The Court of Appeal of the State of California Fourth Appellate District has reversed the Trial Court’s decision of granting an anti-SLAPP motion based on the Commercial Speech Exemption in BioCorRx, Inc. v. VDM Biochemicals, Inc., Case No. G061535. It held that representations or statements made by a company or person for promoting goods and services via the sale of securities to investors did not fall under the scope of the anti-SLAPP statute California Code of Civil Procedure § 425.16. The decision was a significant setback for the defendant.
The anti-SLAPP (Strategic Lawsuit Against Public Participation) laws were enacted to protect the rights of individuals and groups to the freedom of speech and petition by enabling a court to dismiss lawsuits that are deemed to be censorious or intimidating. These include lawsuits that are intended to curb free speech or public participation through the imposition of the litigation cost on these activities. The anti-SLAPP statute at issue, California’s Code of Civil Procedure § 425.16, safeguards individuals and organizations from legal actions that inhibit the constitutional rights of the petition and free speech.
The argument here was whether the statements made by a company while promoting its goods and services through the sale of its securities to investors qualify as free speech protected under this statute. In reversing the decision, the Court of Appeal ruled that such statements do not fall within the purview of the foregoing statute. Thus, such commercial speech could give rise to legitimate legal action if it purportedly causes harm, and cannot be summarily dismissed under the anti-SLAPP provisions.
It is crucial for businesses, particularly public entities and organizations engaged in securities offerings, to heed the implications of this ruling, as this impacts how they represent themselves while promoting goods and services for raising capital through securities sale. While free speech rights are critical, it is equally important to ensure that such rights are not misused to the detriment of other parties.
For more specific details, the complete decision on this case can be accessed here.