing controversy” or
“ongoing discussion” principle espoused therein—Huang also
claims that her alleged statements were protected because Xu is
named as a defendant in a pending class action brought by a
third party (the “Li case”) against Pacific Life Insurance
Company. In granting Huang and Auchel’s motion, the trial
court accepted this alternate theory.
Huang, however, cannot benefit from Terry. The Terry
court held statements (in a church investigation report alleging
the plaintiffs had an inappropriate sexual relationship with a
minor church member) protected because they arose out of an
“ongoing discussion” regarding the welfare of children and were
23
Huang and Auchel failed to meet their burden of
establishing that the challenged statements qualify as protected
activity under section 425.16, subdivision (e)(4).19
of interest to the church community. (Terry v. Davis Community
Church, supra, 131 Cal.App.4th at p. 1550.) Huang’s alleged
statements to Sky Vision agents Luc Bin Wang and Ke Xiao were
made in March 2020, months before the Li case was filed on
August 6, 2020, and before Huang, according to her own
declaration, was even aware of any lawsuit. Thus, these alleged
defamatory statements were not made for the “purpose” of
contributing to any public discussion of that issue. (See FilmOn,
supra, 7 Cal.5th at p. 152.) Further, FilmOn emphasized that
“the [Terry] court considered that the speakers were church
leaders attempting to protect children in the church’s youth
groups, as evidenced by the fact that ‘the matter was referred to
the Davis Police Department for investigation.’ ” (FilmOn, supra,
at p. 146, italics added.) Here, all contextual cues support our
conclusion that Huang’s statements were “ ‘in furtherance of
business considerations’ ” and that none of them is worthy of
anti-SLAPP protection. (Id. at p. 148.)
19 In light of our decision, we need not reach the second
step of the section 425.16 analysis—namely, whether there is a
probability of success on the merits. (See People ex rel.
Strathmann v. Acacia Research Corp., supra, 210 Cal.App.4th at
p. 498 [where § 425.17 exemption applies, a special motion to
strike is denied without reaching the merits of the motion]; see
also Baral v. Schnitt, supra, 1 Cal.5th at p. 385 [second step
reached only if the defendant makes the required showing as to
protected activity].)
24
DISPOSITION
The order granting the anti-SLAPP motion is reversed. Xu
shall recover her costs on appeal.
NOT TO BE PUBLISHED
CRANDALL, J.*
We concur:
ROTHSCHILD, P. J.
BENDIX, J.
*Judge of the San Luis Obispo County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.
25