Budget is a “relocation services broker”—moving companies do
the moves, and Budget arranges for them to do it. The BBB is a nonprofit that provides
information to consumers. Its Reliability
Report for a given company includes a record of consumer complaints made to the
company and the company’s responses, any governmental action against the
company, any licensing or advertising issues that the BBB has learned about the
company, and a BBB Rating, generally “A+” to “F,” “reflecting the extent to
which the company is in compliance with the BBB’s standards for operating in a
trustworthy manner and making good faith efforts to resolve consumer complaints
or concerns filed with the BBB.”
Budget sued for trade libel, libel per se, and a violation
of California’s UCL. It alleged that the
BBB damaged it by stating that Budget was “not in compliance with the law’s
licensing or registration requirements,” Budget’s advertising was “grossly
misleading,” and Budget deserved a grade of “F.” These statements were false
and defamatory, Budget alleged, because it was a broker and not a moving
company; it was in compliance with all laws and regulations; and its ads
weren’t misleading.
The BBB filed a special motion to strike, but Budget argued
that it had a reasonable probability of prevailing on the merits. The Reliability Reports at issue prominently
displayed “BBB Rating F” next to the title “Rating Explanation,” which stated:
Company Rating F
Our opinion of what this rating
means:
We strongly question the company’s
reliability for reasons such as that they have failed to respond to complaints,
their advertising is grossly misleading, they are not in compliance with the
law’s licensing or registration requirements, their complaints contain
especially serious allegations, or the company’s industry is known for its
fraudulent business practices.
Another version stated, “Factors that lowered this
business’s rating include: Failure to have a required competency license.” The Report also stated, “This company’s
business is providing moving and storage services.” Under the heading
“Licensing,” the entries labeled “Agency,” “License Number” and “Status” were
blank. The report advised consumers that
the most up-to-date information on license status would come from two
government agencies that license or register moving companies.
In the “Complaint Experience” section, the Reliability
Report stated: “Bureau Summary and Analysis of customer complaints and company
responses: Complaints allege failure to honor moving quotes, failure to notify
customers that their move will be subcontracted out to another carrier, damage
and loss claims, delivery issues and failure to assist in resolving disputes.
The company generally responds to complaints by referring customers to ...,” A list of the number of complaints “over the
last 36 months” totaled 128.
The trial court denied the special motion to strike. The
court also found that Budget was not a public figure and that the Reliability
Reports on the BBB’s website were commercial speech. (The court of appeal found that the BBB did
not successfully appeal the commercial speech determination.)
The court of appeals affirmed. Though Budget conceded that
the BBB’s acts were in furtherance of its right of free speech, Budget showed a
probability of prevailing. This isn’t a
likelihood of success on the merits—instead the plaintiff must state and
substantiate a legally sufficient claim, more like showing a material issue of
fact. Courts deciding anti-SLAPP motions
consider the pleadings and supporting and opposing affidavits, but they don’t
weigh credibility or compare the weight of the evidence. The question is whether the defendant should
win as a matter of law; a plaintiff’s minimal showing on the merits is enough. Once a plaintiff shows a probability of
prevailing on any part of its claim, the entire cause of action stays.
Libel/defamation must be assessed in context, as it could
have been understood by the average reader in the target context. An ambiguous statement must be assessed for
whether it’s reasonably susceptible to a defamatory interpretation. The claims here were for libel per se, which
doesn’t require proof of special damages.
Libel per se is defamatory language that on its face has a natural tendency
to injure reputation—here accusations of dishonesty or questionable business
methods.
The court first evaluated the alleged statement that Budget
wasn’t in compliance with licensing or registration requirements. The BBB argued that its statement was part of
the explanation of the kinds of things
that can earn a business an F rating—part of a list of illustrative examples,
prefaced with “such as, “and using “or” before the last example. But defamatory meaning is judged by the
natural and probable effect on the intended audience, in context. The court agreed that the average consumer
could easily overlook the words “such as” and “or” “and focus instead on (1) the
statements about noncompliance with licensing laws and (2) “grossly misleading
advertising,” with the understanding that each statement applied to Budget and
supported Budget’s ‘F’ rating.” Plus,
the Reliability Report stated or strongly implied that Budget wasn’t licensed,
with the statement in “Rating Reasons” that the “[f]actors that lowered this
business’s rating include: [¶] Failure to have a required competency
license....” And there were blank spaces under the “Licensing” heading, and the
BBB directed consumers to agencies that wouldn’t have a record for Budget on
file, since it wasn’t a moving agency but rather a broker.
The BBB’s statement “Advertising Review: No questions about
the truth of this company’s advertising [have] come to our attention,” didn’t
prevent liability on the “grossly misleading” statement. The average reader could reasonably be
expected to focus on the F rating and explanation, which appeared prominently
at the top of the web page and which included the “grossly misleading”
advertising statement. Whether the
“Advertising Review” statement neutralized the defamatory meaning of the
earlier statement was for the trier of fact.
In some contexts, “grossly misleading” might be privileged
opinion rather than falsifiable factual statement. But “[t]he actual or imputed expertise of the
defendant regarding the subject matter of a statement may reasonably lead the
target audience to understand or believe that the statement is a factual
one.” So here, given that the BBB “holds
itself out as an expert on the professionalism and trustworthiness of
businesses.” Among its other claims, its
website says that the “BBB is the resource to turn to for objective, unbiased
information on businesses. Our network of national and local BBB operations
allows us to monitor and take action on thousands of business issues affecting
consumers at any given time. BBB is your key advisor, most reliable evaluator
and most objective expert on the topic of trust in the marketplace.” Because of the BBB’s “self-proclaimed
expertise in evaluating companies and the claims in their advertising, a consumer
reading a statement by the BBB that Budget’s advertising was ‘grossly
misleading’ can reasonably be expected to interpret the statement as factual.”
Budget also provided evidence of falsity: a declaration
explaining that Budget is a broker subject to different laws and regulations,
and evidence that it was in compliance with licensing requirements for brokers.
The BBB argued that Budget was a limited public figure and
that it hadn’t shown actual malice. But
the BBB didn’t meet its burden of showing that Budget was a limited public
figure, and Budget’s extensive advertising campaign didn’t in itself make
Budget a limited public figure.
Whether the “F” rating was defamatory was a closer
question. Cases evaluating grading and
rating systems have generally concluded that they’re nonactionable opinions,
including cases about the BBB itself. Castle Rock Remodeling, LLC v. Better
Business Bureau of Greater St. Louis, Inc., 354 S.W.3d 234 (Mo. App. 2011) (the
“BBB’s ‘C’ rating of [the plaintiff] is not sufficiently factual to be
susceptible of being proved true or false,” and “[a]lthough one may disagree
with BBB’s evaluation of the underlying objective facts, the rating itself
cannot be proved true or false”); Better Business Bureau of Metropolitan
Houston, Inc. v. John Moore Services, Inc. ___ S.W.3d ___ 2013 WL 3716693 (Tex.
Ct. App. July 16, 2013) (“the ‘F’ rating itself cannot be defamatory because it
is the Bureau’s self-described ‘opinion’ of the quality of [the plaintiff’s]
services, which lacks a high degree of verifiability”). But that didn’t matter because Budget showed
a probability of prevailing on part of its cause of action for libel, so the
whole cause of action survived.
Likewise, the UCL claim survived because the UCL incorporates violations
of other laws, here libel.
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