Anti-Slapp Law Does Not Protect Solicitation of Employees and Customers

July 2009Newsletters California Update - Third Quarter 2009

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A California Court of Appeal recently held that the California anti-SLAPP statute does not protect defendants accused of soliciting a competitor’s employees and customers. Generally, the anti-SLAPP statute (Strategic Lawsuit Against Public Participation) allows a defendant to move to strike a lawsuit that arises from conduct “in furtherance of the person’s rights of petition or free speech under the United States or California Constitution in connection with a public issue.”

World Financial Group (WFG), sued a competitor for allegedly using WFG’s confidential information and trade secrets to solicit WFG’s customers and recruit its employees. The competitor allegedly held a conference call with currentWFG associates during which it asked the associates to come work for it. The competitor also allegedly sent a flyer to WFG associates comparing the two companies, and forwarded WFG associates a PowerPoint presentation containing information about WFG’s commission structure and other information designed to persuade the associates to join the competitor. WFG also accused the former employees of disclosing confidential information and trade secrets in violation of company policy.

The defendants filed a motion to strike the complaint under California’s anti- SLAPP statute, arguing that their conduct constituted protected speech because it involved subjects of public interest and protected public policy—namely,“the pursuit of lawful employment” and “workforce mobility and free competition.” The court, however, determined that the defendants’ communication was unprotected speech because it was motivated solely by the competitor’s desire to increase its sales ranks, and simply part of a competitor’s pitch to plaintiff ’s associates. The communications were neither “about” the public policies implicated, nor designed to inform the public of an issue of public interest. To hold otherwise, the court noted, would make every case alleging breach of a non-competition agreement or misappropriation of trade secrets subject to the anti-SLAPP statute.

This decision cautions against use of an anti-SLAPP motion to defend against unfair competition claims. That the communications at issue may implicate a topic of public interest is not enough. Rather, to successfully defend a claim under the anti-SLAPP statute, a defendant’s speech must actually be about issues of public interest or designed to encourage participation in matters of public significance. The case is World Financial Group, Inc. v. HBW Insurance & Financial Services, Inc. (2009) 172 Cal.App.4th 1561.