Rebecca Tushnet

JAMS, Inc. v. Superior Court of San Diego County, No. D069862,
— Cal. Rptr. 3d —-, 2016 WL 4014068 (Cal. Ct. App. Jul. 27, 2016)

Kevin Kinsella sued JAMS, an ADR provider, and the Honorable
Sheila Prell Sonenshine (Retired), alleging that he relied on
misrepresentations and omissions on the JAMS website about Sonenshine’s background
in stipulating to hiring her to resolve divorce issues.  Defendants filed an anti-SLAPP motion to
strike, and the trial court found the action exempt from the anti-SLAPP
procedure because it involved commercial speech.  The court of appeals functionally affirmed
(procedural details omitted).

JAMS allegedly promotes the hiring of neutrals for ADR,
collecting a fee for its services. JAMS provides biographies of its neutrals on
its Web site and represents its family law neutrals are “ ‘trusted’ experts.”
According to the complaint, the JAMS Web site stated “ ‘[JAMS ensures] the
highest ethical standards’ and ‘[e]verything we do and say will reflect the
highest ethical and moral standards. We are dedicated to neutrality, integrity,
honesty, accountability, and mutual respect in all our interactions.’”  Kinsella alleged that he agreed to hire
Sonenshine to resolve his over-eight-figure divorce which included assets from
venture capital partnerships he managed. 
He alleged that he carefully reviewed the JAMS website, and agreed to
Sonenshine because of her alleged business experience enabling her to
understand his separate property holdings and private venture capital funds.

However, after Sonenshine began conducting hearings,
Kinsella alleged he “became alarmed by what he saw and doubted that she
possessed the business accomplishments her resume led him to believe she
possessed.” He began to look into her background and discovered information
causing him to question her integrity. 
JAMS allegedly touted Sonenshine’s business success surrounding the
co-founding and management of two companies when “the history of those two
ventures is full of adverse and unfavorable accusations” against Sonenshine and
her son in a class action lawsuit for fraud, and JAMS stated that she founded
an equity fund when “the equity fund existed in name only as it never raised
any equity capital and was, therefore, never funded” and never operated “as a
functioning investment entity.”

Kinsella sued for violations of the CLRA, fraud, negligent
misrepresentation, and state-law false advertising.  Defendants argued that the statements on the
JAMS Web site and in Sonenshine’s online biography weren’t within the
commercial speech exemption to the anti-SLAPP law because (1) the exemption
applies to “ ‘representations of fact’ “ not to omissions or nonfactual
representations such as puffery, and (2) Sonenshine’s biography was not purely
commercial speech because it was also used for noncommercial purposes such as
for litigants to evaluate potential conflicts of interest or for dissemination
to bar groups for noncommercial events.

The commercial speech exemption was added to curb abuse of
the anti-SLAPP statute.  It exempts
actions arising from commercial speech 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 for the statement or conduct was a
commercial audience.  This exception is
to be narrowly construed.

The court of appeals held that the commercial speech
exemption covered more than “positive assertions of facts.”  Likely success on the merits was not an
element of whether the exemption applied. 
Rather, the legislative history showed an exemption aimed squarely at
exempting false advertising claims.  The
exemption was designed to track Nike v.
Kasky, focusing on the speaker (someone who’s selling stuff), the content
of the message (representations of fact meant to induce sales), and the
intended audience (actual or potential buyers). 
However, Kasky and the
legislative history didn’t require affirmative or positive representations, as
opposed to omissions or half-truths.  Kasky specifically noted that unfair
competition law and false advertising law “prohibit ‘not only advertising which
is false, but also advertising which[,] although true, is either actually
misleading or which has a capacity, likelihood or tendency to deceive or
confuse the public.’”

Statements on the JAMS website about Sonenshine’s background
and qualifications to provide ADR services as well as general statements about
how JAMS conducts its business in providing ADR services were thus commercial
speech. The representations in her biography were factual; their truth or  misleadingness was a matter for the merits,
not for the exemption. Statements that JAMS ensured “ ‘the highest ethical
standards,’” that “ ‘[e]verything we do and say will reflect the highest ethical
and moral standards’” and that JAMS is “ ‘dedicated to neutrality, integrity,
honesty, accountability, and mutual respect in all our interactions’” were also
representations of fact “for purposes of analyzing the commercial nature of the
speech.”  They were “specific statements
representing how JAMS conducts its operations,” and were “certainly intended to
be relied upon by customers of its services, otherwise they would serve no
legitimate purpose.” The court noted that violation of these standards could
lead to bar discipline for lawyers. 
Further, posting Sonenshine’s biography in conjunction with these
statements “may have implicitly represented JAMS adopted her representations
about her credentials and ratified them as reflecting ‘integrity, honesty,
[and] accountability.’”  But the court of
appeals didn’t finally reach the issue of whether these statements were true,
false, or otherwise nonactionable.  The
court distinguished cases involving mere promises of future action.

Defendants also argued that the website statements might be
used for multiple purposes, such as to comply with Sonenshine’s judicial duty
of disclosure, and that the causes of action arise from postretention conduct,
not commercial speech. The court of appeals rejected these arguments; first,
all the website statements Kinsella challenged were there in order to be viewed
by actual or potential ADR buyers or customers, or attorneys representing
actual or potential buyers or customers of ADR services. Kinsella used them for
that purpose. “Therefore, the statements or conduct from which Kinsella’s 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.”

References to Sonenshine’s postretention statements in the
complaint also didn’t defeat the commercial speech exemption.  Those allegations were about how Kinsella
found out there were problems, not about the speech that allegedly misled him
to his detriment.  If he did allege
claims based on noncommercial speech, that could be taken care of later.