Bill Limits Developers’ Ability to Sue Foes : Courts: The legislation would require builders to show their cases are more than just a tactic to intimidate individuals and agencies that oppose projects.

Should grass-roots activists have more legal leeway to protest new housing tracts, sewage plants and other socially useful but locally obnoxious developments?

Is it fair to make it more difficult for developers and government agencies to sue these grass-roots rebels?

Is democracy enhanced or weakened by expanding the legal rights of citizen-activists while restricting those of builders?

Those are among the issues raised by a bill pending in Sacramento that would erect substantial legal hurdles for developers, government bodies and others who sue citizens trying to stall or kill their projects.

The legislation, by state Sen. Bill Lockyer (D-Hayward), is intended to make it more difficult to file so-called SLAPP suits, or Strategic Lawsuits Against Public Participation. Critics say developers are increasingly using SLAPP suits to muzzle or scare off environmentalists, homeowners and others battling development projects, including some in the San Fernando Valley.

SLAPP suits often demand millions of dollars in damages from opponents and take years to settle. In the meantime, activists might pay thousands of dollars in attorney’s fees to defend themselves, while wondering if they will be ruined financially by the time the litigation ends.

Under Lockyer’s bill, a lawsuit involving free speech rights or the right to petition government “in connection with a public issue” would be subject to immediate dismissal unless the plaintiff persuaded a judge that the suit had a “substantial probability” of winning.

The bill sailed through the state Senate on a 38-0 vote and now faces an Assembly floor vote, which is expected later this month. Similar legislation by Lockyer last year was vetoed by Gov. George Deukmejian.

Lockyer said his bill is necessary to better balance the legal and political scales between wealthy development interests and “ordinary citizens in the exercise of their First Amendment rights.”

“The legal system should do everything it can to avoid being used to burden people’s free speech,” he said.

His bill, which also would allow a SLAPP defendant to recover attorney’s costs if the suit is thrown out, is supported by free-speech advocates, homeowner groups and environmentalists. However, some backers argue that the bill does not go far enough because it does not provide for punitive damages against plaintiffs that bring unsuccessful SLAPP suits.

But opponents, including the California Building Industry Assn., argue that the bill would unfairly limit developers’ access to the courts and insulate irresponsible protesters against legal challenges.

In recent years SLAPP suits have been filed against a wide variety of conservationists, slow-growth activists and others. Among them:

* A Burbank woman who charged that a proposed development of luxury houses would damage an environmentally sensitive wetlands area. The suit was recently dismissed.

* A Contra Costa County man who sought to stop construction of a garbage incinerator.

Although most SLAPP suits are eventually dismissed on constitutional grounds, they can damage defendants psychologically as well as financially, said Penelope Canan, a University of Denver sociologist who has been studying the SLAPP phenomenon for eight years under a National Science Foundation grant.

“Legally, it’s not a very successful tactic,” said Canan, who takes credit for coining the term SLAPP. “However, politically, sometimes it really does eliminate opposition because of the fear that can be wielded by having to defend yourself against a lawsuit that is usually gigantic in its financial implications.”

Critics say that sometimes even the mere threat of a SLAPP is enough to intimidate grass-roots groups.

Last year, for example, some members of a Northridge-based homeowners group called PRIDE quietly dropped out after developer Nathan Shapell threatened to sue several PRIDE leaders for defamation. Shapell is building the massive Porter Ranch development north of Chatsworth, which PRIDE has vocally opposed for years.

“I remember one gal who said, ‘I don’t want anything to do with PRIDE because I’ll get sued next,’ ” said PRIDE leader Walter Prince, a Northridge businessman.

“We told her, ‘Nobody’s been sued yet. This is just designed to intimidate us.’ But she said, ‘I don’t care. I don’t want to lose my home,’ ” Prince said. No suit was ever filed.

To protect themselves, many activists and grass-roots groups have taken out liability insurance. Richard Close, president of the Sherman Oaks Homeowners Assn., said his group pays $1,900 annually for such a policy.

But Canan said activists who were targets of unsuccessful SLAPPs have started filing countersuits, or “SLAPP-backs.” And many are winning hefty court judgments, she said.

Lockyer said his bill would deter SLAPPs by requiring plaintiffs to show a judge they have a “substantial probability” of winning their case at trial. If they fail, their suits would be subject to immediate dismissal.

Lockyer said existing law contains similar protections for doctors, directors of nonprofit organizations and others engaged in socially beneficial activities.

But lawyers who represent builders, although they concede that SLAPPs are often counterproductive for their clients, said Lockyer’s bill would unfairly restrict developers’ rights.

Gideon Kanner, a professor emeritus at Loyola Law School who often represents developers, said the Lockyer bill would create “a pariah class of people who don’t have free access to the courts.”

He said it would be nearly impossible for developers to show a judge that their lawsuits have enough merit without being allowed, before the trial opens, to interrogate witnesses under oath and develop other evidence.

Making it more difficult for developers to retaliate legally against protesters, Kanner said, would encourage abuses by opponents, force developers to spend large amounts to get their cases heard and ultimately boost the already sky-high cost of housing in California.

Kanner also warned that if developers have less latitude to resolve their conflicts in court, they may quietly try to pay opponents to halt their protests. He said he regards that as a form of bribery that would badly undermine the political process.

Kenneth Bley, a Century City attorney who also represents builders, said Lockyer’s bill, if it becomes law, could undermine lawsuits by developers that otherwise would have had strong chances of success.

He gave a theoretical example:

A homeowners association signs a contract pledging not to oppose a proposed housing tract after a builder agrees to reduce the number of houses. Later, the homeowners decide to resume fighting the project.

Under current law, the builder could argue the reversal was a breach of contract, said Bley. But Lockyer’s legislation might provide homeowners a new defense based on the First Amendment, he said.

“Can I sue for breach of contract, or am I going to get thrown out of court because it involves free speech?” Bley said.

But Lockyer, who chairs the Senate Judiciary Committee and described himself as a staunch civil liberties advocate, said he sees nothing wrong with “kind of purposefully tilting toward protection of First Amendment rights.”

Lockyer said the bill would not bar developers from filing suits but would eliminate “frivolous lawsuits” intended only to harass political opponents.

The bill’s standard of requiring developers to show a substantial likelihood that their suits would prevail, he said, is open to broad interpretation, and many judges probably would decide in favor of developers.

BACKGROUND

SLAPPs, or Strategic Lawsuits Against Public Participation, are lawsuits filed by developers against homeowner groups opposing their proposed building projects. Penelope Canan, a University of Denver sociologist who says she coined the term, said the average SLAPP seeks more than $9 million in damages and takes three years to resolve. Canan knows of at least 500 SLAPPs filed in the past 20 years nationwide but believes hundreds more are filed each year.