Varian SLAPP - You don't know Jack!
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR A NEW TRIAL
"I. The Court Should Not Have Reviewed The Defendants' Web Site And Postings Outside The Presence of Counsel And at Times When Trial Was Not in Session
During in-chambers conferences, the Court inferred that it had looked at the Defendants' web sites which contain postings and other information at times when the trial was not in session. The Court also inferred that it had looked at postings on the Internet concerning the parties in the action, again when the Court was not in session, which postings were not part of the evidence presented at time of trial. (See Declaration of RANDALL M. WIDMANN)
As the Court on numerous occasions stated, it was acting as a trier of fact regarding injunctive relief. The Court had indicated, again on numerous occasions, that its decision concerning injunctive relief would be independent of whatever the jury found concerning the Plaintiffs' claims.
Defendant, MARY DAY (hereinafter "DAY"), submits that the Court's duty was, sitting as the trier of fact, the same as the jury and that the Court was bound to follow the same rules and procedures in effect in making its decision concerning injunctive relief. Therefore, the Court should not have looked at web sites or postings other than those presented at trial. There was no record made of precisely what the Court viewed, but it is tantamount to the jury being allowed to look at the Internet, web sites and postings during trial. Defendant submits that by the Court's doing so, the Defendants' substantial rights were materially affected depriving her of a fair and impartial trial. (See Gay v. Torrence (1904) 145 Cal. 144) As was held in McVey v. McVey (1955) 132 Cal.App.2d 120, 123, when a trial judge sits as a trier of fact, he takes the place of a jury and his conduct is subject to the same rules.
II. The Court Improperly Shifted the Burden of Proof to Defendants.
The Plaintiffs had the burden of proof to prove every element of their claims. Here, one of the claims was that they were libeled. Section 45 of the California Civil Code defines libel as a "false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye that exposes a person to hatred, contempt, ridicule or obloquy or that causes him or her to be shunned or avoided or that has a tendency to injure the person in his/her occupation." In this action, the jury was instructed that it could find that the Plaintiffs had been defamed by the Defendants if it found that various postings fit within specified "categories" as set forth in the jury instructions. The jury was instructed that it must find that the statements were defamatory "in light of all the circumstances" and then was given a series of some twelve categories. This effectively shifted the burden of proof to the Defendants.
As is self evident in looking at the postings placed on Internet postings boards, all the parties posted under various aliases. In ComputerXpress v. Jackson (2001) 93 Cal.App.4th 993, the Court dealt with virtually the same situation as in the instant matter. In the ComputerXpress case, the Defendants were accused of libel for placing messages on Internet posting boards, including at least one of the posting boards involved in the instant action. The ComputerXpress Court in citing with approval the decision in the Federal District Court case of Global Telemedia International, Inc. v. Doe (Central District California 2001) 132 F.Supp.2d 1261, found that the postings were not defamatory. The Global Telemedia case is also virtually identical with the instant matter in that, again, Defendants were accused of posting defamatory messages on Internet financial posting boards. Both Courts noted that the general tenor, setting and format of the postings strongly suggested they were opinions. They noted that the postings were part of an on-going, free wheeling and highly animated exchange about the Plaintiffs 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.
Both Courts noted that while the postings might be disparaging, that does not mean they are defamatory given the context in which the postings were made, namely postings on the Internet by aliases in an open setting in which virtually nothing could be believed.
Here, the Plaintiffs presented no evidence of the circumstances, to wit, the context in which the Defendants posted on the Internet. An example can be easily made showing how the jury was virtually compelled to find that Defendants had defamed the Plaintiffs in this matter given the manner in which the Court instructed the jury and its failure to instruct in other regards as set forth hereinafter. If, for instance, a poster had sent a message to the Defendants here and asked them to post, "The most outrageous and false thing you can think of concerning Ms. Felch" and one or both of the Defendants posted a message back stating, "Felch was a chronic liar, slept her way to the top and was wholly incompetent as a manager" it can readily be seen that the message by the Defendants here would not be defamatory under the circumstances, the context, but, would have been found by the jury here to be defamatory given the instructions and failure to instruct by the Court. Indeed, Defendants had asked for instructions concerning the very issue presented here, namely, that the jury be given instructions concerning the context in which the messages were posted. These included instructions concerning the Internet and the use of aliases. The Court refused those instructions.
Even when Defendant, DELFINO, attempted to give an example of context in a stream of messages, the Court made apparent its view that it considered such evidence to be barely relevant and, certainly too time consuming, as it admonished counsel to "move along" on several occasions.
By not requiring the Plaintiffs to set forth each of the statements it considered to be defamatory and asking the jury to consider the statements on a statement by statement basis, along with the context, again, the Court relieved the Plaintiffs of their burden of proof. It was up to the Plaintiffs to set forth the "circumstances", to wit, the context in which the postings were made, not the Defendants. The fact that a posting discussed Ms. Felch's being a "chronic liar," one of the categories which the Court used in its instructions to the jury, does not make that posting defamatory per se, but it certainly compelled the jury to find it was defamatory, for the jury was left without any context.
The Court also erred when it both instructed the jury and stated during the trial that the case had nothing to do with the "First Amendment right of free speech." That was clearly error for again it shifted the burden of proof to Defendants, forcing them to argue that the First Amendment protected their statements, even though they would be considered defamatory. That is, the statements were presumed to be protected by the First Amendment until shown to be otherwise. The Plaintiffs had the burden of proof to do so, to show that otherwise protected statements were defamatory. By telling the jury the case had nothing to do with the First Amendment, the Court again shifted the burden of proof from Plaintiffs to Defendants.
III. Interlocutory Orders Should Not Have Been Allowed To Be Presented As Evidence By Plaintiffs.
The Court allowed interlocutory Orders, including temporary restraining orders and a preliminary injunctions which had been determined to be void as a matter of law to be introduced to the jury over Defendants' objections. As the record reflects, the temporary restraining orders and preliminary injunctions were all dissolved as a matter of law as was the contempt finding by the Federal District Court. As Defendants argued at the time, since the Federal District Court did not have subject matter jurisdiction, which it found in granting Defendants' Motion for Summary Adjudication, all of its Orders were void ab initio. In W.H. Avitts v. AMOCO Production Company (5th Cir. 1995) 53 F.3d. 690, the Court held that as the District Court lacked subject matter jurisdiction over the action, it was, therefore, without authority to enter "any orders." The 5th Circuit vacated all of the Orders of the District Court, including an Order granting preliminary injunctive relief and an Order granting interlocutory damages. (Id. at 694) In the instant matter, the 9th Circuit found that the preliminary injunction which was allowed to be presented to the jury by the Plaintiffs was void as a matter of law since Federal District Court Judge Whyte lacked subject matter jurisdiction over the action.
Defendants submit that this was an error as a matter of law and was prejudicial in the extreme to their rights to a fair trial.
IV. The Court Abused its Discretion in Allowing the Testimony of Richard Aurielo and Evidence of Past Occurrences Involving Mr. Delfino.
The Court erred in allowing the testimony of Richard Aurielo in this matter. While Mr. Aurielo was the CEO of one of the corporate Defendants, he was allowed to testify about his feelings about the Defendants as well as his personal views of the postings. Mr. Aurielo was not a party to this action, yet he testified extensively about his views of what the postings meant to him personally and to his family and how upset he and his family were at the postings. This had absolutely nothing whatsoever to do with the parties to the action. If the Court's ruling allowing such testimony were correct, then in virtually every case corporate executives could get up and testify concerning their personal views and the effect on their personal lives of actions taken by outside parties regardless of whether the action concerned only the corporation. The Court should have granted Defendants' objections pursuant to Section 352 of the Evidence Code and disallowed that testimony as it was highly prejudicial and irrelevant to the issues before the jury.
Even more egregious was the Court allowing evidence of actions taking place in the work place many, many years before trial that the Plaintiffs asserted involved Defendant, DELFINO, yet had never proved that was the case. This included bulletin board postings in the work place in the early and mid-90s and other actions such as the lab sabotage, etc. Such evidence was directly violative of Section 1101 of the California Evidence Code prohibiting evidence in the form of specific instances of a person's conduct being offered to prove a conduct on a specified occasion. Allowing such evidence was contrary to California law and, certainly, should have been excluded as Defendants argued under not only Section 1101, but 352 of the California Evidence Code. The evidence painted Mr. DELFINO as a person with a character trail of long standing to commit the acts complained of by Plaintiffs, again, directly contrary to the prohibition of Section 1101 of the Evidence Code. The Plaintiffs were not even able to establish that it was in fact Mr. DELFINO who committed the alleged wrongdoing concerning bulletin boards and lab sabotage.
The Court also erred in refusing to allow into evidence that the Plaintiffs had sued other persons for defamation initially who used aliases and in subsequent pleadings dropped them from further pleadings once they learned their identity. This evidence went directly to damages, namely, the damages the Plaintiffs claimed they sustained as a result of defamation and, even more importantly, went to the context in which postings were made. The Plaintiffs themselves have admitted in pleadings that other parties, those not prosecuted by them at trial, defamed them in Internet postings on the same posting boards the Defendants used. This was the context, to wit, the circumstances, in which other postings were made.
V. The Court Erroneously Found There Was a Third Party Beneficiary Agreement in Effect as a Result of Service Agreements.
The Court determined, of its own volition, that the service agreement entered into between Defendants and Yahoo!, by way of example, was a third party beneficiary agreement allowing Plaintiffs to proceed on that theory in order to recover against Defendants. The jury was so instructed. This ruling by the Court was error. The California Supreme Court has recently reiterated long standing California law concerning third party beneficiary rights. The Court, in Hess v. Ford Motor Co. (2002) 2002 Cal. Lexis 621, held that "a third party beneficiary may enforce a contract made for its benefit" (cites omitted), However, a punitive third party's rights under a contract are predicated upon the contracting parties' intent to benefit it. (cite omitted) Ascertaining this intent is a question of ordinary contract interpretation. Thus, the circumstances that a literal contract interpretation will result in a benefit to the third party is not enough to entitle that party to demand enforcement." (Id. At 10)
Here, the Plaintiffs failed to present any evidence of Yahoo!'s intent to enter into a third party beneficiary contract. Indeed, Yahoo!'s doing so would be extremely unlikely for it would, in effect, be subjecting its members to suit on a third party beneficiary theory of liability by anyone in the entire world who claimed they were disparaged on one of Yahoo!'s posting boards. This would, when it became known in the public, severely dampen Yahoo!'s membership roster and thwart Yahoo!'s obtaining new members, for rather than go to Yahoo! and be subjected to suit, a person would sign up for some other service provider and not be subjected to suit on a third party beneficiary theory no matter what they said. Furthermore, doing so would diminish the number of hits Yahoo! got on its message board which directly affects its revenue. No one from Yahoo! presented any evidence as to Yahoo!'s intent concerning the meaning of the service agreement. Without such evidence, this Court was barred from determining that the service agreement was a third party beneficiary agreement as was held in Hess v. Ford Motor Co.
VI. The Court erred in Granting Injunctive Relief Under Section 17200 of the California Business and Professions Code.
In order to proceed under the California Business and Professions Code 17200, there must have been some showing that the Defendants were engaged in some "business practice." (Cal-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163) It doesn't make any difference if the Plaintiffs were engaged in the business practices, the Plaintiffs had to show that the Defendants were engaged in a "business practice." Setting aside the fact that the Defendants' business, MoBeta, was not even named as a party Defendant, there was no showing that the Defendants did anything in any capacity other than as individuals. The Business and Professions Code was not enacted to redress the wrongs Plaintiffs complained of here since the Defendants' wrongdoing did not involve any "business practice." This Court erroneously granted injunctive relief under that legislation.
VII. Excessive Damages.
The jury awarded Susan Felch $100,000 in damages as against DELFINO and DAY for defamation. First of all, the evidence showed and Felch admitted that she suffered no economic loss. Indeed, the evidence was that the corporate Plaintiffs actually paid for her attorneys' fees and costs to bring suit!
What Felch did say she suffered was emotional stress or anxiety. Attached to the Declaration of RANDALL M. WIDMANN and marked Exhibit A is the excerpt of that testimony. Felch testified that she suffered from anxiety, namely that her heart would beat faster or that her blood pressure felt as though it was rising. She said she would breathe faster and lose her train of thought. She testified she had occasional nightmares and had a slight increase in the number of headaches or frequency of headaches that she normally got. She testified she sought no medical treatment nor were any experts offered by her to support her claims. That was the extent of her testimony concerning her injuries. Felch put on no evidence of the alleged damage to her reputation and no one testified they believed any of the postings.
Defendants submit that an award of $100,000 for these injuries is excessive as a matter of law.
As for Plaintiff, Zdasiuk, Mr. Zdasiuk was awarded the sum of $75,000 for the defamation by Defendants in this action. Mr. Zdasiuk's testimony concerning his damages is set forth in the excerpt from his testimony on Exhibit B to the Declaration of RANDALL M. WIDMANN . He testified he suffered anxiety, canker sores and felt afraid. Again, Defendants submit that the damages were excessive as a matter of law. Zdasiuk testified he suffered no economic loss nor did he present any evidence of any damage to his reputation.
The jury awarded Plaintiffs' Felch and Zdasiuk each the sum of $55,000 for misappropriation of their names. There was no evidence as to any damages suffered by the Plaintiffs as a result of misappropriation of their names. No one came forward, for instance, and testified that they believed the postings were, in fact, Felch or Zdasiuk. There was no evidence submitted that the misappropriation of names affected Felch and Zdasiuk in any way, shape or form. Thus, Defendants again submit that the damage award is not only excessive as a matter of law, but unsupported by any evidence and contrary to California law.
The jury found that VARIAN MEDICAL did not sustain any special damages as a result of defamation by either of the Defendants. However, it found that certain statements were libel on their face while other statements were not libel on their face and as to which there was no valid defense. The jury then went on to award VARIAN MEDICAL $50,000 in damages as against DELFINO and $25,000 as against Defendant, DAY. The same held true for VARIAN SEMI-CONDUCTOR.
In order to recover for defamation which is not libelous on its face, special damages must be proved by the Plaintiffs. (Civil Code Section 45(a); Gautier v. General Telephone Co. (1965) 234 Cal.App.2d 302, 309)
Here, since this Court did not require that each statement be passed upon by the jury, clearly the jury awarded excessive damages by granting the corporate Plaintiffs monies for defamatory statements which were not defamatory on their face since it found that the corporate Plaintiffs were not entitled to recover special damages. This makes the damages awarded to the corporations excessive as a matter of law and clearly erroneous. They jury also awarded punitive damages in this matter. The jury awarded $200,000 in punitive damages as against the Defendants on behalf of Felch and $125,000 as against Defendants in favor of Zdasiuk. These awards were improper as no evidence of the financial worth of the Defendants was introduced. The only thing that was shown was some retirement monies which had been used up along with monies from a sale of a home in Defendants defending themselves against the Plaintiffs' claims. There were no other assets of any substance that were described or set forth in evidence.
If no monetary gain flowed from a Defendant's misconduct, evidence of the Defendant's net income is not adequate evidence of a Defendant's financial condition to support punitive damages. (Lara v. Cadag (1993) 13 Cal.App.4th 1061, 1063-1066) The evidence must show the financial condition of the Defendants. It is not sufficient to show the financial condition of a corporate entity if the alter ego doctrine is not established at trial. (Tomaselli v. Transamerica Insurance Co. (1994) 25 Cal.App.4th 1269, 1284-1286)
There was no alter ego theory established at time of trial. Any showing that MoBeta owned a patent which may or may not be valuable was, therefore, improper and could not be considered by the jury. Again, all that was before the jury at the time were in retirement accounts and monies from sale of homes, all of which had been used up by Defendants in defending themselves as they testified. The testimony was uncontradicted and there was no showing of any other assets of any value other than nominal resources as set forth in response to Interrogatories, most of which assets were exempt from execution. The award of punitive damages was both contrary to law and excessive.
DATED: March 7, 2002.
RANDALL M. WIDMANN" geocities.com
Defendant Delfino's Memorandum of Points Authorities: geocities.com |
