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Free Speech

No Pretrial Injunction in Libel Lawsuit Brought by Prehired


From Judge Troy Nunley's decision yesterday in Prehired, LLC v. Provins (E.D. Cal.):

Plaintiff is involved in the business of training and mentoring workers as to how to obtain a better job at a higher pay. Plaintiff markets its services through website and social media sites such as LinkedIn. Plaintiff charges a fee for its services; however, no fee is charged before a client obtains a job or completes the program.

On or about October 14, 2020, Plaintiff and Defendant signed a membership agreement, and Defendant thereafter completed his membership program without incident or complaint. Plaintiff and Defendant subsequently entered into negotiations for Defendant to assist Plaintiff with marketing its business and training its clients. [A deal was made but was later terminated. -EV]

According to Plaintiff, after the parties ended the MTT Partner Service Agreement, Defendant initiated a "campaign to damage the … business and to benefit his own business." [Details below. -EV] … Plaintiff alleges that in the short period following Defendant's statements, multiple clients and potential clients have cancelled sales calls and meetings, cancelled executed contracts, and decided to not complete pending contracts with Plaintiff. Plaintiff states many of these clients and potential clients have specifically referenced Defendant's statements as their basis for withdrawing their business.

As a result of Defendant's statements Plaintiff alleges it has lost a contract worth $20,000 and contractual partners whose work resulted in substantial revenue—including a partner who was expected to provide $2 million in revenue to Plaintiff.

Prehired sued for trade libel (and for intentional interference with business relationships, but I set that aside here), and asked that "the Court enjoin Defendant from continuing to publish false and defamatory statements while competing against Plaintiff." No, said the court:

Plaintiff requests the Court order Defendant to cease making further statements constituting trade libel, to remove "improper posts" and comments on various social media platforms, and to stop communicating with Plaintiff's customers. These are classic prior restraints that seek to limit Defendant's speech, and Plaintiff has failed to meet the strict-scrutiny standard necessary for such prior restraint.

Although Plaintiff categorizes Defendant's statements as "defamatory" Plaintiff maintains they were not opinions but part of a scheme to gain an unfair trade advantage. The statements Plaintiff alleges constitute trade libel are:

  1. "… but [Prehired] often leaves them in debt, jobless and unable to break a $30,000 debt contract."
  2. "PreHired founder Joshua Jordan [] is actively suing 290 graduates, many without jobs or making a fraction of what was promised, because of their inability or unwillingness to forfeit 12.5% of their wages for a prerecorded video series and predatory 'mentorship' from people with little to no sales background."
  3. "This is more than false advertising. It's systematic abuse of new SDRs …"
  4. "There is no longer a path to succeed at PreHired, only a path to succeed in spite of it, and it's time to stand up. The LinkedIn SaaS community has always rushed to the defense of SDRs being abused, mistreated and manipulated. PreHired is an example of this on an institutional level."
  5. "I'm going to share more about my personal experience in the comments: the gaslighting, the false advertising and the ethical issues I witnessed "
  6. "Their 'six week' bootcamp took me no more than 78 business days to fully complete before I moved into my career search process, which turned out to be a complete joke."
  7. "Students at the time were required to submit 20+ applications a week almost aimlessly and send emails that were mostly ineffective."
  8. "I interviewed for nearly three months and faces such extraordinary amounts of ableism during this process, I brought it to the attention of PreHired management. After telling them I had just spoken with a Director of Sales who suggested 'Maybe don't mention your disability to the VP' all they had to say was 'bad luck, keep interviewing."
  9. "They're trying to ruin nearly 300 people's lives due to their own greed and the staff of Prehired has the power to stop it."
  10. "Help People Scammed by PreHired Fight Back!"

Here, the posts are not entirely opinion. It contains a blend of subjective opinions and what could be provably false assertions of fact. "If a statement of opinion implies a knowledge of facts which may lead to a defamatory conclusion, the implied facts must themselves be true."

If an online post contains "exaggerated speech and broad generalities, [and still shows] all indicia of opinion," Defendant is not required to prove every word is true.

Defendant argues he will be able to prove the assertions of facts are true because they are based on his personal knowledge. Defendant submits to the Court a declaration asserting the truth of several of the factual statements made on the social networking sites. Plaintiff submits—assumedly to disprove the truth of the statements—a declaration and screenshots with statements made by Defendant on LinkedIn, none of which appear to disprove the statements outlined above. (See ECF No. 23-1 at 13) (For example: "My current recommendation is to move payments to a bank account you don't use so they can't charge you. Do not communicate to PreHired"; "My goal is to get as close to that 290 mark of contract releases"; "I've been in Forbes and international reviews, we're going to wreck them"; "The game plan is to force their hand to withdraw all lawsuits and release contracts"; "Also we have official backing from a legit bootcamp"; "Enough bad publicity and they'll lose all hiring partners, more staff will resign, and they'll have no way to come back"). Plaintiff also submits a Twitter post where Defendant posted that he received a promotion and "could never have gotten this far without [Plaintiff]." Again, this statement does not prove as false any of the statements made above. Similarly, Defendant's employment offer from July 20, 2021, fails to prove any of the statements as false.

Issuance of a temporary restraining order is an extraordinary remedy, and Plaintiff has the burden of proving the propriety of such a remedy. It is unclear to the Court that Plaintiff can prove that the statements made by Defendant are in fact false. Plaintiff has not carried this burden and simply saying they are false is insufficient to warrant this extraordinary remedy….

In a trade libel case, California [also] requires Plaintiff to prove actual malice, which Plaintiff must prove with "clear and convincing" evidence. "Actual malice consistently has been deemed subjective in nature, provable only by evidence that the defendant 'realized that his statement was false or that he subjectively entertained serious doubt as to the truth of his statement.'"

Defendant argues Plaintiff cannot prove actual malice. Plaintiff argues Defendant knew the statements were false and said them as part of a scheme to destroy Plaintiff's business. As noted, Plaintiff's conclusory assertions, without more, are insufficient to convince the Court that Defendant's statements are in fact false or that Defendant knew they may have been false.

In sum, Plaintiff has not shown it is likely to succeed on the merits of its trade libel claim….

There is a good deal of authority that pretrial injunctions against allegedly libelous speech are generally unconstitutional prior restraints, even if the court thinks the statements that plaintiff seeks to enjoin are likely to be false and defamatory factual claims. But here the court focused more on the uncertainty about plaintiff's likelihood of success on the merits, which in this case is another way to get to the same result.