Free Trial Brief - District Court of Arizona - Arizona

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GREENBERG TRAURIG, LLP
ATTORNEYS AT LAW SUITE 700 2375 EAST CAMELBACK ROAD PHOENIX, ARIZONA 85016 (602) 445-8000

Steven M. Weinberg, SBN 016817, [email protected] Brian J. Schulman, SBN 015286, [email protected] Kimberly A. Warshawsky, SBN 022083, [email protected] Attorneys for Plaintiff Awareness Corporation and Third Party Defendants Allcock and Schmidt IN THE UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Awareness Corporation, Plaintiff, Group Vision International, L.L.C., et al., Defendants. And related cross claims and third party actions. Plaintiff Awareness Corporation ("Awareness") hereby submits its bench memorandum on the defendants' purported defamation counterclaim against Awareness. The sole basis for the Distributor Defendants' claim against Awareness is Awareness' February 10, 2004 "Legal Update" (the "February 10 email"), which was emailed and/or mailed to Awareness distributors regarding the status of this lawsuit. The Distributor Defendants claim that the contents of the email were defamatory. Distributor Defendants are wrong. To establish a claim for defamation against Awareness, Arizona law requires the Distributor Defendants to prove (i) publication to a third party (ii) of a false or defamatory statement of or concerning each of the Distributor Defendants (iii) that is not privileged.
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No. CV03-2024-PHX-DGC PLAINTIFF AWARENESS CORPORATION'S BENCH MEMORANDUM NO. 11RE: THE DEFENDANTS' PURPORTED DEFAMATION CLAIM AGAINST AWARENESS

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Spratt v. N. Auto. Corp., 958 F.Supp. 456, 465 (D. Ariz. 1996). As a threshold matter, then, each Distributor Defendant must establish that the alleged defamatory statements refers specifically to him or her -- either explicitly or by implication. See id. See, e.g., Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980). I. Statements of Opinion are Not Defamatory. Statements of opinion do not constitute defamation and are therefore not actionable. Info. Control Corp. v. Genesis One Computer Corp., 611 F.2d 781, 783 (9th Cir. 1980) (citations omitted). "The determination of whether an allegedly defamatory statement is a statement of fact or statement of opinion is a question of law," and is typically based upon the court's analysis of three factors. Id. First, "it is established that words are not defamatory unless they are understood in a defamatory sense." Id. "Mere expressions of opinion or severe criticism are not libelous if they clearly go only to the merits or demerits of a condition, cause, or controversy which is under public scrutiny." Id. (emphasis added) Second, even apparent statements of fact can assume the character of opinion statements when made under circumstances in which an "audience may anticipate efforts by the parties to persuade others to their positions by [the] use of epithets, fiery rhetoric, or hyperbole." Id. at 784 (noting that it was important to consider whether the audience of the alleged defamatory statements consisted of persons "who would be expected to be aware of the litigation between the parties....") (citations omitted). The third and final factor to consider concerns the language of the alleged defamatory statement. "Where the language of the allegedly defamatory statement is cautiously phrased in terms of apparency or is of a kind typically generated in a spirited legal dispute in which the judgment, loyalties, and subjective motives of the parties are reciprocally attacked and defended in the media and other public forums, the statement is

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less likely to be understood as a statement of fact rather than as a statement of opinion." Id. II. Truth is a Complete Defense to a Claim for Defamation. Only false statements can be considered defamatory. Accordingly, the truth of the contents of the alleged defamatory statements is a complete defense to a claim for defamation. Read v. Phoenix Newspapers, Inc., 819 P.2d 939, 941 (Ariz. 1991) (en banc). "[W]hen proving the statement's truth, the defendant need not prove the literal truth of every detail, but must only prove that the statements are substantially true. Substantial truth is an absolute defense to a defamation action in Arizona." Id. (citations omitted). "Slight inaccuracies will not prevent a statement from being true in substance, as long as the gist or sting of the publication is justified." Id. (internal citations omitted). III. The February 10 email is Privileged and is Therefore Not Defamatory. A party is not liable for defamation if his statement is deemed to be "privileged." There are two kinds of privileges: absolute and qualified. E.g., Burns v. Davis, 993 P.2d 1119, 1122-23 (Ariz. Ct. App. 1999). As the name suggests, an absolute privilege provides a complete defense to an action for defamation. Lewis v. Oliver, 873 P.2d 668, 671 (Ariz. Ct. App. 1994). Arizona courts have long held that statements made in the course of litigation by parties, counsel, and witnesses ­ even if otherwise defamatory ­ are absolutely privileged so long as they have some relation to the underlying litigation. See e.g., Todd v. Cox, 512 P.2d 1234 (Ariz. Ct. App. 1973) (witness' statements privileged); Stewart v. Fahey, 481 P.2d 519 (Ariz. Ct. App. 1971) (party's statements privileged). Arizona's rule governing litigation-related statements is identical to the rule set forth in the Restatement of Torts: A party to a private litigation...is absolutely privileged to publish defamatory matter concerning another in communications...during the course and as a part of, a judicial proceeding in which he participates, if the matter has some relation to the proceeding.
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RESTATEMENT (SECOND) OF TORTS, § 587 (1979). Arizona courts have often applied this and related sections of the Restatement. See e.g., Sierra Madre Dev. Co. v. Via Entrada Townhouses Ass'n, 514 P.2d 503, 506 (Ariz. Ct. App. 1973) (applying § 587); Stewart, 481 P.2d at 521 (applying § 587); see also Todd, 512 P.2d at 1235 (applying § 588, which pertains to witnesses' statements made during the course of litigation). It is not necessary that the statement be directly relevant to any issue before the court; rather a statement is "absolutely privileged if it is connected with, has any bearing on, or is related to the subject of [the lawsuit]." Sierra Madre Dev. Co., 514 P.2d at 50607. Nor is it necessary for the statement to be made in a pleading or in the courtroom. Out-of-court statements may also be privileged so long as they have some connection or logical relation to the action. See e..g., Costa v. Superior Court, 204 Cal. Rptr. 1, 3-4 (Ct. App. 1984); Hawkins v. Harris, 661 A.2d 284, 289 (N.J. 1995); Russell v. Clark, 620 S.W.2d 865, 868-69 (Tex. Ct. App. 1981). "Any doubt as to whether such relationship or connection existed must be resolved in favor of finding a privilege." Costa, 204 Cal. Rptr. at 3. The California Court of Appeal's decision in Costa ­ whose facts are strikingly similar to this case ­ is instructive. There, a fraternal organization filed a lawsuit against a subsidiary organization after a dispute arose concerning the disposition of insurance proceeds that the subsidiary organization had received. During the course of the lawsuit, the chairman of the fraternal organization wrote a letter to its membership explaining the basis and purpose of the litigation. The plaintiffs (who were officers and directors of the subsidiary organization) alleged that the letter was defamatory. The California Court of Appeals held that the statements in the letter were absolutely privileged as a statement made in the course of litigation -- it was written during the course of litigation; had some connection to the action; and was sent to persons who had a substantial interest in the outcome of the litigation. Costa, 204 Cal. Rptr. at 2-4.
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IV.

"Invited Defamation" is Not Actionable. Assuming, arguendo, that the February 10 email is defamatory and is not otherwise

privileged, the Distributor Defendants cannot sustain a claim for defamation where the defendants invited the alleged defamation. It is black-letter law that "`invited defamation,' or the issuance of a defamatory statement wherein the injured party precipitated the statement's release, is not actionable." Jones v. Clinton, 974 F. Supp. 712, 732 (E.D. Ark. 1997) (quoting Litman v. Mass. Mut. Life Ins. Co., 739 F.2d 1549, 1560 (11th Cir. 1984)). As courts have observed, when one's good name is assailed, "he may, of course, reply, and defend himself" so long as the "reply is made in good faith, without malice, and is not unnecessarily defamatory of his assailant . . . ." Id. (quoting Patton v. Cruce, 81 S.W. 380 (Ark. 1904)). Where, as here, the alleged defamation was made in response to plaintiff's own statements and/or conduct, a plaintiff may not recover damages for the alleged defamation. Id. at 732 (Paula Jones' statements in a public forum were deemed to have invited the President's response, and thereby barred any recovery based on the allegedly defamatory statements made in his response). V. A Plaintiff Voluntarily Republishing Alleged Defamatory Statements May Not Recover for Defamation. It is equally well established that a plaintiff who republishes a defamatory statement, or consents to its republishing, cannot recover for defamation based on that statement. Glaze v. Marcus, 729 P.2d 342, 344 (Ariz. Ct. App. 1986) (consent to republication by the plaintiff is a complete defense to an action for defamation). See also 50 AM.JUR.2D Libel and Slander § 241 (1964) ("[A] claim for defamation is generally not recognized where the plaintiff voluntarily republishes the allegedly defamatory words."). "[T]here is defamation where the defamed person is the recipient of the communication and then publishes it to a third person." Spratt, 958 F.Supp. at 465 (adopting the Restatement and finding no defamation claim where the "defamed" plaintiff selfphx-fs1\1506180v03\8/8/05\3:47:00AM

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published the alleged defamatory communications). See also RESTATEMENT (SECOND) TORTS, § 577 cmt. m. VI. At Most, the Distributor Defendants are Entitled to Nominal Damages. Presumed or punitive damages are not appropriate where, as here, "liability for defamation is not based upon a showing of knowledge of falsity or reckless disregard for the truth." Gertz v. Welch, Inc., 418 U.S. 323, 349 (1974) ("States have no substantial interest in securing for plaintiffs ... gratuitous awards of money damages far in excess of any actual injury"). Without this showing of constitutional malice, plaintiffs are limited to compensation for actual injury. Id. (noting that "[u]nder the traditional rules pertaining to actions for libel, the existence of injury is presumed from the fact of publication" but holding that awards for damages must be limited to the plaintiff's actual injury because of the "constitutional command of the First Amendment"). Assuming their claim is not otherwise barred by their own conduct, and that they can otherwise convince the Court that the statements in the February 10 email were defamatory, the Distributor Defendants must prove Awareness acted with constitutional malice. Absent a showing of constitutional malice, however, the Distributor Defendants are limited to, at most, recovery of nominal damages. "Nominal damages are awarded when...there is no proof that serious harm has resulted" from the allegedly defamatory statements. RESTATEMENT (SECOND) OF TORTS § 620 cmt. a. As the court of appeals said in Nelson v. Cail, "[n]ominal damages are trivial in amount," usually one dollar. 583 P.2d 1384, 1389 (Ariz. Ct. App. 1978) (affirming judgment n.o.v., which reduced defamation plaintiff's damages from $1,000 to $1).

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RESPECTFULLY SUBMITTED this 8th day of August, 2005. GREENBERG TRAURIG, LLP By: /s/ Kimberly A. Warshawsky Steven M. Weinberg Brian J. Schulman Kimberly A. Warshawsky Attorneys for Awareness Corporation and Third Party Defendants Allcock and Schmidt

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CERTIFICATE OF SERVICE I hereby certify that on August 8, 2005, I electronically transmitted the attached document to the Clerk' Office using the CM/ECF System for filing and transmittal s of a Notice of Electronic Filing to the following CM/ECF registrants: Curtis D. Drew, Esq. 2342 North Pima Road Scottsdale, Arizona 85257-2405 [email protected] Attorney for Defendant Group Vision International, L.L.C. G. Gregory Eagleburger, Esq. The Eagleburger Law Group 2999 North 44th Street, Suite 303 Phoenix, Arizona 85018 [email protected] Attorneys for Distributor Defendants I hereby certify that on August 8, 2005, I served the attached document by facsimile and United States mail on the following, who are not registered participants of the CM/ECF System:

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/s/ J. David Smith

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