Metropolitan News-Enterprise


Tuesday, July 9, 2019


Page 3


Ninth Circuit Revives Libel Action Over Letter to Stock Exchange


By a MetNews Staff Writer


The Ninth U.S. Circuit Court of Appeals yesterday reinstated a libel action brought by a company that says a judgment creditor made false statements about it to an over-the-counter Chinese stock exchange in an effort to block it from being listed, rejecting the District Court’s view that California’s litigation privilege shields the defendants.

The defendants are California residents Christopher Adams, his father as trustee of a trust, and two corporations. They were plaintiffs in a Los Angeles Superior Court action which resulted in a judgment exceeding $60 million against English Xchange Pte Ltd. (“EXPL”) and others.

Plaintiffs in an action brought in the U.S.  District Court for the Central District of California include Cirrus Education Inc., which succeeded to some intellectual property rights owned by EXPL, a Singapore-based company, while it was in receivership. It is now defunct.

Superior Court Determination

The Superior Court has found Cirrus to be a successor entity to EXPL and jointly and severally liable with others on the judgment. Cirrus insists it is an unrelated entity and contends, in the federal action, that the defendants defamed it by ascribing EXPL’s actions to it, in a letter to the Chinese stock exchange, the National Equities Exchange and Quotations (“NEEQ”).

District Court Judge Terry J. Hatter dismissed the action. He pointed to California Civil Code §47 which provides that a “privileged publication or broadcast is one made...[i]n any...official proceeding authorized by law.”

Hatter said that NEEQ “NEEQ powers include the above three items and, therefore, qualifies as a quasi-judicial authority” and that the “remaining elements are met, as well.”

Ninth Circuit Reversal

Yesterday’s Ninth Circuit opinion says:

“Nothing in the Complaint establishes  whether the NEEQ is an administrative body vested with discretion to consider  evidentiary facts, or whether it is ‘entitled to hold hearings and decide the issue by  the application of rules of law to the ascertained facts.’…Although Adams sent  a letter to the NEEQ requesting an investigation, nothing in the Complaint  addresses the process by which such letters are reviewed or adjudicated. The  district court therefore erred in dismissing Cirrus Beijing’s claims on the basis of  the litigation privilege.”

The case is Cirrus Beijing Corp. v. Adams, 17-56741.

The state-court litigation was commenced Jan. 12, 2008, with Los Angeles Superior Court Judge David Solelo presiding over the latter stages of it. The judgment has been appealed to this district’s Court of Appeal and the parties are awaiting a date for oral argument before Div. Three.


Copyright 2019, Metropolitan News Company