ESG statements are commercial speech excluded from California's anti-SLAPP law

Hicks v. Grimmway Enters., Inc., 2023 WL 3829689, No. 22-CV-2038 JLS (DDL) (S.D. Cal. Jun. 5, 2023)

Hicks alleged that defendant, a California agricultural corporation, misrepresented the environmental impact of its farming practices through its advertising and “Inaugural Report on Environmental, Social and Governance Actions.” She alleged that its statements about “regenerative farming”; its ESG commitments; and “preserving natural resources” were “false, deceptive, and misleading.” She brought the usual California statutory claims.

Defendant brought a motion to strike under the anti-SLAPP law. The anti-SLAPP law does not apply to 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 is an actual or potential buyer or customer, or a person likely to repeat the statement to, or otherwise influence, an actual or potential buyer or customer.

The court found that the commercial speech exception applied to the ESG report. It was undisputed that (1) was satisfied; the ESG report also contains several representations of fact about the defendant’s business operations and goods, boasting of “Environmental Stewardship,” “Leadership in Organics,” low-emission farm equipment, “Responsible Farming Practices,” and “Quality Assurance and Food Safety,” among other aspects of its business operations and goods. One section of the ESG Report is “pointedly” titled “Operations” and describes efforts to “increase productivity, food safety and quality, and accountability.”

Moreover, the ESG report was created, at least in part, to promote the defendant’s goods or services. It “repeatedly spotlights the safety and quality of Defendant’s goods. ‘Consumers can buy our products with confidence that they meet the industry’s most rigorous safety standards,’ reads the ESG Report.” Although “significant sections of the ESG Report discuss topics not strictly tied to Defendant’s goods and services,” such as “Employee Health and Wellness,” “Diversity, Equity, and Inclusion,” and various philanthropic initiatives, the “overall message” was that the defendant was an ethically responsible grower and seller of high-quality food products. “As such, the ESG Report promotes Defendant’s products and its brand more generally.”

“Finally, the ESG Report’s audience consists of actual and potential customers, as well as organizations likely to influence potential customers.” Although the defendant argued that the report was directed to “internal and external stakeholders like employees, policymakers, and advocacy groups,”  the report itself defined the term “stakeholders” as including those groups and also “Consumers” and “Customers.” The ESG Report was distributed to “Chambers of Commerce,” “various trade associations,” and “the media,” “all of which are likely to influence potential customers.” It was also published on the defendant’s website, where direct customers and end-consumers could access it. Although defendant’s VP for External Affairs & Corporate Responsibility stated that the report was only published online so that the defendant could be eligible for a global corporate governance award and “was not put online for any sales-related purpose and was not directed to end-consumers,” the plaintiff submitted evidence that links to the ESG Report were widely circulated on the defendant’s social media accounts. Whatever the initial motivation, “the subsequent promotion of the ESG Report to Defendant’s social media followers supports the conclusion that the ESG Report was used to target Defendant’s actual and potential customers.”

It did not matter whether the challenged statements were made specifically for the purpose of promoting defendant’s sales. The communication as a whole was the key.