The Ninth U.S. Circuit Court of Appeals has permitted a property owner's defamation lawsuit against a San Diego County supervisor to go forward.

A divided three-judge panel overturned a lower court's ruling that Manufactured Home Communities' lawsuit against Supervisor Dianne Jacob was a SLAPP suit. The Ninth Circuit determined that a jury could find some of Jacob's challenged statements were "actionable as provably false assertions of fact."

Manufactured Home Communities (MHC), which is now called Equity Lifestyle Properties, is familiar with federal and state courtrooms in California. The Chicago-based company — controlled by real estate investor Sam Zell, who bought the parent company of the Los Angeles Times in 2007 — owns about 300 mobile home parks with 100,000 spaces across the United State and Canada. In California, the company has challenged local mobile home rent control ordinances and their implementation up and down the state.

In July 2002, MHC initiated phased rent control increases at three mobile home parks in unincorporated San Diego County by sending 90-day notices to residents. All three parks are in Jacob's district. In November of 2002, Jacob issued a news advisory saying MHC was preying on elderly tenants with fixed incomes. She also told residents of one park that MHC enjoyed forcing old people out of their homes, suggested MHC had engaged in fraudulent actions and said the district attorney was considering civil or criminal action against the company. Further, she sent a letter to Zell complaining of rent gouging, residents being forced to surrender their homes, and rents above fair market rates.

In a number of later instances, Jacob told news reporters that MHC had failed to clean up a sewage spill in one of its parks, that the company preyed on older people and that it made a practice of buying distressed properties in order to run out older residents.

In late 2003, MHC sued the county, arguing the county had violated its equal protection, due process and First Amendment rights. Later, the company modified its suit to claim Jacob violated MHC's First Amendment rights, defamed the company and interfered with prospective economic advantage. District Court Judge Napoleon Jones rejected all of the claims, ruling for the county and Jacob. With regard to Jacob's allegedly false statements, the court found that MHC's action was a strategic lawsuit against public participation (SLAPP).

On appeal, the Ninth Circuit upheld nearly all of the lower court's ruling. However, it determined that Judge Jones erroneously dismissed the action regarding Jacob's statements.

Jacob and the county argued that her statements were merely opinion, not provably false assertions that would be subject to legal action — an argument that Jones accepted. But two of three judges on the Ninth Circuit panel accepted MHC's contention that some of the statements referenced specific circumstances or facts and may be proven false.

"While the district court may have been correct in its assessment that each of these statements is properly interpreted as an assertion of opinion rather than fact, a reasonable factfinder could disagree with that assessment," Judge Diarmuid O'Scannlain wrote for the majority. "It does not seem unreasonable, for instance, that a jury could conclude Jacob meant as a matter of fact that MHC had lied about the sewage situation, or that she meant it as fact that MHC had a reputation for driving out elderly tenants."

"[A] reasonable listener could conclude that Jacob's statements were founded in part on an objective, factual basis, especially in light of Jacob's role as a public servant and her having made some of the relevant statements in response to a new reporter's questions," O'Scannlain continued.

The Ninth Circuit sent the case back to the lower court for further proceedings.

In a dissent, Judge Consuelo Callahan said MHC's suit was a SLAPP. "Manufactured Home Communities, Inc., is attempting to chill the valid exercise of constitutional rights of freedom of speech and petition for the redress of grievances by filing a lawsuit against county Supervisor Dianne Jacob based on media interviews about an issue of public controversy," Callahan wrote.

Furthermore, Callahan wrote, MHC did not "demonstrate the falsity of any underlying facts."

The Case:
Manufactured Home Communities, Inc. v. County of San Diego, No. 05-56401, 08 C.D.O.S. 2709, 2008 DJDAR 3325. Filed March 6, 2008.
The Lawyers;
For MHC: David Bradford, Jenner & Block, (312) 923-2975.
For the county: William A. Johnson Jr., county counsel's office (619) 531-4860.