The Second Circuit has now joined the First, Fifth, and Ninth Circuits in holding that state anti-SLAPP laws confer substantive laws under the Erie doctrine, and are therefore applicable in federal court.
In Liberty Synergistics Inc. v. Microflo Ltd., Liberty Synergistics Inc. (Liberty) filed a malicious prosecution suit in California state court against Microflo Ltd. (Microflo) over an earlier round of litigation between the same parties in the Eastern District of New York. Liberty alleged that Microflo, in pursing the previous litigation against Liberty, undertook no reasonable investigation to verify the facts of the complaint and only maintained the ligation against Liberty in spite. Microflo removed the case to the Central District of California and then moved to dismiss the suit under California’s anti-SLAPP law. Before the court decided on the motion, the case was voluntarily transferred to the District Court for the Eastern District of New York. Microflo then reasserted its anti-SLAPP motion under California law, but the District Court judge denied the motion on the basis that New York’s law, not California law, governed the malicious prosecution. Microflo appealed.
The Second Circuit Court of Appeals concluded that the District Court erred by denying Microflo’s anti-SLAPP motion, as the District Court conflated the relevant state choice-of-law question with the separate federal choice-of-law inquiry under the Erie doctrine:
“State rules that are considered “procedural” under state law may still apply in federal diversity suits if those rules are considered “substantive” under federal law pursuant to Erie. Because the plaintiff initially brought this suit in California and then voluntarily transferred it to the Eastern District of New York, and because a California state court would have applied California’s anti-SLAPP rule as a procedural matter, the aspects of California’s anti-SLAPP rule considered substantive by federal law continue to apply in this case, notwithstanding that the case is now being heard in New York, and notwithstanding that the cause of action is otherwise governed by substantive New York law.”
The Court of Appeals remanded the case to the District Court for further consideration of the anti-SLAPP motion. This decision holding that California’s anti-SLAPP law is substantive under federal law is particularly timely, as this issue is currently under consideration at the Ninth Circuit Court of Appeals. In concurring opinions in Makaeff v. Trump University, Chief Justice Kozinski and Judge Paez discussed how they believe that state anti-SLAPP laws should not be applied in federal courts, as they are procedural and not substantive. They said that United States ex rel. Newsham v. Lockheed Missiles & Space Co. (the Ninth Circuit case holding that California’s anti-SLAPP law is substantive and thus applies in federal court), 190 F.3d 963 (9th Cir. 1999), is wrong and should be reconsidered.
Judge Kozinski concluded by noting that he believes the Ninth Circuit Court of Appeals should take a fresh look at the applicability of state anti-SLAPP laws in federal court through an en banc review. Trump University accepted Judge Kozinski’s invitation and filed a petition for en banc review.
Hopefully the Ninth Circuit does not regress (and move in the opposition direction of other Circuits) and California’s anti-SLAPP law will continue to be able to be used in federal court for state claims.