Cases
An Emotional Distress Claim Should Not Be Undertaken Lightly
The case of Mallard v. Progressive Choice Ins. Co. beautifully illustrates a point I discuss with all clients who want to make an emotional distress claim, while at the same time illustrating an important SLAPP rule of law.
Sometimes I will get a call from a potential client within minutes after they were fired. They want to sue for wrongful termination and they want to sue NOW!
But 15 minutes after an employee has been fired, what are the damages? When I ask the caller that question, they answer, “I was fired!” Yes, but what are your damages? “I was fired!”
Rather than to go on all day in this fashion, I explain. Damages are something you can put a dollar sign in front of. Being fired is not a damage, although obviously it can CAUSE damages. But 15 minutes after a termination, an ethical attorney should explain that there are no real damages at that point.
If the employee was making, say, $25 an hour, and they were fired two hours before their shift ended, then the damages at that moment they are calling me are $50, at least in terms of lost wages. But let’s carry it out a little. Let’s assume for our hypothetical that the employee had seen the writing on the wall and had already sent out some feelers for a new job before the axe fell. She makes a few calls, and a week later she starts a new job with the same title that pays $30 per hour with better benefits. What are her damages then?
Well, she went a week without being paid, so she lost $1,000 in wages. Her old employer should at least cut her a check for $1,000, right? But wait a second. Because of the termination, she will made $10,000 more for the year than if she hadn’t been fired. Fair’s fair. If you thought her employer should pay her for what she lost as a result of the termination, then it is only fair that she should pay to the employer the money she gained as a result of the termination, right?
I’m speaking tongue in cheek of course, but I want you to think in terms of the real damage to our terminated employee. Last week I discussed all the damages that flow from a wrongful termination, and if you look at that list, assuming our employee did not suffer any setback to her career track, then there are no real damages.
“But what about emotional distress damages?”, the caller asks. That’s a valid question. If your employer wrongfully terminated you, you might have suffered some emotional distress damages. Again, an ethical attorney then needs to explain what you open yourself up to when you claim emotional distress.
Which leads us to today’s case review.
Progressive Insurance issued an automobile insurance policy to Winly Mallard. She was involved in an auto accident, and her medical expenses exceeded the policy limits, so she proceeded under her insurance policy’s uninsured motorist claim because the driver of the other car involved in the accident did not have liability insurance.
A quick aside here. All the commercials you see with the helpful insurance agents are bull. Yes, you will be fine if you are in an accident that involves only property damages and perhaps some minor medical expenses, but if you ask for anything challenging, the insurance company will fight your coverage.
That was what happened to Winly Mallard. An attorney by the name of Rivers J. Morrell III was retained by Progressive with regard to Mallard’s claim. Morrell propounded form interrogatories to Mallard on Progressive’s behalf. In addition to listing her injuries to her neck and back, Mallard also stated that she had difficulty sleeping, and suffered “[s]hock” and “[n]ervous anxiety.” In addition, she stated she was pursuing a claim for loss of earning capacity.
There it is. Just like a wrongfully terminated employee who wants to assert emotional distress, Mallard had put at issue her mental health. Is she having trouble sleeping because of the accident and/or injuries, or is there something else that could be troubling her? Morrell wanted to know, so her mental health records were subpoenaed from health care providers identified in her verified responses.
Understandably, Mallard felt very invaded. She filed a complaint alleging claims for invasion of privacy and abuse of process against Morrell and Progressive, based on the act of subpoenaing third parties to obtain Mallard’s mental health records. Mallard served only Morrell with the complaint.
Morrell filed an anti-SLAPP motion to strike the complaint, which was opposed by Mallard. The trial court granted the anti-SLAPP motion and ordered the complaint dismissed with prejudice as to both defendants. Mallard appealed.
The trial court granted Morrell’s motion for attorney fees and costs, awarding him $13,756.64 in attorney fees and costs under section 425.16, subdivision (c). Mallard appealed, but the Court of Appeal agreed that the action against the attorney was a SLAPP, and upheld the judgment.
Morals of this story: A determination of an insured’s uninsured motorist coverage is always by way of an arbitration. Apparently Mallard’s attorney thought that an arbitration would not fall under the right of redress aspect of the anti-SLAPP statute, but he was wrong. As I discussed here, the standard is very broad – even a trial in Zimbabwe is considered an official proceeding.
Second, clients must be made aware that making an emotional distress claim leaves them open to very intrusive questions and discovery. That does not by any means mean that it is never appropriate to assert such a claim, but it should only be done after much consideration.
Posted in anti-SLAPP motions, Cases, Recent Cases, SLAPP, Wrongful Termination | Tags: Aaron Morris, Attorney, Uninsured Motorist, Wrongful Termination | No Comments »
Even Nuns Defame; Credibility Key to Any Trial
The report of this defamation caught my eye because of the parties involved. There is a standard joke among attorneys, that if you find yourself suing widows, orphans or nuns, your practice has probably taken a bad turn. In this case, nuns were being sued for defamation.
It started when the nuns decided to sell an old painting they had laying around. The painting was in really bad shape, not even worth hanging, but it turned out to be by a well regarded artist, William-Adolphe Bouguereau. So the nuns had it appraised by an art dealer named Mark LaSalle. Based on his appraisal, the nuns agreed to sell the painting to Mark Zaplin for $450,000. Zaplin had the painting restored to its former glory, a fact that I think is crucial to this case, and turned around and sold it for $2.15 million, netting a tidy little profit.
The nuns sued LaSalle and Zaplin under a number of theories, claiming that Zaplin had been a straw buyer, and that LaSalle was working in concert with Zaplin and had conned the Daughters of Mary by intentionally under-appraising the painting in order to buy it at a bargain price. The two Marks counter-sued for defamation, because the nuns had made these same claims to the media. (In case you’re new here, you can never sue for defamation for things said in conjunction with a lawsuit, since those statements are privileged, but you can sue if the same statements are made to the media.)
Here is the part I find interesting and the main reason for this article. The nuns had a witness. An art dealer by the name of Paul Dumont claimed to know both LaSalle and Zaplin, and testified that LaSalle had told him that they could “make a handsome profit by giving the sisters a low appraisal value of between $350,000 and $450,000 and presenting a buyer who would pay the amount of our deliberate and intentionally inaccurate appraisal.” He claimed that LaSalle had asked him to find a “money man” who would act as a straw buyer.
Wow. Pretty strong stuff. So the nuns must have won, right? Actually, they went down in flames (can I say that about nuns?). A New York jury found against them on all of their claims, and instead awarded LaSalle $250,000 for defamation against Dumont and a church Bishop, and awarded Zaplin $75,000 against Dumont for defamation. LaSalle will also recover punitive damages.
But how can that happen with a witness who is specifically corroborating the story of the fraudulent appraisal and straw buyer? And therein lies the moral of this story. Read the rest of this entry »
Posted in Cases, Defamation, Recent Cases, Trial | Tags: Aaron Morris, Attorney, Defamation, Slander, Trial | No Comments »
The Good, The Bad, and The SLAPP Lawsuit: Don’t Sue For Speech Without Consulting With Counsel
I came across the following article by Darren Chaker who, according to the article, spent many years litigating a free speech case, apparently as the plaintiff. His article provides a nice summary of SLAPP law as it applies to posting critical comments on-line, and the importance of consulting with counsel before filing any free speech suit. [Reprinted here with permission.]
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While legitimate criticism is protected, postings which constitute defamation are not. Ibid.; see also Chaker v. Crogan, 428 F.3d 1215, 1223 (9th Cir. 2005). The Supreme Court has explicitly held that “defamation…[is] ‘not within the area of constitutionally protected speech.'” R.A.V. v. City of St. Paul, 505 U.S. 377, 383 (1992) (quoted in Chaker, supra, 428 F.3d 1215, 1223 (9th Cir. 2005)).
Prior to filing a lawsuit for comments posted online, it is important to know what a “SLAPP” lawsuit is and if what you believe is defamation is that, or merely protected speech. The acronym “SLAPP” stands for Strategic Lawsuits Against Public Participation, see California Code of Civil Procedure § 425.16. I cite California law, however most states have similar SLAPP laws as California. The crux of SLAPP law allows someone who is sued for doing activity which is protected by the federal or state constitution. If the Defendant’s activity sued for is protected activity, then an anti-SLAPP motion could be filed. An anti-SLAPP motion usually seeks dismissal of “lawsuits that ‘masquerade as ordinary lawsuit’ but are brought to deter common citizens from exercising their political or legal rights or to punish them from doing so.” Batzel v. Smith, 333 F.3d 1018, 1023-24 (9th Cir. 2003).
Keep a couple of things in mind before you go to court:
• Once a Plaintiff files a lawsuit, and Defendant files an anti-SLAPP motion, the complaint is frozen. Thus, Plaintiff cannot amend the lawsuit to avoid the court ruling on the anti-SLAPP motion. (Simmons v. Allstate Ins. Co. (2001) 92 CA4th 1068, 1073) Amendments could frustrate the Legislature’s objective of providing a “quick and inexpensive method of unmasking and dismissing such suits.” See, Simmons at p. 400)
• Plaintiff has the option to dismiss the lawsuit. Nonetheless, Code of Civil Procedure § 425.16 gives the trial court limited jurisdiction to decide whether to award attorney fees and costs to Defendant. (Law Offices of Andrew L. Ellis v. Yang, supra, 178 CA4th at 879, 100 CR3d at 777-778)
• A typical California attorney with 10+ years of experience bills from $325-500/hr. If a person files a lawsuit based on defamation, or other protected right, and loses, the court must award attorney fees to “adequately compensate the defendant for the expense of responding to a baseless lawsuit,” Dove Audio, Inc. v. Rosenfeld, Meyer & Susman, 47 Cal. App. 4th 777, 785 (1996). As such, if you lose your case, attorney fees of $12,000-25,000 are typical.
• If you are self represented, this doesn’t buy you any credit with the court for suing someone for doing what the law allowed them to do (e.g. free speech). Self-represented litigants are held to the same standard as those represented by trained legal counsel. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 984- 985) Thus, you can’t say in opposition, “Opps I didn’t know”.
In short, I strongly recommend do NOT file a lawsuit unless an attorney, who is competent in First Amendment law, agrees to file it for you.
I litigated a cutting edge First Amendment case for 7 of its 10 year lifespan. Chaker v. Crogan, 428 F.3d 1215 C.A.9 (Cal.),2005, Cert. denied, 547 U.S. 1128, 126 S.Ct. 2023, invalidated a statute on First Amendment grounds and overruled the California Supreme Court’s unanimous decision in People v. Stanistreet, 127 Cal.Rptr.2d 633. Soon after Chaker v. Crogan, it was also used to strike down Nevada’s analogous statute forcing the legislature to rewrite the law and used as the backbone authority in Gibson v. City of Kirkland, 2009 WL 564703, *2+ (W.D.Wash. Mar 03, 2009). My case continues to be a leading case on viewpoint discrimination. My case is active, living and breathing-forever helping people who once felt oppressed.
Posted in anti-SLAPP motions, Cases, SLAPP, Statutes | Tags: Aaron Morris, anti-SLAPP motion, Attorney, On-line Reviews, SLAPP | No Comments »
Anti-SLAPP Motions Often Used for Delay Purposes
The rare North-American anti-SLAPP Platypus.
A few months back I won on an anti-SLAPP motion that I brought long after the case was filed. The thing is, I was not representing the Defendant initially, but when I was retained the first thing I saw from my review of the case was that the case was a quintessential SLAPP. No discovery or anything beyond the complaint and answer had occurred, so I persuaded the court to allow me to bring a SLAPP motion well beyond the normal 60-day deadline. I won the motion, the case was over, the client celebrated with champagne, and all was good with the world.
That case got some publicity, and now it seems like every attorney thinks they can file an anti-SLAPP motion at any time during the litigation, even on the eve of trial. It just happened to me today. Our case is nearly two years old, and the trial is about a month away. All of a sudden, defense counsel decided that our action is a SLAPP, and it would be an unforgivable miscarriage of justice to allow this matter to go to trial without first bringing an anti-SLAPP motion. Indeed, this was such an emergency, that defense counsel had to go into court on an ex parte basis to ask the court to shorten the notice period to bring the motion because there is not enough time before the trial. An ex parte application requires a showing of irreparable harm, and defense counsel so argued.
The anti-SLAPP motion, which was attached to the ex parte application, was utterly without merit, which is not surprising given that if the complaint was a SLAPP the defendant’s counsel certainly would have been able to reach that conclusion in the prior 22 months. Not surprisingly, the application DENIED.
Why would an attorney do such a thing? By Code, an anti-SLAPP motion is supposed to be brought within 60 days of service of the complaint. It can be brought later upon a showing of good cause to the court, but any delay is counterproductive. The point of an anti-SLAPP motion is to stop a SLAPP action from going forward, and stay the discovery. The discovery stay is one of its most powerful attributes, since the plaintiff is basically frozen in time and made to show his proof without the benefit of any discovery. If the motion is brought after discovery, the defendant loses the biggest advantage of the anti-SLAPP motion. And nothing changes during an action that somehow makes a complaint a SLAPP when it was not previously. In other words, discovery might reveal that an action is ripe for a motion for summary judgment, but it is very unlikely that discovery will reveal that an action was a SLAPP if that was not apparent from the complaint.
So, what possible justification could there be for this tactic of waiting until the eve of trial to bring a meritless anti-SLAPP motion?
Delay.
The ruling on an anti-SLAPP motion can be appealed. The judge today could have easily said, “Well, Mr. Morris, he is seeking only permission to file the motion on shortened notice; the motion is not yet before me, so I can’t decide its merits now. I’ll go ahead and let him file it, and then we can take a look at the merits.” If the judge had gone down that road, the defendant would have bought himself about a one year delay, since he would then have appealed the denial of the anti-SLAPP motion.
“Isn’t that a costly proposition for the defendant, given that you can recover attorney fees on a SLAPP motion?”, you might ask. Actually, attorney fees are not reciprocal with an anti-SLAPP motion. If the defendant successfully brings an anti-SLAPP, he gets his fees, but if the plaintiff defeats the anti-SLAPP, fees are only awarded if the motion was frivolous, and that is a very high standard. Thus, beyond paying his own attorney, there was very little downside to attempting this delaying tactic.
This precise strategy was successfully employed in Platypus Wear, Inc. v. Goldberg. In that case, the defendant waited about a year to bring an anti-SLAPP motion. The trial judge, probably thinking he was being fair to give defendant a chance to present the motion, granted leave to file the motion, which was then denied. Of course, defendant appealed, and the Court of Appeal took the opportunity to explain that judges must not fall prey to this delaying tactic. The heart of the court’s reasoning is set forth at length below, if you are curious, but here is the essential part of the reasoning:
“The primary reasons that Goldberg offered, and that the trial court cited, for allowing the late filing of his anti-SLAPP motion were that doing so would serve both judicial economy and the public policy behind the anti-SLAPP statute. However, these reasons could apply to any late filing. Implicit in Goldberg’s argument is the premise that a trial court should hear any potentially anti-SLAPP meritorious motion, no matter how late in the case it is filed.
…
In this unusual statutory context, in which a party has the right to an interlocutory appeal of a denial of anti-SLAPP motion, a trial court must be wary about freely granting a party the right to file an anti-SLAPP motion past the 60–day deadline. As reflected in Olsen and Morin, the Legislature’s act in allowing an interlocutory appeal of the denial of an anti-SLAPP motion is clearly tied to the fact that the statute contemplates that most such motions will be filed within 60 days of the filing of the complaint.
…
Rather than advancing the anti-SLAPP statute’s purpose of promptly resolving SLAPP suits, the trial court’s ruling had the effect of undermining that statute, as discussed in Olsen.”
We are well award of the anti-SLAPP tricks, and as today’s victory illustrates, know how to stop them.
[Platypus Wear, Inc. v. Goldberg, 166 Cal.App.4th 772 at 783 – 787.]
“There are two potential purposes of the 60–day limitation. One is to require presentation and resolution of the anti-SLAPP claim at the outset of the litigation before the parties have undertaken the expenses of litigation that begin to accrue after the pleading stage of the lawsuit. The other is to avoid tactical manipulation of the stays that attend anti-SLAPP proceedings. The ‘prejudice’ to the opponent pertinent to these purposes is that which attends having to suffer such expenses or be subjected to such a stay. ( Olsen, supra, 134 Cal.App.4th at p. 287, 35 Cal.Rptr.3d 909.)
The 60 day period in which a defendant may file a SLAPP motion as a matter of right appears to be intended to permit the defendant to test the foundation of the plaintiff’s action before having to ‘devote its time, energy and resources to combating’ a ‘meritless’ lawsuit. [Fn. omitted.] ( Morin, supra, 122 Cal.App.4th at p. 681, 19 Cal.Rptr.3d 149.)
[B]y the time Goldberg filed his application on October 31, 2006, the parties had already completed a substantial amount of discovery, and the trial was scheduled to commence in less than three months. By the time the trial court held a hearing on Goldberg’s anti-SLAPP motion, on January 19, 2007, the December 15, 2006 discovery cut-off date had already passed, and the trial was scheduled to begin in a week. Thus, one of the basic purposes of the anti-SLAPP statute—to allow for the prompt resolution of disputes before significant pretrial discovery expenses are incurred—could not be met in this case. In fact, allowing the late filing undermined this goal, in that the trial court continued the trial date, at Goldberg’s request, after the hearing on the anti-SLAPP motion.
The primary reasons that Goldberg offered, and that the trial court cited, for allowing the late filing of his anti-SLAPP motion were that doing so would serve both judicial economy and the public policy behind the anti-SLAPP statute. However, these reasons could apply to any late filing. Implicit in Goldberg’s argument is the premise that a trial court should hear any potentially anti-SLAPP meritorious motion, no matter how late in the case it is filed. The Olsen court rejected this argument. ( Olsen, supra, 134 Cal.App.4th at p. 286, 35 Cal.Rptr.3d 909 [“Discretion to permit or deny an untimely motion cannot turn on the final determination of the merits of the motion”].) In addition, because Goldberg could have attempted to narrow the issues in the case by way of a motion for summary judgment or a motion for judgment on the pleadings, these rationales have very little persuasive force. (See Kunysz, supra, 146 Cal.App.4th at p. 1543, 53 Cal.Rptr.3d 779 [“The same issues raised by [defendant’s] renewed anti-SLAPP motion could just as easily have been raised by, for example, a motion for summary judgment or a motion for judgment on the pleadings”].)
The arguments Goldberg made at the hearing on his application are equally unpersuasive. Goldberg’s counsel’s explanation that Goldberg did not file an anti-SLAPP motion earlier because the case had been “focused on other issues,” is little different from the explanation the Morin court rejected, i.e., that the party had been “devot[ing] time, energy and resources,” to litigating the case rather than pursuing an anti-SLAPP motion. (Morin, supra, 122 Cal.App.4th at p. 681, 19 Cal.Rptr.3d 149.)
Goldberg’s suggestion at the hearing that the trial court should grant his application to allow the late filing because his current counsel had not been counsel of record during the initial 60–day period is also without merit. Goldberg’s current counsel substituted into the case in March of 2005, far in advance of the October 31, 2006 application to allow a late filing. ( Olsen, supra, 134 Cal.App.4th at p. 285, 35 Cal.Rptr.3d 909 [“A claim of excuse from untimeliness based on late discovery after obtaining new counsel is generally unavailing”].) In addition, Goldberg’s counsel’s suggestion that Goldberg should be allowed to bring the anti-SLAPP motion in order to afford the trial court greater discretion to “parse causes of action,” is misguided, since an anti-SLAPP motion is not to be used for this purpose. (See Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 106, 15 Cal.Rptr.3d 215
Goldberg has not demonstrated anything in the procedural history of this case, and specifically, in the litigation involving other parties, that would justify allowing the late filing. The lengthy delay in bringing the matter to trial occasioned by Luce Forward’s interlocutory appeal is, if anything, a factor that weighs against granting Goldberg’s application.
In this unusual statutory context, in which a party has the right to an interlocutory appeal of a denial of anti-SLAPP motion, a trial court must be wary about freely granting a party the right to file an anti-SLAPP motion past the 60–day deadline. As reflected in Olsen and Morin, the Legislature’s act in allowing an interlocutory appeal of the denial of an anti-SLAPP motion is clearly tied to the fact that the statute contemplates that most such motions will be filed within 60 days of the filing of the complaint. (See Olsen, supra, 134 Cal.App.4th at p. 287, 35 Cal.Rptr.3d 909; Morin, supra, 122 Cal.App.4th at p. 681, 19 Cal.Rptr.3d 149.)
While a trial court enjoys considerable discretion regarding whether to allow the late filing of an anti-SLAPP motion, in this case, the delay was extreme, the reasons Goldberg offered in his application for the delay in filing the motion were weak, the court’s reasons for granting the application were unrelated to the purpose of the SLAPP statute, and the potential prejudice to Platypus, given the lengthy delay occasioned by the appeal, is great. Rather than advancing the anti-SLAPP statute’s purpose of promptly resolving SLAPP suits, the trial court’s ruling had the effect of undermining that statute, as discussed in Olsen.
In applying the standard of review articulated in Olsen to this case, “[T]he grounds given by the court for finding the anti-SLAPP motion [timely] are inconsistent with the substantive law of section 425.16, [and] the application to the facts of this case is outside the range of discretion conferred upon the trial court under that statute, read in light of its purposes and policy.” (Olsen, supra, 134 Cal.App.4th at p. 285.)
Posted in anti-SLAPP motions, Cases, Recent Cases, SLAPP, Victories | Tags: Appeal, Frivolous, Platypus v. Goldberg, SLAPP | No Comments »
Blogger Hit With $2.5 Million Judgment
I guess she could consider it a victory. A blogger by the name of Crystal Cox was sued for $10 million by Obsidian Finance Group for comments Ms. Cox posted on obsidianfinacesucks.com. Representing herself, she managed to keep the judgment to just $2.5 million.
Seriously though, nothing in the case went Ms. Cox’ way. She brought an anti-SLAPP motion and claimed that she was protected by the New York Times actual malice rule, as well as the reporter’s shield. But the judge was not convinced. Judge Marco Hernandez of the U.S. District Court in Portland held that a blogger is not a journalist. As such, Cox was caught in a catch-22. She would not be required to reveal her source if she fell under the shield law as a journalist, but without such protection she could not reveal her source without subjecting him to liability, and without that background information, could not prove what she was saying was true.
As to the New York Times actual malice rule, which holds that defamation can be found only upon a showing of actual malice where the plaintiff is a public figure, the court concluded that the plaintiffs were not public figures.
Complicating the matter further, Cox was late in bringing her anti-SLAPP motion (although the judge stated the result would have been the same even if it had been filed on time).
The concerning part of the decision arises from the court’s discussion of what makes one “media.” Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974), held that a plaintiff should not be able to recover damages from a media organization without proof that the reporter was at least negligent and may not recover presumed damages absent proof of “actual malice.” After rebuking Cox for failing to specify any authority for the proposition that a blogger can be media, the court then proceeds to set forth seven indicators that make one “media” without absolutely no authority for those points.
According to Judge Hernandez, Cox failed to show she was media because there was no evidence of “(1) any education in journalism; (2) any credentials or proof of any affiliation with any recognized news entity; (3) proof of adherence to journalistic standards such as editing, fact-checking, or disclosures of conflicts of interest; (4) keeping notes of conversations and interviews conducted; (5) mutual understanding or agreement of confidentiality between the defendant and his/her sources; (6) creation of an independent product rather than assembling writings and postings of others; or (7) contacting ‘the other side’ to get both sides of a story. Without evidence of this nature, defendant is not ‘media.'”
In my never to be humble opinion, those made-up criteria by Judge Hernandez are about 20 years out of date. “Affiliation with a recognized news entity”? The reason that so many “traditional” news outlets are folding is because of the rise of citizen reporters, with no affiliation with any organization and who may or may not have any journalistic background or education.
Nonetheless, the takeaway here is that bloggers are not immune from liability if they stray across the line and engage in defamation. I don’t know what Cox reported about Obsidian Finance Group, so the judgment may have been well deserved. Still, it gives pause to know that a blogger is now straddled with a huge judgment that cannot be discharged in bankruptcy and therefore will likely dog Ms. Cox for at least the next 20 years.
Go here for a more detailed discussion of the judgment, as well as a copy of that judgment.
Posted in anti-SLAPP motions, Cases, Defamation, Recent Cases, SLAPP | Tags: Bloggers, Crystal Cox, Defamtion, Liability, Obsidian Finance Group, SLAPP | No Comments »
SLAPP Law Applies to Foreign Litigation
The California Court of Appeal has interpreted the term “official proceeding” as used in Code of Civil Procedure section 426.16 to include even foreign litigation.
The fact pattern here is rather involved, but to summarize, the action began in Zimbabwe when a wife allegedly took marital property to various locations in that country and then fled with her children to Northern California. The husband was convinced that his sister-in-law had assisted with the removal of the property, so he obtained a “writ of arrest” against her and she spent the night in jail. After a contested hearing, the Zimbabwe court found that there was insufficient evidence to prove that the sister-in-law had assisted in the removal of the property.
The sister-in-law then filed a civil action against the husband in Los Angeles Superior Court for false arrest. A jury found in favor of the husband, but the Court of Appeal reversed and ordered a new trial for various reasons. Back in Zimbabwe, the husband filed for permission to appeal from the final judgment on the arrest case. That application was supported by several declarations, including one from the husband’s California attorney, Donald C. Randolph of Randolph & Associates. The Zimbabwe court denied the application, and the sister-in-law then sued Randolph for malicious prosecution back here in California.
Quite appropriately, Randolph brought an anti-SLAPP motion seeking to strike the malicious prosecution complaint. Clearly, the declaration provided by Randolph was related to litigation and was in furtherance of a right of redress, even if that right was being pursued in Zimbabwe. Unfortunately for Randolph, Los Angeles Superior Court Judge Mel Red Recana was unwilling to take Section 426.16 that far, and denied the anti-SLAPP motion, concluding that it did not apply to activity in a foreign country.
But the Court of Appeal looked at the controversy from a slightly different angle. Although the declaration was provided to a court in Zimbabwe, it “contained statements about the effect of the Zimbabwe order in the Los Angeles case and the facts supporting probable cause for the writ of arrest,” which “were made in connection with issues under consideration in the Los Angeles case.” On that basis, the justices concluded, the statements were made “to influence the determination of issues pending in the Los Angeles case,” and therefore were a part of the right of petition in the Los Angeles case.
The story was reported by the Metropolitan News-Enterprise and can be found here.
Posted in anti-SLAPP motions, Cases, Recent Cases, SLAPP | Tags: 426.16, Donald Randolph, foreign litigation, SLAPP, Zimbabwe | No Comments »
Lawyer Misses “Stealth” SLAPP Action
One of our latest anti-SLAPP victories provides a beautiful illustration of a “stealth” SLAPP suit that the plaintiff’s attorney failed to recognize, to the great expense of his client.
In this case our (future) client’s business partner, we’ll call him Freddy Fraudster, opened a credit card account at a local bank using our client’s personal information. When our client discovered what Freddy had done, he contacted the bank and informed the personnel there that Freddy had committed fraud, and based on this report the bank closed the account and reported the matter to the police. Our client also filed a police report, and filed for a restraining order against Freddy.
Freddy was not happy. He had a long term relationship with the bank, and based on the report by our client, the bank closed his accounts and would have nothing further to do with him. Apparently thinking the best defense is a good offense, and hoping that winning the race to the courthouse might give him some leverage, Freddy filed an action against our client. He claimed that our client had authorized him to open the account, and that the report to the bank was therefore defamatory since it accused him of fraud.
Do you see why Freddy’s action in Superior Court was a SLAPP suit? We did, and we successfully brought an anti-SLAPP motion. You see, a SLAPP suit is one that tries to block a person’s right of petition. Freddy’s attorney realized that the report to the police and the application for the restraining order were protected rights of petition, but he mistakenly thought that the report to the bank, requesting that the credit card be cancelled, was not a petition for redress and therefore did not fall under the SLAPP statute because it did not involve any government agency. No doubt, he thought that by suing our client for defamation, he could make all his evil deeds go away and get back in good stead with the bank by offering to dismiss the case if our client would withdraw his remarks to the bank, court and police. Now it sounds like a SLAPP, doesn’t it?
The interpretation of the SLAPP statutes by Freddy’s attorney was far too narrow. Consider. One day you run a credit report on yourself and you find that someone has fraudulently opened a credit card in your name. What is the first thing you are going to do? Call an official government agency? You might do that eventually, but first you are going to call the credit card company and tell them to cancel the card. Thus, contacting the credit card company, or in our case the bank, is a natural part of the entire “right of petition.”
It’s very similar to the litigation privilege. I occasionally see cases where a defendant tries to sue the plaintiff and his attorney, claiming that the demand letter sent by the attorney was defamatory because it falsely claimed the defendant did something illegal. But under Civil Code section 47, anything said in conjunction with litigation is privileged and therefore not defamatory. The demand letter from the attorney takes place before legal action is ever filed, but it is still part of the litigation process.
So it was here. The report to the bank occurred before any “right of petition” was pursued with a government agency, but calling to cancel the credit card was a natural part of that process. If a plaintiff were permitted to SLAPP a defendant by focusing on the activities leading up to the actual right of petition, then the intent of the anti-SLAPP statutes would be subverted. We explained that to the court, and our motion was granted.
Posted in anti-SLAPP motions, Cases, Recent Cases, SLAPP | Tags: anti-SLAPP motion, attorney fees, right of petition, SLAPP | 2 Comments »
SLAPP Plaintiff Escapes Attorney Fees
There is a basic concept concerning legal fees that some attorneys never seem to understand, so the same issue comes up in many variations. Say, for example, that Joe Attorney and Paul Plumber enter into a contract for some plumbing work at the attorney’s home. The contract provides for attorney fees to the prevailing party if they ever get into a contract dispute. Joe Attorney is not happy with the plumbing work, so he sues, and both parties represent themselves at the trial.
Under this scenario, regardless of who wins, neither party will recover any attorney fees, because there are no attorney fees. Paul represented himself, so it’s pretty obvious he has no basis for attorney fees, but often an attorney in these circumstances will improperly seek fees, claiming that he should be reimbursed for the time he spent on the case, just as though he had hired an attorney (so-called “opportunity costs”). California courts have always rejected this argument, since no attorney was paid for the work, and there are therefore no attorney fees to recover. The fact that the prevailing party happened to be an attorney does not make him eligible for the money he lost fighting the case, anymore than the plumber should be paid for the time he spent prosecuting the case if he prevails.
But this simple reasoning does not keep attorneys from trying. In the latest example, the firm of Carpenter & Zuckerman sued attorney Paul Cohen and his professional corporation Personal Injury Solutions, Inc. Cohen cross-complained back against Carpenter & Zuckerman, alleging, among other things, defamation.
Carpenter & Zuckerman properly responded with an anti-SLAPP motion, which was granted. Cohen appealed, but lost, and Carpenter & Zuckerman filed a memorandum of costs under the anti-SLAPP statute for the attorney fees incurred on appeal (about $33,000). Here is where it gets interesting.
According to the opinion by the Court of Appeal, Carpenter & Zuckerman submitted a declaration from one of the firm’s associates, Candice Klein, attesting to the fact that she had been “retained” by her firm to represent it on appeal. She pointed out that she was not a partner in the firm, had no financial interest in the outcome of the appeal, and asserted that she was hired on an “independent contractor basis”.
It was a valiant effort to distance Ms. Klein from the firm, to create sufficient independence that the court might treat her as a retained attorney, but it didn’t fly with the trial court or the Court of Appeal. A law firm representing itself is not entitled to recover attorney fees, and that does not change when an associate is used. No attorney fees for Carpenter & Zuckerman. It probably didn’t help that Ms. Klien is a graduate of Southwestern University School of Law, one of the finest law schools in the country, creating the automatic assumption that she is really the one running the firm, partner or not.
In defense of Carpenter & Zuckerman, the argument had some merit. In a 2001 case called Gilbert v. Master Washer & Stamping Co., Inc., the Court of Appeal permitted an attorney fee award to a firm that was representing one of its own partners, but in that case the matter involved the partner’s “personal interests”. Similarly, Carpenter and Zuckerman were named individually in this case, but other cases have already held that that is not sufficient if the issues are the same as those asserted against the firm.
Anytime a law firm is sued, any recovery against it will detrimentally affect any partner. And when a law firm is sued in tort for the act of one or more of its lawyers, those lawyers are exposed to liability. In order to recover attorney fees for work done on behalf of individual attorneys in a law firm, there must be a showing that the fees sought to be recovered are not attributable to representation of the law firm. No such showing was made here. Thus, there was not sufficient evidence to overturn the trial court’s conclusion that the individual plaintiffs were not entitled to recover any attorney fees.
Posted in anti-SLAPP motions, Cases, Recent Cases, SLAPP | Tags: attorney fees, Candice Klein, Carpenter & Zuckerman, Paul Cohen, SLAPP | No Comments »
Anti-SLAPP Statute Can Be Used In Federal Court
There is currently no federal anti-SLAPP statute, but that does not mean the anti-SLAPP remedy is not available in federal court. In federal diversity cases brought in California, applying California law, a defendant still maintains the right to bring a motion to strike under Civil Procedure section 425.16. But overlaying this statute onto federal procedures has created some issues.
The right to amend.
In California, it is now clear that once an anti-SLAPP motion has been filed, the plaintiff cannot amend the complaint in an attempt to fix the problems that made the complaint a SLAPP. But in the recent case of Greensprings Baptist Christian Fellowhip Trust v. Cilley, the Ninth Circuit saw things differently.
That case arose from a malicious prosecution action. The defendant filed an anti-SLAPP motion which was granted by the court, but with leave to amend. The court ruled that under the very liberal amendment standards of federal court, leave was proper.
As a side note, the decision made little sense, again illustrating that many courts struggle with the hybrid nature of an anti-SLAPP motion. Even though demurrers are not permitted in federal court, that in essence was the standard applied by the District Court. When a demurrer is sustained because the complaint fails to allege essential elements, leave to amend is normally granted to afford the opportunity to allege the missing elements. In Greensprings, the court determined that plaintiff had failed to meet the second prong of the anti-SLAPP analysis – providing sufficient evidence to show a likelihood of success. But why grant leave to amend? If the issue is evidence, then no amount of amending will provide more evidence.
And that takes us to the next difference between state and federal court as regards the treatment of the anti-SLAPP process:
The right to appeal.
California’s anti-SLAPP statute provides for an immediate appeal from a denial, so the defendant did just that; appealing the court’s decision to permit amendment. But that raised another issue. Federal courts do not like interim appeals, state statute or not. The Court of Appeals held that as a matter of first impression, the order granting anti-SLAPP motion to strike complaint with leave to amend did not conclusively determine the disputed question of the anti-SLAPP statute’s applicability, and thus the order was not immediately appealable. “Accordingly, we hold that we lack jurisdiction under the collateral order doctrine to entertain an appeal from the portion of a district court’s order granting a defendant’s anti-SLAPP motion which gives a plaintiff leave to amend her complaint.”
However, the decision was a narrow one limited to the specific circumstances. The Court of Appeal confirmed that California’s right of appeal is available when immediate review is necessary to safeguard the right protected by the state’s statute. Thus, while Greensprings denied the right to appeal, it affirmed that immediate appeal is available under the proper circumstances.
Posted in anti-SLAPP motions, Cases, Recent Cases, SLAPP | Tags: Amend, Appeal, Greensprings, Ninth Circuit, SLAPP | No Comments »
“Who you calling a thief?” said the cannibal.
A story in this month’s California Lawyer magazine caught my eye as an excellent case study on a point I try to explain to clients, sometimes unsuccessfully, about defamation actions.
Travel with me back to 1847 to the ill-fated Donner Party. While crossing the Sierra Nevada Mountains near present day Truckee, the wagon train could go no further and the travelers had to hunker down and try to wait out the extreme winter weather. Of the original 89 pioneers, only 45 were rescued, and it was soon learned that they had survived by eating the others.
One of the survivors was a German immigrant name Lewis Keseberg. Keseberg admitted to cannibalism, but the authorities became convinced that Keseberg had not always waited for someone to die from exposure before using them as a food source, and he was put on trial for six murders. Although he was acquitted for lack of evidence, one of the rescuers told gruesome stories about Keseberg’s cannibalistic ways, and those stories were printed in the newspaper.
Keseberg sued for defamation, which was an amazing feat in and of itself because California was not yet a state, so such a suit must have been a procedural nightmare. He sought $1,000 in damages.
In what may have been the first defamation action on state soil, Keseberg won his lawsuit, but the court awarded only $1, and ordered Keseberg to pay the court costs.
And therein lies the lesson that some potential clients refuse to accept. Winning a defamation action is more than just proving each of the elements of libel or slander. Context is everything. The damages in a defamation action arise from the loss of reputation. A person can have a reputation that is so bad, that defamatory statements simply don’t make it any worse.
In Keseberg v. Coffeemeyer, Keseberg had been falsely accused of stealing from the people he ate. He was very offended by that accusation, and headlines in the paper that read, “Where Did Keseberg Hide the Donner Treasure?” But here’s the thing, Keseberg, YOU ATE DEAD PEOPLE! You are already off most dinner invitation lists. The added claim that you took the money of the DEAD PEOPLE YOU ATE is not a big blow to your reputation.
I’m reminded of the line from Star Wars.
Princess Leia shouts at Han Solo, “Why, you stuck up, half-witted, scruffy-looking, nerf-herder.”
To which Han Solo responds, “Who’s scruffy-looking?”
I once received a telephone call from a business owner, who had been the subject of a news report on television. The report had to do with the fact that he was putting unauthorized charges on customers’ credit cards. The story had reported that he did this to at least 12 customers, but after checking his records, he determined that he had only done so nine times. He wanted to sue for defamation, based on the fact that he had only cheated nine customers, and not 12. I politely declined. (I changed the facts slightly to protect the privacy of the caller.)
You will not succeed in a defamation action if you are a horrible person, but just not quite as horrible as is claimed, or if out of five terrible things said about you, only one is false.
Posted in anti-SLAPP motions, Cases, Defamation, SLAPP | Tags: Defamation, Donner Party, Reputation, Slander, SLAPP | No Comments »
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