Forced Apology and Admission of Inappropriate Conduct Held Not Defamatory

July 14, 2014,

Defamation claims arise frequently in employment settings. Employees often disagree with their performance reviews and, if they feel particularly aggrieved, resort to the courts to extract a modicum of revenge. Unfortunately for them, statements relating to employee discipline and termination made by managers and supervisors usually enjoy a qualified privilege against defamation claims. The privilege generally insulates such statements from liability absent clear and convincing evidence of malice or some other indicator that the privilege has been abused. When an employer makes a false and defamatory statement about an employee, but that statement is protected by a qualified privilege that has not been lost or abused, the statement is not actionable.

Of course, before the question of privilege even comes into play, there is the matter of whether the statement at issue is defamatory in the first place. In Regina M. Zarrelli v. City of Norfolk, Ms. Zarrelli sued the City of Norfolk, Virginia (her former employer) along with the City's Commonwealth's Attorney, Gregory D. Underwood, based in part on being required to apologize to a vendor. It didn't work, and the case was dismissed both because the statements were not defamatory, and because even if they were, they were protected by qualified privilege.

Zarrelli worked in the Office of the Commonwealth's Attorney and was assigned to the Victim/Witness Assistance Program. On May 4, Underwood reprimanded Zarrelli for violating office policies regarding travel accommodations for non-local victims and witnesses. Zarrelli had allegedly made repeated requests of the Office's travel vendor thatjobless.jpg a rental car be added to a particular witness' travel itinerary despite the Office's Travel Coordinator's repeated cancellation of the rental and instruction from the Deputy Commonwealth's Attorney that witnesses are separately responsible for this kind of transportation. Describing Zarrelli's behavior as "counterproductive and undermining," he suspended her without pay for two days, placed her on probation for one year, and required her to draft a letter to a travel vendor explaining the proper policy regarding rental cars while acknowledging her own "inappropriate" conduct.

She wrote the required letter, but in a matter the court found "dismissively insubordinate," expressing to the vendor that she disagreed that she had acted inappropriately and that she was being forced to write the letter. She was fired the same day.

Zarrelli argued that being forced to write the letter constituted defamation per se because it damaged her professional integrity and hindered her ability to obtain employment elsewhere. The court rejected this, pointing out that "in Virginia, a false statement is not, in and of itself, actionable. That statement must also be defamatory." In other words, to be actionable, a statement must be defamatory in the first instance before it will be considered defamatory per se.

The court also explained that speech will not be actionable if it does not contain a provably false factual connotation or language that can reasonably be interpreted as stating actual defamatory facts about a person.

The court found that the statements at issue did not falsely portray Zarrelli in a damaging light and were not actionable. "At most," the court held, "they reveal her disagreement with Underwood about the rental car policy, and subsequent refusal to follow his direction - facts which she does not contest." The court rejected Zarrelli's argument that the statements could be reasonably interpreted as an implication that Zarrelli was guilty of financial impropriety.

Finally, because Zarrelli failed to show that the defendants acted with some sinister or corrupt motive such as hatred, revenge, personal spite, ill will, or desire to injure the plaintiff, the court found that the qualified privilege had not been lost or abused. The case was therefore dismissed.

Anonymous Online Critic Will Remain Anonymous Absent Defamation

July 2, 2014,

Virginia practitioners will know more about this topic in a few months, when the Supreme Court of Virginia decides Yelp, Inc. v. Hadeed Carpet Cleaning, but for now, we have an opinion from Fairfax Circuit Court applying the six-part test established by Yelp for uncovering the identity of anonymous Internet speakers.

The case is Geloo v. Doe, decided June 23, 2014. Fairfax attorney Andaleeb Geloo filed a defamation action against various anonymous posters to the Fairfax Underground site and sought to uncover their identities by issuing subpoenas to Time Warner Cable, Verizon, and Cox Communications. At issue were statements referring to Ms. Geloo as a "run of the mill court appointed attorney" and a "fat Paki," and a statement accusing Ms. Geloo herself as being the secret author of a discussion thread entitled "Andi Geloo - Bullshit Artist."

Cox moved to quash the subpoena and the court, applying the Yelp test as well as Va. Code Section 8.01-407.1, granted the motion. The Yelp test requires, as a prerequisite to enforcing a subpoena designed to reveal anonymous Internet posters, that the plaintiff demonstrate that (1) notice of the subpoena was given to the poster; (2) the online statements are or may be tortious or illegal, or that the plaintiff has a "legitimate, good faith basis" to believe that they are; (3) other reasonable efforts to uncover the person's identity have been fruitless; (4) the no_anon.jpgperson's identity is needed to advance the claim or is directly relevant; (5) there is no pending demurrer or motion to dismiss; and (6) the recipient of the subpoena is likely in possession of responsive information.

The issue here was #2 - whether the Fairfax Underground statements were defamatory, or whether Ms. Geloo has a legitimate, good faith basis to believe they were defamatory. The court answered "no" to both questions. Simply stated, the statements were not defamatory because they were either constitutionally protected opinion, or mere rhetorical hyperbole that no reasonable reader would interpret as having defamatory meaning.

Interestingly, even after concluding that the statements were not defamatory, the court proceeded to analyze whether the statements might be actionable as defamation per se. I say "interestingly," because in my view, defamation per se is not an independent tort but rather a specific type of defamation. My understanding has always been that if a statement is not defamatory, then by definition it cannot be actionable as defamation per se. In any event, the court concluded that the statements were not actionable as defamation per se.

On the issue of whether Ms. Geloo had a good-faith basis to believe the statements were actionable, the court held that supporting documentation should be provided to the court as Hadeed Carpet Cleaning had done in the Yelp case. Absent such evidence, the court was unable to find a legitimate basis for believing the statements to be defamatory and unwilling to force the disclosure of the identity of the anonymous commentators.

As mentioned above, the Yelp case is currently on appeal. One of the issues is whether Hadeed Carpet Cleaning had actually produced sufficient evidence that the gist of the online criticisms was untrue.

Defamatory and Scandalous Material as Grounds to Seal Record

June 27, 2014,

In bankruptcy court, the presumption in favor of public access to judicial records can be overcome if "scandalous or defamatory matter" is contained in a paper filed therein. (See 11 U.S.C. Section 107). Curiously, there is an absolute judicial privilege for statements made in connection with and relevant to a judicial proceeding, so normally one wouldn't expect to find "defamatory matter" in a court filing. Still, there is a relevance requirement to be entitled to the privilege, and there's always a possibility that potentially defamatory or scandalous statements will be made in a court filing that have nothing to do with the underlying merits. And that's exactly what happened in the recent case of Robbins v. Tripp.

Attorney John W. Tripp was handling a case in bankruptcy court when certain issues arose relating to perceived problems with his practice. The court ordered him to prepare and file a report containing details relating to his organization of files, supervision of staff, communication with clients, and related matters. The bankruptcy court instructed that the report be written "candidly and not as an advocate for any party to this matter." Mr. Tripp moved for leave to file the report under seal, based in part on Section 107's "scandalous or defamatory" provision. The motion was granted, and the trustee appealed.

The district court noted that the Fourth Circuit has not yet spoken on the proper interpretation of this language, and observed further that there is a split of authority among other circuits on the issue. Some focus on the word "scandalous" and apply its dictionary definition, sealing material found to be disgraceful, offensive, or shameful. surprise.jpgOthers have focused on the defamation prong and held that "material that would cause a reasonable person to alter his opinion of an interested party triggers the protections of § 107(b)(2) based on a showing that either (1) the material is untrue, or (2) the material is potentially untrue and irrelevant or included within a bankruptcy filing for an improper end." (See In re Gitto Global Corp., 422 F.3d 1 (1st Cir. 2005)).

The court found that the report at issue qualified for Section 107 protection under either of these tests. Observing that the report was not directly related to the underlying bankruptcy matter and that it contained information about Mr. Tripp's representation of all his clients, and not just the particular debtor in the case, the court found that it was proper to seal the report from public scrutiny because (a) a reasonable person could change their opinion of Mr. Tripp based on the report; (b) the Report was potentially untrue or irrelevant; and (c) unsealing the report could harm Mr. Tripp's professional reputation.

To Sue or Not to Sue

May 17, 2014,

Before rushing to the courthouse to sue someone for libel or slander, there are a number of things one should consider. For one thing, even if no counterclaim is filed, filing a defamation action opens the door to all kinds of personal details about your life that you may prefer to keep private. To prevail, a plaintiff needs to prove that the defamatory statement was false. The defendant--the person who made the statement--doesn't need to prove anything. Think about what that means as a practical matter. If someone Tweeted to a million followers that you are some kind of sexual deviant and that you had sex with a wildebeest (and assuming that the Tweet was understood and believed by readers as a literal statement and not as mere rhetorical hyperbole), and you decide to sue for defamation, you will need to prove that you did NOT actually have sex with a wildebeest. How does one prove such a thing? Well, generally by presenting evidence to the jury about what kind of sex life you DO have so that they can see that you are not the sort of person who would do such a thing. Or maybe you throw in some evidence about your documented fear of antelope. Either way, it could be embarrassing.

There's also the libel-proof doctrine to consider. Because the tort of defamation is concerned primarily with damage caused to one's reputation, some courts have held that when a plaintiff's reputation is already so tarnished at the time a defamatory statement is published that it would be virtually impossible to make the reputation worse, the plaintiff will be deemed "libel proof" and the case will be dismissed prior to trial. If the defendant claims you are libel proof, think of what fun the discovery process will be for you, as the defendant goes about digging for evidence about how bad your reputation already is.

Then, of course, there is the well-known "Streisand Effect." Someone makes an untrue statement about your business in a Facebook post read by perhaps 50 people, most of whom pay little attention to it. You believe the statement caused substantial damage to your reputation, as those 50 people may never buy from your company gnu.jpgagain. So you consider filing suit. Legal proceedings are open to the public. In federal court and in many state courts, complaints are available online to the media and to any curious member of the public. To survive a motion to dismiss, you will need to quote the allegedly defamatory and harmful statement in your complaint. In other words, if you bring a lawsuit, you will be effectively ensuring a much wider audience for the false statement that is supposedly causing damage to your business. People who would have never noticed or had access to the original Facebook post may come to learn of the defamatory statements simply as a result of your filing the lawsuit. Is that really what you want?

If there is a shred of truth to the statement claimed to be libelous, you should also think twice about filing suit. Under the so-called "substantial truth" doctrine, minor inaccuracies in the statement will not be considered sufficient to recover for defamation. If the statement is substantially true such that the general gist of the statement--the part that hurts--is true, then it really doesn't matter much if there are some factual inaccuracies in some of the surrounding details. For example, if the plaintiff in the above example did not have sexual relations with a wildebeest but did have an inappropriate relationship with a water buffalo, he's not going to be successful in a defamation action despite the literal falsity of the statement.

It may seem counterintuitive, but sometimes suing your accuser for defamation--or even sending a nasty cease and desist letter-- can cause more harm to your reputation than good. It should not be undertaken lightly.

Insurer's Duty to Defend Held Triggered by Defamation Claim

May 13, 2014,

Insurance against defamation claims is often found in policies providing coverage for liability arising from "personal and advertising injury." In State Farm Fire and Casualty Co. v. Franklin Center for Government and Public Integrity, for example, the United States District Court for the Eastern District of Virginia examined a business liability insurance policy to determine whether State Farm was required to defend the insured in a lawsuit alleging claims for defamation and tortious interference. The court considered the plain language of the policy and its exclusions and ultimately held that State Farm had an obligation to defend its insured.

Franklin Center for Government and Public Integrity ("FCGPI") operates the Watchdog.org website. GreenTech Automotive, Inc., filed a civil action against FCGPI alleging defamation and intentional interference with business and prospective business relations stemming from two articles posted on Watchdog.org. FCGPI was insured by a State Farm business liability policy, and State Farm brought a declaratory judgment action seeking a declaration of non-coverage based primarily on various policy exceptions.

The policy provided that State Farm would pay what FCGPI was legally obligated to pay as damages because of "personal and advertising injury." The court first considered whether GreenTech's alleged injuries fell within the policy definition of "personal and advertising injury," which the policy itself defined to include injury arising out of "oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services." The court found that GreenTech's claims for both defamation and tortious interference fell squarely within the policy coverage for personal and advertising injury.

The court then examined whether any of the policy exclusions applied to GreenTech's claims. The policy contained an exclusion for injury caused with knowledge that the act would violate another's rights and inflict defense.jpgadvertising injury. GreenTech's complaint alleged that FCGPI made statements in bad faith and with the intent to harm, but the court found that GreenTech did not necessarily have to prove "knowledge" in order to recover on its defamation claim. Noting that State Farm had a duty to defend FCGFI unless "it clearly appears from the initial pleading the insurer would not be liable under the policy contract for any judgment based upon the allegations," the court held that State Farm had a duty to defend.

The policy also contained an exclusion for injury committed by an insured whose business is advertising, broadcasting, publishing or telecasting. The parties agreed that FCGPI was not in the business of advertising, broadcasting or telecasting, so the court only had examine whether FCGPI was an insured whose business was "publishing," a term not defined by the policy. While recognizing that FCGFI "publishes" information on its website in the sense that it disseminates information to the public, the exception only applied to companies whose "business is...publishing," and not everyone who puts information on the Internet can be regarded as being in the publishing business.

The court examined other provisions of the policy and concluded that within the context of the policy, more than one reasonable meaning of the phrase "an insured whose business is publishing" existed, at least one of which would not cover FCGPI's business. Accordingly, the exclusion failed to give the insured fair notice as to when and under what circumstances the exclusion would apply to defamation or other claims. The court held that because the exclusion did not unambiguously or clearly apply, it could not be enforced to reduce coverage otherwise provided.

The court also examined exclusions relating to injury arising out of an electronic chat room or bulletin board and out of a criminal act and found them inapplicable. The court held that State Farm had a duty to defend FCGPI against the defamation and tortious interference claims but that indemnification issues would be determined following the conclusion of the litigation.

As of this writing, State Farm's Motion for Reconsideration is set for oral argument on May 23, 2014.

Defamation Action Against 50 Cent Unlikely to Get Dismissed Early

May 5, 2014,

If Sally Ferreira's allegations are true, she has a valid claim for defamation per se against rapper 50 Cent which could possibly result in a seven-figure damages award. Ms. Ferreira, an actress, model, and dancer, sued 50 Cent (real name Curtis J. Jackson, III) for defamation and emotional distress in federal court in New York, making the following allegations:

Ms. Ferreira has appeared in music videos for various artists such as 50 Cent, Kanye West, Jay Z, Nicki Minaj, Missy Elliot, and Lil' Kim. In March, Ms. Ferreira participated in 50 Cent's music video for the song "Big Rich Town," filmed on the subway in the Bronx. Shortly after the video shoot, leaked photographs of Ms. Ferreira and 50 Cent taken during the shoot appeared on Hip Hop Weekly and MediaTakeOut.com, along with commentary speculating (erroneously) that the two were spotted riding the subway together and that they were romantically involved.

The complaint alleges that 50 Cent, suspecting Ms. Ferreira as the source of the leak, took to Instagram (where he has 1.8 million followers) to post a picture of Ms. Ferreira with the following direct accusation superimposed over her image: "WARNING: do not attempt to work with this thirsty Video bitch [Her name is Sally Ferreira and she's a model...] she sent photos Of the video shoot to Mediatakeout Saying I'm in a relationship With her Can anyone say RESHOOT." Ms. Ferreira says she did no such thing; that she never possessed any photographs of the event and never claimed to be in a relationship with 50 Cent. Forty minutes after the posting, it had received 6156 likes and over 850 comments.

Ms. Ferreira asserts that three separate entertainment industry projects that she was working on were put on hold as a result of the postings and associated negative publicity.

If New York law is anything like Virginia law, this case could go the distance. To state a claim for defamation, Ms. Ferreira needs to show that 50 Cent's Instagram post contained a false and defamatory statement of fact, and that he made the statement with the requisite level of intent. Her complaint appears to do that. While 50 Cent has a 50cents.jpgFirst Amendment right to call Ms. Ferreira a "thirsty video bitch" should he wish to do so, his accusation that she leaked photos of a video shoot to the media claiming to be his new girlfriend is a statement of fact, not opinion, that is not necessarily protected by free-speech rights. It's defamatory in nature because it's the type of accusation that would tend to deter other artists from hiring her to appear in their music videos, and perhaps also deter others in the entertainment industry from associating with her.

Moreover, because the statement is the type of accusation that could "prejudice" Ms. Ferreira in her line of work, it will likely be considered libel per se, which would make it far more likely she could recover a substantial damages award. If the court finds the statement is of the "defamation per se" variety, the jury would be instructed to presume compensatory damages even if not proven, and they would be authorized to award punitive damages even in the absence of proof of harm to Ms. Ferreira's reputation.

50 Cent may have a defense to the case if he can show justification for making the statement. To be held liable for defamation, a defendant needs to be at fault on some level. The precise level of fault required is going to depend on whether Ms. Ferreira is deemed a "public figure." If the court finds that her multiple appearances in music videos for famous artists make her a public figure herself, than she will not be able to recover unless she can show that 50 Cent made a false statement with knowledge that it was false or with reckless disregard of whether it was false or not.

In any event, at a minimum, Ms. Ferreira will need to prove that she did not send photos of the video shoot to MediaTakeout.com. But if what she is claiming is true, a quick subpoena or deposition should make that pretty easy to do.

Nude Model Not a Porn Star; Photo Altered to be Pornographic Defamatory Per Se

April 21, 2014,

In James M. Tharpe, Jr. v. Rudy K. Lawidjaja, currently pending in the Lynchburg Division of the Western District of Virginia, plaintiff James Tharpe, a professional soccer coach and part-time model, alleges that photographer Rudy K. Lawidjaja persuaded him to pose nude after assuring him that no photographs showing Tharpe's genitals or buttocks would be distributed. Lawidjaja took numerous nude photos of Tharpe and promoted him as a model. Eventually, the parties' relationship deteriorated. Tharpe refused Lawidjaja's invitation to quit his job as a soccer coach to relocate to the Washington, D.C. area and serve as Lawidjaja's "house model." Instead, he moved to Tennessee, where he coached soccer for a year, and later accepted a coaching position with Central Virginia United Soccer Club ("CVUS") in Lynchburg.

In August 2011, CVUS notified Tharpe that an Internet search of his name returned inappropriate and embarrassing photographs of which parties associated with the soccer club did not approve. According to the court's examination of the record, Lawidjaja had posted nude photographs of Tharpe on his website as well as other sites, identified Tharpe as a "porn star," and digitally altered the photographs to depict Tharpe with an erection and ejaculating for the camera. The court found that Lawidjaja tagged these pornographic photographs with keywords to link the photos to CVUS (Tharpe's employer, which had nothing to do with the photos) so that any Google search for CVUS would return the photographs. Tharpe sued Lawidjaja for defamation, intentional infliction of emotional distress, and other torts.

To prove a claim for defamation under Virginia law, a plaintiff must show (1) publication (2) of an actionable statement (3) with the requisite intent. A false statement must be defamatory; that is, it must tend to so harm the reputation of the plaintiff as to lower him in the estimation of the community or to deter third persons from associating or dealing with him. A statement may be classified as defamatory per se if it imputes the plaintiff is torso.jpgunfit to perform the duties of his job or prejudices the plaintiff in his profession or trade. A photograph can constitute a defamatory "statement."

The court found that the photographs--taken in the context of their ordinary and common acceptance as the average citizen would understand them, and with every fair inference attributed to them--could be deemed defamatory under Virginia law. The court went further to hold that the photographs were defamatory per se as they arguably impute unfitness for Tharpe to perform the duties of a youth soccer coach and prejudice him in his profession or trade. Additionally, the court found that Lawidjaja "arguably intended to impute that unfitness," as indicated by his tagging the photos with the name of Tharpe's employer.

With respect to the claim for intentional infliction of emotional distress, the court noted that IIED claims in Virginia require a showing that (1) the wrongdoer's conduct was intentional or reckless; (2) the conduct was outrageous or intolerable; (3) there was a causal connection between the wrongdoer's conduct and the resulting emotional distress; and (4) the resulting emotional distress was severe. IIED claims require proof of conduct intended to cause "personal, emotional damage to an individual, rather than conduct intended to cause economic damage to a business."

Here, the court found sufficient evidence in the record to deny Lawidjaja's motion for summary judgment. Intent to cause emotional distress was evident from certain exculpatory clauses in release agreements he asked Tharpe to sign, which Lawidjaja believed gave him the right to use the photographs "for any purpose whatsoever," along with other evidence of bad faith. The court also found that a jury could reasonably conclude that falsely identifying Tharpe as a "porn star" was sufficiently "outrageous" to satisfy the tort, and that Tharpe had suffered severe emotional distress.

Ripoff Report Maintains Section 230 Immunity Despite Lawyer's Novel Challenges

April 7, 2014,

Concerns that freedom of online speech would be chilled if Internet Service Providers were liable for allegedly defamatory remarks made by posters to their sites led Congress to pass the Communications Decency Act (the "CDA"). The CDA shields companies serving as intermediaries for other parties' potentially injurious speech from tort liability arising from users' comments. Section 230 of the CDA provides that "[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." Although the CDA is interpreted broadly in light of Congress' intent in passing the statute, an interactive computer service provider remains liable for its own speech.

To benefit from CDA immunity, (1) the defendant must be a provider or user of an interactive computer service; (2) the plaintiff's claim must be based on information provided by another information content provider; and (3) the claim must treat the defendant as the publisher or speaker of the allegedly harmful speech. In Small Justice LLC v. Xcentric Ventures LLC, a federal court in Massachusetts found that Ripoff Report should not lose its CDA immunity even if it was found to have copyright ownership of the allegedly defamatory content, and even if, as the plaintiff alleged, it "intentionally caused...two defamatory per se publications to be prominently and frequently featured on Google...and other search engines."

Ripoff Report is website operated by Xcentric Ventures LLC on which registered users post complaints about companies and individuals. In January 2012, Christian Dupont posted an allegedly defamatory report about Richard Goren's conduct as an attorney and certain behavior outside of professional activities. In February, Dupont posted a second report containing similar allegations. In March, Xcentric got a registered copyright for Ripoff Reports from January to March.

In July 2013, Goren and Small Justice, a company asserting a copyright interest in the reports at issue, sued Xcentric in Massachusetts federal court, stating several causes of action including libel and intentional interference with prospective contractual relations. Xcentric moved to dismiss pursuant to Federal Rules of Civil brickwall.jpgProcedure 12(b)(1) and (6), arguing that Section 230 gave it immunity from these tort claims. Plaintiffs responded that Section 230 immunity was not available because Xcentric (1) asserted ownership of the copyrights in the reports, and (2) intentionally submitted the posts to Google and other search engines, thereby adopting the content of the posts as its own.

The issue here was whether the allegedly defamatory content was provided by "another information content provider" or by Xcentric itself. The CDA defines an information content provider as "any person or entity responsible in whole or in part for the creation or development of information provided through the Internet or another interactive computer service." For Section 230 immunity to apply, the allegedly defamatory postings must have been provided by an information content provider other than Xcentric because Xcentric would be liable for its own speech under the CDA.

Plaintiffs argued that Xcentric's asserted copyright ownership in the Reports transformed it from an intermediary to the actual provider of the disputed content. According to plaintiffs, Xcentric adopted the Reports as its own speech and subjected itself to liability by holding itself out as the copyright owner. The court rejected this argument. Plaintiffs did not cite any authority holding that an Internet Service Provider adopts content by virtue of copyright ownership, and courts that have addressed the issue have held that an Internet Service Provider is not a content provider unless it specifically encourages the development of the offensive content. Xcentric's acquisition of an exclusive license to the content was not sufficient involvement in the development of the content to nullify Section 230 immunity.

Plaintiffs then argued that Xcentric surrendered its immunity by instructing search engines such as Google to make copies of the two reports under its claimed exclusive ownership of the reports and authorizing the search engines to display the copies. Plaintiffs asserted that by doing this, Xcentric adopted the content of the reports as its own and caused them to be republished. The court rejected this argument as well. Although the CDA allows Interactive Service Providers to be held liable for content they create themselves, the court found here that the alleged conduct did not rise to the level of "creation or development" of information that would render Xcentric an information content provider under the CDA. Plaintiffs did not argue that Xcentric augmented or changed the reports' content in any way, and they conceded that Xcentric's actions were designed to maximize the number of times the reports appeared among Google's search results. Merely endeavoring to increase the prominence of its site among search results does not make Xcentric an information content provider under the CDA.

The court held that Section 230 shielded Xcentric from liability based on publication of the allegedly injurious Ripoff Report posts, so it dismissed plaintiffs' claims for libel and tortious interference.

The Unintended Consequences of Filing a Lawsuit

March 31, 2014,

Defamation law affords remedies to plaintiffs whose reputations have been tarnished by the false and damaging statements of others. But defamation plaintiffs face a particular dilemma: because legal proceedings are generally open to the public, filing a lawsuit over the libel or slander usually results in further publicity of the very statements the plaintiff wants to suppress. This has become known as the Streisand Effect, and is the same dilemma faced by plaintiffs seeking to enforce contracts containing non-disparagement provisions.

A vivid example is provided by the case of Dr. Steven A. Guttenberg v. Dr. Robert W. Emery, currently pending in District of Columbia federal court. Doctors Guttenberg and Emery were joint shareholders of an oral surgery practice for roughly 20 years, but their relationship soured and litigation ensured in 2008. The doctors settled that case with a settlement agreement containing a non-disparagement provision that restricted each of them from making statements concerning the other that might be harmful to reputation.

In November 2013, Dr. Guttenberg filed another lawsuit against Dr. Emery, this time alleging that Dr. Emery violated the non-disparagement provision. Dr. Guttenberg's amended complaint claims that Dr. Emery's wife, while in the waiting room of a veterinary office, told a dental hygienest "that Dr. Guttenberg was a sexual deviant, received oral sex under the table at his office and cheated on his wife. She also stated that he had other affairs, including sexual intercourse at the office." Dr. Guttenberg moved to seal the case, arguing that the public had no legitimate interest in hearing the salacious details of "a private dispute between private individuals." The court disagreed and unsealed the complaint, ensuring that the allegedly disparaging statements would be shared with an audience far greater than would have been the case had the lawsuit never been filed.

Public access to judicial proceedings is central to our system of justice and helps ensure the integrity of judicial proceedings. In determining whether to seal records, courts start with a strong presumption in favor of public access and then consider six factors: (1) the need for public access to the documents; (2) the extent of previous streisand.jpgpublic access to the documents; (3) the fact that someone has objected to disclosure and the identity of that person; (4) the strength of any property or privacy interest asserted; (5) the possibility of prejudice to those opposing disclosure and (6) the purposes for which the documents were introduced during the judicial proceeding.

Although Dr. Guttenberg was certainly correct that the case is a "private dispute," the court noted that the vast majority of civil cases are private disputes but that does not diminish the importance of the public's right to access. The public's access to court proceedings serves as an important check on the judiciary, regardless of whether the case concerns matters of public concern. "Because judicial proceedings are by default public," the court explained, "litigants can be confident that they will be treated fairly and justly."

The more relevant a pleading is to the central claims of the litigation, the less likely a court will agree to keep it a secret. In this case, the statements at issue were central to the case: Dr. Guttenberg could not prove that Dr. Emery and his wife violated the non-disparagement provision without identifying the statements claimed to be disparaging. The specifics of the statements would play a central role during every stage of the litigation, from motions to dismiss to summary judgment to trial.

Upon consideration of the six factors, the court found that the only one weighing in favor of sealing the case was the fact that Dr. Guttenberg himself objected to making the information public. All other factors favored unsealing the allegations, so the court denied the motion to seal.

Preliminary Injunctions Against Defamatory Speech Seldom Justified

February 17, 2014,

Courts grant temporary injunctions sparingly and only after the moving party has alleged and proved facts entitling it to relief. Injunctive relief generally is not available to prohibit the making of defamatory statements as prior restraints on speech violate the First Amendment to the United States Constitution. Injunctions may sometimes be granted, however, where the defamatory words are made in the furtherance of the commission of another intentional tort. Care must be taken to ensure that any injunction is narrowly tailored to achieve the pin-pointed objective of the needs of the case, as prior restraints on speech are considered the most serious and least tolerable infringement on First Amendment rights.

In Chevaldina v. R.K./FL Management, Inc., a Florida appellate court found that the trial court had abused its discretion in granting an injunction against defamatory speech. Irina Chevaldina was an unhappy former tenant of R.K. Management which owned and managed commercial properties in South Florida. When R.K. discovered that Ms. Chevaldina was the author of anonymous, unflattering blog posts about it, it added several tort claims to its already pending action for defamation per se and libel against the previously anonymous blogger. The tort claims included counts for tortious interference with contractual and advantageous business relationships.

In order obtain a temporary injunction in Florida, the moving party must show: (1) a likelihood of irreparable harm; (2) the unavailability of an adequate remedy at law; (3) a substantial likelihood of success on the merits; (4) that the threatened injury to the petitioner outweighs the possible harm to the respondent; and (5) that the granting of the temporary injunction will not disserve the public interest . The trial court determined that Ms. Chevaldina had gagged.jpgblogged extensively about R.K. and that many of the postings were arguably defamatory. The court enjoined Ms. Chevaldina from interfering with R.K.'s advantageous or contractual and business relationships either directly or indirectly, in person, orally, in writing or via blog or other posts on the Internet or in any media. In support of its order, the trial court found that R.K. had a substantial likelihood of ultimately prevailing on the merits, a substantial threat of irreparable injury to R.K. existed , the threatened injury to R.K. outweighed whatever damage the injunction would cause Ms.Chevaldina and the injunction would not be adverse to the public interest.

On appeal, the Third District Court of Appeal cited two Florida cases dealing with the limited exception to the general rule that injunctive relief is not available to prohibit defamatory speech. Both cases involved statements made as part of alleged tortious interference with advantageous business relationships. In Zimmerman v. D.C.A. at Welleby, Inc., an injunction was appropriate because the moving party demonstrated that the damages were incalculable which constituted a special harm of irreparable injury. In Murtagh v. Hurley, injunctive relief was available because the defamatory statements caused current medical patients to end their relationships with Dr. Murtagh. However, because the doctor failed to present evidence that the defendant's conduct had a deleterious effect on his business, he was not entitled to an injunction.

Here, R.K. alleged defamation and intentional interference with advantageous business relationships. However, the court found that the record did not support an inference that the allegedly defamatory blog posts were having a deleterious effect on R.K.'s business. The only real evidence presented was the testimony of a real estate broker about a call he received from the director of real estate for Subway expressing concern about Ms. Chevaldina's blog posts. However, the witness testified that Subway had not withdrawn any leases and had not stopped doing business with R.K. after reading the blogs.

R.K.'s other evidence consisted of requests for judicial notice of affidavits and testimony about search engine optimization techniques and word stuffing on the Internet. The court found that these materials did not constitute competent substantial evidence that any blog post interfered with R.K.'s business or contractual relationships. As there was no real evidence of unjustified interactions with specific parties known to be involved or likely to be involved in an advantageous business or contractual relationship with R.K., the trial court should have denied the temporary injunction for failure to show with reasonable certainty the elements of tortious interference.

Additionally, an injunction should never be broader than is necessary, and here the injunction was over broad. The injunction improperly burdened Ms. Chevaldina's speech more than necessary, attempted to enjoin future defamation and failed to put Ms. Chevaldina on notice as to what she may or may not do under the injunction.

In conclusion, the court noted that Internet rants are common today and are the electronic successors to persons holding posters on a public sidewalk in front of a business warning customers not to do business there. If such a protestor walked into the business and harangued customers or threatened violence, his previously protected opinion would become business interference. Similarly, a blogger may complain about a business and face liability for defamation if warranted, but injunctive relief to prohibit such complaining is another matter altogether.

Defamatory Sting

February 10, 2014,

To be actionable as libel or slander, a statement must not only be false, but must also be defamatory in nature. To have defamatory meaning, a statement must carry a sufficient degree of "sting"; merely offensive or unpleasant statements are not defamatory. See Chapin v. Knight-Ridder, Inc., 993 F.2d 1087, 1092 (4th Cir. 1993) (noting that falsity of statement and defamatory sting must coincide). A communication that is merely unflattering, annoying, irksome, or embarrassing, or that hurts the plaintiff's feelings, without more, is not actionable in Virginia. See R. Sack, Libel, Slander and Related Problems 45 (1980). So how much of a sting is enough to state a claim?

While the Virginia Supreme Court has not spoken recently on the requisite degree of "sting" required to support a defamation action, federal courts applying Virginia law have held that a statement may be actionable only if it contains a false assertion of fact that "tends so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him." See Wolf v. Fed. Nat. Mortg. Ass'n, 830 F. Supp. 2d 153, 168 (W.D. Va. 2011). This is also the position taken by the Virginia Model Jury Instructions and the Restatement (Second) of Torts. See Va. Model Jury Instr. 37.010; Restatement (Second) Torts § 559 (1977).

The most recent pronouncement by Virginia's highest court on the issue appears to be the 1904 case of Moss v. Harwood, in which the court held that to be actionable as defamation, the words must be such that would tend "to injure one's reputation in the common estimation of mankind, to throw contumely, shame, or disgrace" upon the plaintiff, or which would tend "to hold him up to scorn, ridicule, or contempt, or which [are] calculated to render him wasp.jpginfamous, odious, or ridiculous." Moss v. Harwood, 102 Va. 386, 46 S.E. 385, 387 (1904).

When analyzing a particular statement to determine whether it might be sufficient to state a cause of action for defamation, ask yourself these questions: Is the statement the type of statement that would have a tendency to harm reputation? Would reasonable people hearing the statement be deterred from associating or dealing with the subject of the statement if they believed it to be true? Does the statement pertain to the subject's honesty, integrity, or virtue, or is it a mere insult? The answers to these questions may not be clear. If necessary, I can help you. What is clear is that only those statements with a sufficient degree of sting will be deemed actionable in Virginia.

Absolute Judicial Privilege Extends Outside the Courtroom

January 23, 2014,

Otherwise defamatory statements made in connection with and relevant to a judicial proceeding are absolutely privileged against defamation claims. The so-called "judicial privilege" is broad and applies to all forms of communication during litigation. The doctrine encourages unrestricted speech in litigation which in turn promotes compromise and settlement. The United States Bankruptcy Court for the Eastern District of Virginia recently held that not only does the privilege extend to communications outside the courtroom, but that when litigation is pending, the communication need not be made to an interested party to qualify for protection.

The case is Chesapeake Trust v. Chesapeake Bay Enterprise, Inc. (In re Potomac Supply Corp.), decided December 31, 2013. The bankruptcy court had approved the debtor's sale of its operations to an unrelated entity called Potomac Supply, LLC. Chesapeake Bay Enterprise (CBE), an entity who had also negotiated to buy the debtor's operations, filed a motion to reconsider. Potomac Supply's attorney sent an email to CBE's attorney, asking for two exhibits that were missing from the reconsideration motion and making a reference to "all of the fraudulent financing proposals we received from your client..." CBE responded with a third-party complaint alleging that the email was defamatory. The third-party defendants moved to dismiss, relying on the absolute judicial privilege.

CBE offered various arguments in support of its position that judicial privilege did not apply. First, it argued that the privilege is limited to statements made in pleadings, hearings, or depositions. Additionally, it argued that the statements about "fraudulent financing proposals" were gratuitous and irrelevant to the proceedings. CBE also Richmond3.jpgargued that the privilege should not apply to statements made to third parties with no interest in the judicial proceeding, and that the court lacked sufficient information to determine whether the requirements of judicial privilege had been satisfied. The court rejected all of these arguments and granted the motion to dismiss.

After finding that the third-party complaint alleged sufficient facts to enable it to rule on the applicability of the privilege, the court noted that Virginia case law does not limit the application of the judicial privilege to statements published only to interested parties. The Virginia Supreme Court's holding in Mansfield, imposing a condition that the statement be made only to interested persons, applies only to pre-litigation communications, not statements made after a judicial proceeding has commenced. In any event, the court found that the recipients of the email--the debtor, its investment banker, the bank and the committee--were all interested parties.

The court also found that the email was sufficiently related to the litigation to warrant protection, as it referenced the motion for reconsideration. For purposes of applying the privilege, the court held, the concept of relevancy is to be liberally construed.

The fact that the statements were made in an email rather than in a deposition or pleading was irrelevant. The purpose of the privilege is to encourage unrestricted speech in litigation, so courts have extended it well beyond the actual courtroom and have applied it specifically to all forms of written correspondence made during the course of litigation.

How to Unmask Anonymous Yelp Reviewers Who Defame Your Business

January 20, 2014,

The First Amendment protects anonymous speech, including online reviews of products and services written by people using fake names. The right to anonymous speech, however, is not absolute. Defamatory speech, whether or not anonymous, is not entitled to protection, as there is no constitutional value in false statements of fact. If someone pretending to be a former customer writes a defamatory review on Yelp, Amazon, or some other consumer-review site, but doesn't disclose his or her real name, how does the business owner go about identifying the individual so that the individual can be held accountable? The answer lies in Section 8.01-407.1 of the Code of Virginia, which sets forth a specific procedure for uncovering the identities of people who communicate anonymously over the Internet.

The proper application of this statute was recently discussed in Yelp v. Hadeed Carpet Cleaning, a case arising out of Alexandria. As of October 2012, Yelp's site contained seventy-five reviews about Hadeed Carpet Cleaning, many of them critical. Included among these reviews were assertions by anonymous authors claiming to have been charged for work never performed and claiming that "precious rugs were shrunk." Hadeed sued the anonymous authors for defamation, alleging that the reviewers were never actual customers of Hadeed.

After filing the lawsuit, Hadeed promptly issued a subpoena duces tecum to Yelp, demanding the production of documents that would enable Hadeed to identify the authors of the allegedly defamatory reviews. Yelp objected, arguing that Hadeed had not complied with the requirements of Section 8.01-407.1. Hadeed revised its subpoena to comply with the statute, but Yelp continued to object and refused to comply. On a motion to compel compliance, the Circuit Court for the City of Alexandria held that Hadeed's subpoena satisfied the requirements of both the statute and the First Amendment, and ordered Yelp to disclose the information. Yelp refused, and was held in contempt. It then appealed that ruling to the Virginia Court of Appeals (which has jurisdiction to consider appeals of civil contempt orders), arguing that the First Amendment requires a showing of merit on both the law and facts Rugs.jpgbefore a subpoena duces tecum to identify an anonymous speaker can be enforced. The Court of Appeals disagreed, holding in a case of first impression that Section 8.01-407.1 is not unconstitutional and that it alone provides the unmasking standard in Virginia.

The statute provides that a plaintiff seeking to uncover the identity of an anonymous Internet speaker must show that (1) he gave notice of the subpoena to the anonymous communicator via the Internet service provider; (2) either (a) communications made by the anonymous communicator are or may be tortious or illegal, or (b) the plaintiff has a legitimate, good faith basis to contend that such a party is the victim of conduct actionable in the jurisdiction where suit is filed; (3) other reasonable efforts to identify the communicator have proven fruitless; (4) the identity of the anonymous communicator is important, is centrally needed to advance the claim, is related to the claim or defense, or is directly relevant to the claim or defense; (5) no motion challenging the viability of the lawsuit is pending; and (6) the entity to whom the subpoena is addressed likely has responsive information.

The parties agreed that Hadeed had met the first prong by giving the requisite notice to Yelp. In order to meet the second prong, Hadeed needed to show either that the communications are or may be tortious or that it had a legitimate good faith basis for its belief that the communications are tortious. The court held that Hadeed had done both. The court explained that even statements expressed as personal opinions could be defamatory if written by people who weren't really customers, as the supposed opinions would be based on a false "underlying assumption of fact," i.e. that the reviewer was a customer and that the opinion was based on personal experience with the business. Hadeed had attached sufficient evidence to its subpoena to show that it had thoroughly reviewed its customer database and found that it was unable to match the anonymous reviewers with the names of actual customers.

As to the third prong, the court found that Hadeed took reasonable but fruitless efforts to identify the anonymous communicators. Hadeed contacted Yelp to obtain their identities, but Yelp refused. Hadeed was then forced to resort to a subpoena duces tecum to obtain the reviewers identities. Considering the fourth prong, the court held that the identity of the anonymous defendants was not only important, but necessary to move forward with the defamation action. The fifth and sixth prongs were likewise met as there were no dispositive motions pending when the circuit court entered its ruling, and Yelp did not dispute that it possessed responsive information.

The court affirmed the trial court's ruling and held that Yelp could be compelled to produce the requested information.

Implication Not Defamatory if Not Reasonably Drawn

January 10, 2014,

The Supreme Court of Virginia issued an opinion today in which it addressed the concept of defamation by implication. Building on its 1954 decision in Carwile v. Richmond Newspapers, the court reiterated that although defamatory meaning can sometimes be implied with literally true statements, the inferred meaning cannot be extended beyond the ordinary and common acceptation of the words used. Innuendo cannot be used to introduce new matter or extend the meaning of the words used by the speaker. In short, "the alleged implication must be reasonably drawn from the words actually used."

In Webb v. Virginian-Pilot Media Companies, LLC, Phillip D. Webb, an assistant principal at Oscar Smith High School in Chesapeake, sued Virginian-Pilot and reporter Louis Hansen for its handling of a story about the school's disciplinary process. Webb's son, a student of a neighboring school where Webb previously coached pole vaulting, had been charged with a felony for assaulting another student's father but received no punishment from the school. Webb's lawsuit acknowledged that the reporting of the story was truthful, but claimed that the story implied that Webb abused his position of authority to obtain preferential treatment for his son. Webb argued that when the reporter wrote that the student "did not get preferential treatment because of his dad's position," the implied meaning was "exactly the opposite." The court did not agree.

While acknowledging that the article insinuated that Webb's son may have benefited from special treatment, the court held that there was nothing in the article to suggest that Webb solicited or otherwise procured such treatment. Therefore, the article was not reasonably capable of the defamatory meaning Webb ascribed to it and Jury.jpgthe jury should never have been permitted to even consider the claim.

Trial courts perform an essential threshold, gatekeeping function when it comes to defamation claims. Their job is to determine, as a matter of law, whether a statement alleged to be defamatory is reasonably capable of the defamatory meaning the plaintiff ascribes to the statement. This function, the court held, is to ensure that "defamation suits proceed only upon statements which actually may defame a plaintiff, rather than those which merely may inflame a jury to an award of damages." If the inference urged by the plaintiff cannot be reasonably drawn from the actual words used, the trial court should sustain any demurrer filed and dismiss the case. In this particular case, the trial court failed to do that, which decision the Virginia Supreme Court held to be in error.

Defamed Business Entitled to Presumed Damages, But No Injunction

January 6, 2014,

In Virginia, a statement may constitute defamation per se if it imputes an unfitness to perform the duties of a job or a lack of integrity in the performance of those duties, or if it prejudices the plaintiff in its profession or trade. Corporations, like people, can be defamed in this manner. To prejudice a plaintiff in its profession or trade, the statements must relate to the skills or character required to carry out the particular occupation of the plaintiff. Examples include statements that cast aspersions on the target's honesty, credit, efficiency, or its prestige or standing in its field of business. The advantages to a plaintiff when the words at issue are declared defamatory per se (as opposed to per quod) are significant: compensatory damages will be presumed and need not be proven, and punitive damages may be awarded even if compensatory damages are not.

The United States District Court for the Eastern District of Virginia applied these principles in JTH Tax, Inc. v. Grabert. JTH Tax (better known as Liberty Tax Service) franchises tax preparation centers throughout the United States. Trisha Grabert had signed four franchise agreements but was terminated by Liberty due to her alleged failure to submit required reports and pay monies owed. A disgruntled Grabert resorted to www.unhappyfranchisee.com and Facebook, where she posted numerous statements asserting, among other things, that (1) Liberty's quarterly results were "lies and sloppy;" (2) Liberty "bribed" an individual "to testify falsely;" (3) Liberty was engaged in "unlawful actions" that "interfered with [Grabert's] success;" (4) Liberty "steal[s]" tax stores from franchisees; (5) Liberty is "dirty and getting sloppy so they will take your first born to save their tail right now from crippling losses and a shutdown;" and (6) "Liberty Tax, as a whole" are "crooks."

Liberty sued Grabert for defamation per se, as well as for breach of the notes and franchise agreements. The court found that the statements imputed a lack of integrity to Liberty, prejudiced Liberty in its profession, and cast aspersions on its honesty, efficiency, prestige and standing in its field. Because Grabert failed to appear and defend the accuracy of her statements, the court held that the exhibits were sufficient to demonstrate defamation taxes.jpgper se. (Note: Oddly, the court did not address whether the statements could be interpreted as mere rhetorical hyperbole or other non-actionable opinion).

The court then moved to the question of whether Liberty was entitled to recover punitive damages. Even in defamation per se cases, a recovery of punitive damages requires a clear and convincing showing that the defendant made the statements with actual malice, i.e. with knowledge of their falsity or with reckless disregard of their truth. A plaintiff can rely on circumstantial evidence and motive to prove actual malice. The court found sufficient evidence of malice.

For one thing, one of Grabert's online postings read, "I don't think for a second that they promote anything illegal. Unethical? Maybe if you interpret it that way." Second, the court found that Grabert published numerous statements on multiple website attributing sinister motives to Liberty's actions that she could have no way of knowing.

Thus, the court held that Liberty was entitled to both compensatory and punitive damages and set a hearing to establish the amount at a later date. While Liberty had also sought an injunction to compel Grabert to remove her Internet postings, the court declined to award injunctive relief because Liberty failed to demonstrate either that any harm that may have resulted from such postings was "irreparable" or that a monetary award would be inadequate.