Blake Lively Entitled to Attorney Fees (But Not Punitive Damages) in Justin Baldoni et al.'s Libel Lawsuit Against Her

Some excerpts from Judge Lewis Liman (S.D.N.Y.) long opinion today in Wayfarer Studios LLC v. Lively:

[Blake] Lively filed a complaint with the California Civil Rights Department ("CRD") against [Justin] Baldoni and his co-defendants, the Wayfarer Parties, alleging, among other things, that Baldoni and others sexually harassed her on the set of the Film {It Ends With Us} and that the Wayfarer Parties retaliated against her for raising complaints about that harassment by launching a smear campaign to tarnish her reputation….

Lively then sued over that alleged behavior, and the Wayfarer Parties "counter-sued, asserting claims, including defamation, against Lively and others for making statements that the Wayfarer Parties" engaged in or tolerated "sexually inappropriate conduct" or retaliation. The Court rejected that counterclaim, on the grounds that

1. "the fair report privilege … precluded the Wayfarer Parties from bringing a defamation claim against Lively for providing a copy of her CRD complaint to the New York Times,"
2. "the Wayfarer Parties had insufficiently alleged that text messages Lively may have provided to the Times were defamatory," and that
3. they hadn't adequately alleged "that Lively was responsible for any statements made by her husband Ryan Reynolds" "or publicist Leslie Sloane."

In May, the parties settled all their claims, but expressly left open whether Lively can recover attorney fees and damages under Cal. Civil Code § 47.1. (They also waived their right to appeal from any such determination.)

Section 47.1 … [seeks] to shield "survivors of sexual assault, harassment, and discrimination from defamation lawsuits"—and, in particular, the burdensome and invasive discovery process those lawsuits often entail—"by clarifying that claims made in good faith are a form of protected speech." [It also seeks] to compensate survivors for successfully defending themselves against meritless and retaliatory defamation suits by permitting them to recover attorneys' fees and damages incurred as a result of the suits.

To accomplish these goals, the law establishes that "[a] communication made by an individual, without malice, regarding an incident of sexual assault, harassment, or discrimination is privileged under Section 47." (Section 47 provides for a number of other defamation privileges, including the fair report privilege.)

Section 47.1 provides that prevailing defendants in such defamation cases (and recall that Lively was in effect a defendant as to the counterclaims) are entitled to reasonable attorney's fees as well as treble and punitive damages.

The court held that, given Lively's choosing to bring the motion under Federal Rule of Civil Procedure 54(d), the "treble and punitive damages" aspect of § 47.1 is unavailable in this case:

Rule 54(d) is titled "Costs; Attorney's Fees," and it discusses certain procedures for the award of those two categories of expenses. It does not mention "damages"—compensatory, treble, punitive, or otherwise….

That treble and punitive damages cannot be sought through the procedural vehicle of a Rule 54(d) motion finds further support from a reading of the Federal Rules of Civil Procedure "as a whole." The Federal Rules of Civil Procedure establish that "[t]here is one form of action—the civil action." … "A civil action is commenced by filing a complaint with the court." That formal filing "trigger[s] the full array of legal, procedural, and evidentiary rules governing the process by which a court adjudicates the merits of a dispute."…

By seeking damages through Rule 54(d), Lively circumvents this web of procedures and processes designed for the orderly, just, and fair determination of civil claims in federal court. In essence, she seeks to pursue a kind of malicious prosecution or abuse of process claim … and to hold the Wayfarer Parties liable not only for actual damages, but to triple those damages and to impose additional punitive damages, all without the benefit of formal pleading, discovery, and dispositive motion practice in line with Rules 12(b) and 56.

Also lurking in the background is a potential conflict with the Seventh Amendment, which guarantees in federal court the right to a jury trial "in Suits at common law." To the extent a claim for damages under Section 47.1 resembles a kind of abuse of process or malicious prosecution claim, courts have held that "[a]n action for malicious prosecution falls well within the recognized forms of action at common law" for Seventh Amendment purposes….

It is understandable that Lively might attempt to shoehorn her damages claim into a Rule 54(d) motion. Litigation is costly, time consuming, and risky, and to the extent Section 47.1 is intended to remedy harms to defamation defendants as quickly, efficiently, and easily as possible, Rule 54(d)'s procedures—which permit fee liability and award determinations based upon mere motion and evidentiary hearing, present an alluring alternative to the normal arc of litigation. But those benefits cannot come at the expense of the rights of the defamation plaintiff….

But the court held Lively "is entitled to attorneys' fees and costs." It explained why that's consistent with federal procedures and with § 47.1, and also adds this about Wayfarer's First Amendment defense:

The First Amendment protects the rights of citizens to petition the Government for a redress of grievances. This includes petitioning courts for redress. The Noerr-Pennington doctrine stems from this principle. It stands for the proposition that "efforts to influence governmental action through litigation, lobbying, and the like" are "immunized from antitrust liability," "provided the activities are more than a mere 'sham.'" Courts have held that the doctrine is "relevant outside the context of antitrust actions." …

[But] "fee shifting is not civil liability within the meaning of the Noerr-Pennington doctrine." "[B]eing charged with the costs of a suit is not the same thing as being civilly liable for having filed the suit." "Fee shifting simply requires the party that creates the costs to bear them." At least with respect to fees, then, the Court finds the Wayfarer Parties' First Amendment concerns unfounded.

And the court had this to say on the merits of the § 47.1 claim:

[A] defamation defendant is entitled to recover fees and damages under Section 47.1 where: (1) they prevail in the action; (2) the communications at issue in the action conveyed factual information related to an incident of sexual assault, harassment, or discrimination that the individual personally experienced, including workplace harassment under FEHA; (3) the communications were made without malice; and (4) there is or was a reasonable basis to file a complaint regarding the assault, harassment, or discrimination….

[Section 47.1(c) requires that defendants] show that the information contained within the allegedly defamatory statement be the kind for which it would be reasonable to file a complaint. Put differently, Section 47.1(c) serves a gatekeeping function, ensuring that defendants do not unreasonably attempt to stretch the substance of the contested statements to fall within the purview of the statute.

It would be unreasonable, for example, to file a complaint of sexual harassment based on a single instance of vulgar language in the context of a comedy writer's room for an adult show with adult themes. Cf. Lyle v. Warner Bros. Television Prods. (Cal. 2006). A defamation defendant's statements about that experience therefore likely would not benefit from the Section 47.1 privilege. It would also be unreasonable to characterize a supervisor's comments about "bringing his 'guys' into the company" and his rejection of a single travel and expensive reimbursement request as "conduct based on sex or of a sexual nature." See Haberman v. Cengage Learning, Inc. (Cal. Ct. App. 2009). A defamation defendant's attempts to invoke Section 47.1 in that circumstance also likely would be rejected.

The Court need not explore the boundaries of the privilege and all the circumstances in which it might not apply, as it is clear here that the allegations contained with Lively's statements are the kinds for which it would be reasonable to file a complaint. To reiterate, the Wayfarer Parties do not dispute that the statements at issue are ones regarding sexual harassment or discrimination. Of course, they do so indirectly insofar as they dispute the truth of Lively's allegations. But they do not contest the categorical subject-matter match between the substance of her statements and Section 47.1….

The burden accordingly shifts to Wayfarer Parties to demonstrate that the statements were made with malice. {"The malice necessary to defeat a qualified privilege is 'actual malice[,]' which is established by a showing that the publication was motivated by hatred or ill will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff's rights."} … And the Wayfarer Parties have provided little evidence in connection with the motion, and none establishing that Lively acted with malice….

The only evidence that the Wayfarer Parties have submitted in connection with the Section 47.1 motion which might arguably bear on Lively's malice comes from [Danny] Greenberg's deposition, in which he was questioned about a single message he sent in which he used the word "extortion" to "referenc[e] just cumulative behavior that both the studio and Wayfarer and Justin was having to manage." This evidence falls far short of satisfying the Wayfarer Parties' burden.

The testimony excerpts make only vague reference to "behavior" issues without specifying what exactly those issues were or the background surrounding them. There is no indication that Greenberg—who was Baldoni's talent agent at the time and who was proposing language for Baldoni to use in a letter to Sony Pictures Entertainment—was referring to Lively's complaints of sexual harassment, as opposed to something else. Indeed, the Wayfarer Parties' own briefing asserts that these comments were made in connection with Lively's "threats that she would not return to the set unless she was given control over the script and editing"—not that they were made in connection with false and malicious complaints of sexual harassment. Greenberg further added at his deposition that he did not "remember [his] state of mind when [he] wrote" the comment.

Without more, the Wayfarer Parties cannot carry their burden of defeating the Section 47.1 privilege. Lively is entitled to fees and costs.

The amount of fees will be determined later.