Thursday, February 16, 2017
Lawyer’s Defamation Suit Against Facebook Held SLAPP
C.A. Says Company’s Attorney Fairly Reported Allegations in Suit Over Forged Documents
By KENNETH OFGANG, Staff Writer
A New York lawyer’s defamation suit against Facebook, Inc., its founder Mark Zuckerberg, and its general counsel Colin Stretch was properly stricken under the anti-SLAPP statute, the First District Court of Appeal ruled yesterday.
Statements by the defendants, suggesting Paul Argentieri knew that a lawsuit brought against Facebook and Zuckerberg by his client Paul Ceglia was based on forged documents, constituted “fair and true reporting” of the underlying litigation, Justice Henry Needham Jr. wrote for Div. Five. The statements were therefor privileged under Civil Code §47(d), the jurist said.
Ceglia, once an upstate New York wood pellet salesman, sued Zuckerberg and Facebook in New York state court in 2010. Argentieri was his lawyer, and the complaint alleged that Ceglia and Zuckerberg—then a Harvard University student—had agreed in writing in 2003 that Ceglia would receive an interest in “The Facebook” in exchange for $1,000 and other considerations.
Ceglia claimed he was entitled under that agreement to an 84 percent ownership interest in the company. Zuckerberg denied signing that contract, explaining that he had, prior to conceiving what eventually became Facebook, agreed to provide website development services for an unrelated project of Ceglia’s called StreetFax.
Zuckerberg said he provided those services in 2003 and 2004, but was not paid in full.
Finding of Fraud
The Ceglia suit was removed to federal court. A magistrate judge, after discovery, concluded that the lawsuit was a fraud on the court, that Ceglia had fabricated the alleged contract and related emails, and that he had destroyed evidence.
The district judge agreed and dismissed the lawsuit in March 2014. The Second U.S. Circuit Court of Appeals affirmed in 2015.
Prosecutors also concluded that Ceglia based his suit on forged documents. He was charged with fraud, but reportedly removed his GPS monitor and fled the jurisdiction.
News outlets reported last summer that he had contacted them, saying he was in hiding because the CIA was after him.
After the suit was thrown out, Facebook and Zuckerberg sued Argentieri, and other lawyers Ceglia had retained after the suit was filed, for malicious prosecution in New York state court.
Their complaint alleged:
“The lawyers representing Ceglia knew or should have known that the lawsuit was a fraud—it was brought by a convicted felon with a history of fraudulent scams, and it was based on an implausible story and obviously forged documents. In fact, Defendants’ own co-counsel discovered the fraud, informed the other lawyers, and withdrew. Despite all this, Defendants vigorously pursued the case in state and federal courts and in the media.”
Statement to the Press
The day the complaint was filed, Stretch emailed members of the media, saying the law firms named in the suit “knew the case was based on forged documents yet they pursued it anyway.” The other defendants in the case, but not Argentieri, were ordered dismissed from the case by a state appeals court which said those defendants were not shown to have known that the contract was a forgery during the relevant time period.
A petition for review in New York state’s highest court is apparently pending.
Argentieri’s California action was filed in October 2015, and accused the defendants of defamation per se, based on Stretch’s statements to the press. The plaintiff alleged that forensic scientists had concluded the contract between Ceglia and Zuckerberg was genuine and that Ceglia had passed a polygraph test on the subject.
In granting the anti-SLAPP motion, San Francisco Superior Court Judge Joseph M. Quinn concluded that the challenged statements constituted protected activity in connection with judicial proceeding. Argentieri, the judge found, could not prevail as a matter of law because the action was barred by the litigation privilege and the fair and true reporting privilege.
Needham, writing for the Court of Appeal, said the litigation privilege did not bar the action, because the statement was made to the press and not to persons with an interest in the litigation, but that the fair and true reporting privilege applies and is a complete defense.
“Unlike the litigation privilege, the fair and true reporting privilege pertains specifically to communications to the press, and it requires that the report be fair and true, not that it actually further the underlying litigation,” the justice explained.
The dismissal of Argentieri’s co-defendants from the New York litigation, the justice went on to say, “has no bearing on whether the Stretch statement was a fair and true report of the malicious prosecution action.”
The statement, Needham wrote, truthfully reported the allegations of the complaint; that a court later rejected the allegations as a basis for liability on the part of the others does not render the statement inaccurate as to Argentieri.
The justice distinguished Burrill v. Nair (2013) 217 Cal.App.4th 357.
The court there held that the plaintiff—a counselor who concluded in child custody proceedings that the defendant was emotionally abusing the child, as a result of which the defendant allegedly defamed the counselor online and in the media by publicizing a police report the defendant made, accusing the counselor of various acts of misconduct—had a sufficient probability of prevailing to defeat an anti-SLAPP motion.
Needham noted that the defendant in Burrill had lodged a complaint with law enforcement, but not initiated a judicial proceeding; and that Burrill concerned a report made by the complainant, not an attorney’s summary of a pleading he had filed.
The justice also rejected the contention that a statutory exception—providing that a statement is not privileged if it violates the State Bar rule barring attorneys from making out-of-court statements that are likely to materially prejudice an adjudicative proceeding—applies.
The argument is “meritless,” Needham said, because the rule explicitly permits counsel to publicize information contained in the public record, and because there was no showing as to how the proceeding could have been prejudiced by a statement that was made long before a jury would have been selected and merely summarized the complaint.
The case is Argentieri v. Zuckerberg, A147932.
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