Suggestion: If Hqnt does not amend its complaint to add the Texas law allegations, we should strongly suggest to Cohn that venue of the case should be transferred to Northern District of Texas. I have suggested Hqnt engage Phil Offill of Dallas, as its attorney.
By: bulldog257
01 Jun 2004, 10:27 PM EDT
Msg. 304 of 3141
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For Addressees and HqntProfit board members only:
Memo
To: Portfolio Management (MHN;JK)
From: Legal Dept (MRN)
Investment: HQNT (otc-BB)
Date: 6/01/04
Re: Update for file BFI/HQNT V. Max Jones a/k/a Jigfish
(USDC-ED Va, 2004)
Today Hqnt filed its amended complaint (with several pages of Jigfish's posts) as well as a response to Jigfish's 12(b) motion. Defendant is a Texas resident and is subject to the laws of Texas. Hqnt would prefer having the case heard in Virginia, and has not made Texas state specific allegations.
I have noticed two matters that I question: (A) Hqnt did not include in the complaint or amendment the Texas invasion of privacy tort, which denounces the public
disclosure of embarrassing private facts about another, nor an allegation regarding concerted action. Such allegations may be an invitation to the Court sending the
case to a district court in Texas, but the additional possible tort liability theory more than justifies the prospect of change of venue. (b) I am concerned about conflicting libel doctrines regarding public vs private figures. If the case is transferred to Texas,
the 5th circuit decision in SNEAD v. REDLAND AGGREGATES LTD., 998 F.2d 1325 (5th Cir. 1993) would be the applicable standard regarding the issue of whether small corporations and/or their officers are or private and whether the relevant speech involved a matter of or private concern. Virginia is in the 4th Circuit, which does not have a fact finders' item by item inquiry, but a bright line similar to that of the 9th Circuit's in Santa Barbara News-Press v. Ross, SCt docket No. 03-1338. I am concerned that the Ross case may get Supreme Court review for its docket for the term that begins in October. The Supreme Court recently accepted certiorari in the Ross case regarding newspaper articles published against Ross regarding his past soon after he acquired control of a s&l. The trial court determined Ross was not a public figure, thereby making it easier for him to win his case. Instead of having to prove the newspaper acted with malice in printing the articles, Ross only had to show the paper was negligent. Of course, Jones does not have the protection of Hqnt having to prove malice like a newspaper, and probably cannot show that Hqnt or Cohn are public figures under existing 4th circuit law. But if the SCt does docket Ross, then the issue may drag several years. At least under Texas law the fact finder determines if the subject was a public or private figure. In my opinion, the
jury will ultimately determine that Hqnt and Cohn are not public figures, and that the matters Jones stated, particularly equating Hqnt to a Scam, in the context made and for his stated reasons were for private matters. As such, the issue will be damages.
Jones alleges that he is broke and has transferred his assets to his wife. Cohn probably does not think he will collect anything from Jones, but wants a big judgment.
As I informed you, there are a number of new alias posters who have made posts that they are there to protect "Jigfish's first amendment rights." I do not know if any of them understand that commercial speech is not fully protected under the Bill of Rights. In addition, Snead makes the following comment:
"Second, the plurality cited with approval the leading state court decision that held that the Gertz constitutional standards do not apply in cases of purely private defamation. 472 U.S. at 760, 105 S.Ct. at 2946
(citing Harley-Davidson Motorsports v. Markley, 279 Or. 361, 568 P.2d 1359, 1364 (1977)). The reasoning in Markley, 568 P.2d at 1364, is consistent with our conclusion that the lower First Amendment interest in private/private cases is outweighed by the states' interest in protecting
reputation.
[52] Based upon our reading of Justice Powell's plurality opinion, we believe that five Justices of the Dun & Bradstreet Court supported common law standards for private/private cases. We therefore conclude that the Constitution imposes no minimum standard of fault in private/private cases.
[53] Under Texas law, presumed damages are available in cases of per se without any showing of fault on the part of the defendant. E.g., Jenkins v. Taylor, 4 S.W.2d 656, 661 (Tex.Civ.App. — Austin 1928, no writ) (presumed damages available in case of per se as a matter of law); see also 28 TEXAS JUR.3d, Damages § 111 (1983). Because neither the Constitution nor Texas law imposes any fault requirement for the recovery of presumed damages in private/private cases of per se, the district court need only determine on remand whether it wishes to
award such damages."
I think Texas law would treat Jone's comparing Hqnt as a "scam" as an allegation that Hqnt was engaged in misconduct (either civil or criminal) and would allow imposition of damages for libel per se. Such damages may not be dischargeable in a bankruptcy proceeding because of the implied finding of malice.
Suggestion: If Hqnt does not amend its complaint to add the Texas law allegations, we should strongly suggest to Cohn that venue of the case should be transferred to Northern District of Texas. I have suggested Hqnt engage Phil Offill of Dallas, as its attorney.
Did you make your reservations for Hqnt annual meeting?
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