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NY Federal Court ‘SLAPPs’ Sheldon Adelson for Suing Political Group

By Jessica Meek and Margaret Christensen

The Southern District of New York recently granted summary judgment on a claim for damages and attorney's fees brought by the parties who successfully defended a defamation claim under the applicable anti-SLAPP statute. Specifically, in Adelson v. Harris, 973 F. Supp. 2d 467, 504 (S.D.N.Y. 2013), aff'd, 876 F.3d 413, 415 (2d Cir. 2017) ("Defamation Lawsuit"), the court dismissed the plaintiff's claims under Nevada's strategic lawsuit against public participation statute ("anti-SLAPP"). Thereafter, the prevailing defendants sued for compensatory damages, punitive damages, and attorney's fees ("Damages Lawsuit").

The Southern District of New York, in National Jewish Democratic Party v. Adelson, No. 18-CV-8787, appeal pending No. 19-3195, granted summary judgment in favor of the prevailing defendants for compensatory damages and attorney's fees, but not on punitive damages. In the same Order, the Court denied the former defamation plaintiff's Motion to Dismiss the Damages Lawsuit. In doing so, the Court rejected a slew of arguments, and, most notably, that the Damages Lawsuit was itself a SLAPP and that fee recovery was allowed only if the Defamation Lawsuit was "objectively baseless."

Underlying Defamation Lawsuit

Sheldon Adelson is the Chairman and CEO of Las Vegas Sand Corporation, which owns and operates casinos. He provided financial support to Republican candidates during the 2012 presidential election cycle. The National Jewish Democratic Council and its chair, Marc Stanley (collectively, the "Council") published a statement on its website that encouraged Mitt Romney to stop accepting money from Adelson. Importantly, the statement included the allegation that Adelson "personally approved" of prostitution in his Macau casinos.

Adelson then sued the Council for defamation based on the Council's statement. The Court, however, granted the Council's anti-SLAPP motion, awarding attorney's fees and costs to the Council. See, 973 F. Supp. 2d at 504, aff'd 876 F.3d at 415 The Council then filed the Damages Lawsuit to recover compensatory and punitive damages from the Defamation Lawsuit, as well as attorney's fees from the Damages Lawsuit.

Summary Judgment in the Damages Lawsuit

The court granted the Council's motion for partial summary judgment on liability for compensatory damages and attorney's fees—before Adelson even filed a responsive pleading. While noting that motions for summary judgment are ordinarily "unreasonable" at this procedural stage, the court held that this was a case where a pre-answer motion for summary judgment was appropriate. The court explained that the sole precondition for compensatory damages and attorney's fees under Nevada's anti-SLAPP statute is that the district court grant a motion to dismiss under that statute. The Council filed a statement of undisputed facts, including the key fact that the district court indeed granted the Council's anti-SLAPP motion. Because the court granted the Council's anti-SLAPP motion, and Adelson did not dispute this fact, "that end[ed] the matter" on compensatory damages and attorney's fees.

Although the Council was entitled to compensatory damages and attorney's fees as a matter of law, the court declined to enter summary judgment on liability for punitive damages. Liability on punitive damages was "premature" given another Nevada statute requiring proof of "oppression, fraud or malice" for recovery of punitive damages. The punitive damages claim had to wait minimally until after Adelson responded to the Complaint.

Motion to Dismiss in the Damages Lawsuit

Adelson moved to dismiss the Damages Lawsuit on several bases, including that applying Nevada's anti-SLAPP statute would violate the Supremacy Clause and New York's choice of law rules (the court rejected both arguments). This article, however, addresses only two of Adelson's arguments in support of dismissal.

First, Adelson argued that the Defamation Lawsuit—even though dismissed as a SLAPP—was itself protected under the anti-SLAPP statute, and the Damages Lawsuit qualified as a SLAPP. In other words, Adelson contended that the Damages Lawsuit could be a SLAPP if the Defamation Lawsuit was a "good faith communication." Characterizing Adelson's allegation as "puckish," the Court rejected this argument. In short, Adelson had not demonstrated that his initial lawsuit was in good faith; there was no evidence that the allegations in the Defamation Lawsuit were truthful or made without knowledge of their falsehood. The court also noted that adopting Adelson's view would create an "oddity," stating, "[i]t would be peculiar, to say the least, if Nevada wrote its anti-SLAPP statute to shield litigants who file SLAPPs from liability in a subsequent anti-SLAPP damages action."

Second, Adelson argued that Nevada's anti-SLAPP statute does not permit recovery unless the Council demonstrated that the Defamation Lawsuit was "objectively baseless," and the Council did not plead objective baselessness. The court rejected this argument based on the anti-SLAPP statute's plain language. Adelson's proposed "objectively baseless" standard is not in the anti-SLAPP statute, despite Adelson's arguments, essentially, that the standard should be read-in (e.g., that California's anti-SLAPP statute contains the "objectively baseless" standard; that this standard would protect the right to petition the courts; and that the doctrine of constitutional avoidance necessitates reading this standard into the statute). The key point was that the anti-SLAPP statute imposed "no legal precondition on the availability of damages." As the court aptly noted, "[c]ontext only reinforces text."

Takeaways

A theme of the court's order is the presence or absence of statutory preconditions for anti-SLAPP damages. In the motion to dismiss portion of the order, the court emphasized that imposing a heightened pleading standard ("objectively baseless") not found in the anti-SLAPP statute would run awry of the plain text. However, in the summary judgment portion of the order, the court looked to state law limitations outside of the anti-SLAPP statute governing recovery of punitive damages (i.e., "oppression, fraud or malice" as a prerequisite for recovery). Both lines of reasoning are logical, as both are rooted in plain statutory text. However, this case is a reminder for media lawyers that certain state law provisions, even if they are not within the anti-SLAPP statute, may affect the burden of proof and bounds of recovery.

Margaret Christensen and Jessica Meek are attorneys at Bingham Greenebaum Doll in Indianapolis. Bingham Greenebaum Doll will be combining with Dentons in January 2020.

National Jewish Democratic Council was represented by Richard D. Emery, Emery Celli Brinckerhoff & Abady, LLP, NY. Adelson was represented by Lee A. Armstrong, Jones Day, New York.

 
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