Is 'spoliation in droves' defamatory? Comments by Kramer Levin and its partners are protected, court rules
A litigant who claimed he was defamed by Kramer Levin Naftalis & Frankel and two of its partners has failed to win reinstatement of his defamation suit.
The New York Supreme Court’s First Judicial Department in the Appellate Division ruled on Dec. 13 that the some of the alleged defamatory statements were protected by the privilege covering fair and true reports on judicial proceedings. Other comments were hyperbole that isn’t defamatory, the appeals court said. The Legal Profession Blog noted the appellate decision, while the Commercial Division Blog covered the initial decision earlier this year tossing the defamation case.
The alleged defamatory statements included claims that the defamation plaintiff had “spoliated evidence in droves” in litigation that involved “outright skullduggery.”
Many of the comments targeted as defamatory were made by Kramer Levin partner Philip Kaufman in two off-the-record interviews that were never published. The opinions don’t explain how the defamation plaintiff obtained the interview transcripts from two journalists, who were not identified by name in the complaint.
The plaintiff in the defamation suit was Philip Shawe, who sued over statements made when he was enmeshed in litigation with a Kramer Levin client. In that prior litigation, a Delaware judge had imposed a sanction of more than $7 million against Shawe after finding he failed to preserve evidence in the case.
The Delaware judge found that, despite a court order requiring Shawe to provide his laptop for discovery, Shawe had deleted “approximately 41,000” files from his computer. More than 1,000 of those files were unrecoverable.
The judge also said Shawe failed to safeguard his iPhone, which was said to have been accidentally submerged in a plastic cup of Diet Coke and then tossed by a subordinate who was appalled to find rat droppings in the drawer where the phone was drying out.
Shawe had been the defendant in the prior litigation, which involved a dispute over management and control of translation company TransPerfect Global. Kramer Levin’s client, Elizabeth Elting, had co-founded TransPerfect with Shawe in college, but she sued for a forced sale of the company in 2014, according to prior coverage from Forbes. The Delaware judge granted her request.
Shawe’s defamation suit targeted comments that included:
• A judge found Shawe had engaged in “massive spoliation of evidence” (from a law firm press release) and had “spoliated evidence in droves” (made by Kaufman in the off-the-record interviews).
• One of the most interesting cases of Kaufman’s career was the TransPerfect case, which involved “a level of misconduct—indeed, outright skullduggery—that I’d never before encountered” (made by Kaufman in an interview with Law360 for a profile of his litigation career).
• “Some of the stuff, which I’m not at liberty to share with you, is so egregious that it really makes the jaw drop” (from Kaufman’s off-the-record interviews).
• It is unlikely that Shawe would be able to buy back the company after a forced sale because of probable difficulty finding financing. After the judge issues a sanctions decision, “Shawe wouldn’t be able to finance his way out of his own bathtub.” (The statements were made by Kaufman in the off-the-record interviews. He was later proven wrong in his predictions.)
There is no need to use a court’s exact words to be protected by the fair report privilege, the appeals court said. “Defendants’ comment about plaintiff’s ‘massive spoliation’ or ‘spoliation in droves’ is protected,” the New York appellate court said.
Shawe had argued the law firm and its partners had “overstated the matter, because his spoliation proved largely reversible,” the appeals court said. “However, plaintiff did not cause the recovery of the data; rather, it occurred in spite of him. Moreover, he lied under oath about his spoliating conduct. As the court observed, an unsuccessful spoliator is still a spoliator.”
The appeals court also said that predictions are not actionable as defamation, while the “jaw drop” comment was “largely nonactionable hyperbole.”
Shawe had sued Kaufman and a second Kramer Levin partner, Ronald Greenberg. Most of the comments at issue, however, were made by Kaufman.
