Libel Lawsuit Against Case Law Repository for Its Not Noting That a Case Had Settled

Leagle.com publicly distributes a wide range of court opinions, precedential and nonprecedential, from all over the country. Unlike Westlaw, Lexis, and Google Scholar, it is Google-searchable, so when a party's name is Googled, any opinion mentioning the party is likely to come up.

[1.] John D. Thomas had been involved in Modarres v. Thomas, which went up to the California Court of Appeal and came out badly for him. From the Introduction to the opinion (which also appears on Leagle):

John David Thomas and 184 Diamond, LLC (defendants), appeal from a default judgment entered after the trial court imposed terminating sanctions against Thomas for misuse of the discovery process. Following a default prove-up hearing, the court awarded plaintiff Farah Modarres a total of $217,000 in compensatory damages against defendants and $1 million in punitive damages against Thomas only. Defendants argue the trial court abused its discretion by imposing terminating sanctions against Thomas because a lesser sanction would have been sufficient. They also challenge the punitive damages award against Thomas on the grounds Modarres presented insufficient evidence of Thomas's net worth at trial, the punitive damages award was unconstitutionally excessive in amount, and the award erroneously excluded 184 Diamond, LLC, which was otherwise jointly and severally liable with Thomas for compensatory damages.

We conclude the trial court did not abuse its discretion by imposing terminating sanctions against Thomas for his misuse of the discovery process. We also conclude Modarres failed to present admissible evidence of Thomas's then current financial condition sufficient for us to make a well-informed decision whether the amount of punitive damages awarded was unconstitutionally excessive. We therefore modify the judgment to strike the award of punitive damages and remand for a new default prove-up hearing only on the issue of the amount of punitive damages. As modified, the judgment is affirmed.

The case was then remanded to the trial court:

Modarres is entitled to punitive damages. The judgment is modified to strike the award of punitive damages in the amount of $1 million. The matter is remanded for a new default prove-up hearing only on the issue of the amount of punitive damages. We direct the trial court to issue an order under Civil Code section 3295, subdivision (c), permitting Modarres to conduct discovery into Thomas's current financial condition. As modified, the judgment is affirmed. Modarres shall recover costs on appeal.

And on remand, the case settled (according to a later appellate decision, "Modarres and Thomas settled the lawsuit without involving the law firm [that had represented Modarres], allegedly depriving the law firm of its fees").

[2.] Now, the new lawsuit, filed Tuesday and labeled Thomas v. Leagle, Inc. (S.D. Cal.): Thomas is suing Leagle for libel and for placing him in a false light based on its having posted the earlier California Court of Appeal opinion (with no allegations that the opinion itself was inaccurately rendered). Here's the rationale:

Defendants published and continue to publish information regarding a legal case against plaintiff which left the false impression that judgment was in effect against him, including for fraud, when in fact the case was dismissed….

After the Court of Appeal ruled on the matter and the case was remanded to the Superior Court, the lawsuit was dismissed with prejudice, and the previous judgment was of no force and effect whatsoever. The matter published by defendants failed to disclose this fact, and created the false impression that a final judgment has issued finding that Thomas was guilty of civil fraud….

By reason of this publication, Leagle falsely implied that Thomas had been finally adjudged guilty of civil fraud, and was held for punitive damages.

The lawsuit seeks compensatory and punitive damages, and "a preliminary and permanent injunction forbidding defendants to publish the matter in question unless there is a visible and clear clarification that the case was dismissed."

[3.] Now actually I think that posting an account of a government proceeding that suggests guilt without including information about a genuinely exculpatory follow-up to the proceeding might indeed be libelous. "[A]ccurately reporting a … charge … but failing, in the same article, to report the subsequent dismissal of the charge is not covered by the fair-report privilege." (See my Libel by Omission of Exculpatory Legal Decisions for more on that.) And there's also an argument, which I've made in my The Duty Not to Continue Distributing Your Own Libels (pp. 343-46) that people who host certain material about legal proceedings have (to oversimplify slightly) a duty to update it with such exculpatory follow-up decisions once they are on notice that the follow-up decisions have taken place. (That, though, is subject to the statute of limitations, and here the statute of limitations has long run; plus 47 U.S.C. § 230 might preclude such liability as well, where Leagle posts material coming from other sources, such as government sites.)

But here there is no exculpatory decision, in the sense that an acquittal or a reversal of a conviction might be inculpatory. After the Court of Appeal upheld a judgment, the parties settled the case; that isn't a judicial decision that the defendant actually wasn't culpable. To quote one case in which this issue came up (though as to reposted material), Petro-Lubricant Testing v. Adelman (N.J. 2018),

Wintermute argues that Adelman should be stripped of the [fair report] privilege because the modified article failed to report that Wintermute and Laforgia had settled the case. A settlement of the lawsuit, however, is not an adjudication of the truth or falsity of a complaint's allegations. The fair report privilege may not protect a publication that only reprints the allegations but not the favorable verdict. A settlement, however, is different from a favorable verdict. A settlement generally "reflects ambiguously on the merits of the action' and is not a determination of whether the allegations are true or false."

And the court quoted a California case which reasoned, "Generally, a dismissal resulting from a settlement does not constitute a favorable determination [for purposes of the malicious prosecution tort] because '… the dismissal reflects ambiguously on the merits of the action as it results from the joint action of the parties, thus leaving open the question of defendant's guilt or innocence.'" Pender v. Radin (Cal. App. 1994). Sound analysis, I think.

It thus seems to me that Thomas shouldn't prevail in this case. I'm not sure that Leagle will appear to defend itself: its Arkansas corporate chapter has been revoked, and when I came across it recently in my research I couldn't reach anyone there. But I think Thomas's claim is sufficiently unsound as a matter of law that a court ought to reject any motion for default judgment that Thomas might bring.