The Volokh Conspiracy
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From Wexler v. Dorsey & Whitney LLP, decided today by the Second Circuit (Judges Jon O. Newman, Peter W. Hall, and Gerard E. Lynch)
In 2015, plaintiff Shimshon Wexler brought a Telephone Consumer Protection Act ("TCPA") class action in the Eastern District of New York against AT&T, with his wife, Dr. Eve Wexler, as the proposed lead plaintiff. AT&T filed a letter seeking a conference on a contemplated motion to strike, writing that "unless and until Shimshon Wexler both withdraws as counsel and renounces any interest in any future award of attorney's fees in this case, Dr. Wexler is an inadequate class representative as a matter of law."
In response, Wexler's co-counsel (who joined the case a month after filing) explained that Wexler would withdraw as counsel and would not be entitled to attorney's fees recovered in the case but that he may seek payment on quantum meruit grounds for the work done prior to his withdrawal. AT&T moved to strike the class allegations on the ground that Dr. Wexler was not an adequate representative of the class; the district court (Block, J.) granted the motion. In granting the motion, the district court explained that Dr. Wexler, as class representative, should act to maximize recovery to the class and that her interest in a fee award to her husband—who Judge Block noted "intend[ed] to seek fees for his work based on quantum meruit"—gives an opposite incentive.
Dorsey is a law firm that defends companies sued for violations of the TCPA and has a consumer financial services blog. In 2018, Dorsey published a "Legal Update" article written by Betpera both on the blog and on a website called JDsupra. The headline for the article stated "TCPA Class Certification Denial Exposes Major Spousal Scheme." The text of the article read:
"There are plenty of things I'd like to do with my wife one day. Take a trip to Greece. Finally convince her to go camping with me (never going to happen). But filing a class action with her as a class representative is definitely not one of them.
"That's exactly what one husband-and-wife duo tried to pull in the Eastern District of New York. Senior Judge Frederic Block made quick work of the scheme.
"In Wexler v. AT&T Corp., No. 15 CV-0686 (FB) (PK), 2018 U.S. Dist. LEXIS 20157 (E.D.N.Y. Feb. 5, 2018), the Court granted AT&T's motion to strike class allegations based on the inadequacy of the class representative. The class representative was Dr. Eve Wexler, who was the wife of class counsel Shimshon Wexler. After AT&T alerted the Court to their relationship, Mr. Wexler quickly withdrew and was replaced by class counsel who had no relation to Plaintiff. However, Mr. Wexler made it clear that he still intended to pursue an award of feeds for his work on the case prior to withdrawal.
"Plaintiff argued that Mr. Wexler's withdrawal 'mooted' the issue. Not so, said Judge Block. There's no disputing Plaintiff would have an interest in a potential fee award to her husband, had he been appointed class counsel. 'Courts have long found that a familial (or any other) relationship creates a conflict if it gives the class representative an interest in the fees class counsel might recover.' And that conflict didn't just vanish after Mr. Wexler withdrew, especially because he was still planning to seek an award of fees for his work prior to withdrawal.
"The Court astutely observed that '[a]s class representative, Dr. Wexler should act to maximize [class] recovery and, by extension, minimize reductions to it. But her interest in the fee award supplies the opposite incentive.' The Court emphasized that because the 'very nature of a class creates conflicts of interest between the class, class counsel and the class representative,' the requirements of Rule 23 must be 'scrupulously enforced.'
"And enforced they were. The Court held that because Plaintiff had an interest in a possible fee award to her husband, 'she cannot adequately represent the interests of absent class members,' and granted AT&T's motion to strike. Maybe the Wexlers should try salsa dancing instead."
Wexler sued for libel, but the Second Circuit said nay (the only claim on appeal was over the headline):
We agree with the magistrate judge that the headline in this case constitutes opinion and is therefore not actionable. The tenor of the article reflects that it is meant to be not only informative but also amusing and entertaining, making hyperbole in the headline expected and reasonable.
The article's placement on a law firm's blog also suggests that it is informed, at least in part, by the firm's and its author's opinions. The context of the statement therefore cuts against a determination that it is an assertion of fact meant to be taken literally. The language "exposes major spousal scheme" also does not have a readily understood precise meaning of the nefarious sort that is advanced by Wexler—it could just as easily mean exactly what happened here, that the TCPA decision brought to light an ethically questionable arrangement by a married couple (here, to represent both the attorney's and the class's fiscal interests in a class action). The use of "major" does not change this analysis, as that is a relative term, the applicability of which is a matter of opinion.
An average reader would not understand the headline to be "an attempt to convey with technical precision literal facts about" Wexler. And because the statement does not have a readily understood precise meaning, it is not capable of being proved true or false. Nor do we think that a reasonable reader would think that the headline was based on facts other than those disclosed in the article, which accurately describes the ruling of the court. Cf. Levin v. McPhee, 119 F.3d 189, 197 (2d Cir. 1997) (explaining that statements of opinion "may yet be actionable if they imply that the speaker's opinion is based on the speaker's knowledge of facts that are not disclosed to the reader"). The headline is therefore properly read as non-actionable opinion rather than fact, and Wexler's defamation claim fails….