Protecting a Business’s First Amendment Right to Criticize a Competing Business on an Issue of Public Concern
This case raises the issue whether the First Amendment should protect a business from liability for a substantial damages award under a state’s consumer protection statute merely for having spoken out during a heated referendum election campaign on an issue of public concern that involved a competing business. The defendant, Fifth Estate Tower (“Fifth Estate”), a New Hampshire business that builds cell towers, is appealing a $6.7 million jury verdict for unfair competition in violation of New Hampshire’s Consumer Protection Act, N.H.R.S.A. 358-A:2 (“CPA”). The verdict is based on statements that Fifth Estate made during a public referendum election in which voters of the town of Wolfeboro were to decide whether a competing cell tower company, Green Mountain Realty (“Green Mountain”) could build cell towers on public land. The voters rejected the proposed leases between Green Mountain and the town. During the election, Fifth Estate prepared and mailed to over 3,300 registered voters a postcard purportedly depicting one of the proposed towers, to illustrate its concern that the tower would be an eyesore. At trial, Green Mountain’s expert testified that the image of the proposed tower was approximately twice the size of an accurate rendering. The trial judge expressly instructed the jury to ignore the First Amendment. The jury found that each postcard constituted a knowing or willful violation of the CPA, entitling Green Mountain to damages of $2,000 for each of the over 3,300 mailed postcards.
In Fifth Estate’s appeal of the judgment, NELF filed an amicus brief on behalf of Fifth Estate arguing that the statements and printed matter for which Fifth Estate has been found liable under the CPA are core political speech warranting the highest First Amendment protection. As the Supreme Court has made clear, the democratic process must allow for the robust exchange of ideas and opinions in the political arena so that the voter should be free to form his or her own viewpoint without any state intrusion. Accordingly, where, as here, application of state law burdens core political speech, the First Amendment invalidates that application unless it can survive exacting scrutiny and is narrowly tailored to serve an overriding state interest. The imposition of CPA liability here fails this test. Where liability under state law is based on the alleged falsity of speech addressing an issue of public concern, the First Amendment bars liability unless, at minimum, the plaintiff can prove, by clear and convincing evidence, that the defendant uttered the challenged speech with “actual malice,” i.e., with knowledge of its falsity or with reckless disregard to its truth or falsity. In this case, however, the trial court expressly instructed the jury not to consider the First Amendment. Moreover, the CPA does not require actual malice and instead imposes liability broadly for any “unfair or deceptive” conduct or any acts of “unfair competition” without regard to truth or falsity. Because of these constitutional infirmities, NELF argued that the Legislature never intended the CPA to apply to the political arena. Rules of statutory construction restrict judicial interpretation to the plain language of the statute, thereby precluding a court from “interpreting” the CPA, which applies to all “unfair” or “deceptive” acts, to apply only to false political speech made with actual malice. Since application of the CPA to political speech would offend the First Amendment, it is logical to conclude that the Legislature never intended the CPA to apply to core political speech or election campaigns. Finally, NELF argued that, even if the actual malice standard could be engrafted onto the CPA, the statute may still fail strict scrutiny here. One state supreme court has invalidated that state’s fair election law under the First Amendment even though that statute expressly included an actual malice requirement. That court concluded that the First Amendment does not permit the government, rather than the electorate, to be the final arbiter of truth in a heated political debate, in which the line between fact and opinion is frequently blurred, as this very case illustrates.
In a decision issued on November 10, 2010, the New Hampshire Supreme Court agreed with NELF that Fifth Estate is immune from liability under the CPA, which is designed for the business arena and not the political arena. In particular, the Court relied on the Supreme Court’s Noerr-Pennington doctrine, which arose in the antitrust context and is derived from the First Amendment’s Petition clause. Under this doctrine, the First Amendment shields companies from liability based on their engagement in the political process, especially to effect legislative change, even when the disputed conduct is willfully anti-competitive (i.e., seeks to effect a political change harmful to competitors).
This case raises the issue whether the First Amendment should protect a business from liability for a substantial damages award under a state’s consumer protection statute merely for having spoken out during a heated referendum election campaign on an issue of public concern that involved a competing business. The defendant, Fifth Estate Tower (“Fifth Estate”), a New Hampshire business that builds cell towers, is appealing a $6.7 million jury verdict for unfair competition in violation of New Hampshire’s Consumer Protection Act, N.H.R.S.A. 358-A:2 (“CPA”). The verdict is based on statements that Fifth Estate made during a public referendum election in which voters of the town of Wolfeboro were to decide whether a competing cell tower company, Green Mountain Realty (“Green Mountain”) could build cell towers on public land. The voters rejected the proposed leases between Green Mountain and the town. During the election, Fifth Estate prepared and mailed to over 3,300 registered voters a postcard purportedly depicting one of the proposed towers, to illustrate its concern that the tower would be an eyesore. At trial, Green Mountain’s expert testified that the image of the proposed tower was approximately twice the size of an accurate rendering. The trial judge expressly instructed the jury to ignore the First Amendment. The jury found that each postcard constituted a knowing or willful violation of the CPA, entitling Green Mountain to damages of $2,000 for each of the over 3,300 mailed postcards.
In Fifth Estate’s appeal of the judgment, NELF filed an amicus brief on behalf of Fifth Estate arguing that the statements and printed matter for which Fifth Estate has been found liable under the CPA are core political speech warranting the highest First Amendment protection. As the Supreme Court has made clear, the democratic process must allow for the robust exchange of ideas and opinions in the political arena so that the voter should be free to form his or her own viewpoint without any state intrusion. Accordingly, where, as here, application of state law burdens core political speech, the First Amendment invalidates that application unless it can survive exacting scrutiny and is narrowly tailored to serve an overriding state interest. The imposition of CPA liability here fails this test. Where liability under state law is based on the alleged falsity of speech addressing an issue of public concern, the First Amendment bars liability unless, at minimum, the plaintiff can prove, by clear and convincing evidence, that the defendant uttered the challenged speech with “actual malice,” i.e., with knowledge of its falsity or with reckless disregard to its truth or falsity. In this case, however, the trial court expressly instructed the jury not to consider the First Amendment. Moreover, the CPA does not require actual malice and instead imposes liability broadly for any “unfair or deceptive” conduct or any acts of “unfair competition” without regard to truth or falsity. Because of these constitutional infirmities, NELF argued that the Legislature never intended the CPA to apply to the political arena. Rules of statutory construction restrict judicial interpretation to the plain language of the statute, thereby precluding a court from “interpreting” the CPA, which applies to all “unfair” or “deceptive” acts, to apply only to false political speech made with actual malice. Since application of the CPA to political speech would offend the First Amendment, it is logical to conclude that the Legislature never intended the CPA to apply to core political speech or election campaigns. Finally, NELF argued that, even if the actual malice standard could be engrafted onto the CPA, the statute may still fail strict scrutiny here. One state supreme court has invalidated that state’s fair election law under the First Amendment even though that statute expressly included an actual malice requirement. That court concluded that the First Amendment does not permit the government, rather than the electorate, to be the final arbiter of truth in a heated political debate, in which the line between fact and opinion is frequently blurred, as this very case illustrates.
In a decision issued on November 10, 2010, the New Hampshire Supreme Court agreed with NELF that Fifth Estate is immune from liability under the CPA, which is designed for the business arena and not the political arena. In particular, the Court relied on the Supreme Court’s Noerr-Pennington doctrine, which arose in the antitrust context and is derived from the First Amendment’s Petition clause. Under this doctrine, the First Amendment shields companies from liability based on their engagement in the political process, especially to effect legislative change, even when the disputed conduct is willfully anti-competitive (i.e., seeks to effect a political change harmful to competitors).
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