Cases

Hacienda Heights Doctor, Pankaj Karan, Hit with $1.5 Million Judgment for Internet Defamation

In this case, we represented a business and the individual who owns that business. The defendant, a medical doctor named Pankaj Karan, was starting his own business, MDTelexchange, and traveled to an overseas company also owned by our client (we’ll call that the “foreign company”) and entered into a contract for the creation of some custom call center software.

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.

[UPDATE — January 2, 2014]  Dr. Karan did not go silently into the good night. His attorneys appealed the $1.5 million verdict, claiming there was insufficient evidence to support an award of that size. To that claim, and in denying the appeal, the court opened its opinion with the sentence, “All things considered, appellant Dr. Pankaj Karan got off cheaply in the trial court.” Better yet, in commenting on our brief, the court stated:

[Dr. Karan] has misstated the record in numerous particulars, as shown in a respondents’ brief so devastating it has left Karan, like Job, with no reply but silence and a hand over his mouth.

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Peer Review Process for Doctors is a Protected Activity Under SLAPP Statute

Anti-SLAPP Motion against doctor
The California Court of Appeal just ruled that I know what I’m talking about when it comes to SLAPP law, and that I have saved many doctors from filing actions that would have been met with successful anti-SLAPP motions and thereby cost them many thousands of dollars, paying the other side’s attorney fees.

OK, the Court didn’t actually mention me by name, but that’s the way I read it. You see, most doctors (depending on their practice) want and need medical privileges at one or more hospitals. Without those privileges, their practices are really crippled. So when a hospital decides to revoke those privileges, it is a big deal for the doctor.

Following the revocation, the doctors want to do something, anything, to pressure the hospital’s board to reinstate the privileges. That often brings them to my door, wanting to sue for defamation, claiming that someone said something that cost them their privileges, and that they suffered damages as a result.

I have always refused such cases, because I am of the opinion that under normal circumstances, the entire medical peer review process qualifies as an official proceeding. Therefore, it falls under both the anti-SLAPP statute and the absolute privileges of Civil Code section 47. No matter how you try to plead the action, it will come back to the fact that the decision to fire the doctor was a protected activity.

Leading us to the case of radiologist John Nesson versus Northern Inyo County Local Hospital District. Read the rest of this entry »

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City Council Members Repeatedly Bringing SLAPP Actions

Anti-SLAPP motion defeats red light camerasGovernments, especially city councils, are learning the hard lessons about SLAPPs. I already told you about our victory over a city council member who thought she could sue when someone said something she didn’t like, and another city council member who tried to bring an offensive action to stop a legal action by the council.

Now comes the Monroe, Washington City Council with a major case of hubris. From what I can piece together, the city’s red light camera contract is set to expire. The city council took a vote or something and the citizens of that fair city voted resoundingly NOT to renew the contract. But that would mean all the red light camera would go away, and some were concerned that the city council was going to interpret the vote as only a repudiation of that particular contract with that particular vendor, not of the entire red light camera concept.

So along comes a citizen group called Seeds of Liberty. To make sure there was no confusion, it gathered sufficient signatures for a ballot measure that would permit the citizens to vote away the red light cameras. No harm there, certainly. If it was true that the city council intended to view the prior vote as a repudiation of the cameras, then what difference would this initiative make? The initiative would be a concern only if the city council did have some nefarious agenda to keep the cameras.

Sure enough, the City sued to stop the initiative, claiming it went beyond the function of an initiative.

Let’s run that through the SLAPP analysis. The city filed an action that is seeking to prevent a valid initiative from being placed on the ballot, and every indication is that the city does not want that initiative on the ballot because it doesn’t agree with the likely result. Sounds like a SLAPP to me.

The court agreed and granted the Seeds of Liberty’s anti-SLAPP motion. Sadly, this means the people spoke up, their government tried to silence them, and now the city council must pay the attorney fees incurred in bringing the anti-SLAPP motion, which is really just repaying the citizens with their own money.

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Judge Orders Man to Apologize to Ex-Wife on Facebook

Facebook Censorship

Clients sometimes ask me to seek a letter of apology as part of a defamation settlement. I have managed to do so on a number of occasions, but I usually recommend a letter of retraction as opposed to a letter of apology, because the latter is often a deal breaker.

In our society, a true apology is a big deal (as opposed to an “I apologize if you were offended” type of apology). Many defendants would rather pay money than to apologize, which is somehow viewed as weak. After all, a real apology seeks forgiveness from the other side, so it sticks in the craw of most defamers that they are basically asking the victim to pass judgment on them.

With this mind set in mind, one can fully appreciate the frustration of Mark Byron. He and his wife were divorcing and fighting over the custody of their son. When the judge issued an order limiting his custody, he went to his Facebook page to vent, posting:

“… if you are an evil, vindictive woman who wants to ruin your husband’s life and take your son’s father away from him completely — all you need to do is say that you’re scared of your husband or domestic partner… , “

But there was a problem. The judge had also ordered Byron not to do “anything to cause his wife to suffer physical and/or mental abuse, harassment, annoyance, or bodily injury.” His wife was blocked from his Facebook page, but she got wind of the posting anyway and her attorney charged into court seeking a contempt order, asserting that the posting violated the protective order.

The judge agreed that it violated the order, and gave Byron a choice. The normal result for violation of a court order is a fine and/or some time in jail. The judge told Byron he could go to jail for 60 days for the violation of the order OR he could post an apology on Facebook. Byron decided he’d eat a little crow and post the apology rather than to sit in jail for two months. Here is what he posted:

I would like to apologize to my wife, Elizabeth Byron, for the comments regarding her and our son … which were posted on my Facebook wall on or about November 23, 2011. I hereby acknowledge that two judicial officials in the Hamilton County Domestic Relations Court have heard evidence and determined that I committed an act of domestic violence against Elizabeth on January 17, 2011. While that determination is currently being appealed, it has not been overturned by the appellate court. As a result of that determination, I was granted supervised parenting time with (my son) on a twice weekly basis. The reason I saw (my son) only one time during the four month period which ended about the time of my Facebook posting was because I chose to see him on only that single occasion during that period. I hereby apologize to Elizabeth for casting her in an unfavorable light by suggesting that she withheld (my son) from me or that she in any manner prevented me from seeing (my son) during that period. That decision was mine and mine alone. I further apologize to all my Facebook Friends for attempting to mislead them into thinking that Elizabeth was in any manner preventing me from spending time with (my son), which caused several of my Facebook Friends to respond with angry, venomous, and inflammatory comments of their own.

This case is being reported as a judge who trammeled on the free speech rights of a party, but I really don’t see it that way. Would it have been better for the judge to jail Byron with no offer of an alternative? There was another case where a judge told a shoplifter he could go to jail or stand in front of the store wearing an apology sign for a day. People also got up in arms about that verdict, but I think so long as it is offered as an alternative to normal jail time. For the record, to judges everywhere, if you are about to send me to jail, please offer me some crazy punishment as an alternative. On the other hand, if the judge had simply ordered the apology, I would have a problem with that result.

Where I think the judge got it wrong was his determination that Byron had violated the order. The judge had ordered him not to do anything to cause his wife “to suffer physical and/or mental abuse, harassment, annoyance, or bodily injury.” His Facebook posting was an absolutely true statement, and it only became “about” his wife if the reader was familiar enough with the circumstances to connect the dots. The comments were not even addressed to his wife, since she was blocked. To order someone not to say anything that might “annoy” someone else, and then hold them in contempt for doing so, is not appropriate in this country.

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How India Deals with Twitter Defamation

Pooja Bedi suffers Twitter Libel

Pooja Bedi

I recently reported on a Twitter defamation case in Australia, and how strange things can get without a law like the Communications Decency Act. Now comes a case out of India.

India has a police unit called the Cyber Crime Investigation Cell (CCIC). Although I don’t want to see defamation criminalized, because that then gives the government the power to silence unpopular speech, I do admit the thought of an agency you could turn these things over to is slightly appealing.

In the case in India, the CCIC is investigating a complaint filed by actor Pooja Bedi against an anonymous Twitterer (Tweeter?, One who Tweets?), for allegedly defaming her on Twitter. According to Bedi’s complaint to the cyber crime unit, someone has been trying to tarnish her image on Twitter. Bedi has also alleged someone was threatening violence and writing ill about her.  “These things are serious in nature and need to be investigated,” said Bedi in her complaint.

However Bedi said after the police complaint was filed, the accused deleted her account and changed her Twitter ID to @missbollyB, even apologizing to Bedi through her posts. Cyber crime cell officers said they had registered a case of defamation based on Bedi’s complaint. The police have sent a request to US authorities to provide information necessary for the probe.

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Defamation Action Victory by Steve Wynn Against Joe Francis

Defamation by Joe Francis

Defamation Case Victory for Steve Wynn

Joe Francis is infamous as the creator of the “Girls Gone Wild” video series. He is unprecedented in his ability to sabotage his life.Can you say, “self-destructive behavior”?

The most recent example came down today in the form of a $7.5 million damage award against Francis and in favor of Steve Wynn and Wynn Las Vegas. This part is speculation, but I’m guessing that he lost some money at Wynn’s casino (he did, in fact, run up a $2 million debt to the resort, but I don’t know if that was from gambling), and convinced himself that the casino was cheating him. Back to the facts, he began telling tales of how Wynn deceives his high-end customers.

Wynn didn’t like the implication that he was a cheater, and sued Francis for defamation way back in 2008. That litigation finally concluded yesterday, with the judge determining that Wynn had suffered five million in compensatory damages, and also awarded $2.5 million in punitive damages.

Defamation actions are not only about the money. You clear your name through a defamation action by putting the claims on trial. In other words, Francis claimed Wynn was a cheat, Wynn said he wasn’t, and the trial determines who is telling the truth. Therefore, Steve Wynn now has a judicial determination that the claims by Joe Francis were false. If Wynn’s attorneys did their jobs, they should have also obtained an injunction preventing Francis from ever again claiming Wynn cheated him. (That’s what I always do here in California, but Nevada could have different laws in that regard.) By creating that order, Francis can be held in contempt and put in jail if he continues to tell his tales.

This $7.5 million judgment is on top of the $2 million plus interest and fees Francis already owes to Wynn Las Vegas as determined by the Nevada District Court in 2009.

The typical response by a defamation defendant under these circumstances will be to appeal, probably claiming that he could not put on a proper defense because the court denied his outrageous discovery requests or something.

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Australian Defamation Case Illustrates Life Without the CDA

Internet Defamation on Twitter

"That J-Lo, she be crazy!"

I have frequently written here on the pros and cons of the Communications Decency Act (“CDA”). Without it, no website could permit comments, but by the same token it allows unscrupulous website operators to encourage defamatory postings, and then use those postings to extort payments from the victims.

Because of the latter reality, many have suggested to me that they would like to see the CDA abolished. But a case out of Australia demonstrates just how ridiculous things get without the CDA.

Those Australians are people of few words, so I had to read a number of news accounts to piece together what had occurred. A blogger by the name of Marieke Hardy apparently picked up an anonymous on-line bully. For undisclosed reasons, Hardy decided that she had determined the identity of her mystery bully, so she posted the following comment on Twitter:

“I name and shame my ‘anonymous’ internet bully. Liberating business! Join me.”

The “tweet” then provided a link back to her blog, and there on the blog she identified Joshua Meggitt as the bully. Problem was, Meggitt was not the bully.

Meggitt sued for defamation. Hardy settled with him, allegedly for around $15,000. But Meggitt wants more. Meggitt is suing Twitter for defamation for the tweet by Hardy.

Do you see how absurd things quickly become without the CDA? If Twitter is responsible for every comment, then to avoid defamation it would have to put a delay on all comments, and hire thousands of employees to review the comments. As each comment passed in front of the reviewer, he or she would need to make a quick decision about whether that comment could possibly be defamatory, and only then clear it for publication.

I want you to imagine that scenario. You are one of the Twitter reviewers. Thankfully Twitter limits each tweet to 140 characters, so there is not much to review, but you must apply your best judgment to each comment to see if anyone could be offended. So up pops the following:

“That J-Lo. She be crazy.”

Do you hit the approve or disapprove button? Was the “crazy” comment meant in a good or bad sense? Even if the person making the comment meant only that the singer Jennifer Lopez is crazy good, if you approve the comment then every person in the world who goes by the name J-Lo could potentially sue for defamation, claiming that the post accuses them of having mental problems.

But the dispute between Hardy and Meggitt takes the scenario to an even more absurd level. Applying those facts to our hypothetical, what you really received was:

“That J-Lo. http://tinyurl.com/48y28m7″

What do you do with THAT?! Twitter requires you to review and approve or deny 120 tweets per hour. To keep your job you only have less than 30 seconds to make a decision. You quickly click on the link to see why J-Lo is crazy, and you are confronted with a four and a half minute video! Do you have to watch the entire video to make sure it contains nothing defamatory? You don’t have time for that. REJECTED!

And here, all the tweeter wanted to do was pass along a great video by J-Lo.

Under the best possible circumstances, Twitter would be relegated to approving only the most milk toast comments with no possible defamatory implication. In reality though, Twitter could not possibly exist if it could be held liable for every comment posted.

To all of you who just responded with a resounding, “Who cares about Twitter?”, that’s not really the point. I’m talking big picture here.

It will be very interesting to see how the courts in Australia handle this case.

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Anonymous Blogger Turns Case International, and Results in Anti-SLAPP Motion

International Anti-SLAPP MotionAn international defamation action has ended up here in California. Out of the UK, Tyneside councillors (that’s the way they spell it over there) are very upset that an anonymous blogger who calls himself “Mr. Monkey” has been defaming them.

The council has backed a three-year hunt to discover the identity of Mr. Monkey, with the legal fees now exceeding six figures. So far, since they did not retain Morris & Stone, the attempts to uncover the identity of Mr. Monkey have been unsuccessful.

Enter Coun Ahmed Khan, a councillor from a rival political party. The four plaintiff councillors successfully moved to have Khan’s personal computer records disclosed, because they apparently suspected him of being Mr. Monkey. Khan denies that he is the primate in question, but has cried “enough is enough”, and wants to put an end to the search.

To that end, he brought what I can only characterize as an offensive anti-SLAPP motion (not offensive as in crude, but as in the opposite of defensive). He intervened in the San Mateo Superior Court action and filed an anti-SLAPP motion, asserting that even though he is not Mr. Monkey, the comments of Mr. Monkey are protected and the action should therefore be dismissed.

Motion DENIED. Indeed, the court found the motion to be so frivolous that it awarded attorney fees of £40,000 to the plaintiffs. (I once obtained a judgment in Los Angeles Superior Court in British pounds. It’s worth it just to see the court clerks try to figure out how to enter it into the system and calculate interest and the like.)

Khan has now appealed the denial of his anti-SLAPP motion and the award of attorney fees. The complete story can be found here.

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Sending Demand Letter Out of State Can be Problematic

Anti-SLAPP Motion by Attorney

How Matabolic views the case

The case of Metabolic Research, Inc. v. Scott J. Ferrell, et al. is turning out to be a fascinating case on several levels, including liability considerations for attorneys and SLAPP issues. Briefly, here are the facts as set forth in a recent opinion of the Ninth Circuit Court of Appeals.

Scott J. Ferrell is an attorney practicing in Orange County, California. He apparently believes that a supplement being made by Metabolic and sold by GNC (Stemulite) is bad stuff. To that end, he sent demand letters to Metabolic and GNC in Pennsylvania and Nevada, accusing them of violating the California Consumer Legal Remedies Act by way of false advertising, and threatening to sue them (presumably in California)* if they did not stop their (allegedly) evil ways and agree to an injunction to that effect.

In California, Ferrell’s letter would likely have been determined to be part of the litigation process and therefore protected, UNLESS it was deemed to be extortion. (See Flately v. Mauro.) In California, the issue would have proved very interesting, because while Ferrell was not demanding any money, the hallmark of true extortion, the injunction he was demanding was so onerous – including a requirement that all profits be disgorged – that Metabolic claimed it would have put it out of business. Nonetheless, in California it might have been decided that the letters did not cross the line, and Ferrell would have been safe from suit.

But Ferrell’s letters were sent outside of California. In November 2009 Metabolic filed a lawsuit in Nevada State Court against Ferrell, charging extortion and racketeering based on his demand letter. Ferrell removed the case to Federal Court (I never would have done that for the reasons that follow), and then brought a motion to dismiss based upon Nevada’s anti-SLAPP statute, claiming that the lawsuit amounted to a SLAPP because it was suing him for engaging in litigation.

Motion DENIED. The District Court found that “Nevada’s anti-SLAPP legislation only protected communications made directly to a governmental agency and did not protect a demand letter sent to a potential defendant in litigation.” Again, as would be appropriate in California but not necessarily elsewhere, Ferrell took an immediate appeal.

Appeal DENIED. Federal courts do not like interlocutory appeals, and will find a way to reject them. The court did an in-depth review of Nevada’s anti-SLAPP statute, and concluded there was no right of immediate review of a denial of an anti-SLAPP motion. The court referred to this as a “run of the mill anti-SLAPP motion” (ouch), and held that a District Court judge affords sufficient safeguards to protect defendants from SLAPP actions without the added protection of an immediate appeal. However, to twist the knife a little, the Ninth Circuit threw in that Ferrell could have proceeded by way of a writ of mandamus, and that it was offering “no opinion on how we might have decided” such an application had it been pursued.

Lesson 1: Consider that when you send a demand letter out of State, you may be subjecting yourself to an action in that jurisdiction.

Lesson 2: (And I have seen this over and over) Don’t remove a case to Federal court just because you can. The motion may well have been decided the same way in State court, but I would not have wanted it decided there.

* That’s not me presuming, the court opinion used those words.

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District of Columbia Struggling With Anti-SLAPP Law

The District of Columbia instituted an anti-SLAPP procedure back in March but the judges are having a heck of a time figuring it out. (Don’t feel bad D.C., California has had a SLAPP statute since 1992, and some judges still don’t get it.)

Judge Rufus G. King III of the D.C. Superior Court got it right. A local television station did a report on the ridiculous amounts of overtime that was being paid to certain government officials. In one reported case of a fire department Lieutenant, his annual salary was $90,000 but he had earned as much as $119,000 in overtime pay one year.

That Lieutenant took exception with the fact that the news story had used terms like “racked up” and “month after month”, claiming those statements were defamatory. His attorney apparently failed to explain or he refused to understand that only the “gist” of the statement need be true in order to defeat a defamation action, so he filed a defamation action against the television station, and the station quite properly brought an anti-SLAPP motion.

Judge King ruled that the report was a matter of public interest and therefore fell under the anti-SLAPP statute, and that the Lieutenant failed to demonstrate a likelihood that he could establish damages. Motion GRANTED, case DISMISSED. Good job D.C.

But then there was Judge Richard Leon. You may recall that a U.S. Department of Agriculture official named Shirley Sherrod left her job after a video was released, seemingly showing her confessing to discriminating against white farmers. It later came to light that the comments were arguably taken out of context due to the editing of the video. Sherrod didn’t appreciate that, and sued blogger Andres Breitbart, among others, asserting in her complaint that the “deceptively edited” clip constituted defamation. Breitbart responded by bringing an anti-SLAPP motion, asserting that the posting of the clip was an act of protected speech.

Sure sounds like a SLAPP to me, but Judge Leon denied the motion out-of-hand with only a two sentence order. The U.S. Court of Appeals for the D.C. Circuit was stumped by that one as well, and today ordered Judge Leon to explain himself.

Less than a week ago, Judge Robert L. Wilkins out of the U.S. District Court for the District of Columbia was not nearly as concise as Judge Leon, and issued a 55-page opinion denying an anti-SLAPP motion, finding “that the special motion to dismiss procedure under the Anti-SLAPP Act does not apply to a federal court sitting in diversity.”

 

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Aaron Morris, Attorney
Aaron Morris
Morris & Stone, LLP

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NOTICE PURSUANT TO BUSINESS & PROFESSIONS CODE SECTION 6158.3: The outcome of any case will depend on the facts specific to that case. Nothing contained in any portion of this web site should be taken as a representation of how your particular case would be concluded, or even that a case with similar facts will have a similar result. The result of any case discussed herein was dependent on the facts of that case, and the results will differ if based on different facts.

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