A federal court in California has granted in part the motion that two biotech startup investors filed under the state’s anti-SLAPP (strategic lawsuit against public participation) law to dismiss the company’s counterclaims against them. Albergo v. Immunosyn Corp., No. 09-02653 (U.S. Dist. Ct., S.D. Cal., decided January 20, 2011). The investors alleged that they were defrauded into signing a second contract as part of their deal to provide $1.25 million to the company in exchange for 102,500 shares of stock that they purportedly never received. They sued the company for breach of contract, violations of the Securities Exchange Act, fraud, RICO violations, conspiracy, unjust enrichment, and fraudulent conveyance.
The company filed a counterclaim alleging breach of contract, fraud, and intentional and negligent inference with economic advantage. Essentially, the company alleged that by seeking to enforce the contracts through their complaint, the investors made false claims in their complaint and interfered with the company’s attempt to sell shares by seeking relief through the court.
When the investors filed a special anti-SLAPP motion, contending that the company was attempting to punish them for exercising their constitutional rights, the defendant responded that the investors rescinded their first contract by signing the second contract and that they breached the agreements in the second contract to release and hold harmless the defendant for claims arising out of the first contract. The defendant also argued that it had made a prima facie showing that it would likely prevail on its counterclaims, an element needed to defeat an anti-SLAPP motion.
Explaining that the anti-SLAPP statute applies to protect an individual’s right to file a lawsuit, the court determined that the defendant had not, in fact, shown that it was likely to prevail on its counterclaim as to breach of contract because it had not alleged the existence of each of the necessary elements for this claim. As to the company’s fraud counterclaim, the court noted that the company’s allegations were based on claims the investors made in the complaint, which “are privileged” under state law, which privilege “bars all tort causes of action, other than malicious prosecution.” Thus, the court granted the investors’ motion as to the fraud counterclaim. While the court found that the anti-SLAPP statute applied to the company’s counterclaims for interference with economic advantage, it allowed the company to conduct limited discovery on the issue and deferred ruling on it.