Judges occasionally descend from the august pedestals on which they sit to offer decidedly human rebukes to the parties before them. Among attorneys, these moments have a tongue-in-cheek name: “bench slaps.”
At a September hearing, Judge Vince Chhabria of the U.S. District Court for the Northern District of California offered a candid appraisal of a claim for defamation brought by payroll service ADP against the benefits platform Zenefits (in a case known as ADP LLC v. YourPeople, Inc. dba Zenefits and Parker Conrad). A mere two pages in to a 64-page hearing transcript, Chhabria informed the counsel for ADP that:
“…the primary question in this case is whether the lawsuit will die a slow death or a fast death.”
Slow or fast, a case pronounced dead on arrival has the sting of a bench slap. In this case, the death came sooner still, in the form of a settlement between the parties. The reported terms of the settlement provide that the parties drop their claims against one another and, further, clarify that ADP has no reason to believe Zenefits has security problems with its software, while Zenefits has no reason to believe that ADP is unethical.
Now that that’s decided, it’s apparent that the second “slap” of note in the case – Zenefits’ anti-SLAPP motion – played a crucial role in changing the direction of the litigation.
The “SLAPP” in “anti-SLAPP” stands for “Strategic Lawsuits against Public Participation.” The law, in effect in California and 28 other states, allows a person or firm sued for exercising their free speech an opportunity to circumvent time-consuming and costly litigation and discovery, by requiring the party that initiated the lawsuit to satisfy certain threshold criteria before their case may proceed.
In the ADP v. Zenefits dispute, though not dispositive in the mind of Judge Chharbria, the legal leverage provided to Zenefits in the form of an anti-SLAPP motion changed the direction of the case. It provided the fast-growing startup with a powerful tool it could use to combat a claim the court believed had no chance of success.
But while California has a relatively broad anti-SLAPP law (subject to a commercial-speech exception that likely bears reconsideration), other states limit the circumstance in which an anti-SLAPP motion may be filed. That’s a problem, but more troubling still is that 22 states have no anti-SLAPP statute at all.
This case highlights the need for federal anti-SLAPP legislation. First Amendment protections should apply irrespective of the state in which one sits, as that leads to forum shopping. What’s more, the free market demands these protections. It takes little imagination to envision scenarios in which startups less established than Zenefits could have their fundraising efforts stymied or its business model choked out of existence by virtue of a meritless lawsuit.
Without the protections offered by anti-SLAPP statutes, both consumer and commercial interests are endangered by incumbent market participants that have the luxury of pursuing litigation as part of their business strategy.
As a member of the SPEAK FREE Coalition, we at R Street have been beating the drum for a federal anti-SLAPP law for a while now. Last week, I participated in a panel discussing the benefits of federal anti-SLAPP legislation. Today, my colleague Mike Godwin will appear on panel to discuss the specifics of legislation brought by Rep. Blake Farenthold, R-Texas.
As the ADP v. Zenefits suit demonstrates, the need for federal anti-SLAPP legislation is both real and immediate. What’s more, it falls squarely within the realm of achievable bipartisan agreement. The bench slaps that it will engender down the road only sweeten the deal.