Background
In July 2019, nineteen-year-old Zachary Ailes was driving in Flathead County, Montana, with Elizabeth Klemann as his passenger when his vehicle collided head-on with an oncoming car. Klemann sued Ailes for negligence in 2022, represented by attorney Hillary Carls. In February 2023, before serving the original complaint, Carls sent a demand letter to Ailes’s defense counsel threatening to file an amended complaint alleging sexual assault unless the matter was resolved privately, noting that sexual assault verdicts can reach $10 million or more. Ailes’s counsel responded three times in writing, each time arguing that any sexual assault claim would be time-barred under Montana’s two-year statute of limitations for battery and that no cognizable negligence theory could encompass an intentional act. Carls pressed forward regardless, and in September 2023 Klemann filed a First Amended Complaint adding the sexual assault allegations. The case was removed to federal court.
A federal magistrate judge dismissed all claims arising from the alleged sexual assault in a 2024 order, finding they sounded in battery and were barred by the applicable two-year limitations period. The remaining accident-based claims settled and were dismissed with prejudice in May 2025. Ailes then filed this suit in January 2026 against both Klemann and Carls, alleging malicious prosecution and abuse of process based on their assertion of the sexual assault claims.
Both defendants moved to dismiss under Montana’s Uniform Public Expression Freedom Act (“UPEPA”), Mont. Code Ann. §§ 27-34-101 through -112, the state’s first anti-SLAPP statute, adopted in May 2025. Ailes raised three threshold objections: that applying UPEPA to pre-enactment conduct was impermissibly retroactive, that the Supreme Court’s recent decision in Berk v. Choy, 607 U.S. 187 (2026), foreclosed use of state anti-SLAPP statutes in federal diversity cases, and that Carls’s pre-litigation demand letters fell outside UPEPA’s protected-activity categories. The court rejected all three threshold arguments and reached the merits.
The Court’s Holding
The court granted both special motions to dismiss with prejudice. On retroactivity, the court held that UPEPA does not operate retroactively merely because the underlying conduct predates its enactment; because the Act neither extinguishes a cause of action, alters the substantive elements of any tort, nor changes the burden on a plaintiff beyond what Rule 12(b)(6) already imposes, it does not impair any vested substantive right Ailes may hold. On the federal-court applicability question, the court held that Berk — which concerned a Delaware requirement that medical-malpractice plaintiffs file an expert affidavit with their complaint — does not “directly collide” with UPEPA, because Ninth Circuit precedent already resolves any tension between anti-SLAPP procedures and the Federal Rules by applying Rule 12(b)(6) to legal-sufficiency challenges and Rule 56 to factual-sufficiency challenges, eliminating any conflict.
At UPEPA’s first step, the court found that all conduct at issue — Klemann’s court filings and Carls’s pre-litigation settlement correspondence — constitutes protected activity. In-court filings are expressly covered as “communication in a judicial proceeding” under § 27-34-102(a); the demand letters are protected as “communication on an issue under consideration or review in a judicial proceeding” under § 27-34-102(b), consistent with Ninth Circuit authority holding that settlement negotiations while litigation is pending or imminent qualify for anti-SLAPP protection.
At the second step, evaluated under the Rule 12(b)(6) standard, the court held that Ailes failed to state a claim for malicious prosecution on at least two independent grounds. First, Ailes could not plausibly allege lack of probable cause: although the sexual assault claims were ultimately dismissed as time-barred, the limitations analysis required nearly ten pages of legal reasoning in the 2024 dismissal order — addressing Montana’s “gravamen of the claim” framework, the intent element of battery, and equitable tolling theories — demonstrating that the timeliness question presented a genuine legal dispute rather than a frivolous position. Second, the court identified failure of the favorable-termination element, as dismissal on statute-of-limitations grounds is a procedural rather than merits-based termination. The abuse of process claim was likewise dismissed for failure to state a claim.
Key Takeaways
- Montana’s UPEPA — the state’s first anti-SLAPP law — applies to civil actions filed after the statute’s May 2025 effective date even when the underlying conduct occurred years earlier, because procedural statutes are not retroactive merely by virtue of governing pre-enactment events.
- The Supreme Court’s decision in Berk v. Choy does not bar application of state anti-SLAPP statutes in federal diversity cases; the Ninth Circuit’s approach of evaluating anti-SLAPP motions under Rule 12(b)(6) or Rule 56 depending on the motion’s basis eliminates direct conflict with the Federal Rules.
- Pre-litigation demand letters from an attorney discussing potential amended claims and settlement values are protected activity under UPEPA as communications “on an issue under consideration or review” in a judicial proceeding, not merely bare extortion threats outside the Act’s reach.
- A malicious prosecution claim requires that the prior proceeding terminated favorably on the merits; dismissal of claims as time-barred may defeat that element. And probable cause exists if a legal theory, though ultimately unsuccessful, presented a genuine legal dispute — measured objectively at the time of filing, not in hindsight.
Why It Matters
This decision is the first reported application of Montana’s UPEPA and confirms that the statute operates as a meaningful litigation shield for parties and attorneys accused of misconduct in prior proceedings. The ruling signals that plaintiffs who lose on statute-of-limitations or other threshold grounds and then retaliate with malicious prosecution suits face a steep climb: the same legal complexity that defeated their earlier opponent’s claim may simultaneously supply that opponent with the probable cause needed to defeat the follow-on suit.
The court’s treatment of Berk v. Choy is also significant beyond Montana. Plaintiffs in other circuits have begun invoking Berk to argue that state anti-SLAPP statutes cannot apply in federal diversity cases, but this opinion — consistent with post-Berk decisions from the Northern and Central Districts of California and the Ninth Circuit — rejects that reading, holding that the dual-standard framework of Planned Parenthood Federation of America v. Center for Medical Progress renders anti-SLAPP motions compatible with the Federal Rules. Until a circuit split or Supreme Court intervention, anti-SLAPP defendants in the Ninth Circuit appear on solid ground.