T&T Financial of Kansas City v. Taylor

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NOT DESIGNATED FOR PUBLICATION

No. 117,624

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

T&T FINANCIAL OF KANSAS CITY, LLC
d/b/a BREWED BEHAVIOR, et al.,
Appellees,

v.

EMILY TAYLOR,
Appellant.


MEMORANDUM OPINION

Appeal from Johnson District Court; KEVIN P. MORIARTY, judge. Opinion filed December 22,
2017. Reversed and remanded with directions.

Michelle R. Stewart and Jennifer R. Johnson, of Hinkle Law Firm LLC, of Overland Park, for
appellant.

Michael J. Fleming, of Kapke & Willerth, LLC, of Lee's Summit, Missouri, for appellees.

Before HILL, P.J., MALONE, J., and MERLIN G. WHEELER, District Judge, assigned.

PER CURIAM: This appeal addresses Kansas' Public Speech Protection Act, K.S.A.
2016 Supp. 60-5320, which became effective on July 1, 2016. In this case, Tracy Allen
filed a lawsuit against Emily Taylor, alleging that Taylor communicated defamatory
speech through a blog and e-mails. After Allen filed his petition, Taylor filed a motion to
strike under K.S.A. 2016 Supp. 60-5320(d). The district court denied the motion to strike
for the sole reason that Taylor denied making some of the communications identified in
Allen's petition. Taylor filed a timely interlocutory appeal, which the statute allows. We
conclude the district court erred by denying the motion to strike for the sole reason that
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Taylor denied making some of the defamatory communications, and we remand with
directions for the district court to conduct further analysis consistent with the statute.

FACTUAL AND PROCEDURAL BACKGROUND

Allen is the founder, president, and chief executive officer of Brewed Behavior, a
business name registered to T & T Financial of Kansas City LLC. Brewed Behavior
offers comprehensive quality and business support to all segments of the coffee industry.
At the time this lawsuit was filed, Allen was the immediate past president of the Specialty
Coffee Association of America (SCAA).

Prior to this dispute, Allen and Taylor were in a dating relationship for about two
months. Around February 2016, the couple separated. After the relationship ended, Allen
alleges that Taylor assumed the online identity of Sarah Smith. Under this fake identity,
Allen alleges that in April 2016, Taylor authored the blog, "The Truth about Tracy,"
which disparaged Allen, calling him a fraud, a liar, an abuser of women, and a criminal.
Allen also alleges that Taylor sent a post from the blog to the SCAA.

Allen also alleges that Taylor e-mailed disparaging, false statements to a Boy
Scout troop leader with whom Brewed Behavior was working pro bono. Allen claims that
this e-mail accused him of emotionally abusing his own children, among other things.
This e-mail included a link to the blog.

Allen also alleges that in June 2016, Taylor e-mailed his new girlfriend, Jennifer
Peters, telling her that Allen was a narcissistic sociopath. Allen then claims that Taylor
contacted Peters' ex-husband, warning him that Allen is a sex porn addict, an abuser of
women, and a questionable person, and that he should keep his children away from Allen.

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On October 27, 2016, T & T Financial of Kansas City, LLC d/b/a Brewed
Behavior and Allen filed a petition for damages against Taylor, asserting the above
allegations. The petition included causes of action for defamation and tortious
interference with a business relationship. Allen prayed for damages in excess of $75,000
and any other relief the district court deemed appropriate.

On December 20, 2016, Taylor filed a motion to strike Allen's petition under
K.S.A. 2016 Supp. 60-5320. In her motion to strike, Taylor claimed that Allen's petition
implicated her right to engage in free speech on a public issue, which includes
commentary on a good, product, or service in the marketplace. Taylor attached to her
motion to strike an affidavit swearing that she did not author the blog post and that she
did not send the blog post to the Boy Scouts or the SCAA. Taylor did not admit or deny
that she contacted Peters or Peters' ex-husband as alleged in Allen's petition.

On January 9, 2017, Allen filed his response in opposition to Taylor's motion to
strike. In his response, Allen argued that Taylor was not entitled to protection under
K.S.A. 2016 Supp. 60-5320 if she was denying making the communications in question;
that the new statute, which went into effect on July 1, 2016, did not apply retroactively to
his pending claim; that the new statute did not apply because Taylor's communications
were not related to a public issue or issue of public interest; and that the new statute
unconstitutionally denied Allen his right to petition and his right to a jury trial.

The district court held a hearing on February 10, 2017. After hearing arguments of
counsel, the district court found that K.S.A. 2016 Supp. 60-5320 was procedural in nature
and applied to Allen's pending lawsuit. The district court ordered limited discovery
relevant to the motion to strike and also ordered supplemental briefing. Specifically, the
district court determined that Taylor's hard drive on her personal computer was
discoverable, but Allen later declined to pursue discovery because it was too costly.
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On April 10, 2017, the district court filed a memorandum decision denying
Taylor's motion to strike. The district court reasoned that Taylor was not entitled to free
speech protection under K.S.A. 2016 Supp. 60-5320 if she was denying making the
alleged defamatory comments in the first place. Specifically, the district court stated:

"A plain reading of the statute requires a defendant to actually exercise her right of free
speech to seek protection under the [statute]. Critics may argue that this would require a
defendant to admit it made allegedly defamatory statements. The [statute] was designed
to protect those who chose to exercise their freedom of speech, and are then threatened
with legal action for exercising that right. It is a procedural mechanism designed to
punish plaintiffs that file defamation lawsuits for the purpose of harassing or intimidating
defendants when the plaintiff cannot establish a prima facie case. It was not enacted to
give a defendant an opportunity to take a double-pronged approach to a defamation
lawsuit—allowing the defendant to deny that she made the defamatory comments, yet
seek protection under the [statute] for the benefit of the mandatory attorneys' fees if the
motion is successful.
. . . .
"Here, Defendant moved to strike under the [statute], and at the same time filed
an affidavit denying that she wrote the Tumblr posts or e-mails in question. A defendant
may only bring a special motion to strike the claim if the claim is based on or otherwise
relates to a party's exercise of free speech. Because Defendant's affidavit flatly denies that
she made the defamatory comments, the plain language of the statute prevents her from
succeeding on the motion. Accordingly the motion is DENIED."

The district court's memorandum decision did not address Allen's claim that
K.S.A. 2016 Supp. 60-5320 did not apply because Taylor's comments were not related to
a public issue or issue of public interest. The district court also did not rule on Allen's
constitutional argument, although the court stated in dicta that the statute may be
unconstitutionally overbroad. Taylor filed a timely interlocutory appeal from the denial of
her motion to strike pursuant to K.S.A. 2016 Supp. 60-5320(f)(2). Allen attempted to file
a cross-appeal on the retroactivity issue and the constitutional issue; however, this court
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dismissed his cross-appeal, finding this court lacked jurisdiction because nothing in
K.S.A. 2016 Supp. 60-5320 authorized a cross-appeal.

ANALYSIS

On appeal, Taylor claims the district court erred by denying her motion to strike
Allen's petition solely for the reason that she denied making the statements in question.
Taylor contends that she satisfied her initial burden of showing that the claim against her
involved her exercise of free speech, right to petition, or right of association. In
particular, Taylor argues that the first step of the analysis under K.S.A. 2016 Supp. 60-
5320(d) only requires the district court to consider the basis of the underlying claim; thus,
the district court should not have considered her denial when analyzing the first step.

Allen responds that the district court properly denied Taylor's motion to strike.
Allen contends that the plain language of K.S.A. 2016 Supp. 60-5320 requires Taylor to
admit to the allegations in question. Specifically, Allen argues that since Taylor denies
making the allegedly defamatory statements, she could not have engaged in the exercise
of free speech; thus, she should not be afforded the protection of this statute. Allen also
asserts that the purpose behind K.S.A. 2016 Supp. 60-5320 supports his position that the
statute is inapplicable as a defense to his claims against Taylor.

This appeal centers on the interpretation of K.S.A. 2016 Supp. 60-5320.
Interpretation of a statute is a question of law over which appellate courts have unlimited
review. Neighbor v. Westar Energy, Inc., 301 Kan. 916, 918, 349 P.3d 469 (2015).

The most fundamental rule of statutory construction is that the intent of the
Legislature governs if that intent can be ascertained. State ex rel. Schmidt v. City of
Wichita, 303 Kan. 650, 659, 367 P.3d 282 (2016). An appellate court must first attempt to
ascertain legislative intent through the statutory language enacted, giving common words
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their ordinary meanings. Ullery v. Othick, 304 Kan. 405, 409, 372 P.3d 1135 (2016).
When a statute is plain and unambiguous, an appellate court should not speculate about
the legislative intent behind that clear language, and it should refrain from reading
something into the statute that is not readily found in its words. 304 Kan. at 409. Where
there is no ambiguity, the court need not resort to statutory construction. Only if the
statute's language or text is unclear or ambiguous does the court use canons of
construction or legislative history to construe the legislature's intent. 304 Kan. at 409.

Both parties refer to K.S.A. 2016 Supp. 60-5320 as Kansas' first anti-SLAPP
statute. SLAPP is an acronym for "strategic lawsuits against public participation." Tate,
California's Anti-SLAPP Legislation: A Summary of and Commentary on Its Operation
and Scope, 33 Loyola L.A. L. Rev. 801, 802 (2000). In what has become known as a
SLAPP lawsuit, a party (often a large corporation) files a nonmeritorious claim in order
to silence an outspoken critic by tying up the defendant in litigation and draining the
defendant's resources. 33 Loyola L.A. L. Rev. at 802-05. Thus, SLAPP lawsuits are
perceived as having a chilling effect on free speech. 33 Loyola L.A. L. Rev. at 805. For
that reason, as early as 1992, state legislatures began enacting what is known as anti-
SLAPP statutes. André, Anti-SLAPP Confabulation and the Government Speech
Doctrine, 44 Golden Gate U. L. Rev. 117, 118-19 (2014). The hallmark of these statutes
is the ability of a defendant to file an early "motion to strike" so the court can make an
initial determination whether the lawsuit has been filed to harass the defendant or to stifle
the defendant's right of free speech. 44 Golden Gate U. L. Rev. at 119.

In 2016, the Kansas Legislature passed K.S.A. 2016 Supp. 60-5320, Kansas' first
anti-SLAPP statute, which became effective on July 1, 2016. L. 2016, ch. 58, § 1. This
statute is known as the Public Speech Protection Act. K.S.A. 2016 Supp. 60-5320(a).
K.S.A. 2016 Supp. 60-5320(b) explicitly states its purpose:

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"The purpose of the public speech protection act is to encourage and safeguard
the constitutional rights of a person to petition, and speak freely and associate freely, in
connection with a public issue or issue of public interest to the maximum extent
permitted by law while, at the same time, protecting the rights of a person to file
meritorious lawsuits for demonstrable injury."

The statute goes even further by instructing courts how to interpret it: "The
provisions of the public speech protection act shall be applied and construed liberally to
effectuate its general purposes." K.S.A. 2016 Supp. 60-5320(k). Also, K.S.A. 2016 Supp.
60-5320(c) provides definitions for every significant term found in the statute.

Getting to the heart of the statute, K.S.A. 2016 Supp. 60-5320(d) provides a
procedural remedy early in the litigation for those parties claiming to be harassed by a
SLAPP lawsuit. K.S.A. 2016 Supp. 60-5320(d) states, in relevant part:

"A party may bring a motion to strike the claim if a claim is based on, relates to
or is in response to a party's exercise of the right of free speech, right to petition or right
of association. A party bringing the motion to strike has the initial burden of making a
prima facie case showing the claim against which the motion is based concerns a party's
exercise of the right of free speech, right to petition or right of association. If the moving
party meets the burden, the burden shifts to the responding party to establish a likelihood
of prevailing on the claim by presenting substantial competent evidence to support a
prima facie case. If the responding party meets the burden, the court shall deny the
motion. In making its determination, the court shall consider pleadings and supporting
and opposing affidavits stating the facts upon which the liability or defense is based."

K.S.A. 2016 Supp. 60-5320(d) requires a two-step analysis for the district court to
determine if the motion to strike should be granted. First, a party bringing the motion to
strike has the initial burden of showing that the claim against which the motion is based
concerns a party's exercise of the right of free speech, the right to petition, or the right of
association. Second, if the moving party meets this initial burden, the burden then shifts
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to the responding party to establish a likelihood of prevailing on the claim by presenting
substantial competent evidence to support a prima facie case. In ruling on a motion to
strike, the district court shall consider the pleadings and affidavits submitted by the
parties. K.S.A. 2016 Supp. 60-5320(d).

Here, the district court denied Taylor's motion to strike for the sole reason that she
denied making some of the communications identified in Allen's petition. Essentially, the
district court ruled that Taylor was not entitled to bring a motion to strike under K.S.A.
2016 Supp. 60-5320(d) unless she admitted making the allegations in questions. The
district court did not reach the second step in the analysis under the statute, and in fact,
the district court never completed the first step in the analysis by determining whether the
claim against which the motion was based concerned a protected right under the statute.

On appeal, each party's argument turns on the following language of K.S.A. 2016
Supp. 60-5320(d):

"A party may bring a motion to strike the claim if a claim is based on, relates to
or is in response to a party's exercise of the right of free speech, right to petition or right
of association. A party bringing the motion to strike has the initial burden of making a
prima facie case showing the claim against which the motion is based concerns a party's
exercise of the right of free speech, right to petition or right of association." (Emphasis
added.)

Allen focuses on the language that a party bringing the motion to strike has the
initial burden of showing that the claim concerns a party's exercise of the right of free
speech. Allen contends that this language requires Taylor to admit to the allegations in
question before filing a motion to strike. Allen asserts that since Taylor denies making
the allegedly defamatory statements, she could not have engaged in the exercise of free
speech; thus, she should not be afforded the protection of the statute.
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In contrast, Taylor emphasizes the language that a party bringing the motion to
strike has the initial burden of showing that the claim against which the motion is based
concerns a party's exercise of the right of free speech. Stated differently, Taylor argues
that her denial of engaging in any protected activity has no bearing on whether she can
bring a motion to strike or whether she satisfied her burden in step one of the analysis.
Taylor argues that Allen's reading of the statute would violate the Act's purpose by
depriving protection for anonymous speech.

Each party's interpretation of the statute is reasonable. We have found no
legislative history of K.S.A. 2016 Supp. 60-5320 that is helpful in determining the
Legislature's intent beyond what the statute itself already provides. Also, there is no
Kansas caselaw interpreting this statute. However, the Legislature has directed that the
provisions of the Public Speech Protection Act shall be applied and construed liberally to
effectuate its general purposes. K.S.A. 2016 Supp. 60-5320(k).

Liberally construing the statute, we conclude that whether a party may properly
bring a motion to strike turns solely on the contents of the plaintiff's claims. K.S.A. 2016
Supp. 60-5320(d) provides that a party may bring a motion to strike if a claim is based on
a party's exercise of a protected right. Moreover, a party bringing the motion to strike has
the initial burden of showing that the claim against which the motion is based concerns a
party's exercise of a protected right. Put simply, step one of the analysis under K.S.A.
2016 Supp. 60-5320(d) only concerns the content of the claims. As a result, whether
Taylor later admits or denies the allegations is not relevant regarding step-one analysis
because the district court should only consider the contents of the claims in the petition.

Here, the petition alleges that Taylor communicated electronically through her
blog and e-mails and these communications resulted in defamation and tortious
interference. "Communication" means the making or submitting of a statement or
document in any form or medium, including oral, visual, written, or electronic. K.S.A.
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2016 Supp. 60-5320(c)(2). The claims in Allen's petition implicate Taylor's right to
engage in free speech assuming she can establish that the communications were made in
connection with a public issue or issue of public interest. This is the type of claim that
may be subject to a motion to strike under K.S.A. 2016 Supp. 60-5320(d).

Although we can find no case from another state that is directly on point,
persuasive authority supports Taylor's argument that step one of the analysis focuses on
the claim upon which a motion to strike is based and it is irrelevant whether the defendant
admits or denies making the statements in question. In Malin v. Singer, 217 Cal. App. 4th
1283, 1304, 159 Cal. Rptr. 3d 292 (2013), the California Court of Appeals—also
considering a two-step anti-SLAPP statute—held that the defendant's assertion that he
was innocent of the accused conduct is irrelevant because such an assertion is "'more
suited to the second step of an anti-SLAPP motion.'" See also City of Costa Mesa v.
D'Alessio Investments, LLC, 214 Cal. App. 4th 358, 371, 154 Cal Rptr. 3d 698 (2013)
("The merits of [plaintiff's] claims should play no part in the first step of the anti-SLAPP
analysis."); Coretronic Corp. v. Cozen O'Connor, 192 Cal. App. 4th 1381, 1388, 121 Cal.
Rptr. 3d 254 (2011) ("Arguments about the merits of the claims are irrelevant to the first
step of the anti-SLAPP analysis.").

Significantly, we note that the affidavit attached to Taylor's motion to strike
denied making some, but not all, of the communications identified in Allen's petition.
Taylor denied that she authored the blog, "The Truth about Tracy," and she denied
sending the blog post to the Boy Scouts of America and to the SCAA. However, Taylor
never denied that she contacted Peters or Peters' ex-husband as alleged in Allen's petition.
Thus, even if the district court was correct in finding that Taylor was not entitled to free
speech protection under K.S.A. 2016 Supp. 60-5320 because she denied making some of
the communications identified in Allen's petition, this finding would not be a proper basis
for the district court to deny Taylor's motion to strike in its entirety.
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Thus, we conclude the district court erred by denying the motion to strike based
solely on the reason that Taylor denied making some of the communications in question.
We interpret K.S.A. 2016 Supp. 60-5320(d) to mean that a party bringing a motion to
strike has the initial burden of showing that the claims in the plaintiff's petition implicate
a protected right under the statute, and it is irrelevant whether the defendant admits or
denies making the statements in question. The fact that Taylor denied making some of the
statements in question may have a bearing on the second step in the analysis under
K.S.A. 2016 Supp. 60-5320(d), but the district court never reached the second step in the
case herein. Finally, because Taylor only denied making some, but not all, of the
communications identified in Allen's petition, Taylor's partial denial should not have
caused the district court to deny the motion to strike solely for this reason.

In district court, Allen asserted that K.S.A. 2016 Supp. 60-5320 did not apply
because Taylor's communications were not related to a public issue or issue of public
interest. The district court did not address this argument in its ruling. In our view,
whether Taylor's alleged communications involved a public issue or issue of public
interest goes to the heart of the first step in the statutory analysis concerning a motion to
strike. K.S.A. 2016 Supp. 60-5320(d) provides that a party may bring a motion to strike if
the claim is based on a party's "exercise of the right of free speech." K.S.A. 2016 Supp.
60-5320(c)(4) defines "[e]xercise of the right of free speech" to mean a communication
made in connection with a "public issue or issue of public interest." K.S.A. 2016 Supp.
60-5320(c)(7)(E) in turn defines "public issue or issue of public interest" to include an
issue related to "a good, product or service in the marketplace."

Under K.S.A. 2016 Supp. 60-5320(d), Taylor has the initial burden of showing
that the alleged defamatory communications identified in Allen's petition concern the
exercise of her right of free speech, meaning that the communications were made in
connection with a public issue or issue of public interest. In district court, Taylor asserted
that the communications in Allen's petition related to "a good, product or service in the
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marketplace." See K.S.A. 2016 Supp. 60-5320(c)(7)(E). But Allen is not a public servant
as defined in the statute and he does not sell coffee to the public. Brewed Behavior is a
coffee consulting business. At first glance, we question whether the allegations that Allen
is an abuser of women and children, a narcissistic sociopath, and a sex porn addict, even
if true, are in any way related to a good, product or service in the marketplace. The
resolution of this issue should be the focus of the district court's attention in step one of
the analysis. If Taylor is unable to meet her initial burden of showing that the
communications identified in Allen's petition were made in connection with a public
issue or issue of public interest, then the district court may properly deny Taylor's motion
to strike under K.S.A. 2016 Supp. 60-5320(d). The district court also may properly deny
the motion to strike under step two of the analysis if it finds that Allen can establish a
likelihood of prevailing on his claims with substantial competent evidence.

To sum up, we conclude the district court erred by denying the motion to strike
under K.S.A. 2016 Supp. 60-5320(d) for the sole reason that Taylor denied making some
of the defamatory communications identified in Allen's petition. We remand with
directions for the district court to conduct further analysis consistent with the statute. This
opinion does not address the issues that Allen attempted to raise in his cross-appeal, and
these claims may still be asserted by Allen in future proceedings.

Reversed and remanded with directions.