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Exiled Chinese Billionaire Loses Defamation Suit Thanks to Nevada Anti-SLAPP Law

By Alex Shepard

A critic of the Chinese Communist Party ("CCP"), Shuiyan Cheng, recently won a resounding Anti-SLAPP victory over a billionaire Chinese businessman, Wengui Guo. Cheng v. Guo, No. A-18-779172-C (Nev. Dist.). Cheng published statements critical of Guo on Twitter, and Guo sued for defamation and intentional infliction of emotional distress. In the end, the Plaintiff owes the Defendant nearly $200,000, thanks to the Nevada Anti-SLAPP statute. NRS 41.635, et seq.

The statements at issue were written in Chinese, which created the uncommon problem of a judge who doesn't speak Chinese having to decide what the statements at issue actually mean. To provide some background, Guo is a divisive figure in Chinese expat political dissident circles. He left China in 2015 amidst a corruption probe that jailed a high-ranking CCP official who reportedly was a close ally of Guo's and helped him gain his wealth.

After exiling himself to the U.S., Guo made a name for himself by making claims about his ability to expose corruption in the CCP. Part of his notoriety was due to constantly promising earth-shattering revelations about CCP officials. However, numerous reputable press outlets (both foreign and domestic) published articles discussing Guo's claims and their plausibility, along with his rocky relationship with Chinese dissident organizations. Some of these organizations consider him a powerful ally to their cause, while others consider him an opportunist who built his fortune with the help of the very same oppressive regime to which they are opposed.

The New York Times published a lengthy exposé regarding the controversies surrounding Guo in January 2018, but this discussion had been taking place in the press years before then and continued afterward. Many of these articles noted that Guo provided inconsistent details about basic personal information such as his age, and that many of his claims about the CCP had been debunked or were facially implausible. The articles also discussed a number of allegations by the CCP against Guo of corruption and criminal conduct such as embezzlement, fraud, and even rape. During this time, Guo filed several defamation suits against his critics.

In July 2018, Cheng published a small series of Twitter posts about Guo, hypothesizing that he could be cooperating with the CCP's President, Xi Jinping, because his family, which had been imprisoned in China, was suddenly released without explanation. Cheng, relying on the numerous media articles about Guo, expressed his opinion that Guo was a liar and that he had harmed the overseas movement for a democratic China. Guo sued Cheng for defamation and intentional infliction of emotional distress based on these tweets. Cheng filed an Anti-SLAPP motion to dismiss Guo's claims. In his briefing, Cheng submitted three declarations testifying as to why he published his statements and the information he relied on in publishing them, as well as over a dozen articles discussing Guo from 2015 to the present.

In opposing the Anti-SLAPP motion, Guo argued that the documents on which Cheng relied were not from trustworthy sources and that he should have known that they were unreliable. Guo's strategy was to create a factual dispute as to whether Cheng made his statements in "good faith," as that term is defined in the Anti-SLAPP statute, which could have defeated the Anti-SLAPP motion. A defendant that brings an Anti-SLAPP motion under Nevada's statute must prove, among other things, that they made their statements in "good faith," meaning the statements were true or the defendant did not subjectively know they were false. If, and only if, the defendant meets this burden, the burden then shifts to the defendant to make a prima facie showing that he has a probability of prevailing on his claims. If the plaintiff cannot do so, his claims are dismissed.

In December 2019, the Nevada Supreme Court changed how its Anti-SLAPP statute works. See Rosen v. Tarkanian, 453 P.3d 1220. Prior to the Tarkanian decision, every aspect of an Anti-SLAPP motion was treated as a motion for summary judgment, meaning a plaintiff could defeat an Anti-SLAPP motion simply by showing there was a genuine dispute of material fact as to "good faith." In recent years, this has become a reliable method of defeating Anti-SLAPP motions in Nevada; a plaintiff only needed to create some question as to the bare possibility that a defendant knew their statements were false, and that was enough.

This result was contrary to the purpose of the Anti-SLAPP statute, which is to allow for quick dismissals of suits based on First Amendment-protected conduct. The defendant's initial burden of proof was never meant to be high, with the merits of a suit being left for the second prong of the analysis where the plaintiff must show that he has a prima facie case. But too often the "good faith" analysis became the battleground for deciding the merits of a plaintiff's claims, resulting in an improper shifting of the burden of proof to the defendant.

Tarkanian changed this, however, by establishing that merely raising questions as to "good faith" is not enough to defeat an Anti-SLAPP motion. At least as to the first prong of the Anti-SLAPP analysis, the court is required to consider and weigh all the evidence on the record and is permitted to draw inferences based on this evidence in favor of the defendant. This leaves disputes as to the merits of defamation claims where they belong: the second prong. Subsequent Supreme Court decisions have approved of this changed standard as to the prong one analysis, even when the plaintiff is not a public figure. See Stark v. Lackey, 458 P.3d 342 (Nev. 2020); see also Abrams v. Sanson, 458 P.3d 1062 (Nev. 2020).

The Tarkanian decision was published only a few weeks before the hearing on Cheng's anti-SLAPP motion, and the district court relied on this new Nevada Supreme Court precedent heavily in deciding in Cheng's favor. The court determined that Cheng's statements were expressions of opinion, and thus could not have been made without "good faith." To the extent that they contained factual assertions, they were in line with the reputable reporting of major news outlets that predated Cheng's tweets. Cheng thus made his statements in "good faith" under the statute.

For similar reasons, the court found that Guo could not establish a prima facie case for his claims. Because he was a public figure, Guo had to show that Cheng acted with "actual malice," meaning he knew his statements were false or had a subjective awareness that the statements were likely false. Since the U.S. Supreme Court has established that there is no such thing as a false idea, Cheng's statements of opinion could not be false and defamatory. The district court also observed that, because Cheng published his statements on Twitter, the average reader would be less likely to view them as potentially defamatory statements of fact. This marks one of the few times Nevada courts have discussed how social media can affect the analysis of defamation claims. As for any factual statements by Cheng, even though Guo tried to call into question the veracity of some of the sources of news reporting about Guo, he could not refute that reputable newspapers like the New York Times published articles with claims about Guo that were consistent with what Cheng said about him.

After winning the Anti-SLAPP motion, Cheng sought an award of attorneys' fees incurred in defending himself from Guo's claims. On June 4, 2020, the district court granted this motion and awarded Cheng almost $200,000. This victory is an early example showing that the Nevada Supreme Court's decision in Tarkanian makes Nevada's Anti-SLAPP statute more in-line with its intended purpose: to stop wealthy plaintiffs, engaged in campaigns of frivolous defamation litigation, from silencing their critics.

The amount of the award is also important because the district court found that it was appropriate to fashion an award based on the customary hourly rates of Cheng's counsel. This was higher than what Cheng was actually billed, since he received a discount on these rates. The district court found an award based on the higher lodestar rates was appropriate after hearing from Cheng's fee expert, Joseph Garin, who testified that Cheng's attorneys had a high level of expertise in First Amendment and anti-SLAPP matters. (See transcript of fee motion hearing at 8:7 to 10:9, 14:21 to 16:3.) The ability for SLAPP defendants to obtain fee awards based on lodestar amounts should make it more likely that attorneys will take such cases, even when the Defendant is unable to pay full rates.

Alex Shepard is an associate at Randazza Legal Group in Las Vegas.

 
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