Metropolitan News-Enterprise


Thursday, July 28, 2016


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Court of Appeal Allows Misrepresentation Suit Against JAMS




A venture capitalist’s suit against JAMS and the retired Court of Appeal justice who served as private judge in his divorce case can proceed under the commercial speech exception to the anti-SLAPP statute, the Fourth District Court of Appeal ruled yesterday.

Div. One denied the mandate petition brought by JAMS and retired Justice Sheila Prell Sonenshine, seeking to quash Kevin Kinsella’s action.

Kinsella claims that he agreed to allow Sonenshine to hear his now-settled divorce case, involving what he said were assets “valued somewhere north of eight figures,” because it appeared from the biography posted on the JAMS website that she possessed “honesty and integrity” and had a successful business background.

In fact, he alleged in his complaint, the biography “omitted key information,” including that her supposedly successful business ventures EquiCo and RSM EquiCo resulted in “adverse and unfavorable accusations” in a class action suit for fraud. He also alleged that the equity fund she founded “existed in name only as it never raised any equity capital and was, therefore, never funded” and never functioned.

Sonenshine was a Court of Appeal justice from 1982 to 1999. Now 71, she was 37 at the time of her appointment, and it is believed she was the youngest person ever appointed to the Court of Appeal.

She had previously served 18 months on the Orange Superior Court.

Anti-SLAPP Arguments

In their anti-SLAPP motion, the defendants argued that the complaint arose from protected speech, and that they were likely to prevail because the allegedly omitted facts were not required to be disclosed and because, in any event, the litigation privilege and/or judicial immunity applied.

But in ruling that Kinsella’s action was not amenable to the motion, San Diego Superior Court Judge John S. Meyer said the commercial speech exemption of Code of Civil Procedure §425.17 applies because:

“JAMS and Sonenshine are engaged in the business of selling ADR services, including private judging services, to the public. The alleged statements that form the basis of [Kinsella’s] claims were posted on the JAMS[] [Web site] for the purpose of promoting and securing sales or commercial transactions in defendants’ ADR services. The intended audience was [Kinsella], a party involved in dissolution litigation, who actually engaged the services of JAMS and Sonenshine.”

Presiding Justice Judith McConnell, writing for the Court of Appeal, said Meyer was correct. The alleged misrepresentations, the appellate jurist said, “fit comfortably within the commercial speech exemption.”

She distinguished Simpson Strong-Tie Co., Inc. v. Gore (2010) 49 Cal.4th 12, which held that the commercial speech exemption did not apply to an attorney whose advertising encouraged clients to contact him if they might have claims against a certain manufacturer. The manufacturer’s suit was thrown out on an anti-SLAPP motion.

Case Distinguished

In Simpson, McConnell explained, the exemption did not apply because the suit arose from statements about the plaintiff’s business, not the defendant’s. In contrast, she wrote, Kinsella’s suit was based on “representations of fact about the neutrals [JAMS] employs and how it conducts its business.

McConnell rejected the argument that the statements on the site had other purposes, such as to fulfill disclosure obligations.

“JAMS and Sonenshine are engaged in the business of selling ADR services,” she explained. “Kinsella’s causes of action arise from statements posted on the JAMS Web site about both Sonenshine’s background and experience and about JAMS’s operations. It is apparent all of the statements about which Kinsella complains were placed on the JAMS Web site to be viewed by actual or potential ADR buyers or customers, or attorneys representing actual or potential buyers or customers of ADR services. According to the complaint, Kinsella reviewed the JAMS Web site and agreed to use Sonenshine as a privately compensated temporary judge based on the statements….Therefore, the statements or conduct from which Kinsella’s causes of action arise is more ‘commercial speech’ than anything else. Whether or not the statements may be used for other purposes does not change the analysis.”

The case is JAMS, Inc. v. Superior Court (Kinsella), 16 S.O.S. 3749.


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