In its February issue, the ABA Journal has a feature by John Gibeaut entitled "Caperton's Coal," about, what else, Hugh Caperton and Harman Mining's lawsuit against Massey, and its aftermath.
As I wrote yesterday, here is Dr. Steven Hatfill’s motion to dismiss Toni Locy’s appeal, which was filed in the D. C. Circuit Court of Appeals last Thursday (there is an accompanying motion for leave to file out of time), courtesy of Samantha Fredrickson at the Reporters Committee for Freedom of the Press.
Hatfill wants the court to dismiss Locy’s appeal of Judge Reggie Walton’s contempt order as moot because he settled his lawsuit against the government and no longer needs to know the names of Locy’s sources. The district court is willing to vacate the contempt order, once it regains jurisdiction of the case, which means, according to the motion, “[b]ecause Locy has not suffered and will not suffer any sanction under the order of contempt, there is no longer any need for this Court to rule on the merits of her appeal.”
But there is, as the motion calls it, an “ancillary issue [that] remains in dispute between Locy and Hatfill.” The district court has indicated that it will award Hatfill his attorney’s fees incurred in connection with the issue, and Hatfill intends to seek them from Locy as soon as the district court regains jurisdiction.
Hatfill is concerned that, despite his settlement with the government, the court of appeals will rule on Locy’s appeal, presumably in her favor, which would eliminate the basis for his motion for attorney’s fees:
In this case, it would be the tail wagging the dog if this Court were to issue a decision addressing whether the district court properly held Locy in contempt to reach an ancillary dispute regarding fees that has not been reduced to any order (and which is therefore not yet appealable )… On the only order now on appeal, which is the only order that has been entered against Locy [the district court’s contempt order], there is nothing remaining to adjudicate.
Assuming that the court of appeals dismisses Locy’s appeal and Hatfill files his motion for attorney’s fees, the district court appears inclined to grant the motion, which could be disastrous for Locy. The court imposed some onerous fines against her (stayed by the court of appeals), and held that only she, as opposed to USA Today, the news organization that employed her, could pay the fines. And I'm sure Hatfill's lawyers have not been cheap.
You may have read that Dr. Steven Hatfill settled his lawsuit against the United States in June for $5.85 million. The government had identified Hatfill as a person of interest in the 2001 anthrax attacks -- falsely, as it turns out, which resulted in his lawsuit.
In prosecuting his lawsuit, Hatfill sought to compel Toni Locy, a former USA Today reporter, to divulge her sources for articles that had discussed the government’s interest in Hatfill. Locy refused to give up her sources, which resulted in United States District Court Judge Reggie Walton entering a contempt order against her. Here is my post from March about the proceedings involving Locy.
She appealed the order, and the D. C. Circuit Court of Appeals stayed the order and heard oral argument on Locy’s appeal in May, but has not issued a decision.
I suspect most people, including me, assumed that Hatfill’s settlement would moot Judge Walton’s order, but that may not be so. According to Scott Shane's article in yesterday’s New York Times about Bruce Ivins (whom the government has identified as the actual anthrax killer), Hatfill has asked the Court of Appeals to dismiss Locy’s appeal, which would allow Judge Walton’s order to stand.
The Reporters Committee for Freedom of the Press' blog explains that Hatfill's motion could force Locy to pay his attorney’s fees, an amount that could dwarf what Locy would have owed under the contempt order.
Starting this fall, Locy became the Donald W. Reynolds Professor of Legal Reporting at Washington and Lee University in Lexington, Virginia. She formerly held the Shott Chair of Journalism at West Virginia University's P. I. Reed School of Journalism.
Earlier this month, Richard X. Bove, a well-known financial institutions analyst for Ladenburg Thalmann & Co., Inc., issued a report entitled “Who Is Next?,” in which he identified other financial institutions that could be at risk in the wake of IndyMac’s failure. Among the financial institutions Bove identified was BFC Financial Corporation, a holding company for BankAtlantic, which is headquartered in Fort Lauderdale, Florida.
BFC, one of two holding companies for BankAtlantic, was on the list because it was in Bove’s “danger zone,” but BankAtlantic was not on Bove’s list. Its absence did not stop BankAtlantic from filing suit on Monday against Bove and Ladenburg Thalmann in Broward County Circuit Court (Fort Lauderdale), alleging defamation and negligence. BankAtlantic v. Bove, Civil Action No. 0832714 (July 21, 2008). Here is an excerpt from the complaint:
The hysterical market conditions that existed when the Bove Report ["Who Is Next?"] was published, republished and promoted by the firestorm of media attention intentionally generated by Bove and Ladenburg, made it particularly critical that those seeking wide audiences to comment on the financial condition of financial institutions be careful for the harm careless assertion of false facts can cause. BankAtlantic and Bancorp bring this action not simply to collect the damages they have suffered to their reputations as a consequence of these inexcusable wrongs, but also to deal with the current reality that exists in this marketplace -- a falsehood, when widely circulated, becomes its own truth as it is repeated over and over again, at some point replacing the truth altogether. BankAtlantic for the benefit of its customers and employees and Bancorp for the benefit of its shareholders cannot let the lie become the truth.
According to this story on ABC News’ website, Eugene Stearns, BankAtlantic’s lawyer, declined to provide a copy of the complaint because he “can’t republish the defamation.” That’s the same answer he (very politely) gave me when I called to ask him for a copy of the complaint. Mr. Stearns’ theory is because Bove’s report was defamatory, then by disseminating the report, even by sharing the complaint, he makes his client’s situation worse.
This case has attracted a lot of attention from the financial press, which is concerned that Bove and his company are being sued because Bove expressed an opinion that BankAtlantic didn’t like, but which wasn't libelous or defamatory, and which may make other media outlets targets of future lawsuits.
The observation made in this post in Alphaville, the Financial Times’ blog, sums it up:
"Regardless of who has the legal upper hand, it is clear, as the FT notes, that as problems grow in the US banking industry, so does the sensitivity of banks to commentary on their financial health.
How far they can go to quell their critics, however, is a critical question raised by the Bove case for all in the banking, broking [sic] and legal industries."
These legal theories have been addressed very recently, as noted in Bloomberg.com’s story by Edvard Petterson, which considers BankAtlantic's lawsuit in the context of a North Carolina appeals court decision that held that analysts couldn’t be sued for expressing their opinions. Nucor Corp. v. Prudential Equity Group, LLC, 659 S.E.2d 483 (N.C. App. 2008).
In that case, Nucor, a steel manufacturer whose stock is traded on the New York Stock Exchange, sued Prudential and two of its analysts (one of whom had worked at Nucor previously) for making statements about possible antitrust violations committed by Nucor, and alleged claims for libel and unfair and deceptive trade practices. Prudential filed a 12(b)(6) motion to dismiss, which the court granted as to both claims.
The Court of Appeals of North Carolina found that the allegedly libelous statements, “construed only in the context of the document in which they are contained, ‘stripped of all insinuations, innuendo, colloquium, and explanatory circumstances[,]’” were not defamatory and affirmed the trial court.
Nucor's claim for unfair and deceptive trade practices had been based on the alleged libel and thus could not serve as the basis for relief. Nucor also alleged that its former employee’s alleged misappropriation of confidential information constituted tortious conduct that could support its claim for unfair trade practices, but Nucor did not allege in its complaint that its former employee had committed any such acts nor did it allege that the misappropriation proximately caused any injury. The court found that, at best, Nucor had alleged that its employee had breached his confidentiality agreement, which did not constitute an unfair or deceptive trade practice.
Andrew Ross Sorkin, who writes the DealBook blog for The New York Times, wrote a column on July 8 entitled “Psst! Hear The Rumor Of the Day?,” which discussed the rumor du jour tendency on Wall Street, especially since Bear Stearns’ meltdown in March, and a precipitous drop in Lehman Brothers’ stock price amid recent takeover rumors. Coincidentally, Sorkin quoted Bove in the column for the proposition that “absurd rumors can have legs,” which seems to be the point of BankAtlantic's lawsuit.
This post is not about business litigation, but about a situation playing out in the federal courts in Washington, D.C. that presents some significant issues in media law. Toni Locy, a former USA Today reporter who holds the Shott Chair of Journalism at the Perley Isaac Reed School of Journalism at West Virginia University, is currently embroiled in a struggle to protect the anonymity of her sources, without putting herself in jeopardy.
For background about Locy's situation, here is a link to The Wall Street Journal Law Blog’s stories and to the Associated Press story in the Washington Post. (In the interest of disclosure, I worked with Locy at the Daily Athenaeum, the student newspaper at WVU, many years ago. She was the managing editor, while I was a lowly staff writer.) When Locy worked for USA Today, she wrote about Dr. Steven Hatfill, who was alleged to have played a role in the 2001 anthrax attacks. In fact, in 2002, the FBI and then-Attorney General John Ashcroft described Hatfill as a “person of interest.” Hatfill did not have any involvement in the attacks, however, and filed suit in the District of Columbia against the United States for violating his privacy by leaking information to the press. Hatfill v. Mukasey, et al., Civil Action No. 1:03-CV-1793 (RBW). As part of his lawsuit, Hatfill wants to know the names of Locy’s sources at the FBI and the Department of Justice.
United States District Judge Reggie B. Walton (who presided over the I. Lewis “Scooter” Libby trial, during which former New York Times reporter Judith Miller was jailed for 85 days for refusing to cooperate with Special Prosecutor Patrick Fitzgerald’s investigation) ordered Locy to reveal her sources. She refused to do so, however, and on February 19, Judge Walton held her in contempt. At that time, he threatened to fine her, beginning at midnight yesterday, $500 per day for seven days, increasing thereafter to $1,000 per day for seven days, and finally increasing to $5,000 per day for seven days if she continued to refuse to identify her sources. He also threatened to order that she had to pay the fines personally and could receive no financial assistance from USA Today or any media organization or anyone else. That requirement is no small matter, considering that she could be facing fines of at least $45,500, but makes only $75,000 per year.
Last Friday, Judge Walton entered an order assessing the fines as described above and requiring Locy to pay them personally,"to maximize the potential that Ms. Locy will ultimately comply with the Court's order that she reveal her sources at the DOJ and FBI who disclosed information to her about the anthrax investigation." He also refused to stay payment of the fines while Locy’s lawyers appealed his ruling .
Locy’s lawyers yesterday filed an emergency motion to stay with the United States Court of Appeals for the District of Columbia Circuit, which entered an order this afternoon staying the payment of the fines while she prosecutes an appeal. A hearing is scheduled before Judge Walton on April 3.Jeffrey V. Mehalic is an attorney in Charleston, West Virginia, and represents both plaintiffs and defendants in civil litigationMore...
Enter keywords:
