Varian SLAPP: A new trial?
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 629
"GROUNDS AND PROCEDURAL REQUIREMENTS FOR MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT
The power of this Court to grant a Motion for Judgment notwithstanding the verdict is identical to its power to grant a directed verdict. (Hauter v. Zogarts (1975) 14 Cal.3d 104, 110; Alexander v. State of California (1984) 159 Cal.App.3d 890, 896)
As with a directed verdict, the trial court may grant a judgment notwithstanding the verdict as to some but not all issues (Beavers v. Allstate Insurance Co. (1990) 225 Cal.App.3d 310, 323) This procedure is derived from the requirement of California Code of Civil Procedure Section 329 that a Court grant judgement notwithstanding the verdict when an motion for directed verdict should have been granted. (Beavers v. Allstate Insurance Co., supra, at 328- 329 [both procedural devices are different aspects of the same judicial function and, for them to mesh together appropriately, it is necessary that standards be the same for each procedure]).
The primary requirement for the granting of a motion for judgement notwithstanding the verdict is that there was no substantial conflict in the evidence. (Begnal v. Canfiled & Ass., Inc. (2000) 78 Cal.App.4th 66, 72; Alexander v. State of California, supra, at 896; Robinson v. North American Life and Casualty Co. (1963) 215 Cal.App.2d 111, 118) Thus, the Court must grant a motion for judgement notwithstanding the verdict if it appears from the evidence viewed in the light most favorable to the party securing the verdict, that there is no substantial evidence to support the verdict. (Hauter v. Zogarts, supra, at 110; Begnal v. Canfield & Ass., Inc., supra, at 72)
A motion by a Defendant for a judgement notwithstanding the verdict for Plaintiff will be granted when a Plaintiff has failed to prove an essential element of their cause of action. (Kerby v. Elkgrove Union High School District (1934) 1 Cal.App.2d 246) In ruling on a motion for judgement notwithstanding the verdict, the Court may disregard evidence in support of the verdict if that evidence is inherently incredible. (Froggy v. Ralph F. Clark & Ass., Inc. (1987) 192 Cal.App.3d 1204, 1215)
STATEMENT OF FACTS, OF THE CASE AND DISCUSSION AND AUTHORITIES
I. Plaintiffs fail to meet their burden of proof as a matter of law.
It is axiomatic that the Plaintiffs had the burden of proof to prove every element of their claims in this matter. If they failed to meet that burden then judgment must, as a matter of law, be entered in favor of Defendants.
In this matter, the Plaintiffs claimed that postings under a variety of aliases by the Defendants which were made on posting boards were defamatory. The jury was instructed that they were charged with determining wether the postings were defamatory "under the circumstances". The Plaintiffs failed to provide any evidence of the context in which the postings were made, to wit, the circumstances and, therefore, their claims must fail as a matter of law.
This is not an action for defamation in the traditional sense. That is, it is not an action claiming defamation in a printed medium, on the airwaves, or on television. Rather, it is a claim for defamation arising as a result of postings by aliases on various message boards on the Internet. Several cases have finally dealt with this situation, that is, the unique nature of postings and chat rooms on the Internet. In ComputerXpress v. Jackson, et al. (2001) 93 Cal.App.4th 993, the Court dealt with a situation that was virtually identical to the instant matter. In that case, the Defendants posted thousands of messages on the Internet on various financial posting boards, including messages that the Plaintiffs' products were inferior, that the company was a stock scam and would be out of business in thirty days, that the officers and directors were illegally conspiring to manipulate the value of the stock, and that one of the officers or directors had filed bankruptcy, among other postings. (Id. at 1005) Most of the postings were posted on the Raging Bull service provider posting boards, one of the posting boards involved in the instant matter.
The Court noted that the chat rooms are open and free to anyone who wants to read the messages. Membership is also free and entitles members to post messages. There are generally no controls on the postings and literally anyone that has access to the Internet has access to the chat rooms.
The Court held that having reviewed all the postings it found nothing that would satisfy the requirements for libel. It concurred with the decision of a Federal court, namely the Global Software, Inc. v. Elan Computer Group, Inc. (Northern District California 1999) 63 F.Supp.2d 1127 decision. The Court noted that the postings were not libelous because of the general tenure, the setting and the format of the postings suggested they were opinion rather than fact based statements. The postings were part of an on-going, free wheeling and highly animated exchange about the Plaintiff and were full of hyperbole, invective, short hand phrases and language not generally found in fact based documents, such as corporate press releases or SEC filings. Therefore, the postings lacked the formality and polish typically found in documents in which a reader would expect to find facts. (Id. at 1011-1012) The Court further found that while it was apparent that the postings could certainly be considered disparaging, the tone and content identified them as statements of opinion and not facts like the postings in Global Software, Inc. v. Elan Computer Group, Inc. The postings were hyperbolic, informal and lacked the characteristics of fact based documents. The Court also noted that the postings were replete with explicit statements of opinion.
In this matter, the Plaintiffs fail to state any evidence of the context in which the postings were made. Indeed, when Defendant, DELFINO, attempted to show the context in one line or stream of postings, this Court became somewhat perturbed and told DELFINO's counsel to move along. The Court made it clear it considered such evidence to be irrelevant in large measure and of little use in this trial. In fact, quite the opposite is the case.
The jury was left here with postings taken out of the thin air. For instance, a simple example can show how this could have been quite differently had the context been shown. For instance, if a poster has sent a message to one of the Defendants and asked them to "state the most outrageous and false thing you can think of regarding Ms. Felch" and one of the Defendants replied, "Felch is a chronic liar and an incompetent manager," it would be clear that the statement in the posting was not defamatory at all. Yet here, the jury would only see the posting made by the Defendant, not the postings by others which gave rise to the postings by Defendants. Thus, there was no showing by Defendants that the circumstances dictated that the postings made by Defendants were defamatory.
The mere fact that the postings were disparaging, taunting, or filled with invective or hyperbole does not make them defamatory. What makes the postings defamatory is the context because it is only the context that can determine whether or not the postings are meant to be fact based statements or mere opinions. Without context the jury was forced to look at the postings alone without more.
The problem was compounded by the Court's instructions to the jury. Here, this Court instructed the jury that it could find defamatory statements if it found the statements fell under various categories. The statements themselves were never set out in the instructions nor was the jury called upon to identify which statements among the many hundreds offered into evidence by the Plaintiffs they found were defamatory. Without identifying each statement which was claimed to be defamatory, it is not known whether the jury found one, some, or all of the statements defamatory. Furthermore, the instruction calling upon the jury to make findings based upon categories of statements compounds the problem identified hereinabove. Namely, the statements themselves do not have to be scrutinized by the jury, just whether or not they fall into various categories. This makes any sort of effort by the jury to determine the context in which the statements were made and determine whether they were fact based or opinion to be mooted in light of the instructions. Thus, a posting, for instance, that called, in part, Felch a chronic liar would automatically be found to be defamatory regardless of to whom it was made, whether it was made in response to another posting or any sort of context at all or even whether the statement itself in whole was defamatory as the law requires.
There is no question as many of the postings were inflammatory, disparaging and filled with invective and hyperbole, but, again, those types of postings are the precise kind that are protected by the First Amendment of the United States Constitution unless they are otherwise shown to be defamatory. Clearly someone who is posting something about someone which is at all disparaging or offensive are going to be the kind of postings that are going to be disliked by a trier of fact. Whether the trier of fact likes or does not like the language used, the reasons for the postings or anything else is not the issue. The issue is whether under the law the postings were defamatory and here the Plaintiffs presented no evidence of the context, to wit, the circumstances in which the postings were made.
Furthermore, the Court did not allow the Defendants to present evidence that the Plaintiffs has actually sued other individuals using aliases for defamatory statements. That again goes to, not only damages, but context. The Plaintiffs perceived, as they obviously did since they set it forth in their original Complaints, others making statements about them which they considered defamatory, it would be in that context that the postings should be viewed in this matter.
This Court's injunctive relief was also based on simply taking the postings out of context and scrutinizing them on their face. Since the Court did not have presented to it any evidence of the context in which each of the postings were made, it could not base its finding seeking to halt the making of defamatory statements on any more sound ground than the jury did. Furthermore, this Court's Order that it was granting injunction relief in part under 17200 of the California Business and Professions Code was erroneous as a matter of law. In order to grant relief under 17200 of the Business and Professions Code, the Plaintiffs were required to show that there was some underlying business practice within the broad definition of unfair competition. (Consumers Union of the United States, Inc. v. Fisher Development, Inc. (1989) 208 Cal.App.3d 1433, 1438-1439)
In this matter there was no business practice engaged upon by the Defendants. Indeed, MoBeta, their company, was not even named as a Defendant nor did the Plaintiffs present any evidence that the Defendants were acting in any capacity other than as individuals. Section 17200 of the Business and Professions Code was not meant to redress wrongs by individuals acting in their individual capacity but rather was designed to prevent unfair business practices requiring some business act or practice. The equitable doctrine of unfair competition supporting injunctive relief requires that the wrongdoer be seeking to gain some commercial benefit. (KGB, Inc. v. Giannoulis (1980) 104 Cal.App.3d 844, 850). In this matter, the Plaintiffs failed to present any evidence that the Defendants were acting in any capacity other than as disgruntled former employees of the corporate Plaintiffs who had been mistreated by the companies and were speaking out against those they considered to be perpetrators of the wrongs. There was no commercial benefit sought by or any evidence of any commercial benefit sought by Defendants. Thus, the injunctive relief granted by this Court was improper as a matter of law.
The other theory upon which Plaintiffs proceeded was a third party beneficiary theory claiming that the service provider agreements with Defendants were enforceable by Plaintiffs as third party beneficiaries. A third party may not recover on a contract that incidently benefits the third person but was not expressly made for his or her benefit. (Shurpin v. Elmhirst (1983) 148 Cal.App.3d 94, 103; City and County of San Francisco v. Western Airlines, Inc. (1962) 204 Cal.App.2d 105, 121) In this matter, the Plaintiffs presented no evidence of the intent of, for instance, Yahoo!, in having its members enter into the service agreement. There is no way that Yahoo! would have intended the service agreements to be third party beneficiary contracts allowing third parties to enforce them. That would mean that Yahoo! was, in essence, cutting its own throat. That is, people who joined Yahoo! as members would be subject to liability from anyone, literally, in the world from making disparaging or other types of comments on posting boards while that same person could go to another service provider who had no such service agreement and be free to say what they would without being subject to liability by third parties on a world wide basis. There is no question but that Yahoo! would be, in essence, subjecting its members to suit and, furthermore, involving itself in those suits as the provider if the Plaintiffs' theory was correct. In short, it simply doesn't make any sense that Yahoo! would leave its members open to suit since people could go to another provider and not be subjected to suit under that theory of recovery. Why would anyone want to join Yahoo! if they knew they could be suit on a third party beneficiary theory. They could go to Raging Bull or countless other service providers and not be subjected to that liability. Yahoo! would thus, if the Plaintiffs' theory was correct, be directly and intentionally limiting its membership.
Further, if the Plaintiffs' theory was correct, Yahoo! would be limiting the number of hits, that is, people who accessed its boards since it would be, again, limiting the content of the boards while other service providers did not do so. The Plaintiffs presented no evidence of what Yahoo! intended by its service provider agreements with the Defendants here. The intent of Yahoo! was paramount as to whether it was intending that it agreement be made for the benefit of the Plaintiffs in this matter. Presumably, Yahoo! wants to increase business, not turn away qualified members or keep people from accessing its web sites. They are in the business to garner more members and increase the number of hits on their sites since the number of hits determines whether they will attract revenue in the form of advertising, etc.
Finally, it was apparent during the proceedings at trial that there were literally hundreds if not thousands of postings presented by the Plaintiffs. This Court repeatedly expressed concern over the consumption of time of examining each of those postings. That unfortunately compounded the problems already presented hereinabove. It relieved the Plaintiffs of the burden of establishing that each of the statements was defamatory in some way. The statements were, as stated above, virtually presumed to be defamatory since all that the jury had to determine was whether they fell into some category which the Court had already determined regardless of the circumstances, the context in which the statement was made or the actual language of the statement would be defamatory. That is not what the law mandates in California. Each statement is either defamatory or it is not given the circumstances, that is, the context in which it was made along with its language, subject matter, etc. Here, in light of the Plaintiffs' failure to present any evidence of the context in which each of the messages was made along with the instruction given by the Court to the jury that it could find postings were defamatory simply by putting them in a category, the jury was virtually compelled to make the findings it did. The Plaintiffs were effectively relieved of their burden of proof in this matter.
For the foregoing reasons, judgement should be entered notwithstanding the verdict in favor of Plaintiffs in favor of Defendant, MARY DAY.
DATED: March 1, 2002.
RANDALL M. WIDMANN"
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