TASHIMA, Circuit Judge:
This defamation action arises out of a business dispute between companies that design and distribute hygiene products for prisoners. One of those companies, Loops, designed a flexible toothbrush made for safe use in prisons and then bid on a contract with the New York City Department of Corrections ("NYC-DOC"). The other company, Amercare, ultimately won the contract using a similar toothbrush. In a series of letters to government officials and to the press, Loops then alleged that Amercare had engaged in procurement fraud because, among other things, Amercare had counterfeited Loops products. Based on those statements, Amercare filed this defamation action in Washington state court. The action was removed to the Western District of Washington, and the district court granted Loops' motion to strike the complaint under Washington's anti-SLAPP statute. This appeal followed. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
Plaintiffs-Appellants are Phoenix Trading, Inc., dba Amercare Products, Inc., and Wendy Hemming (together "Amercare"). Amercare imports and distributes toiletries and health products, and it often contracts with correctional institutions. Hemming is the majority shareholder and president of Amercare. Defendants-Appellees are Loops LLC, Loops Flexbrush LLC, and Steven Kayser (collectively, "Loops"). Loops designs and markets oral hygiene products for safe use in prisons. Kayser is the founder of Loops and the inventor of the Loops Flexbrush, a toothbrush with a flexible handle that cannot be altered into a shank.
On July 30, 2010, Loops filed a patent infringement action in the Western District of Washington. In that action, Loops alleged that: Amercare fraudulently obtained a sample of the Loops Flexbrush; sent it to China for copying; and then — relying on pricing information obtained from Loops — underbid Loops for a contract with the NYC-DOC. Loops, LLC v. Phoenix Trading, Inc., No. 08-1064, 2010 WL 3041866, at *1-*3 (W.D.Wash.2010).
The district court granted partial summary judgment to Amercare. It held that Loops could not recover monetary damages because Amercare's last sale of the allegedly infringing toothbrush occurred no later than May 22, 2008, yet Loops had not adequately marked its product until September 12, 2008, and had not notified Amercare of its patent until June 13, 2008. Thus, the district court held that under 35 U.S.C. § 287, Loops could not recover monetary damages for its patent infringement claim. Id. at *4-*5, *11-*12. The district court also granted summary judgment on several related claims. Id. at *11-*12.
On February 18, 2010, during the pendency of the patent litigation, Amercare filed a defamation action against Loops in Washington state court, and the action was later removed to the Western District of Washington.
Loops — through either Kayser or Kayser's counsel — sent three letters to various New York City officials, all alleging that Amercare had altered Loops toothbrushes and passed them off as its own. All three letters were part of Loops' claim that Amercare won the contract by way of procurement fraud. The letters alleged that Amercare had filed off the Loops trademark from sample Loops toothbrushes, affixed the Amercare trademark, and presented the altered toothbrushes to the NYC-DOC in its bid. The first letter, sent on August 20, 2007, was addressed to Mayor Michael
On February 18, 2008, Kayser sent a letter to New York officials and several New York Times reporters, alleging that Amercare toothbrushes were "laden with lead and heavy metals" and had "excessive amounts of lead and heavy metals." These allegations were based on an examination — conducted by Intertek (a testing laboratory) and commissioned by Loops — of the Amercare toothbrushes. The Intertek report had detected some levels of lead and other heavy metals, but the report concluded that the products easily complied with relevant regulations.
In certain communications, Loops accused Amercare of infringing one of its patents. These statements were made, with varying degrees of clarity, in: (1) the February 18, 2008, letter discussed above; (2) an April 21, 2008, letter to various New York City officials, which referenced toothbrushes that the NYC-DOC purchased in 2007; (3) a May 19, 2008, letter sent to the International Anticounterfeiting Coalition ("IAC"), the press, and various New York City officials; and (4) a July 29, 2008, letter to the press.
Loops also accused Amercare of "counterfeiting." In most of the letters discussed above, Loops stated that Amercare had provided "counterfeit toothbrushes" to the NYC-DOC. Similar allegations were contained in a letter sent to the IAC, Harper's Bazaar Magazine, and the New York Sun.
The parties filed cross-motions for summary judgment, and Loops filed a special motion to strike under Washington's anti-SLAPP statute, Wash. Rev.Code § 4.24.525.
Turning to the statements made to the media, the court concluded that the statements were made to a "public forum in connection with an issue of public concern" under § 4.24.525(2)(d). Id. As for the statements to the IAC, the court held that they were in furtherance of Loops' free speech rights and in connection with an issue of public concern. Id. at *8. Thus, with respect to the media and IAC statements, the burden shifted to Amercare to show a probability of success on the merits.
The court then concluded that Amercare failed to show a likelihood of overcoming the two-year statute of limitations for defamation claims. Id. at *9-*10. This deficiency applied to the statements regarding product alteration and counterfeiting. As
Washington's anti-SLAPP statute, like many others throughout the country, was designed quickly to dispose of and deter lawsuits that chill the exercise of speech and petition rights. See S.S.B. No. 6395, 61st Leg., Reg. Sess., 2010 Wash. Legis. Serv. Ch. 118, § 1. Under § 4.24.525(4)(a), "[a] party may bring a special motion to strike any claim that is based on an action involving public participation and petition."
Amercare did not contest the first step in the district court, and on appeal it concedes that its claims involve public participation. See Phoenix Trading, 2011 WL 3158416, at *7-*8. Accordingly, after addressing the timeliness of the motion, we address only the second step of the anti-SLAPP analysis.
We review an anti-SLAPP ruling de novo. Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1102 (9th Cir.2003). There is little Washington caselaw on the relative burdens of proof under Washington's anti-SLAPP statute and, in such circumstances, we may look to the standards governing California's similarly structured anti-SLAPP statute. See Castello v. City of Seattle, No. C10-1457, 2010 WL 4857022, at *4 (W.D.Wash.2010) (applying California law because the California Anti-SLAPP Act "mirrors" Washington's anti-SLAPP statute (citing Aronson v. Dog Eat Dog Films, Inc., 738 F.Supp.2d 1104, 1110 (W.D.Wash.2010))). In California, a plaintiff resisting an anti-SLAPP motion "must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited." Wilson v. Parker, Covert & Chidester, 28 Cal.4th 811, 123 Cal.Rptr.2d 19, 50 P.3d 733, 739 (2002) (internal quotation marks omitted), abrogated on other grounds as stated in Hutton v. Hafif, 59 Cal.Rptr.3d 109, 125, 59 Cal.Rptr.3d 109 (Ct.App.2007). Thus, "[t]he burden on the plaintiff is similar to the standard used in determining motions for nonsuit, directed verdict, or summary judgment." Gilbert v. Sykes, 147 Cal.App.4th 13, 53 Cal.Rptr.3d 752,
Amercare first argues that the anti-SLAPP motion was untimely. Under § 4.24.525(5)(a), the motion "may be filed within sixty days of the service of the most recent complaint or, in the court's discretion, at any later time upon terms it deems proper." The operative complaint in this matter was filed on May 21, 2010, but the anti-SLAPP motion was not filed until February 25, 2011. The district court excused the delay, however, because (1) Amercare did not assert any prejudice; and (2) the parties had not engaged in any discovery. Phoenix Trading, 2011 WL 3158416, at *6. The court also noted that most of the evidentiary materials associated with the anti-SLAPP motion were included in the concurrently filed cross-motions for summary judgment. Id. These were permissible factors to weigh in the timeliness analysis; thus, the district court did not abuse its discretion by entertaining the anti-SLAPP motion.
The crux of this appeal is whether Amercare met its burden of showing a likelihood of success on the merits. The district court's merits determination centered on three issues: (1) immunity under § 4.24.510; (2) the statute of limitations; and (3) the elements of defamation.
Section 4.24.510 grants "immun[ity] from civil liability" for statements "to any branch or agency of federal, state, or local government ... regarding any matter reasonably of concern to that agency." This provision is considered Washington's first anti-SLAPP statute, which was later expanded — both substantively and procedurally — by the enactment of § 4.24.525 in 2010. See Aronson, 738 F.Supp.2d at 1109. Immunity under § 4.24.510 does not require a showing of good faith, Bailey v. State, 147 Wn.App. 251, 191 P.3d 1285, 1291 (2008), and Washington courts describe it as an affirmative defense. See Suggs v. Hamilton, 116 Wn.App. 1016, No. 27141-9-II, 2003 WL 1298665, at *8 (Ct.App.2003) (unpublished decision), rev'd on other grounds by In re Marriage of Suggs, 152 Wn.2d 74, 93 P.3d 161 (2004).
Amercare does not seem to dispute that § 4.24.510 attaches to Loops' statements to government agencies and officials, and it is clear that the provision applies. Mayor Bloomberg, Mr. Crescenzo, and the other New York City officials who received Loops' statements are part of a "branch or agency" of local government; likewise, the U.S. Attorney and the U.S. Customs Agency are branches or agencies of the federal government. Moreover, the statements were "reasonably of concern" to these agencies because they included allegations of procurement
As noted above, Amercare claims that the alteration and counterfeiting accusations were defamatory. Loops argues that these claims are barred by the two-year statute of limitations. See Wash. Rev. Code § 4.16.100 (setting limitation for libel and slander claims).
Loops' earliest statements regarding alteration and counterfeiting were sent in August and September of 2007. On October 4, 2007, Mario Crescenzo forwarded Hemming (Amercare's president) the August 20, 2007 letter from Kayser, which accused Amercare of altering and counterfeiting Loops toothbrushes. Crescenzo asked Hemming to provide a "written response to the protest." Hemming responded in a letter sent sometime before October 23, 2007.
Loops argues that Crescenzo's letter to Hemming — and her subsequent response — show that Amercare and Hemming were aware of the operative facts supporting the defamation claims as early as October 2007, and thus that the claims are barred by the two-year limitations period.
"[A] cause of action accrues at the time the plaintiff knew or should have known all of the essential elements of the cause of action. The rule of law postponing the accrual of the cause of action is known as the `discovery rule.'" White v. Johns-Manville Corp., 103 Wn.2d 344, 693 P.2d 687, 691 (1985). "[T]he discovery rule requires a plaintiff to use due diligence in discovering the basis for the cause of action." Clare v. Saberhagen Holdings, Inc., 129 Wn.App. 599, 123 P.3d 465, 467 (2005). Thus, "when a plaintiff is placed on notice by some appreciable harm occasioned by another's wrongful conduct, the plaintiff must make further diligent inquiry to ascertain the scope of the actual harm. The plaintiff is charged with what a reasonable inquiry would have discovered." Green v. A.P.C. (Am.Pharm. Co.), 136 Wn.2d 87, 960 P.2d 912, 916 (1998).
In light of our conclusions regarding § 4.24.510 immunity and the statute of limitations, the only surviving defamation claims involve the statements regarding lead content and patent infringement that were made to either the IAC or to the press. Neither § 4.24.510 nor the statute of limitations applies to those statements and thus, as to those statements only, we turn to the merits.
"A defamation action consists of four elements: (1) a false statement, (2) publication, (3) fault, and (4) damages." Duc Tan v. Le, 177 Wn.2d 649, 300 P.3d 356, 363 (2013). "A public official who sues for defamation may only recover damages upon a showing that the defamatory statement was made with `actual malice' — that is, made with knowledge of its falsity or with reckless disregard of its truth or falsity." Herron v. KING Broad. Co., 109 Wn.2d 514, 746 P.2d 295, 301 (1987) (citing N.Y. Times v. Sullivan, 376 U.S. 254, 279-80, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964)).
This claim centers on the February 18, 2008, letter sent to New York City officials and several New York Times reporters, alleging without elaboration that Amercare toothbrushes were "laden with lead and heavy metals" and had "excessive amounts of lead and heavy metals." These allegations were made despite the results of an earlier examination (commissioned by Loops) of the Amercare toothbrushes, which detected some levels of lead and other elements, but concluded that the products easily complied with federal regulations. Although Loops has § 4.24.510 immunity for the lead-content allegations made to government officials, see Part III. B.1, supra, that immunity does not apply to statements made to the press. We
"To determine whether a statement is nonactionable, a court should consider at least (1) the medium and context in which the statement was published, (2) the audience to whom it was published, and (3) whether the statement implies undisclosed facts." Dunlap v. Wayne, 105 Wn.2d 529, 716 P.2d 842, 848 (1986). The first two factors indicate that the statements were nonactionable opinions. The statements were made in the context of a business dispute in which Loops clearly had a pecuniary interest in undoing the Amercare contract. Under such circumstances, the press would have been prepared for hyperbole and exaggeration. As the Washington Supreme Court has recognized, "[i]n the context of ongoing public debates, the audience is prepared for mischaracterizations and exaggerations, and is likely to view such representations with an awareness of the subjective biases of the speaker." Id. Indeed, before sending the allegedly defamatory statements, Kayser acknowledged that his conclusion about lead content was just his "opinion." Moreover, Kayser's use of the terms "excessive" and "laden with" implies a statement of opinion because they are terms of degree and approximation. The press — an audience that is charged with investigating the accuracy of assertions — likely would not have perceived these exaggerations as statements of fact. See Haueter v. Cowles Publ'g Co., 61 Wn.App. 572, 811 P.2d 231, 239 (1991) (statements that are "not provable as false" but are instead "rhetorical hyperbole" are nonactionable). Thus, the first two factors weigh against Amercare.
The third factor cuts somewhat in Amercare's favor, but is not dispositive. Loops' statements implied some knowledge of the lead content of Amercare's products, yet the letter did not reference or attach the Intertek report. Nevertheless, the context and audience are sufficient to preclude Amercare from meeting its burden as to the lead-content statements. Indeed, "the context and audience often ensure that any implicit facts will be perceived as `merely a characterization of those facts.'" Robel, 59 P.3d at 622 (quoting Ollman v. Evans, 750 F.2d 970, 985 (D.C.Cir.1984)). Moreover, the letter did offer to provide "clarification and supporting documentation" if requested. Accordingly, Amercare did not show a likelihood of success as to the lead-content statements.
Loops obtained a patent on the Flexbrush on February 26, 2008. But even before the patent issued, Loops made several statements suggesting that Amercare was infringing its patent. Amercare asserts that those pre-issuance statements were defamatory. Most of these allegations were made to government officials and thus, as discussed above, they cannot sustain Amercare's defamation claims. And although Loops made oblique references to patent infringement in certain communications with the press and the IAC, none of those statements was defamatory.
First, the February 18, 2008, letter — which was addressed to both government officials and to the press — accused Amercare of "counterfeiting ... patented products." But this statement simply accuses Amercare of counterfeiting, and not patent infringement, and thus any claim based on this statement is barred by the statute of limitations. See Part III.B.2, supra. Second,
Amercare's defamation action was premised on numerous letters that Loops sent to New York City officials, the press, and the IAC. The district court correctly held that Amercare could not show a likelihood of success as to any of these statements; thus, the complaint was properly dismissed under Washington's anti-SLAPP statute.
The judgment of the district court is
Wash. Rev.Code § 4.24.525(2)(d)-(e).
