Monday, May 15, 2006

Attorney Pays Big Price For Suing Newspaper For Defamation

A Morgan County attorney has learned the hard way that you better have a pretty solid case before you sue a newspaper for defamation. In this case, the attorney will have to shell out tens of thousands of dollars to the newspaper he sued for their cost of defending his defamation suit.

The case of Shepard v. Schurz Communication, Inc. arose after Cliff Shepard contacted on behalf of a client Monrovia's city attorney, Steve Litz, and requested written verification of a delinquent sewer bill. Litz furnished Shepard a list of delinquent customers, which included Shepard's client and 51 other customers. The list included the customer account numbers and addresses. Shepard's "civic duty" moved him to send letters to the 51 customer advising them that the City may have violated their right to privacy. The letter read in part:

Additionally, I thought it my civic duty to advise you that the Attorney Litz, as the attorney for the Town of Monrovia, has revealed to me and the Morgan Superior Court that you are on a "Delinquent List" of water and sewer customers. I advise you of this so that you may take such action as you deem appropriate to address this invasion of your privacy.

Litz reacted with anger to Shepard's letter. "Cliff Shepard is a liar. His statement is false," he told the Mooresville Times, which ran Litz' quote in an article with the headline, "Monrovia attorney steamed over letter." [Note: The opinion does not discuss whether this form of solicitation is permitted under Indiana's Rules of Professional Conduct] Shepard filed suit almost two years later alleging that both Litz and the Mooresville Times had defamed him. The newspaper defended its actions by claiming that it merely exercised its right to free speech to write on a matter of public concern, which was made without actual malice. The newspaper also complained of Shepard's failure to comply with the notice requirements of Indiana law (I.C. 34-15-4-2 and 3), affording a newspaper the opportunity to retract a statement before the filing of a lawsuit. The trial court granted the newspaper's motion to dismiss and ordered Shepard to pay its attorney's fees. Shepard appealed the trial court's ruling.

The Indiana Court of Appeals was called upon to explain Indiana's so-called anti-SLAPP statute in reviewing the trial court's decision. In moving to dismiss Shepard's complaint, the newspaper invoked Indiana's anti-SLAPP statute (I.C. 34-7-7-1 et seq.), which provides a defense to a defamation claim entitling the defendant to a dismissal if the act or ommission complained of involves a person's right of free speech in connection with a public issue, and the act or omission is taken in good faith and with a reasonable basis in law and fact. The defendant is required to show the court by a preponderance of the evidence that the act underlying the claim is a lawful act. If a defendant prevails under the anti-SLAPP statute, the plaintiff is required to pay the defendant's reasonable attorney fees.

To establish a claim of defamation in Indiana, a plaintiff must prove the existence of "a communication with defamatory imputation, malice, publication, and damages." In Indiana, the actual malice standard in matters of public concern applies to not only public figures but private individuals as well. In the case at hand, the only false and defamatory statements Shepard alleged were made were those attributed to Litz: "Cliff Shepard is a liar. His statement is false." The Court of Appeals agreed with the lower court that the newspaper had "accurately reported a quotation upon a matter of public concern" and had demonstrated that it had not acted with malice. It noted that the Times ran a second story after it ran the first story with the quote, allowing Shepard to explain his side of the story. The statements of Litz reported by the newspaper, according to the court, "were essentially rhetorical hyperbole by an opposing attorney, statements incapable of being proved true or false by the Times.

Making matters worse for Shepard, the Court of Appeals noted that he did not timely respond to the newspaper's motion to dismiss, and he designated no evidence showing that the newspaper had acted with malice. "Accordingly, because the speech was 'lawful' and concerned an issue of public interest, the anti-SLAPP statute criteria were satisfied, providing for an award of attorney fees," the Court of Appeals concluded. As a consequence, Shepard is required to pay to the newspaper $35,950 in attorney fees and $1,318 in costs in obtaining its summary judgment against Shepard. Compounding Shepard's woes, the Court of Appeals also ruled that Shepard must pay the newspapers' appellate attorney fees.

A hat tip to the Indiana Law Blog for catching the release of this decision today.

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