Under California's Anti-SLAPP law, a defendant may bring a special motion to strike any cause of action "arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue . . .". Cal. Code Civ. Proc. § 425.16(b)(1). The defendant bears the initial burden of establishing that the challenged allegations or claims arise from protected activity in which the defendant has engaged. If the defendant meets this burden, the plaintiff must then demonstrate its claims have at least “minimal merit". The trial court will strike the claim if the plaintiff fails to meet its burden.
The Anti-SLAPP law defines "act in furtherance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue" as including any:
- written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law,
- written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law,
- written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or
- other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.
Cal. Code Civ. Proc. § 425.16(e)(2).
In Sugarman v. Brown, 2021 Cal. App. LEXIS 1089, Steven Sugarman sued, among others, Christopher Brown, alleging that that Mr. Brown's sign-off as lead audit partner of the audit report included in the company's annual report on Form 10-K induced Mr. Sugarman to hold the company's securities. The Court of Appeal in the published portion of the opinion found that the statements were "made in connection with an issue under consideration or review by [an] official proceeding", explaining:
The SEC is required by law to review disclosures made by issuers of securities, "including reports filed on Form 10-K," "on a regular and systematic basis" and no less frequently "than once every 3 years." (15 U.S.C. § 7266, subds. (a) & (c).) "Such review shall include a review of an issuer's financial statement." (15 U.S.C. § 7266, subd. (a).) In our view, this alone subjects plaintiff's claims against Mr. Brown to the anti-SLAPP statute.
This does not mean that mean a cause of action based on statements in a Form 10-K will always be stricken. It simply means that the plaintiff will have to demonstrate that his or her claims have "minimal merit". In Sugarman, the plaintiff's claims were dismissed because he failed to present any evidence on the merits of his claim.