Court Grants Law Firms Wide Berth In Celebratory Press Releases

By: Carl I. S. Mueller of The Maloney Firm, APC
 

In J-M Manufacturing Company, Inc. v. Phillips & Cohen LLP, the California Appellate Court considered whether a defamation and trade libel claim based on a law firm’s celebratory press release fell within Code of Civil Procedure § 425.16. In its decision filed on May 2, 2016, the Court of Appeal reversed the trial court’s decision that “it was a question of fact for the jury whether the press release was privileged as a fair and true report of judicial proceedings” within Civil Code § 47, and granted the law firm’s Anti-SLAPP motion striking the defamation and trade libel allegations.
 
The press release at issue arose from a jury decision as to liability in a bifurcated trial finding against J-M Manufacturing Company, Inc. (“J-M”), as follows:
 

On November 14, 2013 the jury returned a special verdict in favor of each of the five representative plaintiffs, finding that J-M did “present or caused to be presented to a [government] officer or employee a claim for payment or approval that was false or fraudulent,” that the claim was materially false and that J-M presented the false claim with the requisite intent.

 
However, no decision was made as to damages. Like many law firms, the law firm trying the case against J-M, Phillips & Cohen LLP (“Phillips & Cohen”), issued a press release announcing the winning verdict on the liability stage, with the following headline:
 

JM Eagle faces billions in damages after jury finds JM liable for making and selling faulty water pipes.

 
Phillips & Cohen also included within its press release that the jury found that J-M “knowingly manufactured and sold to government entities substandard plastic pipe,” despite the jury making no express findings as to these allegations.
 
In response to the press release, J-M filed a lawsuit against Phillips & Cohen that alleged defamation and trade libel:
 

[S]tatements in Phillip & Cohen’s press release that “a federal jury unanimously found that J-M manufactured and sold pipe that is ‘faulty,’ ‘substandard,’ ‘weak,’ and ‘shoddy’” were “neither a fair nor an accurate report of the proceedings” and grossly misrepresented the jury’s findings.

 
Applying Civil Code § 47, the Court of Appeal was tasked to determine whether a privilege existed for Phillip & Cohen’s statements as a “fair and true” report of official proceedings. Although the trial court had found that adequate evidence had been presented in opposition to Phillip & Cohen’s Anti-SLAPP motion to allow this issue to be decided by a jury, the Court of Appeal found:
 

[I]n measuring “a ‘fair and true report’” the defendant is “permit[ted] a certain degree of flexibility/literary license,” [Citing Reader’s Digest Assn. v. Superior Court (1984) 37 Cal.3d 244, 262, footnote 13.]

 
Further the Appellate Court ruled that any challenged statements must be read in light of the entirety of the allegedly defamatory publication:
 

[T]he challenged language must be viewed in context to determine whether, applying a “totality of the circumstances” test, it is reasonably susceptible to the defamatory meaning alleged by the plaintiff.

 
In its opposition to the Anti-SLAPP motion, J-M conceded its allegation arose out of protected activity, but still contested, and the trial court agreed, that there was enough evidence to show a likelihood of prevailing on its claim. But the Appellate Court held in its decision to reverse:
 

To describe the noncompliant and misrepresented pipe sold by J-M as “faulty” or “substandard” falls well within the acceptable margin of flexibility/literary license.

 
Further, as to the misleading headline, the Appellate Court determined that any misunderstanding would be cured after “the headline is read and considered with the press release as a whole.”
 
As such, the Appellate Court has apparently opened the door for law firms to issue flashy press releases – even if it rises to “self promotion or puffery” – provided that the bravado of those headlines are properly explained within the body of the press release.
 

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