Libel

Reputation Repair Service Costs as Measure for Damages in a Libel Case

An interesting decision, on a motion for default judgment.

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From Dinkins v. Schinzel, decided Friday by Judge Jennifer A. Dorsey (D. Nev.):

Pro se plaintiff Kenneth Dinkins seeks default judgment against pro se defendant Geraldine Schinzel for libel per se. When Schinzel failed to comply with a court order after the parties' settlement conference, I ordered default be entered against her and granted Dinkins the opportunity to move for default judgment under Federal Rule of Civil Procedure 55. Because Dinkins's claim satisfies the factors outlined in Eitel v. McCool (9th Cir. 1986), I grant his motion, award him $43,000 in general damages, and close this case….

After a real-estate deal between Schinzel and Dinkins went sour, Schinzel published libelous statements about Dinkins and his business on the internet. In January 2019, I resolved the parties' cross-motions for summary judgment, ordered them to attend a settlement conference, and—within ten days of the conference—to file a joint pretrial order. The parties failed to settle their dispute, and Schinzel stopped appearing in this litigation, ignoring Dinkins's attempts to prepare the joint pretrial order and failing to file her own. Based on Schinzel's apparent refusal to comply with my order and upon Dinkins's motion, I entered default against her, dismissing her counterclaims, striking her answer to Dinkins's complaint, and authorizing Dinkins to file a motion for entry of default judgment. Like his motion for default, Dinkins's motion for default judgment is unopposed….

As default has already been entered in this case, I must take the complaint's factual allegations as true, except those relating to damages…. The court reserves the power to require a plaintiff to provide additional proof of facts or damages in order to ensure that the requested relief is appropriate….

The second and third Eitel factors focus on whether Dinkins has stated a claim under which he can recover…. Dinkins's complaint allegations, taken as true, state a claim for libel per se. Dinkins alleges that Schinzel published multiple false and defamatory statements about him on ripoffreport.com, calling him a "scam artist," a "theif [sic]," "a pathological lier [sic][,] and a vulger [sic] low life that prays [sic] on trusting individuals." She also accused Dinkins of "running a criminal enterprise," claimed that he "stalks" others, had "no license of any kind," ran a real-estate website teaching others to "scam," and she asserted that he is "being investigated for selling vacant land illegally across state lines."

Dinkins alleges that Schinzel knew these claims were untrue when she made them. Finally, Dinkins claims that these defamatory remarks damaged his business as both a real-estate investor and a real-estate investing coach. So this factor weighs in favor of entering a default judgment against Schinzel….

[T]he court [also] considers the amount of money at stake in relation to the seriousness of the defendant's conduct. For a libel per se claim, Dinkins is entitled to presumed, general damages, largely because of the "impossibility of affixing an exact monetary amount for present and future injury to the plaintiff's reputation, wounded feelings and humiliation, loss of business, and any consequential physical illness or pain." However, such damage claims must "still be supported by competent evidence."

Dinkins maintains that he is entitled to $300,000, which is the sum of his allegedly lost business revenue and the cost of hiring a professional company to repair his online reputation. Dinkins's estimates about his lost revenue are speculative at best. He does not provide evidence of prior or lost sales, but instead attaches alleged text and email conversations in which individuals decline to do business with him, citing their concerns about his reputation. {Dinkins admits that it is "impossible" to know the extent of Schinzel's damage to his reputation or determine who would have bought properties from him, absent her libelous statements.}

Dinkins also attaches estimates from ReputationX and DMA, both of which perform search-engine optimization to suppress negative online content and promote positive articles. DMA charges $18,000 per month for an indeterminate number of months, and caters to "celebrities" and "professional athletes." ReputationX requires an initial $3,000 investment, with an additional $5,000 per month, every month, for up to twelve months. Absent concrete evidence regarding Dinkins's lost revenues, anticipated or otherwise, or the need for DMA's "aggressive" services, I cannot authorize an award of $300,000—such an amount would be exceedingly harsh. But Dinkins has provided sufficient evidence warranting damages in the amount needed to hire ReputationX for eight months, for a total of $43,000. So this factor weights in favor of awarding default judgment….

Under these circumstances, default judgment is warranted here. Dinkins is entitled to a default judgment of $43,000 against Schinzel for his libel per se claim….

NEXT: Pitfalls of Statutory Term Limits for Supreme Court Justices

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  1. Interesting. In false advertising and trademark cases, courts do recognize remedial PR efforts as a form of damages, assuming you can show that there is a real need and you have a real plan of what you are going to do.

    1. I had the exact same thought. In trademark parlance, they’re called “corrective advertising” damages. His other damages theory also has a trademark analog–lost profits from reputational damage is essentially a claim based on harm to the goodwill of a mark.

      I had not thought of personal libel remedies being so closely analogous unfair competition cases, but it has a certain elegance I like about. I suppose it makes sense too–every person is their own brand now.

  2. IANAL. Couple of questions.

    The Defendant’s decision to just sort of drop out, not participate in the court-ordered sessions, and refuse to co-author the joint pre-trial order, seems rather stupid to me; pissing off the judge is not wise. Is this common with clients in civil cases like this?

    How do Plaintiff’s collect damages in these civil cases? I won in small claims court once, $500 + $80 in costs, and collecting was a slow frustrating process.

    If the Defendant doesn’t have enough property or cash to pay up, what happens? Does the unpaid debt disappear after a few years, or does it take a bankruptcy, or is it permanent?

    1. With the caveat that state law differs…. generally you need to garnish their wages, if they work and aren’t below income thresholds. Otherwise you’re usually out of luck. You can ask the sheriff to seize property they have to pay the judgment, but usually so much stuff is exempted that you can’t actually get anything. You can docket the judgment as a lien against any real property they own and maybe get it paid if they ever sell it and actually have equity in it.

  3. This would make sense if reputation repair services could actually successfully repair ones reputation (witjout doing anything legal in the process.)

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