Here are a pair of recent cases decided within the past few weeks that raise the interesting impact of privilege in the law of defamation:
Western American Transportation LLC v. Morrow, 2008 U.S. App. LEXIS 1215 (5th Cir. 2008), and Harris v. Bornhorst, 2008 U.S. App. LEXIS 724 (6th Cir. 2008). Now, these are both federal cases - the first was apparently brought under diversity jurisdiction, while the second raises a slew of federal issues that are beyond the scope of this blog. Today I am just going to address Western American Transportation LLC v. Morrow, and I will post a comparative entry on Harris v. Bornhorst (which has, I think, a much more interesting set of facts) later in the week.
In Western American Transportation, the plaintiff filed a lawsuit alleging that the defendants "had violated the parties' agreement by diverting business and accounts receivable away from Western American." and specifically that the defendants had "wrongfully withheld funds that should have gone to Western American, thereby committing theft and conversion." The defendants filed a counterclaim that this allegation was defamatory.
As the court points out later on the opinion, accusing someone of a crime is (at least in some states) "defamatory per se". That is to say, in jurisdictions which apply that rule, all the complainant has to do is show that the statement was made, and was false, and the court will presume that an injury has occured. per se defamation will be covered extensively in a future blog (it is a fun area by itself, with plenty of twists and turns), but for the purposes of this discussion, it is enough to say that it simplifies things - indeed, the court notes that "[t]he parties agree that Western American's theft-and-conversion allegations were defamatory per se and are accorded a presumption of malice."
So, here we have a case where it is agreed that the statement was made (obviously - it was in a filing with the court!), and as it happens, a partial settlement by the parties wherein the plaintiff even agrees that the claims were not true! It seems like this would be a slam-dunk for a finding that defamation has indeed occured, but wait - there's a catch, and the catch is called "privilege":
So, was the statement here material? Definitely, says the court - it was the basis of the original cause of action filed, the "core issue in that suit". Did the plaintiffs have probable cause? The court finds that they did, which is unsurprising given the very low level of suspicion needed to show probable cause. Readers may be familiar with probable cause as a criminal law concept, but as this case demonstrates, there is room for it to pop up in tort as well (another area of tort where it arises on occasion is in false imprisonment cases, where a store owner has detained a suspected shoplifter).
As for the "without malice" element, the court finds that the plaintiffs believed that the allegations were true when the complaint was filed, and that is enough to meet this requirement. Counterclaimants argue that a statement which is defamatory per se should be presumed inherently malicious. The court concedes that this presumption exists, but notes that "a presumption of malice may be rebutted by the defendant." Although the court does not spell out the test for such a rebuttal to occur, since the burden of proof in simple torts is preponderance of the evidence, plaintiffs would have needed to do no more than provide evidence showing it more likely than not that they believed the truth of the allegations. And that is exactly what they did.
So, the upshot of this case seems to be this: if a) you have some reasonable basis to suspect something bad about another person, and b) you honestly believe this bad thing to be true, and c) this bad thing is material to some cause of action you have against this person, then d) you can say things in the context of allegations supporting a legal pleading that would otherwise run you afoul of the law and expose you to liability for defamation. This may for a moment seem to give rise to the thought "aha, I can get away with defaming [insert disliked person] if I sue them!" But considering the cost of intiating litigation (and the fact that you have to be suing them for something), it's hardly worth the effort. In any event, the rule certainly makes sense in light of the number of lawsuits in which one party's allegations can be read as accusing the other party of acts amounting to a crime. If every such action was subject to a counterclaim based on an allegation of defamation, those defamation claims would be brought almost as a matter of course, as a way for the defendant to further declare their innocence of the claim. That, in turn, would muddle up litigation and burden court calendars at an entirely new level.
Two other notes of interest on this case. First, a disclaimer: remember, this is a case under Louisiana law. There is no federal law of defamation, and this outcome says nothing about what might be returned by courts in other states. Second, an interesting quirk in the procedural posture of the case. This appeal arises not out of the ongoing dispute between plaintiff and defendant (that seems to have been largely settled along the way), but between plaintiff's insurance company and defendant. Plaintiff's insurer did not want to cover plaintiff for the costs of defending the defamation suit. The case implies that the insurer was unhappy with the terms of plaintiff's settlement, and it is logical to suspect that the insurer was none too pleased that plaintiff effectively admitted to the defamatory conduct. However, the court's affirmation of the finding of privilege moots that dispute, as there no longer remains any defamation claim, which lets the insurer off the hook. Thus the court does not reach another interesting issue, whether the insurer must cover the costs of defending the defamation claim.
Western American Transportation LLC v. Morrow, 2008 U.S. App. LEXIS 1215 (5th Cir. 2008), and Harris v. Bornhorst, 2008 U.S. App. LEXIS 724 (6th Cir. 2008). Now, these are both federal cases - the first was apparently brought under diversity jurisdiction, while the second raises a slew of federal issues that are beyond the scope of this blog. Today I am just going to address Western American Transportation LLC v. Morrow, and I will post a comparative entry on Harris v. Bornhorst (which has, I think, a much more interesting set of facts) later in the week.
In Western American Transportation, the plaintiff filed a lawsuit alleging that the defendants "had violated the parties' agreement by diverting business and accounts receivable away from Western American." and specifically that the defendants had "wrongfully withheld funds that should have gone to Western American, thereby committing theft and conversion." The defendants filed a counterclaim that this allegation was defamatory.
As the court points out later on the opinion, accusing someone of a crime is (at least in some states) "defamatory per se". That is to say, in jurisdictions which apply that rule, all the complainant has to do is show that the statement was made, and was false, and the court will presume that an injury has occured. per se defamation will be covered extensively in a future blog (it is a fun area by itself, with plenty of twists and turns), but for the purposes of this discussion, it is enough to say that it simplifies things - indeed, the court notes that "[t]he parties agree that Western American's theft-and-conversion allegations were defamatory per se and are accorded a presumption of malice."
So, here we have a case where it is agreed that the statement was made (obviously - it was in a filing with the court!), and as it happens, a partial settlement by the parties wherein the plaintiff even agrees that the claims were not true! It seems like this would be a slam-dunk for a finding that defamation has indeed occured, but wait - there's a catch, and the catch is called "privilege":
However, even when a plaintiff makes a prima facie showing of the essential elements of defamation, recovery may be precluded if the defendant shows that the statement was protected by a privilege, absolute or qualified. In Louisiana, a defamatory statement by an attorney in a judicial proceeding is protected by a qualified privilege, but the statement must be material and must be made with probable cause and without malice.
So, was the statement here material? Definitely, says the court - it was the basis of the original cause of action filed, the "core issue in that suit". Did the plaintiffs have probable cause? The court finds that they did, which is unsurprising given the very low level of suspicion needed to show probable cause. Readers may be familiar with probable cause as a criminal law concept, but as this case demonstrates, there is room for it to pop up in tort as well (another area of tort where it arises on occasion is in false imprisonment cases, where a store owner has detained a suspected shoplifter).
As for the "without malice" element, the court finds that the plaintiffs believed that the allegations were true when the complaint was filed, and that is enough to meet this requirement. Counterclaimants argue that a statement which is defamatory per se should be presumed inherently malicious. The court concedes that this presumption exists, but notes that "a presumption of malice may be rebutted by the defendant." Although the court does not spell out the test for such a rebuttal to occur, since the burden of proof in simple torts is preponderance of the evidence, plaintiffs would have needed to do no more than provide evidence showing it more likely than not that they believed the truth of the allegations. And that is exactly what they did.
So, the upshot of this case seems to be this: if a) you have some reasonable basis to suspect something bad about another person, and b) you honestly believe this bad thing to be true, and c) this bad thing is material to some cause of action you have against this person, then d) you can say things in the context of allegations supporting a legal pleading that would otherwise run you afoul of the law and expose you to liability for defamation. This may for a moment seem to give rise to the thought "aha, I can get away with defaming [insert disliked person] if I sue them!" But considering the cost of intiating litigation (and the fact that you have to be suing them for something), it's hardly worth the effort. In any event, the rule certainly makes sense in light of the number of lawsuits in which one party's allegations can be read as accusing the other party of acts amounting to a crime. If every such action was subject to a counterclaim based on an allegation of defamation, those defamation claims would be brought almost as a matter of course, as a way for the defendant to further declare their innocence of the claim. That, in turn, would muddle up litigation and burden court calendars at an entirely new level.
Two other notes of interest on this case. First, a disclaimer: remember, this is a case under Louisiana law. There is no federal law of defamation, and this outcome says nothing about what might be returned by courts in other states. Second, an interesting quirk in the procedural posture of the case. This appeal arises not out of the ongoing dispute between plaintiff and defendant (that seems to have been largely settled along the way), but between plaintiff's insurance company and defendant. Plaintiff's insurer did not want to cover plaintiff for the costs of defending the defamation suit. The case implies that the insurer was unhappy with the terms of plaintiff's settlement, and it is logical to suspect that the insurer was none too pleased that plaintiff effectively admitted to the defamatory conduct. However, the court's affirmation of the finding of privilege moots that dispute, as there no longer remains any defamation claim, which lets the insurer off the hook. Thus the court does not reach another interesting issue, whether the insurer must cover the costs of defending the defamation claim.
No comments:
Post a Comment