Date created: 12/4/07
Last modified:12/4/07
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John Quiggin

Lawsuits a straitjacket

Australian Financial Review

21 July 2005

Among many things we have imported from the United States, one of the less fortunate is novel forms of tort litigation, including class actions and innovative extensions of concepts of negligence. At best, such actions serve as a second-best substitute for appropriate regulation, in cases where the government has failed to do its job properly. At worst (and most notably in relation to actions brought against companies in the name of their own shareholders) they are little more than legal blackmail.

As a general rule, Australian supporters of the free market can be counted on to criticise such innovations and to point to the destructive consequences they have had in the United States. Yet, faced with one of the most pernicious of all kinds of tort actions, they have mostly been either silent or supportive.

The innovation is referred to in the United States as a Strategic Lawsuit against Public Participation, or SLAPP. This is an action brought by a corporation (or occasionally a wealthy individual) with the aim of silencing critics. The plaintiff relies, not on the merit of the case, but on the fact that the critic will be unable to bear the financial and emotional cost of defending the action. Typically, the statement of claims is both lengthy and vague, and the plaintiff seeks extensive and burdensome discovery of information from the defendants.

A prominent example was a lawsuit brought by the US cattle industry against TV host Oprah Winfrey for publicising the dangers of feeding cattle on ground up parts of other cattle, a practice now known to contribute to the spread of mad cow disease, and prohibited worldwide. Winfrey won, but only because she had the resources to fight a four-year legal battle.

Winfrey’s victory was, however, an indication that the tolerance of the courts and the US public for SLAPP suits had been exhausted. As with most legal fashions, the reaction against SLAPP suits began in California which passed legislation in 1992 allowing defendants to strike out SLAPP suit where the complaint arises from conduct that falls within the rights of petition and free speech . The statute “applies to any writing or speech made in connection with an issue under consideration or review by a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law”, that is, in effect, to any political speech.

The SLAPP suit has now come to Australia in the form of an action brought by Tasmanian forestry company Gunns claiming $6.3 million in damages from twenty of its critics, including two members of Parliament, several organisations and a number of private individuals. The initial claim covered 218 pages, and canvassed allegations ranging from defamation to criminal damage.

This was replaced, at a late stage in the first round of proceedings by an even longer and vaguer document of 360 pages. Each of the defendants had to respond to what Justice Bongiorno described as a “tortuous”, “incomprehensible” document that would “make explorers like Burke and Wills quake in their boots”.

In striking out the claim, Bongiorno described parts as “ambiguous at best and misleading at worst”, legally “embarrassing” and said it failed to make clear to defendants the nature of the case against them.

A charitable interpretation of the Gunns claim is that it is the product of sloppy drafting. But this kind of obfuscation is characteristic of the SLAPP suit. The point is not to right specific legal wrongs but to wear down your opponents until they give up. Gunn’s lawyers have already indicated that they plan to pursue the case.

A particularly disturbing feature of the Gunns lawsuit is the way it mixes up allegations of criminal damage, such as sabotage of logging equipment, with a damages case that is primarily based on alleged defamation. Obviously, if Gunns has the evidence to show, in a civil court, that any of the defendants has engaged in sabotage, they are fully entitled to expose those responsible and to recover damages.

But that should be a specific action, not part of an incomprehensible grab-bag of spurious claims made against unspecified members of a disparate group of people. As it is, the protection of legal proceedings permit the plaintiffs, while alleging defamation, to make accusations that would themselves be defamatory in ordinary circumstances, without any apparent redress.

Gunn’s action in this matter, is a clear indication that allowing defamation action by corporations does harm than good. Companies like Gunns have ample resources to defend themselves in the open marketplace of public opinion. They do not need the courts to do their job for them.

John Quiggin is an Australian Research Council Federation Fellow in Economics and Political Science at the University of Queensland.

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