In 2009, the California Public Employees' Retirement System filed a lawsuit alleging negligent misrepresentation and negligent interference with prospective economic advantage against Moody's Investors Services, Inc., Moody's Corporation and The McGraw-Hill Companies, Inc.  The defendants filed a special motion to strike the complaint under California's anti-SLAPP statute, Cal. Code Civ. Proc. § 425.16.  The trial court denied the motion and both sides appealed.

Last Friday, the Court of Appeal affirmed the trial court's ruling.  Cal. Pub. Emp. Ret. Sys. v. Moody's Inv. Serv., Inc.,  2014 Cal. App. LEXIS 454 (May 23, 2014).  The Court of Appeal found that CalPERS' action arose from the defendants' activities in furtherance of their constitutional right of free speech in connection with a public issue.  However, the Court of Appeal agreed that CalPERS had met its burden to establish, based on competent and admissible evidence, "a probability" of prevailing on the merits.  The Court of Appeal also rejected the defendants' affirmative defenses of the First Amendment and federal preemption under the Credit Rating Agency Reform Act of 2006.