Key Decisions

October 2013 – Statements Posted On The Internet Were Defamatory

(filed under: Key Decisions | October 20, 2013)

Statements Posted On The Internet Were Defamatory

Sanders v. Walsh
(Cal. Ct. of App., 4th Dist.), filed September 16, 2013, published September 16, 2013

KEY FACTS

Cheryl Sanders’ mother purchased a wig from a company called Wiggin Out. According to Sanders, Constance Walsh, the owner of Wiggin Out, allegedly represented that the wig was custom made. Walsh denies making that statement.

Sanders paid for the wig using a check from the account of West Coast Building Contractors, a corporation she formed with her husband, for which she was an authorized check signer.

After realizing the wig was not custom made, Sanders’ mother attempted to cancel the contract and return the wig. Sanders stopped payment on the check.

Wiggin Out filed a small claims action against Sanders’ mother alleging breach of contract. Wiggin Out contended Sanders’ mother had not tried to return the wig and cancel the contract.

In the small claims trial, Sanders offered into evidence a letter issued by Federal Express confirming the package had been sent to Wiggin Out and refused. Wiggin Out argued that the letter was fraudulent.

Sanders’ mother prevailed in the small claims action. The small claims court found Wiggin Out had made misrepresentations and that Sanders’ mother tried to return the wig and cancel the contract, but that Wiggin Out refused to accept the wig back.

Two months later Walsh and Wiggin Out published a lengthy “rebuttal” to an online posting on Ripoffreport.com regarding the circumstances of the small claims action. The rebuttal consisted of a series of paragraphs prefaced by “Fact:” explaining Walsh and Wiggin Outs’ version of the facts, with editorial commentary interspersed throughout. There were, essentially, two allegedly defamatory statements made: first, that Sanders used an “unauthorized” check to purchase the wig, and, second, that Sanders fabricated a letter from FedEx to try to prove her mother attempted to return the wig to Wiggin Out.

Several months later, an anonymous author posted the following on the website Yelp.com:

“Investigation on the City of Anaheim? Cheryl Sanders in the planning dept. We all know what is going on in the City of Anaheim planning dept. Our residents are tired of our tax dollars being sunk into the City of Anaheim, into the planning dept and into the friends and family members (sub-contractors) of the employees of the planning department! How much extra ‘under the table’ money is being made from our planning dept????? A nice detailed audit and internal investigation will fix this rather quickly as we have demanded one from our government! We the residents of Anaheim are tired of the Planning Dept. planning for themselves and not our community. We hope that people like Cheryl Sanders are investigated, audited and brought to justice!!!!!! We are tired City of Anaheim and the people are now joining together to bring justice to our community! Oh, I agree on keeping our own lawns in order, however we cannot let the city ‘flip and spin’ the responsibility back on to its residents!! This is an old trick and now its our turn to make the city of Anaheim responsible for its dishonest acts that are happening behind closed doors!”

The same day, an anonymous author posted the following statements on the website MerchantCircle.com: “Thank you Cheryl Sanders for hurting the community by giving all the construction business in Anaheim for a under the table bribe. I hope that an investigation takes place soon and you end up behind bars. Cheryl Sanders at the City of Anaheim Planning Dept. has been putting up a front long enough. We hope to bring you down soon. Your dishonesty and greediness will soon come to an end.”

Sanders read those posts and was “devastated” and concerned about losing her job and livelihood. She filed a complaint against unnamed defendants, later amending to name Walsh and Wiggin Out, alleging causes of action for libel, false light, and intentional and negligent infliction of emotional distress.

The trial court awarded Sanders compensatory and punitive damages.

HOLDING & REASONING

The Court of Appeal affirmed. It rejected Walsh and Wiggin Outs’ contentions that: (1) the defamatory statements were nonactionable opinion; (2) the court erred in excluding evidence of Sanders’ prior felony conviction, which was previously dismissed pursuant to Penal Code Section 1203.4; (3) there was insufficient evidence to support a finding of malice related to punitive damages; and (4) the court erred in connection with certain discovery orders. The court found the trial court erred in finding Walsh and Wiggin Out were collaterally estopped from relitigating issues previously decided in the small claims action, but that the error was harmless.

The court first reviewed the case law relative to defamatory statements versus nonactionable opinions, particularly when expressed in internet postings. Based on these, it found that the various postings were of specific factual claims, not vague implications of fact as was the case in which courts had found postings nonactionable. They were not mere opinions.

The court noted: “While courts have recognized that online posters often play fast and loose with facts…this should not be taken to mean online commentators are immune from defamation liability.”

The court next turned to the collateral estoppel issue. The trial court precluded Walsh and Wiggin Out from offering evidence that the FedEx letter Sanders had proffered was forged. The trial court did so because the small claims court found the letter was genuine and under the authority of the case of Pitzen v. Superior Court, 120 Cal.App.4th 1374 (2004), a small claims plaintiff could not relitigate an issue decided in the small claims court. The appellate court found that the trial court had correctly applied the Pitzen case, but that the Pitzen case had been wrongly decided. The appellate court chose to follow the precedent set by the California Supreme Court in Sanderson v. Niemann, 17 Cal.2d 563 (1941), which held there was no collateral estoppel with respect to a small claims action.

Although the trial court erred in precluding Walsh and Wiggin Out from challenging the authenticity of the FedEx letter, the error was harmless. Even if they were right that the letter was forged, there were other, unrelated defamatory statements that would have supported a finding of Walsh and Wiggin Outs’ liability. Since, Sanders’ only claimed damage was for the defamatory charge of corruption, it did not matter whether the FedEx letter was forged or not or whether Walsh and Wiggin Out were liable for it.

Sanders had been convicted of a felony and the trial court precluded Walsh and Wiggin Out from offering evidence. However, that felony was reduced to a misdemeanor pursuant to Penal Code, Section 17 (b), and later dismissed pursuant to Penal Code Section 1203.4. With certain exceptions, a felony conviction dismissed pursuant to Section 1203.4 is not admissible to attack a witnesses’ credibility. The trial court did not err, and even if it did, Walsh and Wiggin Out had not articulated how it erred.

As to whether there was substantial evidence in support of the trial court’s finding of “malice,” the court said:

“To show actual malice, plaintiff must demonstrate [defendants] either knew [the] statement was false or subjectively entertained serious doubt [the] statement was truthful. The question is not ‘whether a reasonably prudent man would have published, or would have investigated before publishing. There must be sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication. Publishing with such doubts shows reckless disregard for truth or falsity and demonstrates actual malice.”’

“A defamation plaintiff may rely on inferences drawn from circumstantial evidence to show actual malice. ‘A failure to investigate [fn. omitted] [citation], anger and hostility toward the plaintiff [citation], reliance upon sources known to be unreliable [citations], or known to be biased against the plaintiff — such factors may, in an appropriate case, indicate that the publisher himself had serious doubts regarding the truth of his publication.’”

The court noted that although Walsh testified that she held an honest belief that the statements posted on Ripoffreport.com were true, she offered no argument concerning the corruption allegations. Rather, she denied making those. Since Walsh admitted the corruption allegations were posted using an e-mail address to which she had access, there was substantial evidence from which the trial court could find she had made those allegations. Between the fact Walsh did not testify to having an honest belief in the corruption allegations and the evidence Walsh had a hostile relationship with Sanders (as evidenced by the harsh statements Walsh admitted making about Sanders in the Ripoffreport.com posting), the patently false nature of the claims, Walsh’s denial that she posted the statements, and Walsh’s hostile attitude towards Sanders, there was substantial evidence to support the trial court’s finding of malice.

ANALYSIS

This case provides helpful guidance on two major topics. First, the difference between defamatory statements versus nonactionable opinion, particularly as it relates to internet postings. Second, the implications of malice.

In addition, this case demonstrates the problem of the strategic decision to deny having done something. Having denied the corruption allegations, Walsh was precluded from testifying that she had an honest belief that they were true.