Court Holds Form 10-K Statements That Constitute “Protected Activity” – Corporate / Commercial Law


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United States: Court Holds Form 10-K Statements That Constitute “Protected Activity”

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Under California anti-SLAPP law, a defendant can bring a special motion to strike out any cause of action “arising out of any act of that person in the exercise of the person’s right of petition or free speech. under the Constitution of the United States or the Constitution of California in connection with a public broadcast. . . “. Cal. Code Civ. Proc. § 425.16 (b) (1). The defendant bears the initial burden of establishing that the contested allegations or claims arise from a protected activity in which the defendant has engaged. the defendant fulfills this burden, the plaintiff must then demonstrate that his claims have at least a “minimal basis.” The court of first instance will annul the claim if the plaintiff does not fulfill his charge.

The Anti-SLAPP Act defines “action in support of a person’s right to petition or free speech under the Constitution of the United States or California in connection with a matter of public interest. “As including:

  • written or oral or written statement made before legislative, executive or judicial proceedings, or any other official proceedings authorized by law,
  • written or oral or written statement concerning a matter considered or considered by a legislative, executive or judicial body, or any other official procedure authorized by law,
  • written or oral or written statement made in a place open to the public or in a public forum relating to a matter of public interest, or
  • other conduct for the exercise of the constitutional right to petition or the constitutional right to freedom of expression in connection with a matter of public interest or a matter of public interest.

Cal. Civ code. Proc. § 425.16 (e) (2).

In Sugarman vs. Brown, 2021 Cal. App. LEXIS 1089, Steven Sugarman sued, inter alia, Christopher Brown, alleging that Mr. Brown’s approval as the senior audit partner of the audit report included in the company’s annual report on Form 10- K had induced Mr. Sugarman to own the shares in the company. . In the published portion of the opinion, the Court of Appeal concluded that the statements had been “made in connection with a matter under consideration or under consideration by [an]official procedure “, explaining:

The SEC is required by law to review disclosures made by issuers of securities, “including reports filed on Form 10-K”, “on a regular and systematic basis” and at least “once every 3 year”. (15 USC § 7266, subds. (A) & (c).) “Such a review must include a review of the financial statements of an issuer.” (15 USC § 7266, subd. (A).) In our view, this alone subjects the plaintiff’s claims against Mr. Brown to anti-SLAPP law.

This does not mean that a cause of action based on statements in a Form 10-K will always be struck. It simply means that the claimant will have to demonstrate that their claims have “minimal merit”. In confectioner, the Applicant’s claims were dismissed because he presented no evidence on the merits of his claim.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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