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.

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.

It is an ethical violation for an attorney to threaten criminal action as a means to extract a civil settlement. For example, California’s Rules of Professional Conduct state that “a member shall not threaten to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute.” (Rule 5-100.)

Then there are the criminal extortion laws:

“Extortion is the obtaining of property from another, with his consent . . . induced by a wrongful use of force or fear. . . .‟ (Pen. Code, § 518.) Fear, for purposes of extortion ‘may be induced by a threat, either: [¶] . . . [¶] 2. To accuse the individual threatened . . . of any crime; or, [¶] 3. To expose, or impute to him . . . any deformity, disgrace or crime[.]’ (Pen. Code, § 519.) ‘Every person who, with intent to extort any money or other property from another, sends or delivers to any person any letter or other writing, whether subscribed or not, expressing or implying, or adapted to imply, any threat such as is specified in Section 519, is punishable in the same manner as if such money or property were actually obtained by means of such threat.’” (Pen. Code, § 523.)

Despite these prohibitions, some attorneys can’t resist throwing a threat of criminal action into their demand letters. They apparently think (if they give it any thought at all) that an express or veiled threat of criminal action will be protected under the litigation privilege, but that is not the case. If you include a demand for money in a letter that threatens to pursue criminal action, you have committed extortion, and as Flatley v. Mauro held, that is not protected speech because criminal acts are not protected.

The most recent example of this was discussed in the just published decision of Miguel Mendoza v. Reed K. Hamzeh. According to the opinion, an attorney named Reed K. Hamzeh was representing a client named Guy Chow, seeking to recover money allegedly owed to Chow by Miguel Mendoza. The dispute concerned Mendoza’s employment as the manager of Chow’s print and copy business. Hamzeh sent a letter to Mendoza’s attorney, which according to the opinion stated:

As you are aware, I have been retained to represent Media Print & Copy (“Media”). We are in the process of uncovering the substantial fraud, conversion and breaches of contract that your client has committed on my client. . . . To date we have uncovered damages exceeding $75,000, not including interest applied thereto, punitive damages and attorneys‟ fees. If your client does not agree to cooperate with our investigation and provide us with a repayment of such damages caused, we will be forced to proceed with filing a legal action against him, as well as reporting him to the California Attorney General, the Los Angeles District Attorney, the Internal Revenue Service regarding tax fraud, the Better Business Bureau, as well as to customers and vendors with whom he may be perpetrating the same fraud upon [sic].”

The letter goes on to list Mendoza‟s alleged transgressions, including failure to pay Media‟s employees, sales taxes and bills.

What followed next was Flatley all over again, with some additional twists. In May 2011, Mendoza responded to the demand letter by filing an action against attorney Hamzeh, asserting causes of action for civil extortion, intentional infliction of emotional distress and unfair business practices. Just as in Flatley, Hamzeh thought his letter was protected under the litigation privilege, and brought an anti-SLAPP motion to strike Mendoza’s complaint. But here, the plaintiffs counsel had the benefit of the already decided Flatley, and wrote to Hamzeh to say that the anti-SLAPP motion would be frivolous since the facts fell squarely under that decision. Hamzeh decided to go ahead regardless, and after the court denied the motion it awarded attorney fees on the grounds that the motion had, indeed, been frivolous. Hamzeh then appealed from the denial of the anti-SLAPP motion, and lost. The action against Hamzeh for civil extortion and the other causes of action will now proceed.

The takeaway from Hamzeh’s experience is that the standard for civil extortion is very low. On appeal, Hamzeh argued that his demand letter was not nearly as egregious as the one utilized in Flatley, which was true, but as the court found, the issue is not how far the letter goes, it is whether it amounts to civil extortion as a matter of law. As you can see from the Penal Codes above, that requires only a demand for money in conjunction with a threat to “expose, or impute to him . . . any deformity, disgrace or crime . . . .” That standard is incredibly broad! It doesn’t even matter whether or not a crime occurred that can be properly reported. Further, as I just realized in preparing this article, the threat doesn’t even need to concern criminal conduct; it is enough to threaten “disgrace”. If an attorney wrote a letter suggesting that the defendant should settle to avoid having his family realize what he had done, it appears that would constitute civil extortion.

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.

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 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 action. Here are the most common examples:

– A husband is going through a divorce, and the wife filed a declaration with the court stating that he was physically abusive to the children. He wants to file an action against his wife for defamation for the false claims she made in the declaration.

– An attorney sent a letter to an employee’s employer, claiming that he stole property and trade secrets from his former employer, threatening to sue if the property is not returned and if the employer makes use of any of the trade secrets. The employee did not take an 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.”

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 hall 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. There can be no “but I have absolute proof that the witness knew he was lying” exception, because then anyone could file the action claiming to be in possession of such proof. The action would still have to be litigated in order to look at your 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.

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

In the vast majority of case, 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.

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.

]]> http://californiaslapplaw.com/2012/12/the-litigation-privilege-and-collateral-defamation-actions/feed/ 0 http://californiaslapplaw.com/2012/12/saying-your-letter-cannot-be-published-does-not-make-it-true/ http://californiaslapplaw.com/2012/12/saying-your-letter-cannot-be-published-does-not-make-it-true/#comments Sat, 08 Dec 2012 00:59:17 +0000 Aaron Morris http://californiaslapplaw.com/2012/10/saying-your-letter-cannot-be-published-does-not-make-it-true/ In a prior posting, I discussed how ineffectual cease and desist letters are, and how some recipients of such letters will even post them as a sort of badge of honor.

In an apparent attempt by some attorneys to keep from having their letters published, I have now seen a number of instances where the attorney sending the letter adds the following language:

“You are not authorized to disclose the contents of this letter publicly or to disseminate it…”

Some even go so far as to claim that the letter is copyrighted, asserting that by publishing the letter the recipient will be violating copyright law. This is all hogwash, but I suppose the attorneys reason that the recipient may not know that it is hogwash, and it may prevent some of them from putting up the letter and making fun of the attorney and his or her client for sending it.

For a great example of this, and how instead of achieving the intended purpose it only invited greater comment, check out this amusing article by techdirt. The article is also a great example of not knowing when to hold them, and when to fold them.

I learned long ago to view every letter I draft as a potential trial exhibit. Don’t send a letter you would not want to see projected onto a wall for the judge and/or jury to view and critique. That rule now applies to the Internet. If an attorney feels the need to insert language falsely claiming that the recipient is not allowed to show it to anyone else, then that is a letter that probably should not be sent.

When a client wants me to get defamatory content removed from the Internet, they normally ask me to send a cease and desist letter. Normally, I refuse. Most attorneys will happily take the client’s money and send a cease and desist letter, but I have seen hundreds of such letters, brought to me by clients asking me to do something about the defamation after another attorney sent an unsuccessful cease and desist letter. Long ago I learned that cease and desist letters are very ineffective. Often, the defamer will even post the letter as a badge of honor, to show that he succeeded in getting the victim’s goat, to the point that he retained counsel.

I think the reason cease and desist letters are so ineffectual is because they are perceived as toothless threats. In most instances, the defamer will ignore the letter and sit back and wait to see if the victim is really willing to pursue the matter in court. But if you send that cease and desist letter along with the complaint, giving the defamer five days to comply, they become very effective. Now he knows that the victim has already taken the time and expense to have the attorney draft the complaint, and is ready to pull the trigger.

So I followed this draft complaint approach for a client who had terrible things published about him on multiple blogs, and I could not believe how the defamer’s attorney responded. When the defamer did not comply within the five day deadline, we filed and served the complaint, and the defamer’s attorney responded with an answer and cross-complaint. The attorney brought an action for the emotional distress his client was suffering as a result of my demand letter, the draft complaint and the subsequent legal action.

This was the quintessential SLAPP, but there was a problem. The cross-complaint was so poorly drafted, I worried that if I filed the anti-SLAPP motion it might fail just because we could not determine exactly what the defamer was suing for. I needed the defamer’s attorney to better state his SLAPP, so I demurred to the cross-complaint pointing to the lack of specificity in the allegations.

The defamer’s attorney fell into the trap. Not only did he amend the cross-complaint to make very clear that cross-complainant was suing for the emotional distress he suffered from the demand letter and draft complaint, he added a new cause of action for abuse of process. Follow this logic. He contended that since my demand letter and draft complaint were sent to the defamer with the intent to make him take down the defamatory posts, the complaint was only then filed because he refused to do so. Therefore, the defamer’s attorney reasoned, the complaint was filed for an improper purpose. Instead of seeking damages, the complaint was seeking to have the defamatory comments removed, and therefore was an abuse of process. (The complaint did, of course, seek damages, but counsel contended that since the cease and desist letter had not demanded damages, then the complaint was not really intended to recover damages.) You can’t make this stuff up.

Now the cross-complaint was ripe for an anti-SLAPP motion. In opposition to my motion, defense counsel argued that the facts were identical to Flatley v. Mauro, where an attorney’s demand letter was found not to be protected by the litigation privilege because it amounted to extortion. One problem though – the cease and desist letter did not ask for any money. Thus, defense counsel was arguing that my cease and desist letter was extortion even though it did not ask for money, and the subsequent complaint was an abuse of process because the cease and desist letter had not asked for money. Talk about damned if you do, damned if you don’t.

Of course the court granted the anti-SLAPP, and the attorney moved to be relieved, leaving the client to fight the motion for attorney fees in pro per. Wow. It was an interesting motion to draft, because I did not need to say one word about the falsity of the statements published by the defamer. The first prong of the SLAPP analysis was easily met because the cross-complaint dealt with my client’s seeking redress, and the second prong was equally automatically met since the cross-complainant could never show a likelihood of succeeding because his action was barred by the litigation privilege.

Yes, some SLAPPs can be harder to spot than others, but to all attorneys, if you find yourself preparing a cross-complaint based on the fact that someone sued your client, that’s probably a SLAPP. Malicious prosecution is still a viable cause of action, but only after having successfully defended the original action, and only then if all the elements can be met. Here is another attorney who learned that lesson the hard way.

And that is where the divergence in the two versions of the story begins. Our clients asserted (and proved at trial) that the working software was delivered on time by the foreign company. The defendant, Dr. Karan, claimed otherwise, and blamed the failure of his start-up company on the software.

Dr. Karan’s claims never made sense, because while the software would have been useful in his business, it was in no way essential. Blaming the software for the failure of the business was akin to saying a business failed due to a lack of business cards. But for whatever reason, Dr. Karan chose to blame our clients, and in an email announced that he was going to “work night and day to inflict the maximum amount of financial pain that is allowed under the law.” To that end, he ignored the fact that his contract was with the foreign company, and instead attacked our client personally, along with his other company, taking to the Internet to trash their reputations.

This is a scenario that I see over and over in defamation cases. Someone becomes unhappy with a business or individual, and decides to criticize them on-line. It might even begin with a laudable motive – just putting out the word to the public to avoid a business that did not satisfy the critic. I would defend to the death the right of anyone to go on line and publish a legitimate criticism of a business.

But something happens that takes the person beyond a legitimate review. As the person types the words, he or she decides it’s just not stinging enough and won’t cause enough harm. In this case, Dr. Karan must have felt that a legitimate review of the foreign company, stating that in his opinion the software did not work as promised or was not delivered on time, just wasn’t hurtful enough. He posted two articles on his own blog, and sent an email to our clients’ customers. In the email and postings, Dr. Karan’s comments had almost nothing to do with the alleged problems with the software. Indeed, he abandoned his claim that the software was late, and instead claimed that it had never been delivered at all. He added that our client had cheated an employer ten years earlier, and that his company had failed to pay vendors hundreds of thousands of dollars. Although our clients had never received a single complaint from a customer, Dr. Karan claimed that “they are swindlers of the highest kind and have milked many of their clients of money and time.”

At trial, Dr. Karan could not identify a single customer that our clients had “swindled”, he could not identify a single vendor they had failed to pay, could not specify how he had cheated his former employer, and acknowledged that the software was in fact delivered. Today, an Orange County jury, known for being very conservative with damage awards, awarded $1.5 million jointly and individually to both of our clients for the damage to their reputations and business, caused by Dr. Karan.

In a standard civil action, the plaintiff has the burden to prove the case. This is true in a defamation action as well, but since truth is a defense to defamation, the burden of proving a statement is true falls on the defendant. I can’t fathom how defendant thought he would get away with what he published in this email and on his blog, but I think he may have thought he would be safe because we could not prove a negative. In other words, how do you show that you have never defrauded any of your customers? Bring in every customer you have ever worked with to testify that you did not defraud them? That would be impossible, and that is why the law puts the burden on defendant to prove the TRUTH of the statements. Dr. Karan could not prove his statements were true.

Not the coach in question.

I get frequent calls from people who have run afoul of the anti-SLAPP statute, basically asking, “what can we do about this terrible law?”

Here’s the deal. Every law eventually gets subverted. The Americans With Disabilities Act sounded like a great idea, but then you ended up with attorneys who use it as an extortion racket, forcing fast food restaurants to pay thousands because a counter was 17 ½ inches high instead of 18.

So it is with California’s anti-SLAPP statute. It is a great statute, and for the most part attorneys have not found an effective way to misuse it, except for right to appeal an adverse decision, which many now use as a delaying tactic. Opposing counsel in one of my cases recently brought a motion for permission to file a very late (by two years) anti-SLAPP motion on the eve of trial, and when the motion was quite properly denied, then filed an appeal from that denial. Of course I had no difficulty getting the Court of Appeal to dismiss the frivolous appeal, but it delayed the trial a month. Except for this type of abuse, in most other regards California’s anti-SLAPP law provides a very useful tool to get rid of lawsuits designed to silence free speech or frustrate the right of redress.

However, in case you still have it out for California’s anti-SLAPP law, I bring you an example out of Illinois that should make you feel a little better. California pioneered the anti-SLAPP concept, and most states have used that law as a template, but that hasn’t prevented some from coming up with their own strange hybrids.

Enter the case of Steve Sandholm, a high school basketball coach/athletic director in Illinois. In the case of Sandholm v. Kuecker, some parents decided they didn’t like Sandholm’s coaching style, so they really went after him, hoping to get him replaced. They posted useful, positive comments such as “[he is] a psycho nut who talks in circles and is only coaching for his glory.” The efforts were to no avail, because the school board decided to keep him. However that decision only fanned the flames, and the parents kept up their campaign. Sandholm found some of the statements to be defamatory, so he brought a defamation action.

But wait. Illinois has an anti-SLAPP statute that states that speech and petition activities are “immune from liability, regardless of intent or purpose, except when not genuinely aimed at procuring favorable government action, result, or outcome.” Wow that’s a broad standard. A school district is a government entity, and the parents were trying to get that government entity to do something (removing the coach), so did that fall under Illinois’ anti-SLAPP statute? If I read the statute correctly, that means that even if the parents got together and decided to fabricate lies about the coach, they are immune from a defamation action so long as those lies were “genuinely aimed at procuring a favorable government . . . outcome.” (I’m not saying that happened, I’m only using the case to present a hypothetical.) And how in the world is a court going to determine if the actions were “genuine”?

Incredibly, that’s exactly how the Court of Appeal interpreted the statute. Read this excellent summary of the case by John Sharkey to see just how convoluted the anti-SLAPP process can become.