Case Results

Former 49er Ray McDonald sues rape accuser for defamation

“Former San Francisco 49ers defensive end Ray McDonald has gone on the offensive, filing a lawsuit Monday against the woman who accused him of sexual assault in December, as a way to try to clear his name in hopes of restarting his career.”

Source: www.usatoday.com

This will be an interesting case to follow.

McDonald was accused of rape after spending the night with a woman me met at a San Jose bar. She claimed that while partying with McDonald at his home, she bumped her head during a hot tubbing incident, and did not recall anything that followed until she woke up naked in his bed the following morning. She spent the day with him, but sought medical treatment the next day. McDonald never denied that he had sex with the woman, but said it was consenual.

For reasons I have explained here before, reports to the police are privileged and will not support a defamation action. If that is the basis for the claim, this case will soon be gone on an anti-SLAPP motion. But if the woman alleged rape outside of that context, then McDonald’s case will survive.

[MAY 23, 2016 UPDATE:] The attorney for the woman brought an anti-SLAPP motion, based on the fact that the rape was reported only to the police. As I predicted, since McDonald was unable to identify anyone other than the police who received the allegedly defamatory claim, the anti-SLAPP motion was granted and McDonald’s case was dismissed.

Reports to the police are privileged, and can never form the basis of a defamation claim. This case makes clear why that MUST be the rule.

For sake of argument, let’s say McDonald did rape the woman. (Her story seems a little dubious, but let’s assume it was true for sake of this discussion.)

McDonald, who probably has some money from his NFL days, wants to silence this woman and hopefully get her to drop the charges. So he sues her for defamation, knowing that she will have to spend tens of thousands of dollars fighting against that legal action. She may very well get worn down by the time and expense of the legal action, and agree to drop her criminal charges in exchange for McDonald dropping his civil action.

We can never permit criminal defendants to use civil proceedings as a means to intimidate witnesses, and that is why reports to the police are privileged.

That does not leave McDonald without a remedy if the claims were false. If he is found not guilty in the criminal trial, he can then sue his accuser for malicious prosecution, if he can show that the claim was made with malice. Malice can be shown by proving that the woman could not have believed what she claimed.

Court of Appeals upholds $14.5 million defamation verdict against State Farm in hail fight

The largest defamation verdict in Indiana history — more than $14.5 million awarded to a contractor who claimed State Farm Fire & Casualty ruined his business and reputation — has been upheld by the Indiana Court of Appeals.

 

In a decision issued Tuesday, the three-judge panel found Hamilton Superior Court Judge Steven R. Nation correctly denied the insurance giant’s request for a new trial based on a claim that roofing contractor Joseph Radcliff obtained the judgment through fraud on the court.

The case grew out of a 2006 storm that battered Central Indiana with golf-ball-size hail and ravaged thousands of homes. The damage tally topped $1 billion, with State Farm alone paying out more than $200 million on about 50,000 damage claims.

 

The payout to Radcliff, however, was not the result of damage to homes or cars — but for what a Hamilton County jury determined was damage State Farm did to the roofing contractor’s reputation.

 

Source: www.indystar.com

These cases are becoming so commonplace, I’ve taken to calling them the “second appeal”. Here’s the way they work.

The defendant loses in the trial court, then they lose on appeal, so they bring their own action or motion back in the trial court, claiming the original verdict was achieved by a “fraud on the court”, usually based on some evidence the defendant claims would have resulted in a different result.

There is support for such case, but the circumstances for a successful fraud on the court claim are extremely narrow. Here, the insurance company claimed that after the trial, it obtained a declaration from a witness who said the plaintiff had lied and withheld evidence. That approach won’t fly. Courts want finality to their verdicts, and that is evidence that could have been presented in the original trial. A defendant does not get to call a “Mulligan” because it failed to vigorously defend the case the first time around.

In one of my cases, a plaintiff sued my client and we counter-sued. In the end, we obtained a large judgment, and just as in this case, the plaintiff appealed and lost. The plaintiff then brought an action for fraud on the court, claiming the entire matter had been covered by an arbitration agreement, and that we had “defrauded” the court by allowing it to enter a judgement, knowing the matter was subject to arbitration. You read right. The plaintiff brought the action under an agreement that contained an arbitration clause, and then claimed that we had defrauded the court by not invoking the arbitration requirement. The case was thrown out on demurrer.

See on Scoop.itDefamation Law

Sleeping Fan Sues New York Yankees, MLB, ESPN for Defamation

Andrew Rector proved today that you really can sue anyone – even MLB, ESPN or the New York Yankees – for just about anything.

Source: www.rantsports.com

Clients often call and say, “can this person sue me for defamation if I [fill in the blank].” As I always say, and as this case illustrates, anyone can sue anybody for anything. The question is, can they do so successfully? Here, a sleeping baseball fan by the name of Andrew Rector is suing for the comments made by the sportscasters when the camera captured him napping.

Can he sue for defamation? Yes. But will he be successful? The answer here will be, no. A ridiculous and frivolous suit.

[UPDATE:] My prediction was correct. As reported by the New York Daily News, the court threw out (or should I say, put to sleep?) Rector’s ridiculous legal action.

Here is the video of the incident in question, which resulted in the unsuccessful legal action:

Can a Court Order Someone Not to Defame You?

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

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

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

The much tougher challenge is getting a court to order a defendant to stop defaming the victim before there has been a trial. Typically, it takes at least a year to take a matter to trial, and that may be far too long for the victim. A temporary injunction can be obtained in a matter of days, so that affords a much faster remedy if it is available.

But there is a problem. An injunction is usually issued with little or no time for the defendant to oppose it. The procedure is that the plaintiff files an ex parte application with just 24 hours notice to the other side. The plaintiff’s attorney may have taken weeks to prepare a carefully crafted application supported by any number of declarations from witnesses, but the defendant gets just 24 hours to put together an opposition. Indeed, it’s far worse, because notice must be given 24 hours in advance, but the application may not be served until just four hours before the hearing, depending on the procedure followed by a particular court. If good cause can be shown, the ex parte application can be sought with no notice to the other side. A defendant could be ordered to stop speaking before the judge has ever heard his side of the story. Is that fair? Continue reading

Morris & Stone Wins $1.5 Million for Internet Defamation Victims

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 will vigorously defend 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, and was therefore liable for Internet defamation.

Pankaj Karan was admirably represented at various times during the action by Randolph Catanese and Douglas Hume from Catanese & Wells, David R. Calderon from Barth, Berus & Calderon, and Palak Chopra from the Law Offices of Palak Chopra.

[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.

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

Anti-SLAPP Court of Appeal

How to Handle Mixed Causes of Action?

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

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

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

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

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

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

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

Yelp Sues the McMillan Law Group, Claiming it Posted Fake Reviews

YelpI get probably two calls a month from potential clients, complaining that after they refused to subscribe to Yelp’s services, Yelp responded by removing most or all of their positive reviews. If true, then Yelp cannot seriously contend that it is interested in the integrity of its reviews.

The claims seem supported by a recent action by Yelp. In this case, a small San Diego law firm, the McMillan Law Group, subscribed to Yelp’s services, allegedly based on representations that were made about the number of page views it would receive. When the results fell below what the McMillan Law Group says was promised, it demanded a refund. Yelp balked, and the law firm sued in small claims court. The firm prevailed, and obtained a $2,700 judgment against Yelp.

Yelp appealed, and doubled-down by filing its own action back against the McMillan Law Group. It seems that Yelp had been busy looking into the law firm’s positive reviews, and decided that they did not all adhere to Yelp’s terms of use. Yelp’s complaint is a sight to behold, alleging that the McMillan Law Group is liable for breach of contract, intentional interference with contractual relations, unfair competition and false advertising. Yelp alleges:

“The McMillan Law Group, a San Diego law firm specializing in bankruptcy, exemplifies the behavior that Yelp combats daily through its algorithms and investigations—the planting of fake reviews intended to sway potential clients with false testimonials. The McMillan Law Group’s efforts to mislead consumers are particularly brazen and disappointing given they have targeted some of the most vulnerable consumers of all—individuals who may be facing bankruptcy and who are looking for potential legal representation.”

In the complaint, Yelp details its investigative results, alleging that multiple Yelp user accounts were created from a computer located at the same McMillan Law Group IP address used to create reviews about that law firm.

In an interview with Bloomberg Law, Julian McMillan stated, “It’s bullying tactics. I get it. They want me to spend some money but I just don’t see how they come a winner in this [from a PR standpoint].”

As McMillan also notes, Yelp’s lawsuit seems like a really bone-headed move from a discovery standpoint. Since Yelp is claiming that false reviews by the McMillan Law Group have interfered with its contractual relations and caused it damages, it has now made all of its business practices and income fair game for discovery. It will also be very interesting to learn whether Yelp routinely brings such lawsuits to maintain the integrity of its reviews, or does so only in response to being sued.

For a detailed discussion of the love fest between Yelp and the McMillan Law Group, see the article at Bloomberg Law.

[UPDATE: May 6, 2015]  Yelp apparently realized the folly of its actions, and today filed a Request for Dismissal, disposing of its action against McMillan Law Group. No doubt Yelp will claim that the case settled, and likely it did, but not in the manner that would imply. A plaintiff always has the power to dismiss their own case — there is nothing the defendant can do to stop a dismissal — but a dismissal entitles the defendant to court costs. Often plaintiff’s counsel will approach defense counsel and offer to dismiss the action in exchange for a waiver of costs. Since costs are usually pretty nominal in the grand scheme of things, it is rare that a defendant will refuse this offer.

I’d be willing to bet any non crucial part of my anatomy that McMillan did not pay any money to Yelp as a part of any settlement. Yelp had no way to show any damages, so McMillan was not facing any risk of liability; only the costs of defense. Had it been me, and Yelp had offered a walkaway in exchange for a waiver of costs, I would have refused, knowing that Yelp would dismiss anyway, but I would have the satisfaction of a cost judgment against Yelp. I’m sure McMillan would have come to the same conclusion.

Alternatively, if the parties become cagey about the terms of the “settlement,” with both sides refusing to give any details, then that will likely mean that money went from Yelp to McMillan. In other words, McMillan would not give up the ability to set the record straight just to avoid the comical trial and full access to Yelp’s internal records. There would have to be some strong motivation for McMillan to remain mum about any settlement.

Alternatively to that alternative, if Yelp really did have some dirt on McMillan posting fake reviews, the consideration for silence about the settlement could have been that Yelp would keep that information to itself.

Anti-SLAPP Victory: Reality Television is Free Speech

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

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

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

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

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

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

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

Can you sue Stephen King when you find out Pet Sematary [sic] is not based on reality? Then why did Hester and his counsel think they could sue A&E for its fictional Storage Wars? Not surprisingly, A&E’s attorneys asked the same question in the form of an anti-SLAPP motion. The motion was a no-brainer, because it involves a free speech issue of public interest, bringing it within the anti-SLAPP statute, and there was zero chance of Hester prevailing on at least one or more of his causes of action, so the second element was a lock. As I have explained many times here, a SLAPP suit will often make no mention of defamation or any other obviously SLAPPable claim, but nonetheless will be a SLAPP.

Lesson 3:  Betting wrong on a SLAPP can be very expensive since some courts continue to rubber-stamp huge fee applications.

There is case authority for the proposition that if a court finds that a fee application on an anti-SLAPP motion was inflated, it can deny fees altogether, but I have yet to see a court follow the rule. In one case, I was brought in to challenge a fee application, and persuaded the court to knock off about 40% of the hours that were requested by the attorney who had successfully brought the anti-SLAPP motion. When the court stated in was reducing the fees by that amount, I reminded it of the authority that it could deny the fees altogether since defense counsel had been caught padding the bill. The judge responded, “Padding, what padding? I did not see any padding.” Well your honor, if the hours were all legitimate, then you should have awarded the full amount. But since you agreed with me that 40% of the time was inappropriate, then I would describe that as padding.

I have not reviewed the invoices for the anti-SLAPP motion in this case, nor do I know what other activities if any followed the original anti-SLAPP motion (for example, the plaintiff will sometimes request permission to conduct discovery following the motion and that takes time), so I offer no opinion on whether the time spent was appropriate. In the end, even after reducing the attorney fees requested by defense counsel, the attorney fees awarded still exceeded $120,000.

Chink in Armor of Communications Decency Act?

Sarah Jones

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

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

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

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

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

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

Reporting a Fact is Never Defamatory

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

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.

Aaron Morris

Morris & Stone, LLP

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

(714) 954-0700

Email Aaron Morris

View Aaron Morris, Trial Attorney and Partner at Morris & Stone, with emphasis on Free Speech and Defamation Law.

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