The Volokh Conspiracy

Mostly law professors | Sometimes contrarian | Often libertarian | Always independent

Free Speech

Court Dismisses Lawyer's and Client's $120M Libel Lawsuit Against Legal Newspaper


From Beres v. Daily Journal Corp., decided Monday by Judge William Dimitrouleas (S.D. Fla.):

Plaintiff Christopher T. Beres, a Florida lawyer, and Plaintiff Andrew Delaney, one of Beres' clients, bring one count for defamation against Defendant Daily Journal Corporation based on the Daily Journal's publication of a two-part article….

The Amended Complaint alleges that on April 28 and April 29, 2020, the Daily Journal published a two-part article entitled Does Covid-19 Threaten Your Trade Secrets? Yes, It Does. (Part I), and Does Covid-19 Threaten Your Trade Secrets? Yes, It Does. (Part II). Plaintiffs allege that these articles defamed them. In addition to alleging that the headlines themselves are defamatory because "the articles 'conclude' that [P]laintiffs were guilty six days after the case was filed: 'Yes, it does,'" Plaintiffs allege that the following statements contained within Part I are false and defamatory:

Any time there is a termination of an employee, there is potential for misappropriation or loss of trade secrets. Consider the following potential scenarios: …

  • A terminated employee cannot find new employment and decides to use the former employer's trade secrets as a source of income. See, e.g., HC2 Inc. v. Delaney, Case No. 1:20-cv-03178 (U.S. District Court for the Southern District of New York) (complaint alleges that a former employee of a legal staffing company tried to extort clients for $450,000 by threatening to release confidential information after they suspended a document review project due to the COVID- 19 pandemic).

Plaintiffs allege that "[e]very part of the first sentence" of the bulleted paragraph is false and defamatory because Delaney was not "a terminated employee [who] cannot find new employment," Delaney did not "decide to use the former employer's trade secrets as a source of income," and because there were no "trade secrets" in the SDNY Action. Plaintiffs also allege that "'threat to disclose confidential information' and 'extortion' in [t]he Daily Journal is a clear reference to Beres's April 7, 2020 employment demand letter to Toyota …, thereby imputing these crimes to him." According to Plaintiffs, the content of the articles "spread like a disease including on social media" and caused substantial damage. Plaintiffs seek twenty million dollars ($20,000,000.00) in compensatory damages and one hundred million dollars ($100,000,000.00) in punitive damages….

No, says the district court:

[1.] Beres, the lawyer, loses "because nothing contained within the article—including the statement, citation, and parenthetical—are 'of and concerning' Beres."

[2.] As to Delaney, "the only portion of the article concerning Delaney, a parenthetical and accompanying citation, contain no material falsities." "The introductory phrase 'complaint alleges' makes clear that the parenthetical merely describes the complaint's allegations, not that it vouches for their veracity." And the parenthetical describes those allegations substantially accurately: "A comparison of the allegations in the SDNY complaint with the parenthetical reveal that the parenthetical is not substantially and materially false."

[3.] Nor can Delaney prevail on the theory that the sentences preceding the citation and parenthetical defame him: That material "presents only a hypothetical 'terminated employee' in a 'potential scenario,'" and the "'see, e.g., denotes that numerous sources indirectly support the proposition,' not that the case is a literal example of what preceded it." (The court cites as authority the Bluebook—likely the most broadly used legal citation manual—and a source related to it; that likely makes sense, I think, given that the article is aimed at a lawyer audience.)

Seems right to me.