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 kidnaped. 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 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. 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.”
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 would defend to the death the right of anyone to go on line and publish a legitimate criticism of a business.
But something happens that takes the person beyond a legitimate review. As the person types the words, he or she decides it’s just not stinging enough and won’t cause enough harm. In this case, Dr. Karan must have felt that a legitimate review of the foreign company, stating that in his opinion the software did not work as promised or was not delivered on time, just wasn’t hurtful enough. He posted two articles on his own blog, and sent an email to our clients’ customers. In the email and postings, Dr. Karan’s comments had almost nothing to do with the alleged problems with the software. Indeed, he abandoned his claim that the software was late, and instead claimed that it had never been delivered at all. He added that our client had cheated an employer ten years earlier, and that his company had failed to pay vendors hundreds of thousands of dollars. Although our clients had never received a single complaint from a customer, Dr. Karan claimed that “they are swindlers of the highest kind and have milked many of their clients of money and time.”
At trial, Dr. Karan could not identify a single customer that our clients had “swindled”, he could not identify a single vendor they had failed to pay, could not specify how he had cheated his former employer, and acknowledged that the software was in fact delivered. Today, an Orange County jury, known for being very conservative with damage awards, awarded $1.5 million jointly and individually to both of our clients for the damage to their reputations and business, caused by Dr. Karan.
In a standard civil action, the plaintiff has the burden to prove the case. This is true in a defamation action as well, but since truth is a defense to defamation, the burden of proving a statement is true falls on the defendant. I can’t fathom how defendant thought he would get away with what he published in this email and on his blog, but I think he may have thought he would be safe because we could not prove a negative. In other words, how do you show that you have never defrauded any of your customers? Bring in every customer you have ever worked with to testify that you did not defraud them? That would be impossible, and that is why the law puts the burden on defendant to prove the TRUTH of the statements. Dr. Karan could not prove his statements were true.
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.
Morris & Stone Defamation Victory – Hair Transplant Doctor Stipulates to $150,000 Judgment
Our client in this case was Spencer Kobren, a well known Consumer/Patient Advocate, author and the Founder of The American Hair Loss Association. Besides hosting a weekly radio broadcast, Kobren also owns and operates the online message forum baldtruthtalk.com where hair loss consumers can discuss and share their experiences with product and service providers in the hair loss industry, as well as provide commentary and reviews of hair transplant surgeons in the field.
As most Internet savvy people now know, the Communications Decency Act (“CDA”) shields the operator of a website from any liability for comments posted on an open forum. When someone on Kobren’s forum posted critical comments about a Beverly Hills hair transplant surgeon, the doctor took exception. However, instead of contacting Mr. Kobren or his staff to ask for help in properly addressing negative comments posted by one of his former patients, the doctor decided to defame our client by posting completely fabricated reviews and comments on various blogs, review sites and social media sites, accusing Kobren of fraud, coercion, extortion, organized crime and the running of a criminal enterprise.
As an aside, some sites encourage negative comments, and have no concern as to whether or not they are true. Operators of these sites are also protected by the CDA, but knowingly allowing false and defamatory comments to be posted was not the intention of the CDA, and we will not represent a party who is using the CDA to that end. This was not that type of case. Spencer Kobren runs a very positive and useful board, and will intervene where appropriate when the content crosses the line.
Back to the story. Despite my repeated postings of articles about the wisdom of a walk-away, and even this one, which is almost identical to this case, some defamers feel they must show bravado, claiming they can prove the truth of all of their comments. It’s as though they never think it through until I serve the first set of discovery questions, which forces them for the first time to sit down and put in writing all the facts they are contending support the statements they made. I have this image in my mind of them sitting at their kitchen table, my discovery requests spread in front of them, and after about 45 minutes of trying to answer the questions and realizing that there is not one fact they can offer that would support the defamatory statements they made, saying to themselves, “Man, I am SCREWED!”
Such a moment must have occurred in this case. Defendant first did not even respond to the complaint, then he hired an attorney to undo the default, then he fired that attorney, and agreed to remove all the defamatory comments, never to speak ill of our client again, and to pay $150,000.
Calling Someone a Liar is Defamatory, Judge
I run into this attitude from judges occasionally. Thankfully, I’ve always been able to turn them around, but when I read about it, it still raises my hackles a little.
The attitude of which I speak was most recently illustrated by a New York judge named Harold Baer. The case involved a couple of former girlfriends of Matthew Couloute Jr., a New York Lawyer. The women went to the website LiarsCheatersRUs.com and allegedly posted bad comments about Couloute. (One denies making the posts, the other says they were truthful.)
If the comments had been limited to statements about how he was a cheap date or a lousy kisser, I would defend to the death their right to say such things. But as is often the case, someone who is mad enough to go to such a hate site is someone who wants to inflict pain, so they stray far afield. One of the women allegedly posted the comment, “He is very, very manipulating, he’s an attorney so he’s great at lying and covering it up without batting an eye.”
In anyone’s book, that is defamatory. The statement “great at lying” states not only that he has lied, but that he had lied on multiple occasions to the point that he is great at it. The “without batting an eye” comment means that he has no compunction against lying, so that is a slam on his ethics. But here was the judge’s reasoning for throwing out the case:
“The average reader would know that the comments are ‘emotionally charged rhetoric’ and the ‘opinions of disappointed lovers.’”
With all due respect Judge (Judges hate it when you say that), that does not make the comments non-defamatory. Yes, the circumstances of a statement can dictate whether the statement was meant to be taken as true, but you don’t get to call someone a liar and get a pass because the reader knows you were mad when you said it. The circumstance that allows you to get away with calling someone a liar is if the reader would know that you simply don’t have sufficient knowledge to know whether someone is a liar, as illustrated by another case I wrote about.
Additionally, the judges comments are really demeaning toward women. I can picture him patting the heads of the defendants, saying, “there, there little ladies; you are obviously just jealous lovers and didn’t mean what you said.”
Now, in the judge’s defense, Couloute made the huge mistake of not hiring Morris & Stone to prosecute the action, and as a result it appears the law firm he did hire failed to properly plead the case. According to this article, the judge “also refused to let Couloute revise his suit to include charges of defamation.” Thus it appears that Couloute’s attorney was trying to prosecute the case under an interference with prospective economic advantage claim. That is supported by another statement in the article, that the judge said “Couloute failed to prove the women were using their words to poison clients against him.”
The moral of the story? Know that when you sue for defamation, depending on the judge, you can run into some very provincial attitudes.
Britain’s ASA Announces that Restaurant Reviews May Not Be Trustworthy
I found this news squib interesting because it follows the precise example I often use to explain the difference between opinion and a statement of fact, and it shows how one country is dealing with reviews posted for extortionist purposes.
First, the example. If you eat at a restaurant and later post a review that says the food tasted like poison, you are probably safe from a claim for defamation. Most would agree that your statement is mere hyperbole; that you are offering your opinion that the food tasted bad, not that you actually meant it contained poison.
On the other hand, if you say that the food did, indeed, poison you, then you’d better be able to back it up with hard evidence. The first cannot be measured – what you think poison tastes like is your opinion. The second statement can be tested, because we can see if the food that day could have led to food poisoning.
Now to the real life application. It seems that one of the latest fads in Internet extortion is for a reviewer to post a review claiming that he suffered food poisoning at a restaurant. The extortionist then offers to accept, say, $5,000 for the pain and suffering of the poisoning and, oh, incidentally, offers to take down the terrible review as well. Other times the offer to remove the post never comes, because the false allegation of food poisoning is from a competitor.
This scam has become so rampant in Great Britain that the Advertising Standards Authority (ASA) has informed TripAdvisor that it can no longer claim or even imply that its restaurant reviews can be trusted. The news item added that it is not always the case that the reviewer knows he or she is publishing a falsehood. When one suffers legitimate food poisoning, they almost always blame the last place they ate, not realizing that the incubation period for a good case of food poisoning is usually one or two days, and can take as long as a week. In most cases, it is impossible to know which restaurant is responsible for the poisoning except by finding a common restaurant among a group of victims.
Privileged Statements Become Defamatory Outside Court
Thinking about yesterday’s post, I thought I should add one more point to the discussion of how false statements made in conjunction with a court action cannot form the basis for a defamation lawsuit.
I explained that under California Civil Code Section 47, and similar code sections in probably every other State, declarations made as part of a legal action are privileged, and therefore do not constitute defamation, since by definition defamation must consist of a false, unprivileged statement.
And the definition of a “legal action” is very broad, and can include statements made in anticipation of litigation. For example, Joe Client goes to an attorney and falsely tells him that Jane Defendant embezzled money from the company. The attorney sends a nasty letter to Jane, setting forth the lie about the embezzlement and stating that if she does not return the money in ten days, he will be filing a lawsuit against her.
Can Jane sue for defamation? After all, Joe Client just told a lie about her to a third party, the attorney. The answer is no. The statements to the attorney were made in anticipation of litigation, and are therefore privileged. (But whether a statement was made in anticipation of litigation can be a hotly contested issue, so be sure to run it past an attorney.)
But it is often the case that someone who lies in conjunction with litigation, will not confine himself to telling those lies only in conjunction with that litigation. As an example, I offer the current divorce case of singer Paul Anka versus his wife, Anna Anka. Paul claims they had a prenuptial agreement, Anna says they did not. She claims that if he produces a signed prenuptial agreement, that will mean he forged her signature because she never signed such a document. (I have no idea who is telling the truth, and offer the case only as an illustrative fact pattern.)
Falsely accusing someone of forgery is defamation, but not if it is said in court. So, she can sign court declarations all day, and testify on the stand, that Paul is a forger, and there would be nothing he could do in terms of defamation.
But Paul is suing for defamation, because he claims she made the statement, or at least implied it, to reporters. Such a statement, if she made it and if it is false, is pure defamation that enjoys no immunity since it was made outside the litigation context.
When clients call to say they want to sue because of lies contained in a court document, I explain why that is not possible, but tell them to be on the look out for the statement being made outside of the litigation. It is often the case that the person will have told the same lies to friends or neighbors, posted them on a blog, or published them via Facebook.
Morris & Stone Victory — Another Blow Against Internet Defamation
A hard-fought victory for free speech.
The defendant in this case was Elvia Orrillo-Blas, MD, an emergency room doctor at a hospital in the Inland Empire. When it was decided that her annual contract to provide services to the hospital would not be renewed, she took to the Internet, posting multiple defamatory messages on Craigslist.com about the director she felt was responsible for the decision not to renew her contract. In the anonymous postings, she would sometimes pretend to be a nurse or patient at the hospital when making her false claims about the director. The director retained us to sue for Internet defamation.
One problem we had to overcome in order to prevail in this action was the fact that the director was so well regarded that witness after witness talked glowingly about him during the trial. That was great to show the falsity of the statements published by the defendant doctor, but it also showed that the Plaintiff had not suffered a significant loss of reputation since the witnesses still loved him. The jurors later explained that this love-fest was the reason they awarded a relatively moderate amount of compensatory damages, but during the trial this left me to wonder if they were fully appreciating the malice behind what defendant had done.
Not to worry; the jury came roaring back in the punitive damages phase and made very clear with the amount of punitive damages that the defendant doctor needed to be punished for her conduct. In closing argument I had explained that cases like this actually promote freedom of speech and the marketplace of ideas that we hold so dear in America, because those ideals are not served by knowing falsity. The jury apparently agreed.
As the icing on the cake, the judge then granted our request for injunctive relief, prohibiting the doctor from defaming our client in the future. Although each instance of defamation is actionable, repeatedly suing a serial defamer is not the best solution because of the expense and delay in getting to trial. With an injunction from the court, the doctor can actually be jailed if she repeats her false claims about our client and is found to be in contempt of court for defying the court’s order.
More Judges Catching Up to the Times
Trials are decided by humans with all their human experiences. Whether a judge or jury is deciding a case, your relative success will depend on the nature of those experiences, and your ability to persuade the trier of fact to set them aside when appropriate. Internet defamation cases necessarily require some understanding of the Internet by the trier of fact, or at least the willingness to absorb new concepts. Thankfully it has not happened to me in any of the cases I have handled, but I still hear horror stories about judges who make comments like, “no one really believes anything they read on this . . . In-ter-net,” or “what is this google you keep talking about?”
At least a Small Claims Judge in Canada appears to understand a thing or two about Internet defamation. In the case, the defendant took a disliking to a local dog kennel for whatever reason. She visited some animal discussion boards, and posted comments about the kennel, referring to it as a “puppy mill.” The kennel took exception to this characterization, and sued for defamation in Small Claims Court. (In one of my earliest postings, I sing the praises of suing for defamation in Small Claims Court. Take note how effective that can be.)
The court found in favor of the Plaintiff dog kennel, and awarded $14,000 in damages. The court correctly determined that calling a dog kennel a “puppy mill” is a bad thing. But what caught my eye was the simple logic of the judge, the sort of logic that sometimes eludes other judges. First he was upset that these postings were made on the Internet, recognizing that “the use of the Internet worsens the defamation.” That may seem extremely self-evident to most of us, but remember those aforesaid judges that still view that Internet as a fad among kids that will soon pass. The judge also stated that the defamation was “particularly malicious” because the purpose of the defendant was to put out of business a kennel that supported a family of 11.
Wow. A judge that recognizes that Internet defamation can be more egregious than verbal defamation, and who views the conduct from a real world perspective of how it impacts the people behind the business. Thank you Canada.
No, I Wasn’t Kidding About the Wisdom of Walking Away
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.
Tony La Russa Drops Action Against Twitter
Even when a lawsuit is weak on merit it sometimes achieves its purpose. I will have no part in filing a meritless lawsuit, but sometimes it is appropriate to push the envelope.
Take the case of Tony La Russa, famous baseball manager. Like so many other well known people, someone hijacked his name and image on Twitter, leading many “followers” to believe that the musings coming from this Twitterer (Twitterite?) were coming from the real deal. La Russa tried to persuade Twitter to intervene and remove the fake identity, but sure as there is a fail whale, the fine folks at Twitter refused to cooperate.
La Russa filed suit and got a lot of grief for doing so, with most legal experts citing the Communications Decency Act (CDA) as a barrier to the suit. But, obviously, this is not a typical CDA situation. Yes, La Russa was seeking to hold Twitter liable for the “postings” of third parties, and that is classic CDA material. But there are some interesting side issues. For example, a website cannot encourage visitors to post copyrighted e-books for download and then expect to escape liability under the CDA because third parties are the ones actually posting the books. In that case, the Digital Millennium Copyright Act would trump the CDA. Like a copyright, people have a pecuniary interest in there own identities. Should Twitter be permitted to assist in those that would steal that identity?
The La Russa case will not be providing any answers to this question, because it has been withdrawn, but not before Twitter deleted the offending account. Most are reporting this story as a victory for Twitter, but didn’t La Russa get exactly what he asked for in the first place?
For more on this story, go here.
