Intercon Solutions, Inc. v. Basel Action Network

791 F.3d 729, 2015 U.S. App. LEXIS 11157, 2015 WL 3941463
CourtCourt of Appeals for the Seventh Circuit
DecidedJune 29, 2015
DocketNo. 13-3148
StatusPublished
Cited by30 cases

This text of 791 F.3d 729 (Intercon Solutions, Inc. v. Basel Action Network) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Intercon Solutions, Inc. v. Basel Action Network, 791 F.3d 729, 2015 U.S. App. LEXIS 11157, 2015 WL 3941463 (7th Cir. 2015).

Opinion

EASTERBROOK, Circuit Judge.

Intercon Solutions, which provides recycling services for electronic devices, engaged Basel Action Network (BAN) to evaluate its business. Intercon asked BAN to certify it as an environmentally friendly operation. BAN concluded, however, that Intercon ships hazardous waste to China, to firms that use methods of disposal that violate the policy of Illinois, where Intercon is based, and are inconsistent with Intercon’s public representations about its practices. BAN communicated this conclusion to two agencies (one state and one federal) and to the public. Inter-[730]*730con responded with this defamation action under the diversity jurisdiction. The complaint, based on Illinois law, alleges that BAN’s statements are false, and that BAN knows them to be false.

BAN is a Washington corporation with its principal place of business in Seattle. The parties agree that BAN’s statements were made in Washington but were circulated widely in Illinois (in addition to being sent directly to two agencies) and that Illinois law therefore governs the defamation claim. But in answer to the complaint BAN asserted a defense based on Washington’s anti-SLAPP statute, ROW §§ 4.24.510, 4.24.525. Section 4.24.510 is the nation’s first anti-SLAPP law, enacted in 1989; § 4.24.525 was added in 2010. BAN contended, and the district court held, that Illinois (whose law governs choice-of-law issues) would give BAN the benefit of this defense under Washington law because BAN is based in Washington and made its statements there. 969 F.Supp.2d 1026,1034-36 (N.D.Ill.2013).

SLAPP stands for “strategic lawsuit against public participation.” Many states have concluded that some actions for defamation (and a few other torts) are filed, not to prevail, but to impose on the speaker the costs of defense, which can be substantial. 'See Thomas R. Burke, Anti-SLAPP Litigation ch. 8 (2014) (collecting state legislation). An anti-SLAPP statute is a specialized version of the tort of abuse of process, designed to reduce defense costs by creating an absolute or qualified immunity, and (in several states) by requiring early disposition of a motion to dismiss. A defendant that prevails on such a motion usually is entitled to recover its costs of litigation and may be entitled to damages as well.

The Washington anti-SLAPP statute provides both an immunity and a requirement of early disposition on a paper record. Section 4.24.510 gives the defendant immunity from liability for statements communicated to a governmental body. The district court observed that this does not cover statements that BAN made directly to the public or to Intereon’s business rivals. 969 F.Supp.2d at 1036-39. Section 4.24.525, by contrast, applies to “[a]ny oral statement made, or written statement or other document submitted, in a place open to the public or a public forum in connection with an issue of public concern”. RCW § 4.24.525(2)(d). Eco-friendly recycling is an issue of public concern, so § 4.24.525 applies to all of BAN’s public statements.

Section 4.24.525(4)(b) permits a defendant to file a “special motion to strike” the complaint, accompanied by affidavits and other documents showing that the claim “is based on an action involving public participation and petition.” Any statement within the scope of § 4.24.525(2) meets this standard. If the defense shows this, then the judge must dismiss the suit unless the plaintiff can “establish by clear and convincing evidence a probability of prevailing on the claim.” Section 4.24.525(5) requires expedited action: the court must hold a hearing within 30 days and issue a decision within 7 days of the hearing. Pending the hearing and decision, all discovery is stayed (§ 4.24.525(5)(c)). If the court grants the motion, the defendant recovers attorneys’ fees, costs, and a penalty as high as $10,000 (§ 4.24.525(6)).

The district court declined to rule on BAN’s motion, holding that a special motion to strike is incompatible with the Federal Rules of Civil Procedure. 969 F.Supp.2d at 1041-55. The court relied particularly on Rule 12(d), which says that, if a motion responding to a complaint includes any evidence, “the motion must be treated as one for summary judgment under Rule 56.” BAN’s motion included sev[731]*731eral hundred pages of affidavits and other documents.

Federal rules prevail in federal court. See, e.g., Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 559 U.S. 393, 130 S.Ct. 1431, 176 L.Ed.2d 311 (2010); Walker v. Armco Steel Corp., 446 U.S. 740, 100 S.Ct. 1978, 64 L.Ed.2d 659 (1980); Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). Congress can alter federal pleading standards and occasionally does so, see Tellabs, Inc., v. Makor Issues & Rights, Ltd., 551 U.S. 308, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) (Private Securities Litigation Reform Act of 1995), but states lack a comparable power. It follows, the district court held, that § 4.24.525 cannot be applied in federal suits, even though some aspects of the statute, such as the clear- and-convincing-evidence standard, and provisions for fee-shifting and penalties, are substantive in nature.

BAN immediately appealed from the district court’s order denying its motion to dismiss the complaint. It relied in part on § 4.24.525(5)(d), which says that “[e]very party has a right of expedited appeal from a trial court order” resolving a special motion to strike, and in part on the collateral-order doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). At the oral argument of this appeal, members of the panel expressed skepticism about appellate jurisdiction, noting that state statutes cannot expand (or contract) federal jurisdiction and that the Supreme Court has been unwilling in recent years to expand the scope of the collateral-order doctrine. . See, e.g., Mohawk Industries, Inc., v. Carpenter, 558 U.S. 100, 130 S.Ct. 599, 175 L.Ed.2d 458 (2009). BAN’S motion, far from being “collateral” to the merits, is an effort to win outright. A defense differs from a collateral matter. See, e.g., United States v. MacDonald, 435 U.S. 850, 98 S.Ct. 1547, 56 L.Ed.2d 18 (1978). Instead of dismissing the appeal immediately, however, the court deferred action to give the parties time to ask for certification under 28 U.S.C. § 1292(b). Recognizing that it had taken sides on an important and debatable issue that is open in the Seventh Circuit, the district court certified its order for interlocutory review, and we decided to accept the appeal on that statute’s authority.

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791 F.3d 729, 2015 U.S. App. LEXIS 11157, 2015 WL 3941463, Counsel Stack Legal Research, https://law.counselstack.com/opinion/intercon-solutions-inc-v-basel-action-network-ca7-2015.