SANTA ANA, Calif. – An 8-month-old lawsuit by CH Bus Sales accusing ABC Companies of defamation and unfair competition is slowly making its way through the courts and appears to be months away from a final ruling.
CH Bus, which distributes Turkish-made Temsa motorcoaches, filed the suit last fall against ABC and senior vice president Clint Guth alleging that Guth tried to steer a bus contract to his client by spreading false information implying that Temsa was funding the terrorist group ISIS.
Guth no longer works at ABC.
ABC filed a motion to have the suit dismissed, claiming the alleged “false information” was constitutionally protected free speech on a public issue.
The court denied ABC’s motion earlier this year, and the company’s appeal is pending before the California Court of Appeal, with a ruling expected this fall.
In denying the motion, the court also asked CH Bus Sales to submit an amended complaint including more detail to back up its claims that the alleged defamatory statements hurt the company, interfered with the bidding process and constituted unfair competition.
If ABC’s appeal is rejected, the underlying defamation case could go to trial later this year or early next year.
The lawsuit, filed in Orange County, Calif., Superior Court, alleges that Guth sent an anonymous letter to the entertainment company Netflix, which had sought bids on a contract for commuter bus services in the San Francisco Bay Area.
Transdev Services Inc., a CH Bus client, teamed up with Compass Transportation Inc. to bid on the contract. If their bid was successful, the companies planned to purchase at least 13 Temsa buses from CH Bus.
According to the lawsuit, WeDriveU, Guth’s client, also had bid on the Netflix contract and, if successful, planned to purchase buses from ABC.
When it appeared that Transdev/Compass was likely to win the contract, “ABC Bus Sales and Clint Guth schemed to smear the reputations of Temsa, Transdev and Compass in order to increase the likelihood of WeDriveU winning the Netflix contract,” the lawsuit alleges.
“In furtherance of their scheme, in May 2016, Defendants ABC Bus Sales and Clint Guth caused a package to be sent to Netflix with a non-existent return address,” the lawsuit states. “In this package, Defendants ABC Bus Sales and Clint Guth made defamatory statements which falsely implied or represented, among other things, that Temsa was complicit in the funding of terrorist organization ISIS. Defendants ABC Bus Sales and Clint Guth also implied or represented that Temsa supported attacks against Israeli citizens.”
The defendants also “falsely implied or represented to Netflix that an officer at Transdev/Compass intended to unionize Netflix’s employees,” and told Netflix that if the companies won the bid, it would “result in Netflix receiving ‘undue negative press’,” the suit alleges.
Transdev/Compass ultimately won the Netflix contract.
In its motion to have the suit dismissed, ABC cited California’s anti-SLAPP (Strategic Lawsuit Against Public Participation) statute, which is designed to crack down on frivolous lawsuits attacking the constitutional right of free speech in connection with a public issue or an issue of public interest.
ABC doesn’t deny that a package of information and a letter were delivered to Netflix. However, in its anti-SLAPP motion, ABC alleges that the information provided to Netflix consisted “entirely of political material that is protected by the First Amendment.”
“Plaintiff’s lawsuit is a blatant attempt to suppress and chill the exercise of free speech on matters of public concern, namely, activities of the government of Turkey and U.S.-Turkish political relations,” the motion said.
The company said the package included articles about Turkey’s ties to ISIS that had been published in such publications as the Wall Street Journal, the Times of Israel and observer.com, “accompanied by brief commentary about the enclosed research material.”
ABC said the information didn’t say Temsa was complicit in the funding of ISIS or that it supported attacks against Israeli citizens, as the CH Bus suit alleges.
What the letter to Netflix did say was that the Sabanci family, which owns Temsa, has close personal and business ties with the family of Turkish President Recep Tayyip Erdogan.
According to the ABC motion, the letter stated, “The Sabanci & Erdogan families do not have the same moral compass or ideologies as those that ride commuter coaches in the bay area.”
ABC also denied that Guth said Mike McLean, an officer at Transdev/Compass, intended to unionize Netflix employees. The letter only pointed out that McLean’s father was involved with local unions, that the officer had a lot of former clients in the Bay Area, and that it would be “advantageous to Mike McLean for his customers to become unionized.”
As to the lawsuit’s claim that Guth told Netflix it could receive “undue negative press” if it purchased Temsa motorcoaches, ABC said the letter only pointed out that commuter transportation in the Bay Area was “a very visible hot button occasionally receiving undue negative press.”
The letter was sent, ABC said, “with the public interest in mind.”
ABC’s motion also said that since Transdev/Compass won the contract, CH Bus didn’t suffer any economic harm as a result of the information sent to Netflix. And, the motion said, because none of the information sent to Netflix named CH Bus Sales, the company has no standing to sue, even though it sells products for Temsa.
“It is well established that the seller of a product cannot bring a defamation action based on allegedly false statements made about the product or the product’s manufacturer,” ABC said in the motion.
Michael Haggerty, chairman and majority owner of CH Bus Sales, disputes that argument, saying, “Everybody in the industry in that area of northern California knows about this case.”
Haggerty said the next time a high-tech company calls for bids for a shuttle contract, it could decide to stay away from Temsa “because they might be concerned that it wouldn’t be patriotic to hire them.” That would affect CH Bus, Transdev/Compass and Temsa, he said.
Haggerty said Temsa, which is a part owner of CH Bus, has since joined the lawsuit against ABC as a co-plaintiff.
An ABC executive declined to comment on the lawsuit except to say the company plans on “aggressively defending” itself.
ABC and CH Bus are scheduled to file briefings on the appeal over the next two months. If CH Bus prevails, the case could then go to a jury trial either later this year or in 2018.