Defamation

SLAPPs: Birds do it, bees do it, even big law firms that should know better, do it.

angry photoI’m not so sure about that title, but it made me chuckle. The point of this article is that attorneys who create SLAPPs run the gamut, including large firms, who would presumably have an attorney or two who should know better. This latest case in my office is an object lesson as to how SLAPPs come about, and why the California’s SLAPP statute was such a great idea.

The case is the typical scenario where my client went off and started a business to compete with his former employer, and the former employer doesn’t like that one bit. The company sued, claiming the usual misappropriation of trade secrets, interference with prospective economic advantage and the like. My client cross-complained for breach of contract, because the company stopped paying certain significant residuals to which he is entitled. We will ultimately win, but the company is going to do what it’s going to do.

“Don’t you dare tell the world about how we’re going out of business.”

One thing it decided to do was to use the action to silence any criticism by my client. My client sent out a cautionary email to employees of the company, warning them about the shenanigans of the company. He explained that the company had not only breached contracts by cutting off his residuals, it had done the same to someone else. The email then directed the recipients to reports about the company published by Moody’s and Bloomberg, as well as press releases by the company itself, which all stated that the company is in some pretty dire financial straights.

He also sent out a press release, summarizing some events in the litigation. Specifically, when we took the deposition of the former vice president of the company, he took the Fifth and refused to answer any questions. The press release accurately reported those facts.

The company is represented by a law firm I had never heard of before this case, but according to its letterhead, it has some 30 offices, with five or six of them right here in California. It must be a pretty big firm.

The company and its attorneys apparently decided that while they were doing what they were going to do, my client is not allowed to tell anybody about the litigation or point to news stories about the finances of the company. They amended their complaint, adding four cause of action for libel, trade libel*, false advertising and unfair competition, all based on the email and the press release.

Under the heading of you can’t make this stuff up, here are some of the things they alleged were defamatory.

“It’s not 100% certain we are going to fail, it’s only close to 100%.”

My client provided a link to the article by Moody’s, and he said, “as one analyst says, the chances of [the company] defaulting on its [debts] is 100%.”

That’s defamatory, according to the complaint, because the analyst actually said, “the chances of [the company] defaulting on its [debts] is close to 100%.” So, apparently in opposing counsels’ world, that difference is defamatory because someone wanting to invest in the company would be put off by reading that the chance of default is 100%, but if they knew it was only “close to 100%” then they would be pulling out their checkbooks.

My client also wrote that his “complaint against [the company] alleges twelve causes of action, including . . . breach of the covenant of good faith and fair dealing . . . among others.”

Why is that defamatory? Because according to the complaint, my client did NOT file a complaint, he filed a CROSS-complaint, and the cause of action for breach of the covenant of good faith and fair dealing was thrown out on demurrer (before I was involved).

So, again, for that to have caused any loss of reputation, we have to assume that someone considering working for the company or investing in it would say, “I’m fine with a company that doesn’t pay its employees, so long as that’s only alleged in a cross-complaint, and so long as there is no cause of action for breach of the implied covenant. But if there’s a COMPLAINT that alleges breach of the implied covenant, the deal’s off!

This is the precise sort of case for which the anti-SLAPP statute was designed. In my never to be humble opinion, the causes of action were added purely out of a desire to gain leverage in the action, and a quick disposal of that sort of claim is the purpose of the anti-SLAPP statute. This was the quintessential SLAPP, and you are left scratching your head as to how a firm could have blundered into it, unless . . .

Crazy like a fox?

Since the SLAPP was so obvious, it has not escaped me that the firm may be crazy like a fox. It just smacks of a set-up. As stated, at the end of the day the company will be writing my client a substantial check. When I first came into the case, opposing counsel was fighting to postpone the trial, trying to put off that eventuality. It takes about six months to have a motion heard in this courtroom, and the judge does not move up motions on an ex parte application unless there has been a cancellation. If opposing counsel checked my background and saw that anti-SLAPPs are a big part of my practice, they may have filed an intentional SLAPP as a means to delay the action. That may seem crazy given the attorney fees that will come from the successful motion, but given the finances of the company, the goal might just be to push this case beyond a bankruptcy filing.

Still, I was recently retained to handle an appeal in a case where the judge improperly denied an anti-SLAPP motion, and then compuounded the error by refusing to give a jury instruction on protected speech. The jury awarded substantial damages based on protected speech. That case illustrates why it is crucial to get protected activities out of the action, even if it is clear that the plaintiff may have filed a SLAPP for purposes of delay.

*A rookie mistake to allege trade libel. It seldom makes sense to allege trade libel because the elements are far harder to meet than an action for libel, and it certainly doesn’t make sense to allege trade libel when you are already alleging libel.

Council spent £200,000 trying to unmask anonymous blogger

A council has dropped a five-year, £200,000 legal campaign trying to unmask a blogger called Mr Monkey, who made allegations of impropriety against four senior members of the authority. A Freedom of Information request has forced South Tyneside council to admit how much they spent trying (and failing) to discover the identity of Mr Monkey, who made allegations of impropriety against four senior members of the authority. They've dropped the curious case after the Guardian started asking questions

Source: www.theguardian.com

The Council suspected the blog was authored by Ahmed Khan, but Khan has always vehemently denied being Mr Monkey and unsuccessfully filed an ‘anti-SLAPP’ (Strategic Lawsuits against Public Participation) motion in 2011, which would have prevented the council from obtaining more of his details. But this claim was dismissed by a judge as “frivolous”, as the nature of the John Doe suit meant he was never named as a defendant. 


There are procedures by which an anonymous blogger can oppose a subpoena that would expose his identity, but you can't simply bring an anti-SLAPP motion claiming you're not the defendants.

Read the rest of this entry »

Cooley Law School loses defamation suit against New York law firm

Cooley Law School has lost an appeal in their defamation lawsuit against a law firm that posted criticism of the school's reporting of student debt on a popular law school message board.


The school had filed a $17 million lawsuit against Kurzon Strauss LLC, a New York firm, and two attorneys associated with the firm, Jesse Strauss and David Anziska, accusing them of posting defamatory statements on the popular law school message board "JD Underground". The post said that federal regulators were investigating Cooley Law School over student loan default rates and employment for graduates.


Those statements were later retracted, but the firm then began preparing a proposed class-action lawsuit against the school, at which point Cooley filed its suit against the firm accusing them of defamation, breach of contract and interference with business relations, among other claims.


A trial court granted judgment to Kurzon Strauss before trial, saying that Cooley Law School was a "public figure" and therefore would have to prove that the firm acted with a disregard for the truth, a bar the court said Cooley could not clear


Source: www.mlive.com

When in individual or entity is deemed to be a "limited public figure", the theory is that such a person has greater access to the media, and therefore tell their side of the story. Therefore, when a limited public figure sues for defamation, they have  a higher standard of proof to show that defamation. Specifically, they must show the person who allegedly defamed them acted with "actual malice" or "reckless disregard for the truth".


Here, the court concluded that Cooley Law School would not be able to meet that burden.


Go here for more Internet Defamation cases.

Read the rest of this entry »

Can a Court Order Someone Not to Defame You?

Temporary Restraining Order

I get many calls from victims of Internet defamation who want me to go to court and get an order to stop the defamation. In other words, they want a court order that stops someone from speaking or publishing statements that the victims deems to be defamatory. Is that possible?

Like most legal questions, the answer is, “it depends.”

California law is very clear that after a trial has determined that the statements being made are defamatory, the court can order the defendant to stop making those statements. The reason is that defamatory speech is not protected, so once it has been found to be defamatory, the court can order the defendant not to repeat the defamatory statements. Once the court has issued such an order, it can be enforced just like any other court order, with the court assessing sanctions and even jail time if the defendant refuses to comply.

By the way, most attorneys do not appear to be aware that a “gag order” is constitutionally permissible. In law school it was drummed into their heads that a court cannot order someone to speak, but they fail to realize that once a court has found that a statement is defamatory, it is no longer protected speech. I see complaint after complaint where the attorney has not requested injunctive relief, and that does not serve the client well. Without the injunction, even if the defamed party prevails on the defamation action, there will be nothing to prevent the defendant from saying the same things again, necessitating an entirely new case. As a practical matter, a defendant just having been found liable for defamation will probably not want to be sued again for the same comments, but I prefer not to leave things to chance.

So you absolutely can silence someone AFTER the court has found the speech is defamatory, but the much tougher challenge is getting a court to order a defendant to stop defaming the victim BEFORE there has been a trial. Typically, it takes at least a year to take a matter to trial, and that may be far too long for the defamation victim. A temporary injunction can be obtained in a matter of days, so that affords a much faster remedy if it is available.

But there is a problem. Read the rest of this entry »

Anti-SLAPP Motions are Used For Just About Everything

Paris Hilton Greeting Card

This case is a few years old, but it illustrates how anti-SLAPP issues can come up in just about any context. In this entertaining case, Hallmark Cards published a card using Paris Hilton’s likeness, and her ridiculous tag-line, “that’s hot”.

Hilton sued for the unauthorized commercial use of her image and, incredibly, Hallmark brought an anti-SLAPP motion, claiming the card was a matter of public interest. The trial court denied the anti-SLAPP motion, finding the card and its speech was not a matter of public interest, and the Court of Appeals for the Ninth Circuit agreed.

“First, ‘public interest’ does not equate with mere curiosity. Second, a matter of public interest should be something of concern to a substantial number of people. Thus, a matter of concern to the speaker and a relatively small, specific audience is not a matter of public interest. Third, there should be some degree of closeness between the challenged statements and the asserted public interest; the assertion of a broad and amorphous public interest is not sufficient. Fourth, the focus of the speaker’s conduct should be the public interest rather than a mere effort to gather ammunition for another round of private controversy. Finally, … [a] person cannot turn otherwise private information into a matter of public interest simply by communicating it to a large number of people.”

Here is the complete opinion.

 

Why It Is a Really Bad Idea to Use Litigation as a Means to Discover Defamation

Defamation - Shot in Foot

I get this type of call perhaps twice a week, so I decided to post this article, in order to provide detailed information to prospective clients who bring up these issues.

Here is the scenario. The caller is convinced that he is being slandered, but does not know exactly what is being said. He may know who is making the statements, but has heard only rumors about what is being said, or has witnessed only the consequences of the statements. Often the issue will arise in the workplace, where because of the statements of a co-worker, the caller is being passed over for promotions, or perhaps was terminated because of those statements. Other times it might be a neighborhood situation, where the caller feels he is being shunned by neighbors and has reason to believe it is because of something said at an HOA meeting.

The problem with this sort of case is that you can’t determine if you are being defamed until you know what is being said. The consequence of a false statement can be severe, but that does not mean the statement is defamatory. For example, you might be entirely correct that you are being passed over for promotions because of something being said by a co-worker, but that co-worker might simply be saying that you are lazy and should not be promoted. That statement is not defamatory, because it is an opinion. Defamation can be very nuanced, and whether a statement is defamatory can come down to a single word or even the voice inflection used.

Before I can take a case, I have to know what was said. In cases where the prospective client does not have direct evidence of what is being said, I have a simple screening process. Read the rest of this entry »

Anti-SLAPP Motion Does Not Dispose of Action as to Unprotected Claims

Anti-SLAPP Court of AppealIn a ruling that makes perfect sense, the Fourth District Court of Appeal held that an anti-SLAPP motion can be used to excise some allegations in a cause of action that involve protected activities, while leaving intact those allegations that do not fall under the statute.

In Cho v. Chang (LASC case number B239719), Jessica Chang sued a former co-worker, Howard Cho, for sexual assault and harassment. Chang filed a cross-complaint that was a clear SLAPP, because the two causes of action alleged defamation and infliction of emotional distress based on the things Chang had said about Cho to her employer, EEOC and DFEH. As I have said here many time, statements to government entities are protected, and the statements to the employer are a natural part of the redress process, and therefore are also protected.

But wait a second. The cross-complaint also alleged that the statements by Chang to her co-workers were defamatory. In some circumstances statements to co-workers can be protected, and indeed that was the argument made by Chang, but here the connection was too attenuated. As the court stated,

“Chang argues that her comments to co-workers related to matters of ‘public interest,’ but that is without merit. A public interest involves more than mere curiosity or private information communicated to a small number of people; it concerns communications to a substantial number of people and some connection with the public interest rather than a private controversy.”

So, if the allegations about the statements to co-workers state a valid action for defamation and infliction of emotional distress, must that baby be thrown out with the bath water just because it is contained in the same cause of action that include protected speech? Los Angeles Superior Court Judge Michael Johnson, and the Court of Appeal, answered “no” to that question. They both determined that an anti-SLAPP motion could be used surgically to remove just the allegations of protected activities and speech, while leaving any cognizable claims.

Nonetheless, the anti-SLAPP motion was successful, at least in part, so did Chang recover her attorney fees? In that regard, Judge Johnson was not very charitable. The judge noted that a party prevailing on an anti-SLAPP motion is normally entitled to an award of attorney fees, but said:

“While Chang’s motion has been granted in part, the ruling has produced nothing of consequence. Cho is still entitled to pursue his causes of action for defamation and [intentional infliction of emotional distress], and the evidence to be presented at trial is largely the same. Chang should have been aware that Cho’s allegations about private comments were viable, and she should have addressed the other allegations in a more focused and less burdensome manner (such as a traditional motion to strike or a motion in limine). Chang’s request for an award of fees and costs is denied.”

Defamation is Bad, but it Doesn’t Justify Chilling Free Speech

Blocked in Canada

Our neighbors to the North are very American-like, until you get to issues of free speech. Most view Canada as the “least protective of free speech in the English-speaking world.” Reasonable minds can differ on some of Canada’s laws, such as prohibiting the media from identifying criminals until they have been convicted, but most of the law is still based on policies designed to prevent any criticism of the government. Canadians can be held liable by English-Canadian courts for comments on public affairs, about public figures, which are factually true, and which are broadly believed.

A recent parody video posted on You Tube illustrates just how lacking the concept of free speech is in Canada. The video is a fake cable company ad posted by Extremely Decent Films. It does not mention any cable company by name, and indeed it is specifically directed at American cable companies. Nonetheless, someone lodged a complaint in Canada, and that was sufficient to scare You Tube into removing the video, given the vagaries of Canada’s libel laws (although the video has since been reposted in response to articles such as this one).

Anti-SLAPP Victory: Reality Television is Free Speech

storage warsThe reality show “Storage Wars” has created a case that offers some important anti-SLAPP (and litigation) lessons.

In December, David Hester filed a lawsuit against A&E Television Networks alleging that producers of Storage Wars rigged the reality-television series by salting storage lockers with valuable items before they were auctioned off to buyers. The producers deny the claim, pointing out that they have no access to the lockers before they are sold, but it could be that they are adding the items with the assistance of the buyers, after the purchase, to make the show more entertaining. After all, if the show was nothing but lockers full of expired National Geographic magazines, that would get boring fast. But I digress.

According to his lawsuit, Hester was told that his contract would be renewed for season four, but after complaining about the “fraud” that was being perpetrated on the viewers, he was told his services would no longer be required. He sued A&E and another entity for wrongful termination (huh?), breach of contract, breach of the covenant of good faith, unfair business practices, and declaratory relief.

Lesson 1:  For every wrong, there is not necessarily a remedy.

Some attorneys just never get this. If I hire you for my television show, and I have the contractual right not to renew that contract at some point in the future, and you do something I don’t like, such as telling me you don’t like the way I am running the show that I’m paying you $750,000 to be on, then I just may decide not to keep you around. You are not some bastion for the public, given the task of making sure my show is pure. All reality shows are faked to some extent, and the viewers all know they are faked (although, incredibly, I did once run into a guy who thinks Ghost Hunters is totally legit).

It may stink that Hester got “fired” for wanting to keep the show honest, but if he wanted to make sure he never got fired for criticizing the show, the he should have added a “you may not fire me when I tell you your show stinks” clause to his contract.

Lesson 2:  A faked reality show is an expression of free speech.

Can you sue Stephen King when you find out Pet Sematary [sic] is not based on reality? Then why did Hester and his counsel think they could sue A&E for its fictional Storage Wars? Not surprisingly, A&E’s attorneys asked the same question in the form of an anti-SLAPP motion. The motion was a no-brainer, because it involves a free speech issue of public interest, bringing it within the anti-SLAPP statute, and there was zero chance of Hester prevailing on at least one or more of his causes of action, so the second element was a lock. Read the rest of this entry »

Chink in Armor of Communications Decency Act?

Sarah Jones

Former Cincinnati Bengals cheerleader Sarah Jones won her defamation lawsuit against the gossip website TheDirty.com on Thursday in federal court, winning an award of $338,000. Whether she will ever collect any money is a different issue, but some see the decision as groundbreaking since the Plaintiff got around the Communications Decency Act.

Jones, 28, sued in 2009 after TheDirty.com published comments alleging she had slept with all of the Bengals, and had sexually transmitted diseases. The first trial ended in a deadlock, when the jurors were unable to unanimously agree whether the posts about Jones having sex with all the Bengals players and likely having sexually transmitted diseases were substantially false.

The case caught the attention of defamation attorneys after U.S. District Judge William Bertelsman ruled the website was not shielded from liability by the Communications Decency Act (CDA) of 1996. Many thought the ruling was a departure from all other rulings protecting website operators who use third-party content, and no doubt you will see this case reported as the first chink in the CDA’s armor, but I’ll explain why it is nothing new.

Whomever posts a defamatory comment on a website is always liable for the posting. The CDA protects a website operator from liability for third-party postings, but the website operator is still liable for his own postings, and that was the case here. The “shtick” of TheDirty is for visitors to post horrible comments about people, and the host, Nik Richie, then throws in his two cents worth. It was Richie who commented that Jones had slept with every player on the team, so of course he can be held liable for his own comments.

As evidenced by the first mistrial, on a different day with a different jury, the result could have been very different, and this could very well be reversed on appeal. As I have stated here many times, context is everything. A statement is only defamatory if it is offered as a true fact as opposed to being a joke or satire. When Richie makes the claim that Jones has slept with every player on the team, how would he be in a position to know that, and can it really be taken as a true statement that she slept with EVERY player on the team?

Complicating the matter is Jones’ history. I wrote here about the cannibal who sued because he was called a thief. It’s hard to argue that you have lost reputation for being falsely accused of being a thief when you are an admitted cannibal. Here, plaintiff is same Sarah Jones who gained national attention as a teacher for her dalliances with an under-aged student, for which she was sentenced to two years in prison (suspended).

Aaron Morris, Attorney
Aaron Morris
Morris & Stone, LLP

Tustin Financial Plaza
17852 17th St., Suite 201
Tustin, CA 92780

(714) 954-0700

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