Libel

Morris & Stone Case Creates Important Internet Defamation Authority

Super hero with computer circuit

Internet Defamation Law Clarified

Morris & Stone is proud to announce that righteous Internet defamation cases will now be easier to prove, due to a Court of Appeal opinion resulting from one of our cases.

I was brought in as co-counsel to first chair a trial in Santa Cruz, representing an attorney we will refer to as “Esquire”. In addition to her legal practice, Esquire had a business on the side, which was based in some warehouse space. A few years into Esquire’s lease, the warehouse was purchased by someone we will call “Painter”, making Painter Esquire’s landlord.

The problem was, Painter wanted the entire warehouse for his own use, so he made a buy-out offer to Esquire. But Esquire liked the space, and turned down the offer.

Then began what Esquire saw as a harassment campaign, designed to get her to move out. The harassment included fights over parking and jack hammering during business hours. Ultimately, Esquire was forced to go to court to get an injunction against Painter to stop some of the behavior.

The same day the injunction was issued, Esquire received her first negative Yelp review, which was followed by two more. It was clear the reviews were false, because they accused Esquire of poorly performing services that her company did not even offer. By subpoening records from Yelp and then the Internet Service providers, Esquire confirmed that one of the reviews had been posted from Painter’s business account, and two had been posted from his home account.

Judge Ariadne Symons

Continue reading

No, I Wasn’t Kidding About the Wisdom of Walking Away

Internet Defamation - Take the Settlement Fool

Just two weeks ago I posted comments on the wisdom of taking a walk-away settlement when you are a defendant with no moral high ground in a defamation action.  I told the story of how the defendant in the case I prosecuted was afforded the opportunity to take down the defamatory comments and walk away without paying any damages, rejected it, and now must pay over $200,000 to my client as a result of his hubris.

You’d think that might have at least given the defendant and his counsel in a different case a moment of pause in the trial that followed two weeks later.  My client sued the defendant, who then filed a frivolous cross-complaint, apparently thinking that would give him some leverage.  The parties had discussed settlement throughout the year-long litigation process, but the defendant had always insisted on money coming his way, and there was no way that was going to happen.

Come the day of trial, the judge conducted one final settlement conference, and my client, knowing the defendant doesn’t have much money anyway, graciously offered to just walk away.  There it was; that same moment in time discussed in my last posting, where the defendant is afforded the opportunity to avoid sending his life, or at the very least his finances, in a bad direction.  But the defendant refused and demanded payment of a ridiculous amount of money on his ridiculous claim.  My client declined.

With no settlement, the case proceeded to trial and I called the defendant as my first witness in a trial that both sides had estimated would last three days.  Two hours into my examination, the judge spontaneously announced that he had heard all he needed to hear, and unless defendant had some “miraculous evidence” he was going to find in favor of my client.  In chambers, he said to defense counsel, “Mr. Morris is very methodically cutting your client to pieces.”  He suggested the parties and attorneys talk settlement again.  My client said fine, and said he would dismiss the action in exchange for defendant paying the same ridiculous amount defendant had been demanding.  Defendant agreed, and we set up a ten year payment schedule, non-dischargeable in bankruptcy.  Ouch.

If you got the tie-in between the photo above and the article, give yourself a prize.  It’s from the movie The Road Warrior, and the gentleman in the photo is imploring the people at the oil refinery to “just walk away” and let him and his warriors take the gasoline.  I think I may start dressing like that for settlement conferences.

Morris & Stone Victory — $200,000 from Defendant Who Failed to See Wisdom of Walking Away

Perhaps because the adrenaline and endorphins flow during a courtroom battle, I become very thoughtful in the calm that follows. I won a small but satisfying court victory recently in an Internet defamation case, and it made me realize how much the process mirrors a scene from a movie.

The movie is Taken. Even if you haven’t seen the movie, you probably saw the scene to which I refer since it was shown in the trailers. The main character, who we come to learn is some sort of retired Über-spy, is on the phone with his teenage daughter when she is kidnapped. He hears the bad guy pick up the phone, and he calmly gives the following speech:

I don’t know who you are, and I don’t know what you want.
If you are looking for ransom, I can tell you I don’t have money.
But what I do have are a very particular set of skills;
skills I have acquired over a very long career.
Skills that make me a nightmare for people like you.
If you let my daughter go now, that will be the end of it.
But if you don’t, I will look for you, I will find you and I will kill you.

Most every Internet defamation case I handle starts with such a moment. Not nearly so dramatic, of course, and there are no deaths involved if the defendant doesn’t listen to me, but the concept of a choice is the same.

Most of my defamation clients aren’t seeking money initially; they just want the bad guy to stop defaming them. My marching orders are usually just to get the person to take down the false comments. So I write to the bad guy, explaining that this does not need to go any further. He strayed from the path and said and did some things he shouldn’t have, but if he just takes down the posts and walks away, “that will be the end of it.”

That is the moment in time. I am affording the prospective defendant the opportunity to avoid sending his life in a bad direction. I am less of an advocate and more of a caregiver, just trying to convince the patient to stop engaging in self-destructive behavior. But he makes the ultimate decision whether to accept that help, or to continue on his path.

In Taken, the kidnapper could not help himself and responded by saying, “good luck.” He did not take the skill set seriously enough, thinking he would be impossible to find. Today’s defendant also did not take the skill set seriously enough, thinking since he lived across the country we would never pursue him. He was one of a few on-line competitors with my client, and had engaged in some trash-talking that escalated into defamatory comments about my client’s business practices. All he had to do was take down the false statements and walk away and that would have been the end of it. He refused, and today a judge ordered him to take down the false statements, never to make the statements again, at risk of fines and imprisonment, and to pay my client over $200,000.

Pick your battles. I will defend to the death your right to post honest comments on the Internet. If you want to take on a plaintiff that you feel is trying to shake you down, then I’m with you one hundred percent. But don’t get into a court battle just to prove who has the bigger . . . lawyer. The defendant in this case had no moral high ground. He knew what he was saying about my client was untrue, so why on earth wouldn’t he take the opportunity to walk away? As a famous philosopher once sang, “You’ve got to know when to hold them, know when to fold them.”

How Not to Write a Yelp Review

How to Write a Yelp Review
Picture a typical fight on the playground at an elementary school. One child gets mad at another because she lost at tetherball, so she screams, “I don’t like you and nobody else does either!” It’s not hurtful enough for the girl to say that she doesn’t like the other girl, she seeks to add credibility to her argument by speaking for the rest of humanity.

Some people never grow up. I get calls from potential clients, needing me to defend them against a defamation action for a review they posted on Yelp. A call I received today illustrates why these people find themselves being sued for defamation. Changing the facts to protect the confidentiality of the client, here is what happened:

The caller hired a contractor to add a room to her home. The contractor did his thing, but the caller wasn’t happy with the result. She then paid another contractor to come in and do the work the way she thought it should have been done. Then she sat down at her computer to tell the world via a Yelp review what she thought about the first contractor.

She wrote about her experience with the contractor, and why she was unhappy with the work he did. So far so good. I would defend to the death her right to post that review.

But like the girl on the school yard, a dry dissertation of the problems is just not stinging enough. Someone might still do business with this contractor, and she owes the world a duty to make sure that the no good, son-of-a-gun never gets another job. Continue reading

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

Can the Dead Be Defamed?

Defaming the DeadI don’t receive these calls very often, but they are heart wrenching when I do. I have received multiple calls over the years arising from television portrayals of deceased people. They typically arise from those “true detective” shows. An unsolved case is discussed, and the family of the prime suspect elects to point the finger at someone close to the case who has since died. A dead person is the perfect scapegoat, because he can’t defend himself.

As you can imagine, having the loving memory of a former, spouse, sibling and/or parent sullied by a false accusation of murder does not sit well with those involved. Their love-one is being defamed, and they call wanting to sue for defamation.

But consider the very basis of defamation. The damage that defamation causes is the loss of reputation AND the emotional distress that flows therefrom. We’ve all been taught not to speak ill of the dead, and no doubt it causes tremendous heartache for the family of the deceased when lies are told about him, but he isn’t here to suffer. This is why the law provides that you can’t defame the dead.

When I present this bad news to callers, inevitably it is followed up with the classic quantum of harm argument. Potential clients always look first to the harm that is being caused, and assume there must be a remedy.

“But these claims are destroying my life because now everyone thinks my deceased husband was a murderer. There must be something we can do.”

I understand this logic, and indeed it is seemingly embraced by the most fundamental of all legal maxims, “equity will not suffer a wrong to be without a remedy.”

The problem is the definition of “wrong”. If the law says that you can’t defame the dead, then the fact that you speak poorly of the dead does not make your speech defamatory, and you have thus committed no “wrong” in a legal sense. Thus, the fact that you are doing something that causes emotional distress to others does not mean that there is a basis for a legal action. Some vegans are no doubt very upset that there is so much meat being eaten around them, but they can’t sue because meat-eating is not a legal wrong. The harm suffered does not necessarily determine whether a wrong was committed.

Go here for a very interesting discussion of defaming the dead, with many historical examples.

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.

Defamation is Bad, but it Doesn’t Justify Chilling Free Speech

Blocked in Canada

Our neighbors to the North are very American-like, until you get to issues of free speech. Most view Canada as the “least protective of free speech in the English-speaking world.” Reasonable minds can differ on some of Canada’s laws, such as prohibiting the media from identifying criminals until they have been convicted, but most of the law is still based on policies designed to prevent any criticism of the government. Canadians can be held liable by English-Canadian courts for comments on public affairs, about public figures, which are factually true, and which are broadly believed.

A recent parody video posted on You Tube illustrates just how lacking the concept of free speech is in Canada. The video is a fake cable company ad posted by Extremely Decent Films. It does not mention any cable company by name, and indeed it is specifically directed at American cable companies. Nonetheless, someone lodged a complaint in Canada, and that was sufficient to scare You Tube into removing the video, given the vagaries of Canada’s libel laws (although the video has since been reposted in response to articles such as this one).

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.

It’s Not Defamation if No One Knows it’s You

Sammy Hagar BookAs the old saying goes, if a tree falls in the forest and no one is there to hear it, does it make a sound?* In the context of defamation law, the saying could be, “if no one knows it’s you, is the statement still defamatory?” The answer is no.

I get a surprising number of calls like this. Now that anyone can publish a book with a few mouse clicks, more people are publishing their life stories, and those stories always manage to irritate someone. That someone then calls me, stating that some person in the book is them, and they want to sue for defamation. They go on to explain that the name given is not theirs, that the geographic location given is someplace they have never lived or visited, and the gender has been changed, but they know it’s them and damn it they want to sue. In some cases it is clear that the caller made the whole thing up in their mind, but in other cases it is clear that the person referenced really is the caller. Even so, if the author changed the identity so much that no one would recognize them, there is no case.

Today’s example involves rocker Sammy Hagar. He wrote a book called “Red: My Uncensored Life in Rock“, which tells a story of a woman he had sex with following a concert, who later claimed to be pregnant.  He explains that he paid her some support during the alleged pregnancy, but that no child was ever born and he now thinks the entire thing was simple extortion. Had he named her, that would have supported a claim for defamation since he accuses her of a criminal act, but she is identified only as a “Playboy bunny from California”. Apparently the woman in question was a Playboy bunny, but Hagar changed the state from Michigan to California, perhaps specifically to make her less identifiable.

Nonetheless, the still unidentified “Playboy bunny from California” sued Hagar for defamation and infliction of emotional distress. Not surprisingly, the trial court today threw out the case.

U.S. District Court Judge Linda Reade ruled that Hagar did not defame the woman because he did not refer to her by name in the book – identifying her erroneously as a “Playboy bunny from California” – and the woman did not prove she suffered any financial, reputational or emotional injuries from his statements. Only individuals who already knew about their relationship, not the general public, would have understood Hagar was referring to her in the book, she added.

Although Hagar’s statements in ‘Red’ brought back painful memories for Doe, the evidence does not support a finding that Hagar’s conduct was extreme enough to permit the court to find outrageous conduct sufficient to support Doe’s intentional infliction of emotional distress claim, Reade wrote.

 

* It’s a deep thought, but I’ve always thought it was kind of silly because of course a falling tree makes a sound. The laws of physics don’t stop just because no one is there.

Aaron Morris

Morris & Stone, LLP

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

(714) 954-0700

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

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