For decades, smart-growth advocates have been pushing land-use policies to revive downtowns as an antidote to suburban sprawl, with its mega-shopping centers and housing developments gobbling up fast-vanishing open space and adding to New Jersey’s bad-air days due in no small part to pollution from traffic congestion.
Now comes a recent Appellate Division court case that, if not reversed by the state Supreme Court, threatens not only to undermine these justly praised downtown revival policies, but also could also lead to an erosion of our First Amendment rights to speak out against harmful development projects by testifying against them in local zoning-board hearings and sometimes by filing lawsuits to overturn approvals.
On July 25, 2017, a three-judge appellate panel handed down its 23-page ruling in Woolwich v. Ammons, upholding a classic SLAPP suit — which stands for “Strategic Litigation Against Public Participation”— filed by a Walmart Supercenter against a local supermarket and its law firm.
As in the typical SLAPP suit, Walmart filed a host of arcane, hard-to-prove, and seldom-litigated damage claims against its opponents — including “malicious abuse of process,” “tortious interference with a prospective contract” and topped off with a “civil conspiracy” charge — seeking an unspecified amount of damages, but doubtless in the millions.
The core of these intimidating claims is Walmart’s allegation that the legal action filed by opponents of this massive 1.5-million-square-foot project “was part of a pattern of sham litigation,” according to the court, and “brought for the sole purpose of injuring market rivals rather than to address actual grievances.”
This must come as quite a shock to land-use lawyers, planners, and smart-growth activists such as New Jersey Future.
That’s because since the 1980s, New Jersey has been a national leader in protecting the First Amendment right of everyone, competitors included, to “petition government for redress of grievances” by dismissing SLAPP suits brought by deep-pocketed developers against opponents of their projects who dare to speak out and file lawsuits against harmful projects that are approved.
For example, in a frequently cited 1999 case, LoBiondo v. Schwartz, a New Jersey appellate court eloquently explained why SLAPP suits are, or used to be, so strongly disfavored and quickly rejected by courts:
In SLAPP suits “commercial interests seek to quell effective opposition … Protesting citizens are sued into silence. Ultimately prevailing in the litigation is not the point — rather the litigation is undertaken to impose upon the citizens the expense and burden of defending a lawsuit. This is consequently viewed as a serious and significant threat to the free, open, and vigorous debate on public issues that the courts have so scrupulously protected as a bedrock principle of the First Amendment and as an imperative to democratic form of government.”
That said, there is a “sham litigation exception” to the anti-SLAPP suit policy of our courts, but it is a very narrow one. To qualify the developer must show that the appeal of the local zoning approval is “objectively baseless … a mere sham to cover an attempt to interfere directly with the business relationships of a competitor …”
How is a court supposed to make such a finding? The guidance given by the Woolwich opinion – written by Judge Michael Guadagno, husband of the Republican gubernatorial candidate – is both unhelpful and frightening. It is unhelpful because it fails to provide any meaningful criteria and seems to allow judges to render decisions based on their gut instincts as to whether “no reasonable litigant could realistically expect success on the merits and with the specific intent to further wrongful conduct...”
The second prong of sham litigation is equally troubling. It can be found if there is a “series of actions with or without regard to their merit and for the purpose of using the governmental process to harm a market rival and restrain trade,” which may be found by “looking at the defendant’s won-loss percentage as evidence of the defendant’s subjective motivations.”
As a result, the would-be superstore opponents — they could be a mom-and-pop grocery store on Main Street or a local merchants association that rightly fears the blighting effect of destructive competition from a superstore sited on the edge of town — face a troubling dilemma.
If they exercise their First Amendment freedoms to speak out against the project and file suit, they could face a SLAPP countersuit for damages against them. If they do not oppose the development, they face the prospect of losing customers to the new superstore or shopping center, and eventually closing shop.
So much for smart-growth policies. And so much for the revival of downtowns. That’s why the New Jersey Supreme Court should agree to hear this case and to categorically reject or at least limit collateral damage from this surprising departure from established principles.