SLAPPs, Forests and Trees, Biting the Hand

This week’s issue of The Lawyers Weekly (vol 30., no. 3, May 21/10) has an article on the first page crowing about the successful dismissal, under Quebec legislation, of an action found to be a SLAPP (a Strategic Lawsuit Against Public Participation) action. The article continues on p.3 under the caption “Decision will ‘no doubt discourage’ abusive suits and SLAPPs.”

I’m going to put aside (what is to me the obvious) conflict between anti-SLAPP legislation and the “not plain and obvious that the action must fail” threshold which, in substance, is all that is needed on the merits issue for the action to be safe from summary judgment. And, I’ll put aside what is, in some ways, the conflict between the ethos underlying anti-SLAPP legislation and that permitting extremely permissive class action legislation. Both have involve aspects of what some might call “economic terrorism”.

As is common, in my experience, in discussions about the merits or demerits of anti-SLAPP legislation, the article doesn’t mention the sanction(s) which would likely be most effective in preventing lawsuits which are, in fact, SLAPP actions. Make the lawyer and law firm whose name(s) are on the pleading liable for the costs of an action which is dismissed on on the basis it , too, and make it illegal for the client to indemnify.

In practice, most SLAPP lawsuits will be initiated by lawyers, whether in-house or “out-house”. It’s important to keep in mind that most (perhaps all) of the common law jurisdicitions — I don’t know about Quebec — have the first instance rule that a corporation wanting to sue has to be represented by a person qualified to act a lawyer in that province. In Ontario, for example, a corporation needs leave to act through a person who isn’t a lawyer.

In practice, then, most SLAPP lawsuits (perhaps all) exist because a member of the legal profession was prepared to represent the corporate litigant. If that is considered a problem, then the various law societies have to consider whether there’s a professional conduct issue.

I noticed — I wasn’t surprised at the absence (pace John G — I’m sure the subject came up) — that the ULCC model act states that the directors and officers of a corporation that initiated a SLAPP action may be held liable to personally pay damages but doesn’t refer to outside counsel. The corporations (in house counsel) could be caught by this, but not outside counsel. Also, the action is silent on the issue of costs. Perhaps the drafters of the ULCC model act thought costs were moot since the act allows the court dismissing the action to award damages, costs are technically part of damages, and in any event the usual provincial (common) law rule is that cost follow the event. All of the common law provinces (and I’m going to assume Quebec) have legislation/regulations governing civil litigation which permit judges to hold the the litigants’ lawyers personally liable for litigation costs. Most of us here know how infrequently those provisions are applied.

PS: John G: the legislation should preclude the corporation indemnifying the officers and directors and also preclude insurance coverage for any person held liable for damages or costs under the legislation obtaining. If you’re going to wave Damocles’ sword, sharpen the edge and the point.