When a party or an attorney files an objectively baseless defamation complaint, the trial court is required to impose sanctions on one or both of them, including but not limited to an award of attorneys’ fees. This is the main takeaway from Nestler v. Scarabelli decided a few days ago by the Virginia Court of Appeals. Litigation attorneys in both state and federal court are required to adhere not only to codes of ethics but also to procedural rules that prohibit using litigation for an improper purpose. Under Virginia Code § 8.01-271.1, any time a lawyer signs and files a complaint on behalf of a client, the lawyer is certifying that “to the best of his knowledge, information and belief, formed after reasonable inquiry, [the complaint] is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and…is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.” The court found that Dr. Scarabelli violated that rule by filing a defamation claim against Dr. Nestler that had no reasonable chance of success. Consequently, the trial court was not only permitted but required to impose an appropriate punishment.
MCV Associated Physicians (“MCVAP”) hired Dr. Tiziano M. Scarabelli as the Virginia Commonwealth University Health Systems’ Director of Cardio-Oncology on a one-year contract. After only a few months, MCVAP had received several complaints from staff members about Dr. Scarabelli’s alleged lack of professionalism. MCVAP also received complaints about Dr. Scarabelli from interns, residents, and patients, some of which appeared to constitute allegations of sexual harassment, such as claims that Dr. Scarabelli was “very touchy feely,” would put his hands on women’s thighs, and would often comment on the physical attractiveness of women. There were also claims he was just rude, “always putting down other physicians.” After a year, MCVAP decided not to renew Dr. Scarabelli’s contract.
Litigation ensued, involving multiple parties, claims, and counterclaims. Among them was a defamation claim Dr. Scarabelli filed against an MCVAP doctor named John E. Nestler, who had allegedly made the following statements about Dr. Scarabelli:
- “Based on multiple complaints raised against you by interns.”
- “Concerns that were raised.”
- “Multiple complaints have been raised.”
- “Administrative leave.”
- “Dr. Scarabelli was placed on administrative leave.”
Naturally, Dr. Nestler filed a demurrer seeking to dismiss the claim for failing to allege sufficient facts to support a cognizable defamation claim, but the trial court overruled the demurrer and allowed the claim to proceed to trial. After Scarabelli had finished presenting his evidence, Nestler moved to strike the evidence and again asked the court to dismiss the defamation claim on the grounds that the statements he made were true and, even if they had been false, they lacked defamatory sting. Before the court could rule on the motion, Scarabelli voluntarily dismissed his defamation claim against Nestler.
At this point, Nestler had “won” the case and was free to go. However, due to the American Rule relating to attorneys’ fees, the victory was hollow in that he had been forced to go through an entire litigation process and spend lots of money on legal fees, only to have the case–which was never valid to begin with–dropped at the last second. It certainly appeared that the defamation claim against him had been brought for an “improper purpose” in violation of Virginia Code § 8.01-271.1. So he moved for sanctions against Dr. Scarabelli and his lawyer. The motion was denied, but Nestler appealed the denial of his motion and the Virginia Court of Appeals reversed, finding that the trial court abused its discretion in denying the motion and holding that Scarabelli and his attorney must both be sanctioned for pursuing a defamation claim they knew to be baseless.
Citing Schaecher v. Bouffault, 290 Va. 83, 92 (2015), the court pointed out that a valid defamation claim requires both falsity and defamatory sting. “Language contains defamatory sting when it: harms ‘one’s reputation in the common estimation of mankind’; vilifies, shames, or disgraces; tends to cause ‘scorn, ridicule, or contempt’; or ‘is calculated to render [the subject] infamous, odious, or ridiculous,'” it wrote. True statements are not actionable.
When an attorney signs a complaint, he is certifying that to the best of his knowledge, after reasonable inquiry, the claims made therein are “well grounded in fact and…warranted by existing law” or a good-faith argument for a change in the law. (See Va. Code § 8.01-271.1). The Virginia Supreme Court has held that if 8.01-271.1 is violated, the trial court must impose sanctions. (NB: This is often cited as a reason Virginia does not have a strong anti-SLAPP law; many consider it unnecessary considering a mechanism already exists for recovering attorneys’ fees when frivolous defamation actions are brought).
In this particular case, the timing showed that Scarabelli and his lawyer knew they had no valid defamation claim against Nestler, yet pursued it anyway. At Dr. Scarabelli’s deposition, he testified that he wasn’t really aware of any defamatory things that Dr. Nestler said, but that he was more concerned with Dr. Nestler’s actions, particularly “that he didn’t…try to find a remedy for the wrong which had been done” to him. Despite this admission, one month after the deposition, Scarabelli filed an amended complaint alleging that Nestler had made five defamatory statements (as indicated in the bullet points above).
The evidence at trial showed that the statements were undeniably true. Scarabelli did not contest that he was placed on administrative leave, nor did he challenge the fact that several complaints had been made against him (he only contested the veracity of those complaints). Right off the bat, then, it should have been apparent to Scarabelli’s attorney that a defamation claim did not exist against Nestler. Moreover, the court held, “none of the above statements contain the requisite defamatory sting,” and were not actionable for that additional reason. Nestler’s statements were not an attack on Scarabelli’s reputation or character; rather, they were mere observations of objectively true facts. Scarabelli and his counsel appeared to recognize the “utter lack of merit” in the claim as they quietly dropped it right before the jury retired from the bar.
The court found it was impossible to reconcile Scarabelli’s sworn testimony that he was unaware of any defamatory statements by Nestler with the certification by his lawyer a month later that a defamation claim against Nestler was “well grounded in fact” and “not interposed for any improper purpose.” Nestler was forced to litigate the unwarranted claim for several years and participate in a six-day jury trial, only to see the claim dropped at the eleventh hour. Under these circumstances, the court held, both Scarabelli and his attorney violated Section 8.01-271.1 and sanctions were mandatory.