Do You REALLY Want to Fight that Case?

Posted on April 14, 2013 by Aaron Morris

Don't Fight a Case with no Defense

Too many attorneys and their clients defend against cases that have no defense.

You took out a loan, your financial circumstances went south, and you were not able to repay the loan. Now you have been served with a complaint from the lender, so you take it to an attorney to see what can be done. So far so good, but consider your options very carefully. Some attorneys are more than happy to take your money and pursue a defense, but what is the point if you have no defense? Delaying the action for a year while you try to get your finances back in shape might have some appeal, but a defense can sometimes leave you in much worse circumstances. Here are two cases from my practice that illustrate what I am talking about.

The case of the defaming doctor.

In the first case, we brought an action against a doctor who had defamed our client. When the doctor’s contract at a hospital was not renewed, she decided our client was to blame. She took to the Internet and posted false comments about his job performance, in some cases assuming the false identity of a nurse and in others a patient. When we presented irrefutable proof that she had published the anonymous comments, she admitted what she had done. If ever there was a case that should have settled, this was one, but her insurer picked up coverage and for unknown reasons decided to fight the case right through trial, despite our very reasonable settlement demand.

The result was disastrous for the doctor. The case went to a jury verdict, and since the verdict was now a matter of public record, I was free to write about it, as were other attorneys and news organizations who found the story interesting. An Internet search of her name now brings up news of her bizarre behavior in multiple places on the first page of the search results, including the top position on Google.

A complaint contains only allegations, and anybody can allege anything about anyone. It might be frustrating to have those allegations in the public domain, but at that point the claim can still be made that they are only allegations, and a settlement can keep the entire matter confidential. Once the matter goes to verdict, the claims are no longer allegations, they are proven facts, and can be reported as such. I am the first to suggest fighting the good fight, but this doctor admitted she posted the false, defamatory comments. Where did her counsel think he was going to go with that? Taking the matter to trial only made a bad situation far worse. I can’t imagine anyone hiring this doctor after reading about what she did. The information posted about this case will undoubtedly be a source of embarrassment for this doctor for years to come, and that could have been easily avoided.

The case of the unpaid loan.

But if the doctor’s fate was bad, it pales in comparison to the unfortunate defendant who failed to repay a loan to our client. The defendant in this case is a wheeler-dealer who as far as I can tell has never held a day job, but promotes various business ventures and raises money for those ventures. Our client loaned over $200,000 to the defendant, and in pursuing the case we learned that he obtained the loan under false pretenses. I decided to add a cause of action under the criminal code for theft, which if successful would entitle our client to treble damages and all attorney fees. Continue reading →

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Court Finds that Statement about Cause of Suicide is an Opinion

Posted on March 28, 2013 by Aaron Morris

Boston album cover

An interesting defamation case out of New York, involving the world of music and illustrating the burden of proof.

As explained here on various occasions,  truth is a defense (a point sadly lost on many defense attorneys). Thus, the burden of proof is on the defendant to show the truth of whatever it is he said or published.

In one of our recent cases, the defendant falsely stated that our client had cheated customers. Throughout the case, no matter how many times I explained to defense counsel that it would be his burden to prove that my client cheated customers, he kept responding, “you’ll never be able to prove that your client didn’t cheat customers.”

Really? My client took the stand and testified that he has never cheated a customer. That’s all it takes. The defendant then had the burden to prove the truth of the statement, and could not name a single customer our client had cheated. Judgment for plaintiff.

It is fascinating to see how many attorneys don’t understand the most basic rules of litigation. One of those rules is that testimony is evidence. Opposing counsel thought (based on what he told me) that since my client had been accused of cheating customers, he would have to bring in a parade of former customers to testify that they had not been cheated. And, according to the reasoning of opposing counsel, even that would likely be insufficient, because unless he produced 100% of his former clients, counsel would be free to argue that the customers he did not present had been cheated. He truly believed that my burden to show the statement was false was nearly insurmountable. He failed to understand that my client could simply testify to the fact, and that would then shift the burden to defendant to prove the truth of the statement. That, indeed, would have required some quantum of cheated customers to prove the point.

But watch for situations where neither side can prove the truth or falsity of the statement.

Tom Scholz and Brad Delp had been members of the band Boston. For reasons not important to the story, there had been some friction between Scholz and Delp. In March 2007, Delp killed himself by means of carbon monoxide poisoning. Thereafter, the Boston Herald newspaper published articles that claimed Scholz was responsible for Delp’s suicide.

Scholz sued for defamation, claiming it was a false statement to blame him for the death of Delp. But how can anyone truly know the reason for a suicide? Even if there is some triggering event that causes the person to take their life, that does not mean it was the reason. More likely, there are a number of factors that finally lead to the fateful decision. Stating the reason for a suicide will always, at best, be a matter of opinion.

That is the conclusion reached by the judge in this case. Neither side could prove the truth or falsity of their statements. Scholz could take the stand to testify that he was not the cause of Delp’s suicide, but how could he know? And since Scholz could not prove the falsity of the statement by the Boston Herald, the burden would never shift to the newspaper. The judge concluded that the truth or falsity of the statement could never be determined. He didn’t use this example, but to borrow an example from that era, it’s a little like blaming Yoko Ono for the break-up of the Beatles, when John Lennon isn’t here to testify. The judge ruled that why Delp killed himself will forever be an imponderable, making any statement about the suicide merely an opinion, and opinions are not actionable.

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Appeal Victory: Treble Damages for Theft Affirmed Against Defendant

Posted on January 18, 2013 by Aaron Morris

Bell v. Igal Feibush: Treble Damages Awarded for Theft by False Pretext

As we reported in October of 2011, we persuaded an Orange County Superior Court Judge to apply Penal Code section 496(c) – making it illegal to receive stolen goods – to a case where the defendant had failed to repay a loan. The loan agreement did not provide for attorney fees, so by bringing the civil action under Penal Code section 496(c), our client was entitled not only to recovery of all of her attorney fees, but treble damages as well.

The case involved a loan made by our client to the defendant, Igal Feibush. Feibush and his entities failed to repay the loan, and we were retained by the plaintiff to sue. I am always bothered by cases where the worst that can happen to the defendant is that he is made to repay the money that he borrowed in the first place (plus interest). Most attorneys would have pursued this as a garden variety breach of contract case. However, since the loan agreement did not provide for attorney fees, Feibush would face no downside in fighting such an action. Sure, he would incur his own attorney fees, but at the end of the day the case would likely have settled for less than what was owed, or gone to trial and resulted in a judgment for only the loan amount. Our client would have been left far from whole.

We figured out a better way. Penal Code section 496(c) makes it illegal to receive stolen property, and provides for a civil action to recovery any losses that result from violation of that criminal code. We included a cause of action under that statute, arguing that Feibush had used a false pretense to obtain the money from our client. Basically, he told her he had a certain valuable trademark, and that the money from the licensing of that trademark would be used to repay the loan. It turned out he did not own that trademark, and he made no money from its licensing.

A quick aside for an important concept. Picture that an aluminum salesman comes to your door and sells you aluminum siding for $12,000. He presents you with and you sign an agreement for the installation of the aluminum siding, you pay the $12,000, and then he never installs it. You sue for breach of contract, but during discovery you find out that he is not even a licensed contractor and has no access to aluminum siding. You can add a claim for fraud, and that gives you a shot at punitive damages, but basically your damages are the same under both the breach of contract and fraud causes of action — the $12,000 you paid for the aluminum siding that was never installed.

But here’s the thing. If he had come to your door, put a gun in your face and stolen the $12,000, everyone would understand that was a theft. The fact that he used a bogus contract instead of a gun to steal the money from you does not make it any less of a theft. That reality is so self-evident, but it escapes many judges. Kudos to Judge James Di Cesare who understood that a theft is a theft, whether by way of burglary, robbery or bogus contract.

Let me make this perfectly clear. It a party enters into a contract, and simply fails to perform, that is still nothing more than a breach of contract. But if a party enters into a contract in order to obtain money or other property from the other party to the contract, knowing that he has no ability to perform, that is both fraud and theft. Feibush argued on appeal that if the court affirmed this verdict, all breach of contract actions would become claims for theft. As you can see, that simply is not true.

And now back to our story. The Judge agreed that this was more than a simple breach of contract, and amounted to receipt of stolen property (the money). Although he expressed that he didn’t like it, because it afforded a set “penalty” with none of the considerations of a punitive damages claim, he agreed that the criminal statute applied, and awarded three times the damages, and all of our attorney fees. Our client had loaned Feibush $202,500, but the total judgment was just under $700,000.

Although Judge Di Cesare saw this as a bad thing, from the viewpoint of the victim and her attorney, this application of Penal Code section 496(c) affords another huge benefit. The same result (albeit without the attorney fees) could be achieved with a fraud action and the award of punitive damages. However, punitive damages require a showing of the defendant’s net worth and the ability to pay the damages. That can be a huge hurdle when the defendant is someone like Igal Feibush, because he won’t have any property in his name or show any personal income. The purpose of punitive damages — punishing a wrongdoer — is sometimes thwarted where it is most appropriate, if the defendant is successful at hiding his assets. Conversely, the treble damages under 496(c) are a fixed penalty, and require no such showing.

Feibush appealed the treble damages aspect of the judgment, claiming (1) his conduct did not amount to a theft; (2) that a civil action could not proceed under 496(c) unless he had first been criminally convicted; and (3) if he was the party who stole the money, he could not be convicted for receiving it.

The Court of Appeal rejected his arguments, and affirmed the judgment. The Court found that the criminal statute means exactly what it says. It agreed with us that theft by false pretense (the bogus contract) is still a theft, that there need not first be a criminal conviction, and that even the person who steals the money is still liable for receiving it. As icing on the cake, the Court of Appeal decided that our application of the statute, and the fact that the statute has generated no appellate decisions, made the opinion worthy of publication. In the future, when we advance this theory and encounter a judge who just can’t wrap his or her mind around the concept, we can cite to our own case as authority.

Here is the published opinion.

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Parents Claim Yoga Classes Violate First Amendment

Posted on December 21, 2012 by Aaron Morris

Yoga as violation of First Amendment
“Foolery, sir, does walk about the orb like the sun. It shines everywhere.” — William Shakespeare

Parents in San Diego are objecting to yoga classes offered at a grade school, claiming they violate the First Amendment. As reported by the New York Times, the parents claim that yoga promotes Hindu religious beliefs.

The Times quoted Mary Eady, the parent of a first grader, who stated, “They’re teaching children how to meditate and how to look within for peace and for comfort. They’re using this as a tool for many things beyond just stretching.”

The problem is that the parents have fallen prey to a false syllogism. Here is how it played out. The yoga program at the school is supported by a nonprofit organization called the Jois Foundation. Some members of that foundation have the view that yoga is part of a spiritual experience that goes beyond exercise and stretching. Since they believe and espouse that, the parents therefore believe that yoga is part of a religious belief.

However, any activity can be found to have religious significance, and it is the participant who decides whether to ascribe the religious tie-in. To use an analogy, if I bought a pool for a public school, and then gave a speech about how I believe swimming is akin to receiving a Christian baptism, then should all parents pull their children out of any swim classes on First Amendment grounds because of my beliefs? This point becomes even more obvious when you consider that even the Foundation members don’t agree. “We’re good Christians that just like to do yoga because it helps us to be better people,” Foundation member Russell Case told the Times.

I did enjoy the quote from the school’s superintendent, Tim Baird. “If your faith is such that you believe that simply by doing the gorilla pose, you’re invoking the Hindu gods, then by all means your child can be doing something else,” he told the Times.

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Hacienda Heights Doctor, Pankaj Karan, Hit with $1.5 Million Judgment for Internet Defamation

Posted on August 8, 2012 by Aaron Morris

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.

Posted in Case Results, Internet Defamation, Verdicts | Tagged , , | 1 Comment

Judge Orders Man to Apologize to Ex-Wife on Facebook

Posted on March 8, 2012 by Aaron Morris

Facebook Censorship by Contempt

Clients sometimes ask me to seek a letter of apology as part of a defamation settlement. I have managed to do so on a number of occasions, but I usually recommend a letter of retraction as opposed to a letter of apology, because the latter is often a deal breaker.

In our society, a true apology is a big deal (as opposed to an “I apologize if you were offended” type of apology). Many defendants would rather pay money than to apologize, which is somehow viewed as weak. After all, a real apology seeks forgiveness from the other side, so it sticks in the craw of most defamers that they are basically asking the victim to pass judgment on them.

With this mind set in mind, one can fully appreciate the frustration of Mark Byron. He and his wife were divorcing and fighting over the custody of their son. When the judge issued an order limiting his custody, he went to his Facebook page to vent, posting:

“… if you are an evil, vindictive woman who wants to ruin your husband’s life and take your son’s father away from him completely — all you need to do is say that you’re scared of your husband or domestic partner… , “

But there was a problem. Continue reading →

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Some Judges Just Don’t “Get” Defamation

Posted on February 21, 2012 by Aaron Morris

Defamation on the Internet Calling Someone a Liar

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. Continue reading →

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Australian Defamation Case Illustrates Life Without the CDA

Posted on February 17, 2012 by Aaron Morris
Internet Defamation on Twitter

"That J-Lo, she be crazy!"

I have frequently written here on the pros and cons of the Communications Decency Act (“CDA”). Without it, no website could permit comments, but by the same token it allows unscrupulous website operators to encourage defamatory postings, and then use those postings to extort payments from the victims.

Because of the latter reality, many have suggested to me that they would like to see the CDA abolished. But a case out of Australia demonstrates just how ridiculous things get without the CDA.

Those Australians are people of few words, so I had to read a number of news accounts to piece together what had occurred. A blogger by the name of Marieke Hardy apparently picked up an anonymous on-line bully. For undisclosed reasons, Hardy decided that she had determined the identity of her mystery bully, so she posted the following comment on Twitter:

“I name and shame my ‘anonymous’ internet bully. Liberating business! Join me.”

The “tweet” then provided a link back to her blog, and there on the blog she identified Joshua Meggitt as the bully. Problem was, Meggitt was not the bully. Continue reading →

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Gloating Over $5,000 Settlement Costs Parents $234,011.87

Posted on January 18, 2012 by Aaron Morris

Canadian Teacher, eh?Some callers to my office, wanting to sue for defamation because someone said terrible, false and hurtful things about them, are disappointed to learn that they cannot seek legal action because the speech falls under a privilege. By definition, “privileged” speech can never be defamatory, and therefore cannot support a defamation action.

Examples? Speaking at a City Council meeting, testifying in court, or filing a police report – all privileged speech. (There are of course exceptions to every rule of law, but my New Year’s resolution was to write shorter articles.) So, if someone trashes you from the witness stand in court, there is nothing you can do about it from a defamation standpoint. (Although the person could be criminally liable for perjury. Sorry, couldn’t let that one go.)

“BUT,” I tell the caller, “if the person steps out of court and makes the same statements, you have them.”

I ran across this case out of Canada that so beautifully illustrates the point, eh. Continue reading →

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How to Fight Back Against Online Defamation

Posted on December 31, 2011 by Aaron Morris

Aaron Morris on Internet Defamation

Always striving not to reinvent the wheel, I keep my eyes open for articles that do a good job of explaining basic legal concepts.  In that regard, I receive many calls from prospective clients who don’t yet know the fundamentals of pursuing an online defamation claim.  Many times, the callers want to sue Google since it is Google’s search engine that is revealing the sites that are posting the defamatory comments.  That is not possible (although in one instance we persuaded Google to stop indexing a particular magazine, but that is rare).

The following article [reprinted with permission] provides a brief outline of how to attack online defamation.  If you happen to be in New Jersey, contact the author for any action you need to pursue or defend.  If you’re here in California, or the action needs to be brought in California, then call Morris & Stone at (714) 954-0700.

___________________________

Individuals now have the freedom to inexpensively and easily share everything  from their art to their opinions online. However, the ease and anonymity  associated with posting information on the Internet, comes at the cost of  providing a perfect avenue for those seeking to abuse the system. So what  happens when, for instance, an opinionated Internet rant goes too far? What if a  video stream broadcast damages the reputation of someone featured in it? More  importantly, do the victims of these scenarios have any rights under the law, or  are they at the mercy of the author or poster? Continue reading →

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