Court of Appeal: Employer's Lawsuit Against Terminated Employees Beats Anti-SLAPP Motion

Overhill Farms received notice from the IRS that hundreds of its employees' social security numbers were invalid. The company gave employees a chance to correct the problem. Those who did not were terminated. The law imposes fines and potential criminal liability on employers who permit employees to work with false social security numbers.

Led by an activist organization, some of the terminated employees began protesting at Overhill. The protestors accused Overhill of being racists and ageists, and all kinds of other -ists because of the termination decision based on the IRS's action.  The leaflets they handed out said, among other things:

“OVERHILL FARMS UNFAIR and RACIST EMPLOYER.”  The leaflets distributed at the protests contained the heading “OVERHILL FARMS UNFAIR AND RACIST.”  Overhill is “[a]n abusive and racist employer in the manner that it treats its workers,” which “discriminates against Latinos”; has “unfairly terminated 300 workers,” has “fired workers for expressing themselves freely according to the First Amendment of the U.S. Constitution,” has “exploited Latinos for 30, 20, 15 and 10 years and then threw them to the streets — many single female heads-of-household,” and has exploited part-time workers “visciously as if modern slavery were in place.” 

Well, Overhill fought back. It sued the protestors for a variety of torts, including defamation, interference with prospective economic advantage, and unfair business practices. But the protesters challenged the lawsuit as a "SLAPP" - a lawsuit in retaliation for their First Amendment activity - protesting.
Protesting of course is protected by the First Amendment. But the First Amendment does not protect against libel - provably false statements of fact. Certain types of false statements have to be made with malice to constitute defamation.

The court of appeal said that merely calling Overhill "racist" was not defamatory:

We agree that general statements charging a person with being racist, unfair, or unjust – without more – such as contained in the signs carried by protestors, constitute mere name calling and do not contain a provably false assertion of fact.  Similarly, references to general discriminatory treatment, such as that contained in the handbill and flyer here, without more, do not constitute provably false assertions of fact.  (See, e.g., Beverly Hills Foodland v. United Food & Commercial Workers Union, Local 655 (8th Cir. 1994) 39 F.3d 191, 196 [“‘[T]o use loose language or undefined slogans that are part of the conventional give and take in our economic political controversies — like ‘unfair’ and ‘fascist’ — is not to falsify facts.’  [Citations.]”].) 
But, the protestors went further:

The press release contains language which expressly accuses it of engaging in racist firings and declaims upon the disparate impact the firings have had on “immigrant women.”  Similarly, after discussing Overhill’s termination of one-fourth of Overhill’s work-force, the leaflets explicitly assert that  the discrepancy in social security numbers was merely a “pretext” to eliminate certain workers, and refers to Overhill’s conduct as “racist and discriminatory abuse against Latina women immigrants.”  Moreover, in almost every instance, defendants’ characterization of Overhill as “racist” is supported by a specific reference to its decision to terminate the employment of a large group of Latino immigrant workers.  The assertion of racism, when viewed in that specific factual context, is not merely a hyperbolic characterization of Overhill’s black corporate heart – it represents an accusation of concrete, wrongful conduct.

 The court therefore held that generally calling someone racist is hyperbole. But saying that an employer fired an employee due to unlawful discriminatory motive is a provable assertion of fact.  That conclusion could have ripple effects beyond protesting. For, if this opinion stands, when an employee alleges wrongful termination due to discrimination, retaliation, etc., an employer is within its right to sue for defamation if it can prove that the statement is false.

The decision was 2-1. The dissent said:

I part company with the majority opinion in two fundamental respects.  First, my colleagues in the majority have incorrectly made this court the first state or federal appellate court in America, ever, to hold that the epithet “racist” constitutes a provably false assertion of fact as the basis of a claim of defamation.  The majority attempts to argue that it is only so holding because the term “racist” was used in combination with other words.  But those other words are not actionable and the majority does not and cannot argue otherwise.  Whether the word “racist” is used as a noun or an adjective in combination with other words does not matter.
Second, in my view, the majority misapplies the United States Supreme Court opinions in Milkovich v. Lorain Journal Co., supra, 497 U.S. at page 19 and Linn v. United Plant Guard Workers (1966) 383 U.S. 53, 58.  Defendants’ communications in their dispute with their employer simply did not contain a provably false fact and the reasons for their allegations were disclosed.  (Franklin, supra, 116 Cal.App.4th at p. 387.)  The majority opinion’s parsing of the one word “discrepancies” in reaching its conclusion is not consistent with United States Supreme Court jurisprudence in defamation cases.  I agree the employees’ claims might not be persuasive, but that does not make them defamatory.
My thought is that the California or US Supreme Court will take up this case.  A lot of former employees accuse their employers of being "racist" or discriminatory in making employment decisions.  One can imagine the argument that this decision will interfere with the enforcement of the civil rights laws.  One can also argue that the term "racist" or "discriminatory" is a powerful weapon and should not be tossed around without a factual basis to back it up.  There's the rub. We'll see what happens next.

The opinion is Overhill Farms, Inc. v. Lopez and the opinion is here.