Metropolitan News-Enterprise


Thursday, June 30, 2016


Page 1


C.A. Rejects Libel Suit Against Lawmaker as SLAPP




A lawsuit by a losing Assembly candidate, accusing the man who beat him of running a libelous campaign ad, was correctly thrown out under the anti-SLAPP statute, the Third District Court of Appeal has ruled.

James E. Reed, a Democrat who lost the 2014 Third Assembly District contest to James Gallagher, failed to demonstrate provable falsehood in Gallagher’s characterization of him as an “unscrupulous lawyer,” the court ruled. Nor did he show that Gallagher’s campaign acted with actual malice in running the ad on television and online, Justice Jonathan Renner wrote for the court.

Renner’s June 1 opinion was certified yesterday for publication.

Reed lost the general election to Gallagher, a Sutter County supervisor prior to his election to the Legislature, by about 63 to 37 percent. Both are on the ballot again this year, but for different offices—Gallagher is seeking reelection, while Reed finished second in a field of seven in the primary and faces Republican incumbent Doug La Malfa for the First District congressional seat.

Reed, who practices in Fall River Mills in Shasta County, appealed after Butte Superior Court Judge Michael Candela granted Gallagher’s motion to strike the complaint under Code of Civil Procedure §425.16. The judge ruled that the complaint arose from protected activity, and that Reed did not show that he was likely to prevail.

Disgruntled Client

The Gallagher campaign based the ad on a suit filed against Reed by a former client, Bonnie Hinckley, for whom Reed was co-counsel in a dispute over her husband’s estate. Hinckley claimed that Reed, her other lawyer, and their respective firms violated the State Bar Act provision setting forth requirements for contingency fee agreements and engaged in elder financial abuse.

The trial court granted Hinckley a summary adjudication of her claim for rescission of the contingency agreement. The parties subsequently entered into a confidential settlement of the fee dispute.

Gallagher’s 30-second ad about the case said that “legal records show that Reed is an unscrupulous lawyer” who had “been ordered to pay back fees he improperly collected from an elderly client” and cited a newspaper article quoting Hinckley, who called Reed “a crook” who took advantage of “a naïve widow” whom he “raked…over the coals.”

Reed, in his suit against Gallagher, claimed the ad was libelous because it falsely implied that Reed had been found to have engaged in wrongdoing and ordered to return money to Hinckley, and that the use of the newspaper article falsely suggested he was accused of a crime.

Candela, in granting the anti-SLAPP motion, said that Gallagher had shown that the action arose from free-speech activity and that Reed “failed to demonstrate a probability of prevailing on his claim.”

Renner, writing for the Court of Appeal, agreed.

Flatley Exception

He rejected Reed’s contention that the “illegality” exception explained in Flatley v. Mauro (2006) 39 Cal.4th 299 applies. The case held that anti-SLAPP protection did not extend to a lawyer’s extortionate attempt to collect a settlement from a wealthy public figure by threatening to make public an allegation by the lawyer’s client that she was raped by the target.

Reed had cited Penal Code §115.2, which makes it a crime to willfully and maliciously misrepresent the content of public records in a political ad. But Renner said there was no evidence of malice or intent to deceive.

The justice went on to say that Reed could not prove that anything said in the ad was false.

“[W]e conclude that the characterization of Reed as ‘unscrupulous’ is a subjective judgment, rather than a provably false statement of fact….We further conclude that the average viewer, considering the ad in context, would have understood the word ‘unscrupulous’ to reflect Gallagher’s opinion or interpretation of what legal records from the Hinckley litigation show, rather than a precise rendering of any particular legal record.”

The case is Reed v. Gallagher, 16 S.O.S. 3203.


Copyright 2016, Metropolitan News Company