political speech isn't covered by Lanham Act but is protected by Cal anti-SLAPP law

Mosafer Inc. v. Broidy, 2022 WL 793029, No. 2:21-cv-06320-MCS-JC (C.D. Cal. Feb. 4, 2022)

Mosafer, a travel business that “aligns its branding with the State of Qatar,” sued several defendants for making public statements allegedly disparaging the State of Qatar and harming the Mosafer parties’ brand, which is closely aligned with the country. They alleged violation of California’s FAL and UCL, false advertising under the Lanham Act, trade libel, and negligence. The Broidy parties counterclaimed against Mosafer, Qatar, and other parties for filing the complaint with the improper purpose to silence them from criticizing Qatar, alleging violation of Virginia’s business conspiracy statute, abuse of process, and violation of RICO. They also asserted several other claims against Qatar alone for engaging in a “hack-and-smear campaign” against Broidy, including CFAA, DMCA, and DTSA claims.

The court first found the California anti-SLAPP statute applicable to the state claims. “[M]aking statements using print media, the Internet, and social media that Qatar is a safe haven for terrorists and extremists, commits human rights abuses, and should be boycotted” were all political opinions on issues of public interest. The court rejected Mosafer’s argument that the speech was unprotected because the activities of which they complain were illegal under the Foreign Agents Registration Act (FARA).

True, the anti-SLAPP statute “cannot be invoked by a defendant whose assertedly protected activity is illegal as a matter of law and, for that reason, not protected by constitutional guarantees of free speech and petition.” However, “unless the conduct conclusively is shown or admitted to be illegal, a defendant can still invoke the anti-SLAPP statute.” There was neither a concession nor “uncontroverted and conclusive evidence” that the movants actually violated FARA.

The state-law claims then failed. First, they were untimely. “Under California law, the statute of limitations begins to run as soon as the plaintiff knew or should have known it sustained any significant injury, even if the plaintiff is not at the time aware of the facts necessary to establish the claim or the legal theory that would support it.” The complaint was filed mid-2021, and the injuries allegedly began in mid-2017, which was outside the statute of limitations for everything but the UCL. Although defendants allegedly intentionally concealed their identities and the purported disinformation conspiracy, Mosafer was still aware of its injuries. “Facts later discovered concerning the source of the injury or the identity of the defendants have minimal bearing on the accrual of the claims.” Anyway, Mosafer pled that various news sources, including the New York Times and the Associated Press, reported about Broidy’s alleged unregistered foreign lobbying efforts in March and April 2018. “These publications in internationally recognized news sources gave the Mosafer Parties constructive notice of alleged wrongdoing on which they predicate their claims.” Even if the continuing violation and continuing accrual doctrines applied, Mosafer pled no facts about any remaining defendant’s wrongful acts after October 2017, so it was still too late.

UCL-fraudulent/FAL: Statutory standing requires “lost money or property as a result of” the false or fraudulent statements or conduct at issue. The majority view [among federal courts; I bet the Cal. SCt eventually disagrees as to competitors] is that plaintiffs have to allege their own reliance, not their customers’, so Mosafer lacked statutory standing. The minority view is specific to competitor suits, and Mosafer didn’t allege competition with any of the defendants.

Also, the UCL-fraudulent, FAL, and Lanham Act claims had to be dismissed [the last not on anti-SLAPP grounds, of course] because  they were “predicated on noncommercial activities by the defendants. Claims under these statutes can reach only commercial speech.” The statements were political speech. “The only identified activities even tangentially related to commerce are statements advocating a ‘boycott’ of an entire country. Even so, none of these activities pertain to the Mosafer Parties, their business, their products or services, or their competitors. There is no close question here; the activities are clearly not commercial because there is no proposed commercial transaction.”

Trade libel: None of the alleged speech

specifically mentions or pertains to the Mosafer Parties, let alone disparages their products, their business, or their alignment with Qatar.… If the law afforded a remedy to any private company that aligned its brand with a country any time a publication disparaged the country, Victorinox (maker of Swiss Army knives), IKEA (purveyor of Swedish furniture), and Volkswagen (manufacturer of German-engineered cars) would have happy shareholders and overworked litigation attorneys.

Negligence: The alleged duty arose from FARA, but FARA doesn’t provide a private cause of action and can’t be used as the basis of a negligence claim.

UCL-unlawful: Failed because it required a violation of some other law; there was none.

Counterclaims: Qatar was a sovereign and immune from the counterclaims; the initial complaint didn’t constitute “an action brought by a foreign state,” the allegedly relevant exception under the Foreign Sovereign Immunities Act. The Mosafer parties were US citizens, not agencies or instrumentalities of Qatar, nor were they plausibly agents or alter egos of Qatar under common law principles.

As to the other parties, the anti-SLAPP statute applied to the claims against them. Did the foreign counterclaim-defendants have constitutional rights of petition or free speech protectable by the anti-SLAPP statute? Yes, because the filing of the complaint occurred within the US, and “[t]he First Amendment ... protects the speech of non-citizens as well as speech abroad.”

The counterclaims lacked merit, given the litigation privilege, and the court would reach the same result under FRCP 12(b)(6) if the anti-SLAPP statute didn’t extend to foreign defendants. Also, the Virginia business conspiracy claim failed because California law applied under standard choice of law principles, and RICO claims failed because they were RICO claims. (OK, because filing the complaint wasn’t tortious/unlawful, and can’t be a predicate act regardless—the cases hold that “[a]busive or sham litigation does not constitute a RICO predicate act”—and the second alleged predicate act, publishing a press release, wasn’t wire fraud or other racketeering activity. But isn’t it simpler to say that the claims failed because they were RICO claims?)

The parties now have to move for attorneys’ fees and, one assumes, pay each other’s attorneys.