The Virginia Defamation Law Blog

July 15, 2013

VitaminSpice CEO Files Libel Claim Against DealFlow Media

Edward Bukstel, CEO and majority shareholder of VitaminSpice, Inc., a publicly traded company, has brought a libel action in the Eastern District of Pennsylvania against DealFlow Media and affiliated individuals, claiming that DealFlow knowingly published a false story about VitaminSpice. The complaint alleges the following facts.

DealFlow provides independent research services and analysis for finance professionals such as investment managers, law firms, banks, public and private corporations, hedge funds, and financial companies. It publishes The DealFlow Report for individuals and institutions in the field of business and finance. DealFlow’s website asserts that over 6000 institutions rely on it for accurate, comprehensive and timely information about finance.

In early 2013, Bukstel negotiated a deal allegedly worth over $8 million involving the sale of VitaminSpice assets to a New York investor. An article appeared in a March issue of The DealFlow Report, entitled “VitaminSpice CEO Says He Requested Trading Halt Amid Dispute Over Stock Manipulation.” The Article went on to report that Bukstel had accused his former attorney of stock manipulation. According to Bukstel, the Article, its title in bold, appeared on page one of the issue and was the major headline. Bukstel asserts that the defendants intended the article to be conspicuous so that every reader would be drawn to it.

June 24, 2013

Pilot’s Defamation Case Goes to Supreme Court

by Lee E. Berlik

Applying Virginia law, the Colorado Supreme Court upheld a $1.4 million jury verdict against Air Wisconsin back in March of 2012, finding it was responsible for slander of a former pilot and not entitled to immunity. On June 17, 2013, the United States Supreme Court granted certiorari to consider the question of whether a court can deny the immunity provided by the Aviation and Transportation Security Act (ATSA) without a prior determination that the air carrier’s statements to the Transportation Security Administration (TSA) were materially false.

After the September 11th terrorist attacks, Congress passed the ATSA in order to encourage the reporting of security concerns. The ATSA requires airlines and their employees to report potential security threats to the TSA. Reporting parties are given broad immunity and may only be liable for reports made with actual knowledge that the report was false, inaccurate, or misleading, or with reckless disregard as to the truth or falsity of the report. Because failure to report can result in civil penalties, shorthand for the policy has become known as “when in doubt, report.”

William Hoeper was a pilot for Air Wisconsin Airlines. Hoeper apparently had failed three proficiency exams and abandoned his fourth attempt. Approximately ninety minutes into the test, Air Wisconsin contends that Hoeper ran the simulator out of fuel, flamed out the engines, and nearly crashed. According to Air Wisconsin, Hoeper knew he would be terminated and was acting irrationally, yelling and cursing at his instructors. Hoeper’s version of the story is that Air Wisconsin was conducting the simulator test unfairly, and a personal dispute was escalated into a matter of national security.

June 13, 2013

Not Every Website Is Entitled to Section 230 Immunity

by Lee E. Berlik

Section 230(c)(1) of the Communications Decency Act is intended to immunize providers of interactive computer services against liability arising from content created by third parties. Under Section 230, most Internet services will not be liable for false or defamatory material published on their sites so long as the information was created by another party. Although this statute provides website operators with a strong defense against defamation claims and other torts, a motion to dismiss is not a sure thing, at least not here in Virginia.

Section 230 applies to providers and users of an “interactive computer service,” but does not protect information content providers. If a website provides both functions, it will not be immune from liability. In Nasser v. WhitePages, Inc., the Western District of Virginia held that discovery would be required before the court could determine whether WhitePages was entitled to Section 230 immunity. Santa Clara University law professor Eric Goldman, who writes frequently about the protections of the Communications Decency Act, has sharply criticized the ruling as “overly cautious.”

Michael Nasser filed an emotional distress and nuisance action against WhitePages, Inc., alleging that WhitePages incorrectly listed his phone number as that of “Comcast Phone of Virginia,” resulting in thousands of unwanted phone calls intended for Comcast. Nasser made numerous requests to remove the listings, but the listings remained on WhitePages’ website for approximately sixteen months. Nasser alleged that he had to seek medical treatment for various issues because of the unwanted calls, and he sought $500,000 in compensatory and punitive damages for intentional and negligent infliction of emotional distress and nuisance.

June 10, 2013

Lost Profits Caused by Defamation Must Be Proven with Competent Evidence

by Lee E. Berlik

On May 31, 2013, the Fourth Circuit reversed a $4 million verdict against U.S. Bancorp for defamation, finding that the amount was excessive and/or unsupported because the jury apparently based its verdict on expert testimony of lost profits admitted in violation of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Still, in MyGallons, LLC v. U.S. Bancorp, the court found that Bancorp’s public statements refuting the plaintiff’s press release were sufficient to support defamation liability, so it ordered a new trial on damages only.

When Steve Verona conceived of a prepaid consumer gas card program, he contacted Voyager Fleet Systems, Inc., a subsidiary of U.S. Bancorp, about processing the program’s payments. Voyager operates a payment processing network for commercial and fleet gas purchases but was not set up to issue consumer gas cards. Verona explained his program to Bancorp executives, one of whom directed Verona to work with an authorized reseller of the Voyager payment processing system, “GoGas,” as Bancorp would not work with him until the program was larger. GoGas submitted and Bancorp approved Verona’s fleet card application and issued Verona several dozen cards using the Voyager payment network. Verona distributed the cards to family and friends who used the cards to purchase gas. Verona branded the program “MyGallons.”

Internally, Bancorp stated that MyGallons was an approved Voyager fleet card account and that it was working to expand the program. Bancorp began drafting a new contract for its relationship with MyGallons. Bancorp, GoGas and Verona worked to design fleet cards with MyGallons and Voyager logos on them.

June 3, 2013

This Is Why Exact Words Must Be Pleaded

by Lee E. Berlik

Defamation claims carry a particularity requirement, though the degree of particularity required is not as high as with fraud claims. While it is not necessary, for example, to specifically identify in the complaint the persons reading or hearing the statement, or to describe all the surrounding circumstances existing at the time the statement was allegedly made, what is required is to identify the exact words claimed to be defamatory.

This rule exists for good reason: it helps free court dockets of cases in which a plaintiff’s characterization of a statement (which is often exaggerated or unreasonable) forms the basis for the claim rather than the statement itself. Courts need to be able to make a threshold determination of things like whether the words at issue appear to be about the plaintiff, whether they are capable of being reasonably interpreted as a statement of fact, and whether they would tend to degrade the plaintiff in the eyes of the community. Defamatory meaning is a huge component of the test for liability, and the precise language used is crucial to the existence of an actionable claim.

Take the lawsuit filed in D.C. last month against NBA great LeBron James by a man claiming to be his father, Leicester Bryce Stovell.

May 16, 2013

Injunctive Relief Unavailable for False Light Claim, Says Pennsylvania Court

by Lee E. Berlik

Many jurisdictions, including Pennsylvania, follow the old common law rule that equity will not enjoin a libel. The First Amendment carries a presumption against prior restraints, but does not pose an absolute bar to injunctive relief in defamation actions. Still, most courts are extremely reluctant to grant equitable relief in actions for libel, slander, invasion of privacy, and related actions, due in no small part to the fact that money damages are usually adequate to compensate the plaintiff.

Recently, in Pennsylvania, Dr. Steven R. Graboff, a board certified orthopaedic surgeon and expert witness, tried unsuccessfully to obtain an injunction against the American Academy of Orthopaedic Surgeons and the American Association of Orthopaedic Surgeons (AAOS), requiring them to remove from their website an article that portrayed him in a false light. In an earlier action, Graboff had sued for false light invasion of privacy based on the offending article and a jury awarded him $196,000 in economic and non-economic damages. After the lawsuit, however, AAOS refused to take down the article. So Dr. Graboff sued them again, alleging “continued tortious conduct.”

He sought an injunction as well as additional compensatory and punitive damages, claiming AAOS intentionally and maliciously disregarded his rights by keeping the harmful article on the website in willful disregard of the earlier judgment. AAOS moved to dismiss this new action on several grounds.

May 1, 2013

Google Loath to Remove Content Claimed to Be Defamatory

by Lee E. Berlik

The Internet search giant Google periodically issues “Transparency Reports” which summarize government requests for removal of content from the Internet and Google’s response to the requests. Google also discloses statistics regarding requests received from copyright holders. The latest report, issued for the last six months of 2012, reveals that Google received 2,285 government requests to remove 24,179 pieces of content during that time period – a significant increase from the first six months of 2012 during which it received 1,811 requests to remove 18,070 pieces of content. By a large margin, the number one reason for a removal request is claimed defamation, followed by privacy and security reasons, trademark and copyright infringement, violence, impersonation, government criticism, bullying, national security, adult content, hate speech, religious offense, drug abuse, electoral law, geographical dispute, suicide promotion and “other.”

The large increase in removal requests is mostly due to clips of the movie “Innocence of Muslims” and Brazil’s most recent elections. Twenty countries asked Google to review YouTube videos containing clips of “Innocence of Muslims.” Seventeen of those countries asked Google to remove the videos. Although Google restricted the videos from view in some countries, it did not remove the content from others. Google received 316 requests for removal of information relating to alleged violations of Brazil’s electoral code. Although it removed some content in response to court decisions, it is appealing other cases on the ground of freedom of expression under the Brazilian Constitution. Also related to the elections, Google received requests from a prosecutor, an attorney and a judge to remove blog posts and search results that were allegedly defamatory. Google refused to remove this content.

The latest report shows that Google readily removes content that infringes a protected copyright or trademark, and that it complies with court orders to remove defamatory matter. However, Google is typically unwilling to remove allegedly defamatory material that has not been declared as such by a court of law. For example, Google refused to remove YouTube videos that allegedly defamed a school administrator, police officers, government officials and prosecutors, and it only age-restricted an allegedly defamatory video showing Argentina’s president in a compromising position. However, Google did remove items that a court had ruled defamatory to a man and his family, and in response to a court order, it removed a blog post that allegedly defamed a retired military officer accused of business gain through political ties.

April 20, 2013

D.C. Defamation Case Filed Against Redskin Fred Davis

by Lee E. Berlik

Makini R. Chaka is an owner of Remy Enterprise Group, LLC (“Remy”), an entity that arranges and coordinates logistics for celebrity appearances at public and private events. When Remy arranges a celebrity appearance, either the venue or the celebrity pays Remy a portion of the fee paid to the celebrity. Remy’s clients include professional athletes, music recording artists and other well-known entertainers.

According to a new lawsuit filed in District of Columbia federal court, Washington Redskin tight end Frederick Davis has described Chaka as a “madam” and “pimpette” who procures prostitutes for professional athletes. In her Complaint, Chaka contends that Davis also insinuated that she is violent, dishonest and an extortionist. Chaka claims that Davis said as much to Chaka’s clients and potential clients, and has sued him for defamation, invasion of privacy, tortious interference with contract and intentional infliction of emotional distress.

To falsely identify someone as a “madam” or “pimp” may be defamatory, but much will depend on the precise words used and the context in which the statement was made. Not long ago, motorcycle stuntman Evel Knievel sued ESPN when they published a picture of him with his arms around two women (one of whom was his wife) and the caption, “Evel Knievel proves that you’re never too old to be a pimp.” Evel claimed the caption was defamatory because he was not actually soliciting prostitution and his wife was not a prostitute. The Ninth Circuit held that the statement was not actionable, based primarily on the fact it was published on an extreme sports website full of lighthearted, jocular content targeted at a youthful audience. In other words, the court found that a reasonable reader would likely not interpret the “pimp” statement literally.

April 15, 2013

Overzealous Pleading Doesn’t Advance Your Cause

by Lee E. Berlik

Travel agent John Mathews may have a meritorious claim against a Virginia hotel for breaching a contract to provide food for a large group of tourists. It’s hard to tell, though, when he clutters his complaint with counts for defamation, invasion of privacy, tortious interference, and intentional infliction of emotional distress, and fails to include a count for breach of contract. This latest complaint represents Mr. Mathews’ fourth attempt to present his case to a federal court in Pennsylvania. Had he opted to file a simple breach-of-contract action in Virginia’s general district court instead, he might have secured a judgment by now.

The allegations go as follows. Mr. Mathews booked a “Winter Get Away Tour” with the Westin hotel at Washington Dulles in 2012. He alleges he planned the event with the hotel sales manager and estimated there would be 150 guests with the tour. He claims he emphasized that this was only an estimate and he would furnish a final number later.

When 174 people signed up for the getaway (or rather, the “get away”), the hotel was not able to feed everyone, as the head chef apparently wasn’t notified of the final number. On both Saturday and Sunday nights, some guests went without meals and an unlimited, all-you-can-eat buffet was converted to a limited, one-serving one. Mathews had advertised the tour to include two buffet dinners and two buffet breakfasts and claims he had to reimburse many guests due to the missed or reduced meals.

April 8, 2013

Federal Employees May Be Immune From Defamation Claims

by Lee E. Berlik

I previously reported on the Stafford County case of Suzanne Brown v. Katherine Schoeneman in which Brown, an FBI agent, brought a defamation action against Schoeneman for allegedly false reports Schoeneman made to superiors accusing Brown of making sexual advances toward her. The Government removed the case to federal court, substituted itself as the defendant under the Westfall Act, and moved to dismiss under the Federal Tort Claims Act. The court granted the motion as the FTCA’s waiver of sovereign immunity expressly excludes claims for libel and slander. See 28 U.S.C. § 2680(h).

The Westfall Act (aka the Federal Employees Liability Reform and Tort Compensation Act of 1988) amended the Federal Tort Claims Act to make it the exclusive remedy for torts committed by federal employees acting within the scope of their employment. It precludes federal employees from being sued for claims arising under state tort law (such as slander or intentional infliction of emotional distress) if they were acting within the scope of their employment. See 28 U.S.C. § 2679(b)(1). If the FTCA precludes recovery against the United States, then the plaintiff may be left without a remedy, as this case demonstrates.

Upon consideration of the Government’s motion to dismiss, the only issue before the court was whether the allegedly defamatory acts fell within the scope of Ms. Schoeneman’s employment. The plaintiff did not dispute that if the conduct was committed within the scope of employment, substitution of the United States as the defendant and removal to federal court was appropriate.