Litigation

Allegations Must be Taken in Context When Considering Anti-SLAPP Motion

Man amid puzzle pieces
I’ve decided to report in detail on this unpublished anti-SLAPP ruling, both because it is an interesting SLAPP case, illustrating some creative thinking, and because it gives an interesting peak behind the curtains regarding how real estate developers create additional revenue streams.

Attorneys unfamiliar with the anti-SLAPP statutes sometimes make the mistake of filing a cross-complaint, or amending a complaint, that includes causes of action that arise from the currently pending litigation itself. Here, after a successful motion for judgment on the pleadings by defendant, the plaintiff amended the complaint, and a single word in the allegations seemed to make reference to something that had occurred during the litigation. The defendant latched onto that word, and claimed that the amended complaint was a SLAPP since it amounted to suing for conduct during the litigation.

The takeaway, if you are disinclined to review the case in detail, is that while the plaintiff must be careful with the wording of the allegations, the defendant cannot be too technical. Allegations are, of course, taken in context.
Read the rest of this entry »

SLAPP006 – CalPERS v. Moody’s – Is an Opinion Always Protected Speech Under the Anti-SLAPP Statute?

California SLAPP Law Podcast

With the wisdom of a penny-stock investor trying out day-trading for the first time, the brilliant financial minds at CalPERS (California Public Employees’ Retirement System) decided to dump more than a billion dollars into three “structured investment vehicles” or SIVs, backed by subprime mortgages. After all, Standard & Poors had given these three SIVs AAA ratings, even though they were “stuffed full of toxic, subprime mortgages, home equity loans, and other types of structured-finance securities linked to subprime mortgages,” as CalPERS now alleges.

As most do when they make really bone-headed investment decisions, CalPERS looked for someone to blame, and settled on Standard & Poors for that AAA rating. It sued Standard & Poors for negligent misrepresentation, asserting that the ratings company should be held responsible for the losses suffered by CalPERS.

“But wait a cotton-picking minute,” said some fictional attorney representing Standard & Poors, “I read somewhere in law school that opinion is protected speech, and won’t support an action.” On that basis, Standard & Poor’s filed an anti-SLAPP motion, but a San Francisco judge denied the motion, finding that CalPERS had provided sufficient evidence to meet the second prong of the anti-SLAPP analysis.

Today’s podcast examines the opinion of the Court of Appeal as regards the anti-SLAPP motion. Is an opinion about the worth and safety of an investment inherently protected opinion speech?

California Public Employees’ Retirement System, Inc. v. Moody’s Investors Services, Inc., 14 S.O.S. 2584 (A134912). For a copy of the opinion as well as a copy of the original complaint, go here.

Morris & Stone Victory – Reducing Attorney Fees

Inflated Fee ApplicationsI am often brought in as an expert to oppose inflated attorney fee applications following an anti-SLAPP motion. Of course every case is different, but thus far I have never failed to get the requested fees reduced. Lest you be overly impressed, I will immediately note that I only handle a case if I agree that the attorney fees should be reduced. Sadly, there are far too many unethical attorneys who, after prevailing on an anti-SLAPP motion, view fee application as a winning lottery ticket, and greatly inflate the fees. In most instance my services are sorely needed to challenge the application, but there have been a few occasions where the fees being requested are reasonable in my opinion, and I inform the plaintiff and/or his attorney that I cannot opine that a reduction would be appropriate.

In today’s case, the fee application was of the all too common variety, where defense counsel grossly overstated the fees to which he felt entitled. In this case, the plaintiff had negligently filed a SLAPP, making the common mistake of seeking damages that flowed from fighting a legal action, claiming that the action was an “abuse of process”. When the defendant filed the anti-SLAPP motion, the plaintiff was educated as to the litigation privilege, and dismissed the challenged causes of action (others still remained). Rather than just bringing me in as an expert, the client decided to retain me to oppose the motion and prosecute the remaining causes. Read the rest of this entry »

SLAPP001 – Why Every Litigator Must Know California SLAPP Law


California SLAPP Law Podcast

California’s SLAPP Law provides for the use of special motions to strike, called “anti-SLAPP motions“, to quickly dispose of lawsuits that were filed only to improperly silence free speech or to prevent the defendant from pursuing a lawful legal remedy.

But as one person put it, the 15 Legislators who passed the law failed to consider the 4,000 attorneys who would interpret it. There is a dark side to California’s SLAPP Law. It trades one form of abuse for another. It was designed to protect free speech and the right of redress, but now it keeps some legitimate cases out of court because the risks are just too high. And with its automatic right of appeal, it is used to greatly delay trials. Any anti-SLAPP motion, no matter how ill-conceived, gives the defendant an automatic right of appeal. A defendant can therefore delay a trial for a year or more just by filing an anti-SLAPP motion.

Finally, with the right to attorney fees it provides, it provides unscrupulous attorneys with a mechanism that allows them to recover windfall fees.

With Episode 1 of the California SLAPP Law Podcast, I take you through the history of the anti-SLAPP statutes, and explain why every California litigator must be familiar with this law.

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.

 

Reporting a Fact is Never Defamatory

Facts are not defamatoryIt is never defamation to report a fact, even if that fact is that a person was charged with a crime they did not commit. I understand why callers sometimes don’t understand this distinction. The completely innocent caller was falsely arrested, so it seems like a newspaper that reports the arrest is somehow making a false statement that the caller committed a crime. But look closer, caller. The paper did not report that you committed the crime, the paper reported that you were ARRESTED for the crime. Truth is an absolute defense to any defamation claim, and it is true that you were arrested.

I also see this come up often in the context of an expunged criminal conviction. The caller was arrested and convicted for some youthful indiscretion, and later had the conviction expunged. Years later, the caller was either fired from or denied a job because a background investigation revealed the conviction. “But I had that expunged, so they shouldn’t be able to report it to my employer!”, the caller exclaims. The caller wants to sue for defamation, because in his mind the offense was expunged, and therefore it never happened. Since it never happened, it must be defamatory to claim that it did, right?

Not so much. Expungement does not change reality. The caller was arrested and convicted, so it is not a false statement to report that fact, and therefore there is no basis for a defamation claim. Note, however, that I am only talking about defamation claims. There are Labor Codes that make it illegal to discriminate on the basis of expunged criminal convictions. Go here for a discussion of those Labor Code sections.

What I don’t understand is how so many attorneys miss this point and pursue doomed defamation claims for their clients.

A recent example of this that caught my eye is a case out of Nevada. As reported by the Las Vegas Sun, the accounting firm of Deloitte & Touche was hired to perform an audit of a company called Global Cash Access Holdings, Inc., which is a publicly traded company that provided cash access services to the Nevada gaming industry.

The accounting firm uncovered information from an FBI bulletin which claimed that the two men who founded the company – Robert Cucinotta and Karim Maskatiya – were involved in criminal activity. As they were required to do by law, Deloitte & Touche disclosed this information to the audit committee. Cucinotta and Maskatiya were not happy with this disclosure, and felt it amounted to defamation because they were never convicted of any crimes and there was no evidence that they did anything criminal. They sued Deloitte & Touche, claiming that the disclosure cost the company $400 million in market capitalization and cost them $100 million personally.

But can you see why the comments by Deloitte & Touche were not actionable defamation? The accounting firm simply reported information that was contained in the FBI bulletin, as it was required by law to do. Certainly if those allegations against two principals of the company proved to be true it would greatly impact the value of the company, so that information was quite properly reported.

The Nevada Supreme Court, in a decision written by Justice Michael Cherry, said, “We agree with our sister jurisdictions that those who are required by law to publish defamatory statements should be privileged in making such statements.” In this case the court said Deloitte’s communication to the audit committee of the cash access company was required by the federal securities law.

Anti-SLAPP Victory — Shaheen Sadeghi v. Delilah Snell

Defamation Road Less TraveledI just wish counsel would run these cases past me before filing a defamation action. Here is a tale of a SLAPP that should have been spotted a mile away.

The tale starts with an article in OC Weekly. The article was about a guy named Shaheen Sadeghi. The article was extremely favorable to Sadeghi, referring to him as the “Curator of Cool” and discussing his amazing success in Orange County. OC Weekly even put his visage on the cover of the paper. Truly, it was a positive article that most would kill for.

But everyone has their detractors, and Sadeghi’s was a woman named Delilah Snell. After disclosing that Snell happens to be the girlfriend of a OC Weekly editor, the article reports on a dustup between Snell and Sadeghi, as told by Snell. Here is what the article said:

Still, some say Sadeghi will do whatever it takes to succeed. Delilah Snell, owner of Road Less Traveled, a shop in Santa Ana that sells environmentally friendly gifts and home goods, met with him in 2008 to discuss an opportunity to move to the Camp. (Full disclosure: Snell is the girlfriend of OC Weekly editor Gustavo Arellano.) She says the rent rate he gave was way too high, at least triple what she was paying, and she declined the offer. Then, she claims, he made a threat. “He basically said to me, ‘If you don’t move into my center, I will copy your business,'” she says.

Snell, co-founder of the Patchwork Indie Arts & Crafts Festival and a pioneer in Orange County’s eco-movement, believes her store is the model for the Camp’s SEED People’s Market, an airy, 12,000-square-foot gallery-type outlet that sells sustainable products and handmade crafts. Sadeghi owns the store with his wife, Linda. Snell claims that SEED has approached many of the vendors featured at Road Less Traveled and even used a photo of her shop in a promotional email sent out to customers. (The Weekly has a copy of the email.)

The article then goes on to tell Sadeghi’s side of the story:

Of Snell’s accusations, Sadeghi responds, “I think she’s full of it.” He says his business plan for SEED was dated “five years before she developed a business plan.”

“It’s a whole different store, whole different vibe,” he says, “and it has nothing to do with Road Less Traveled.”

The article then returns to singing the praises of Sadeghi, providing examples of how he is beloved by his tenants at his business centers like The Lab in Costa Mesa.

Sadeghi sued Snell in Orange County Superior Court, alleging in his complaint that Snell “orally accused Mr. Sadeghi of threatening to copy Ms. Snell’s business idea and plan if Ms. Snell did not move into Plaintiff’s retail center.” Sadeghi then alleged causes of action for slander, slander per se, libel, libel per se, invasion of privacy/false light, intentional interference with economic prospective advantage (sic), negligent interference with economic prospective advantage (sic), unfair competition, and injunctive relief. Whew! All arising from the statements Snell allegedly made to the OC Weekly, claiming that Sadeghi had said “If you don’t move into my center, I will copy your business.” Snell responded with an anti-SLAPP motion.

A quick aside to discuss the “Wall of Wrong”.

A potential client will call me, and during the call will tell me about 20 evil deeds committed by the defendant. In their mind, they have been horribly wronged, and they want to sue. Fair enough, but for a legal action each wrongful deed must be viewed independently to determine if it is actionable. I call the wrongful acts the “Wall of Wrong”, and each wrongful act is an item on that wall. (I considered calling it the Shelves of Wrong, but that didn’t seem as catchy.) I explain to the client that to determine if there is a case, we must walk up to the wall, take down each item and examine it independently to see if it will support an action. If not, it is tossed away never to be discussed again.

The reason this exercise is so important is because the client groups all the perceived wrongdoing together, and views it as a single act that certainly must support an action. But when all the conduct that does not support the action is stripped away, the client will often see that there is no action or that what is left remaining is pretty petty.

One more point to keep in mind in the defamation context is that just because something is false does not mean it is defamatory.

So let’s take Mr. Sadeghi to the Wall of Wrong to see if he has a case. Here, there are only two items to examine: (1) the claim that he was going to copy Snell’s business, and (2) that he pressured Snell to lease space in his center with the aforesaid threat. Let’s take those items off the shelf one at a time and decide if they will support a suit.

“I will copy your business.”

Sadeghi alleged that he never said he was going to copy Snell’s business. So, is it defamatory to falsely claim that someone said he was going to copy your business? Of course not. That statement, whether true or false, does not accuse Sadeghi of any wrongdoing. Imitation is the sincerest form of flattery. As the court put it in granting the anti-SLAPP motion, “Pepsi copies Coke. Gimbel’s Copies Macy’s. This is the nature of business.” Mr. Sadeghi, take that statement from the Wall of Wrong and never speak of it again.

Pressuring Snell to lease space.

Is it wrong to pressure someone to lease space in a mall? Of course not. But let’s refine that a little. Is it wrong to say you will copy someone’s business if they don’t lease space from you? Sometimes creating an analogous fact pattern makes it easier to analyze. Let’s say you have a chain of pizza restaurants, and a landlord comes to you and says, “we really want a pizza place like yours in our center, so we just want you to know that if you don’t lease the space, we’re going to create a pizza place just like yours for our center.”

Anything wrong with that? Sure, he’s pressuring you to rent the space with the threat of opening a competitor if you don’t, but that’s fair. When a landlord is looking for an anchor store in their mall, don’t you think they play Macy’s and Neiman Marcus off one another? Mr. Sadeghi, take that statement from the Wall of Wrong and never speak of it again.

So we are left with nothing on the Wall of Wrong, meaning that there is no case to pursue. This case should never have been filed, and the court properly granted the anti-SLAPP motion.

A SLAPP is not saved by numerous legal theories.

The other essential takeaway from this case is that nine causes of action do not a case make if the basis for the action is defective. In other words, if it was not defamatory for Snell to claim that Sadeghi said “If you don’t move into my center, I will copy your business,” then those words will not support any other legal theories like intentional infliction of emotional distress or unfair competition.

Further information about the case and the Court’s minute order can be found here, and the original article in question can be found here.

Texas Judge Still Unclear on SLAPP Law

Internet Defamation SucksI came across this humorous article that combines local politics and what certainly appears to be a SLAPP suit, although the judge couldn’t see it.

I get about one call a week that begins with the statement, “We’ve got to do something about this SLAPP law.”  In every instance so far, the caller thinks the SLAPP statute is a really bad idea because they filed a SLAPP, and got hit with an anti-SLAPP motion.  “We’ve got to do something about this SLAPP law” translates to “this SLAPP law really stinks because it is keeping me from suing someone who said something I don’t like.”

For a real-life example of the very purpose of the SLAPP suit, and the machinations that can pop up when someone tries to avail themselves of the SLAPP statute, go to Bullies: The Story of a SLAPP Suit Gone Wild.

By the way, this story presents a lesson that everyone should have figured out long ago. If your name is, say, Melissa Kingston, you should at the very least own the domain name melissakingston.com. The reasons are myriad. At the very, very least, Ms. Kingston may someday become a famous author, and would want to be able to promote her books on that website. Also, if another Melissa Kingston gets the name first and puts up a website about devil worship, some might mistakenly think she is the one promoting herself as the devil’s spawn.

Finally, and the relevant point to this article, owning your name on the Internet is very cheap insurance. If someone takes a dislike to you and [yourname].com is just sitting there ripe for the plucking, your detractor can buy that name and get into all kinds of mischief. It’s not bullet proof protection by any means — seeing that [yourname].com is taken, the detractor will just settle for [yourname]sucks.com — but the latter name is automatically recognizable as a protest site, whereas the former is not. Right now, if you have not done so already, go to Go Daddy and check on the availability of your name, and if it is there, buy it. The cost to own your name on the Internet is about 87 cents per month, and that includes a free landing page, where you could post your favorite picture or quote if you can’t think of anything else to do with it for now.

An Employee’s Report to Human Resources is Protected by SLAPP Statute

Human Resources Internet DefamationAlways remember when reviewing a complaint to see if it is a potential SLAPP that the anti-SLAPP statute is not only about speech, it includes the right of redress. Then, whenever you see that the defendant has complained to someone — anyone — consider whether that is a natural step one would pursue in seeking redress.

We were the first firm (that we know of anyway) to successfully pursue an anti-SLAPP motion based on a report to a bank. Our client’s partner had opened a credit card in the name of the company, and when our client found out, he went to the bank and closed the account, informing the bank personnel that his partner had committed fraud. The partner sued for defamation, and we successfully brought an anti-SLAPP motion on the grounds that reporting the fraud to the bank was the first logical step dealing with the fraud. Stated another way, all would recognize that if our client had gone to the police and reported the fraud, that would be protected, but who would go directly to the police without first running to the bank to get the card cancelled in order to stop any false charges? The court agreed with my argument that the report to the bank is part of the same right of redress.

And so it was found in the just reported case of Aber v. Comstock. There, and employee brought a claim against her employer and two of its employees for sexual assault. Comstock, one of the employees who Aber was suing, filed a cross-complaint against Aber for defamation and intentional infliction of emotional distress.

Comstock’s case was likely doomed from the start, because as I have already explained here, suing someone for suing will almost always be a SLAPP, and he even alleged that part of the defamation was the report to the police, which is clearly protected. Specifically, Comstock alleged that Aber “orally published false statements about COMSTOCK to third parties, including but not limited to, friends, employees of Wolters Kluwer, health care practitioners, and the police.” The court reviewed the law that applied to each of these statements, and the most interesting was the analysis of the statement Aber made to her employer’s HR representative.

Were Ader’s statements to the HR department protected under the SLAPP statute?

An earlier case (Olaes v. National Mutual Ins. Co.) had found that statements to a company’s HR department were not part of “an official preceding authorized by law” and therefore did not fall under the SLAPP statute. Here, however, the court noted that a U.S. Supreme Court case (Faragher v. City of Boca Raton) had found that the failure of an employee to take advantage of corrective opportunities afforded by the employer could be used as an affirmative defense against a claim by the employee. So, put them together. Aber did not have to report the alleged assault to HR, but had she failed to do so, then her subsequent action for the assault could have been defeated. Bingo. That makes the report to HR a necessary part of the right of redress, and pulls it into the anti-SLAPP statute.

The case was properly decided, but is a little concerning given the course the court followed. The justices shoe-horned the report to HR into the SLAPP statute by finding it was necessary in order to preserve the ultimate legal action. As we demonstrated with our credit card case, the standard need not be so stringent, and instead the determining factor should be whether the conduct was a natural part of the process.

Go here to see the complete decision in Lisa Aber v. Michael Comstock.

The Litigation Privilege and Collateral Defamation Actions

Spawning Litigation Actions
I get the same question a couple of times a week, so I decided that a article on the litigation privilege is in order, so I will have a place to send potential clients for a detailed discussion.

The question from potential clients almost always comes up in the context of wanting to start a collateral action* for defamation in response to something that is being said in some other court action. Here are the most common examples:

— A husband is going through a divorce, and his wife or a witness or the wife’s attorney filed a declaration with the court stating that he was physically abusive to the children. He wants to file an action against his wife (or the witness or the attorney) for defamation for the false claims made in the declaration.

— Someone is seeking or has obtained a restraining order against the caller, and in support of the request for a restraining order the person filed false declarations and gave false testimony in court. The caller has absolute proof, including emails and recordings, showing that the statements were false. The caller wants to sue for defamation because of all the false statements, which are now a matter of public record.

— An attorney sent a letter to an employee’s employer, claiming that the employee stole property and trade secrets from his former employer, and threatening to sue if the property is not returned or if the employer makes use of any of the trade secrets. Based on the letter, the company fires the employee rather than to run the risk of a lawsuit. The employee did not take any property from the former employer and is not using any trade secrets, and wants to sue the former employer and its attorney for defamation.

— An employee is suing for wrongful termination, and the deposition of one of his former co-workers is taken. At that deposition, the co-worker falsely claims that she was sexually harassed by the employee suing for wrongful termination. As a result of this claim, the court grants a motion for summary judgment and throws out the action, and the employee’s marriage is severely strained because of the claim of infidelity. The employee wants to sue the co-worker for defamation for what she said at her deposition.

— A person is sued for fraud, and in the complaint there are dozens of false allegations, stating that the defendant engaged in illegal conduct and made misrepresentations to the plaintiff in order to cheat her out of money. After the complaint is served, the plaintiff dismisses the action, but the complaint is now a matter of public record, and anyone doing a search on the Internet can find this complaint with all its lies. The defendant wants to sue for defamation.

Statements Made in Conjunction with Litigation are Privileged

None of the above circumstances would permit an action for defamation. A quick definition is necessary to explain why. Defamation requires an UNPRIVILEGED false statement. Therefore, if a statement is privileged, it cannot be defamatory.

The statements that are privileged are set forth in Civil Code section 47, which states in part:

47. A privileged publication or broadcast is one made . . . (b) In any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law . . . .

Thus, any statement made in conjunction with a “judicial proceeding” is privileged, and cannot form the basis of a defamation action. It’s that simple.

When I explain this to potential clients, I typically get a response that goes something like this:

“So you’re telling me, they can falsely accuse me of rape, and there’s NOTHING I can do about it?!”

“Well, your question was whether you could sue them for defamation, and no, you cannot sue them for defamation.”

“But I can prove that they knew what they said was false.”

“It’s not a question of being able to prove it’s false, you can’t sue them for defamation if the statement is made in conjunction with litigation.”

“So you’re telling me, they could falsely claim I murdered 50 people, and there’s NOTHING I can do about it?!”

And so it goes, with the caller coming up with greater and greater examples of outrageously false statements, apparently thinking that I will ultimately see the foolishness of what I am claiming, and respond, “Oh, well, if he falsely accuses you of killing 20,000 people, then THAT would be enough to sue for defamation.”

It doesn’t work that way. The litigation privilege is absolute, and once you understand the public policy behind this rule, you will probably agree that it is essential. I will also show you why it really doesn’t make any difference in the grand scheme of things.

A World Without the Litigation Privilege

Imagine a legal system without the litigation privilege. Let’s put you into a garden variety personal injury action as an example. You went to a bar and had a couple of beers, but you were there for many hours, so you were stone cold sober on your drive home. When you stopped for a red light, someone rear-ended you, and you are now suffering serious back problems as a result. You are suing the person who rear-ended you for your medical expenses and pain and suffering.

During discovery before the trial, the attorney representing the defendant who rear-ended you contacts your family members and employer, and asks them about your “drinking problem.” Following the conversation with the attorney, your boss calls you in and says you will no longer be permitted to use the company car, because he has concerns about your drinking.

The bartender is deposed and testifies that he saw you drinking before the accident, and recalls that you had ten beers, when in fact you only had two.

At trial, the defendant testifies that you stopped abruptly in the middle of the road for no reason, and that is what caused the accident. He claims that when you got out of the car, you apologized for the accident, stating that you were too drunk to be driving. Both statements are false.

As a result of the testimony of the bartender and the defendant, the jury finds in favor of the defendant. In the hallway following the verdict, the jurors all tell you that you should seek help for your drinking problem. You have to pay thousands in court costs to the defendant.

In this world without a litigation privilege, what do you do? Well, you can’t let stand all those false claims, so you file two more actions, suing the bartender and the defendant for defamation. For good measure, you file a third action against the attorney for talking to people about your alleged drinking problem.

Thus, your one action has now spawned three more. Now, when you testify in those three actions that the bartender, defendant and attorney were all lying, how should they respond? They can’t allow those accusations to go unchallenged, so they each file lawsuits back against you for calling them liars. Our original personal injury action has now spawned six new actions. In fact, since you claimed that the person who rear-ended you was negligent, and he proved that he wasn’t, he probably already sued you for lying about him in the first action.

And there is a collateral effect. The bartender testified to what he thought was the truth. He remembered you as having ten beers, but he had confused you with someone else and was just wrong. For coming to court and telling what he thought was the truth, he bought himself a lawsuit. He now must pay an attorney thousands of dollars to defend him against your defamation action. Would anyone ever agree to testify in court if they could be sued for what they say? They could be compelled to attend with a subpoena, but you can bet they are going to testify that they don’t remember anything in order to avoid being sued.

Thus the reason for the ABSOLUTE litigation privilege. If you allow anyone to be sued for what they say in conjunction with a lawsuit, the system would fall apart. Every action would spawn many more, and the courts would be unable to keep up. No one would be willing to testify, so cases would often be impossible to prove.

The frustration of the callers is understandable, especially when they have proof that the statements were false. They understand generally the reasons for the litigation privilege, but feel that there must be an exception when there is irrefutable proof that the other side knowingly make false statements. But consider that for a moment. If there was an “I have absolute proof that the witness knew he was lying” exception, how would that work? That exception would defeat the rule, because then anyone could file an action claiming to be in possession of such proof. The action would still have to be litigated in order to look at the proof.

The only “exception” is that the statements have to made in furtherance of litigation. Anything said in court or in a court document is obviously privileged, but so too are the statements by the attorney when he contacted potential witnesses.

Collateral Actions Accomplish Nothing.

Before you rail against this necessary public policy, claiming that there should be a consequence for lying, understand also that it really doesn’t make much difference. Here is why.

A caller will tell me that during divorce proceedings, his wife lied about him abusing the children, and as a result he got limited visitation. He wants to sue for defamation for all the lies about the abuse.

But wait a minute. “Didn’t you explain during the divorce proceedings that you did not abuse the children?”, I ask.

“Yes, and all my family members testified that I was a wonderful father who never hit my children, the children testified that I never hit them, and we had an expert witness, a social worker who testified that there was no indication that I ever abused the children.” But my wife testified that I did beat the children, some of her friends testified that long before the divorce she had told them about me beating the children, and her expert witness testified that the behavior of the children was indicative of abuse by the father. For whatever reason, the judge believed her witnesses and not my witnesses.”

“OK, so with every opportunity to tell your side of the case, the judge did not believe you and you lost. Why would the result be different in a new case?”

“Well I have more witnesses, and she introduced hospital records of one of my children being taken to the hospital for a broken finger, and claimed that I broke that finger, but I can prove that I was away on business on that day.”

“Did something prevent you from introducing those travel records to the judge in the divorce action?”, I ask.

“Well, no, but it was so obvious that I did not abuse the children I didn’t think I needed to.”

So you see why a collateral action, even if permitted, would not accomplish anything. If the party could not prove their position in one court, there is no reason to believe they will have a different result in another. And if there was more evidence that could have been presented, it should have been presented in the first action. The strong public policy supporting the litigation privilege does not need to bend to give you a second bite at the apple – just put on all your evidence in the first action. If despite all your evidence the judge gets it wrong, then you should appeal from that case, not file a new one.

Be honest with yourself, and you will have to admit the real reason you want to bring a collateral action.

If the following does not apply to you, then don’t be offended. In the vast majority of cases, when someone calls wanting to sue for defamation for something said in a court document, their real motive has nothing to do with wanting to clear their name. Conceptually, it makes no sense to bring a separate action to prove the falsity of a statement made in pending litigation, for all the reasons already stated. If you didn’t abuse the children, prove it in the divorce proceeding.

Indeed, the oft-stated reason for bringing the action is because all the lies told in court are now a matter of public record, and the caller wants to clear his name. If so, then his name needs to be “cleared” in the same action, so anyone seeing that public record will see the truth. Winning in a separate action would do nothing to correct the record in that other action.

The real reason the person is calling wanting to file a separate action — one that they will often deny — is they are seeking leverage. They reason that if they can file a separate action and expose the witness or party to civil liability, or just the cost and annoyance of having to deal with the second action, that will pressure the person to alter or withdraw the testimony. That is not a proper purpose for legal action.

Does that mean you are completely without remedy?

Lying on the stand or in a declaration is perjury, which is a criminal offense. If you can prove that the person knew what they were saying was false, then by all means file a police report. The police cannot become a back-door court of appeal, deciding who was lying, so the standard remains the same. If you could not prove your point in the first action, then the lie that you claim was perjury will probably not be black and white enough for the police to pursue it.

Also, the statement is only privileged if it is made in conjunction with the litigation. That is a very broad definition. The statement does not need to be in a court document, but it must advance the litigation. That is why the attorney talking to the family members about your drinking problem was privileged. But if that same attorney calls a press conference and discusses your alleged drinking problem, you could then sue for defamation since that does nothing to advance the litigation.

A few words about limited privileges.

Thus far, I have discussed only the litigation privilege, which is absolute. There are a number of privileges, and some of them are only limited privileges. With a limited privilege, the person can be sued for defamation if it can be shown that the statement in question was made with malice. In those cases, it is not enough to show the statement was false, you must show that the person made the statement with malice or reckless disregard for the truth.

The Common Interest Privilege is the most prevalent privilege with only limited immunity. This privilege is set forth in Civil Code section 47(c), which provides:

A privileged publication or broadcast is one made: . . .

(c) In a communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information. This subdivision applies to and includes a communication concerning the job performance or qualifications of an applicant for employment, based upon credible evidence, made without malice, by a current or former employer of the applicant to, and upon request of, one whom the employer reasonably believes is a prospective employer of the applicant. This subdivision authorizes a current or former employer, or the employer’s agent, to answer whether or not the employer would rehire a current or former employee. This subdivision shall not apply to a communication concerning the speech or activities of an applicant for employment if the speech or activities are constitutionally protected, or otherwise protected by Section 527.3 of the Code of Civil Procedure or any other provision of law.

As you can see, this is a very broad privilege, giving limited immunity to anyone who is speaking to another, so long as they have a good faith belief that the person to whom they are speaking is interested in the subject matter.

Note also that this section destroys the cherished belief held by many that when you look for work and your prospective employer calls for a reference, your former employer can’t say anything bad about you. Also in the employment context, this is the section that prevents you from suing an employee for telling lies about you to management (unless you can show those lies were told with malice).

Here is the actual jury instruction on the limited (also referred to as the “qualified privilege”):

1723. Qualified Privilege (Civ. Code, § 47(c))

Under the circumstances of this case, [name of plaintiff] cannot recover damages from [name of defendant], even if the statement(s) [was/were] false, unless [he/she] also proves that [name of defendant] acted with hatred or ill will toward [him/her].

If [name of defendant] acted without reasonable grounds for believing the truth of the statement(s), this is a factor you may consider in determining whether [he/she] acted with hatred or ill will toward [name of plaintiff].

Note that the jurors are specifically instructed that they cannot award damages even if the statements were false, unless the plaintiff proves that the defendant acted with malice. Thus, the burden is on the plaintiff, and that is a tough burden to meet since it involves getting into the defendant’s head.

I see this often in the sexual harassment context. A woman reports to HR that she is feeling sexually harassed by a coworker, and as a result of that report, the coworker is investigated and possibly even fired. The report by the woman is privileged because HR would certainly want to know if an employee is sexually harassing another. It may be that the coworker did something innocent like offering to get the woman a cup of coffee, but if the woman took that as sexual harassment, the fact that she was 100% wrong does not translate her reporting the incident into a malicious act, and she would be protected by the limited privilege.

Finally, note that the quantum of harm does not determine whether a defamation action exists. If the common interest privilege applies and no malice can be shown, then the fact that the false report of sexual harassment destroyed the coworker’s marriage and caused him to be fired, does not create a defamation action. Again, defamation requires an UNPRIVILEGED statement, so if the statement was privileged, then it can never be morphed into defamation no matter how much damage it caused.

* Collateral Action or Attack — A legal action to challenge a ruling in another case. For example, Joe Parent has been ordered to pay child support in a divorce case, but he then files another lawsuit trying to prove a claim that he is not the father of the child. A “direct attack” would have been to raise the issue of parenthood in the divorce action.

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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