Presentation Materials on Massachusetts Data Regulations

by Lee Gesmer on March 17, 2009

Recently my partner Joseph Laferrera has given a series of presentations and webinars on the controversial new Massachusetts data security regulations. Information on his upcoming webinar with Ntirety (a database administrator and client of our firm), on April 2, 2009 at 10:00 a.m., is available at this link.

A copy of the slides Joe is using now (they change often, based on developments), is on scribed.com, here:

The New Standard – Massachusetts’ Sweeping New Data Protection Rules

Continue Reading Presentation Materials on Massachusetts Data Regulations

I’d Like to Hire You Counselor, But First Tell Me What You Contributed to the Judge in the Last Election?

by Lee Gesmer on March 14, 2009

“We will sell to no man … Justice” Magna Carta (1297)

“If you think aficionados of a living Constitution want to bring you flexibility, think again. You think the death penalty is a good idea? Persuade your fellow citizens to adopt it. You want a right to abortion? Persuade your fellow citizens and enact it. That’s flexibility.” Supreme Court Justice Antonin Scalia

“In civilized life, law floats in a sea of ethics” Former Supreme Court Justice Earl Warren

…. “nor shall any State deprive any person of life, liberty, or property, without due process of law” … Fourteenth Amendment to the United States Constitution

————————–

Should the Supreme Court extend the Due Process Clause of the Fourteenth Amendment to create a constitutional right to a fair tribunal in the state courts? That’s the issue facing the Court in Caperton v. A.T. Massey Coal Co., which was argued before the Court last week.

The facts are straightforward – in fact, John Grisham adapted them for his novel The Appeal.

Justice Brent D. Benjamin, Supreme Court West Virginia

Caperton won a $50 million judgment against the A.T. Massey Coal Co. in state court in West Virginia in 2002. Unhappy with this outcome, the Massey CEO, Don Blankenship, authorized an appeal to the West Virginia Supreme Court of Appeals (the highest state court in West Virginia). But Blankenship believed that one of the judges on that court was anti-business, and he realized that there would be a judicial election in time to unseat that judge before the appeal was heard. Blankenship helped raise several million dollars in support of the candidate he endorsed, Brent Benjamin. That’s a lot of money for a judicial election in West Virginia, and no surprise, Benjamin won. And, now-”Justice” Benjamin was the “swing vote” in a 3-2 decision that ruled in favor of Massey Coal, overturning the $50 million judgment. During the proceedings Caperton repeatedly asked Justice Benjamin to withdraw from the case based on conflict of interest (or, as lawyers prefer to say, “recuse himself”), but Benjamin, who had sole say on this issue, refused.

Caperton appealed to the federal courts, claiming that he had been denied due process under the 14th Amendment to the U.S. Constitution when Justice Benjamin refused to withdraw from the panel deciding the case. In response, Massey argued (as it had below) that campaign contributions alone were not enough where the contributions had gone to Benjamin’s campaign fund (not to Benjamin personally), and there was no evidence that Justice Benjamin had any “actual” bias.

This is a difficult case for the Court, because the facts are so one-sided in favor of Capterton. Would you like a judge sitting on your case, knowing that his election was probably due to the other side’s overwhelming financial support? This is a classic example of a situation where “hard cases make bad law.” Yet, if the Court accepts Capterton’s argument it may open the floodgates to challenges to judges in state courts throughout the country. As in so many constitutional cases decided by the Court, the question is where to draw the line for the guidance of the lower courts, and how to avoid opening a Pandora’s box of litigation the issue.

It’s easy to think of situations that might face the courts if the Supreme Court rules in favor of Caperton, and several of the Supreme Court judges (Roberts and Scalia), did just this during oral argument. What if the contribution had been made by members of a trade group that had an interest in ongoing litigation? How few members would the trade group have to have before constitutional problems arose? How much contribution money is too much?

More fundamentally, what basis is there to conclude that the Constitution authorizes the federal courts to sit in judgment on judicial disqualification proceedings in the state courts? Does the Constitution empower the federal courts to guard against abuses of this nature by state court judges? What judicial “standard” (or test) should the court create to be applied in future cases? Isn’t this something the states are better left to regulate themselves? Won’t the political process itself eliminate judges who can be bought? After all, the case involving Judge Benjamin has received massive amounts of adverse publicity, and by now, Justice Benjamin may regret his decision not to have recused himself from this case.

The transcript of oral argument (linked below), is quite entertaining. This a “hot bench,” and Ted Olsen, arguing for Capterton, barely got one sentence into his argument before being challenged by Justice Scalia who (with some help from Chief Justice Roberts) had him under attack throughout his argument. It’s not surprising that these two “conservative” justices were hostile to the new due process rights which Mr. Olsen was advocating. The outcome of this case will be of great interest, regardless of the ruling.

Link to the transcript of oral argument in Caperton v. A.T. Massey Coal Co., March 3, 2009

Continue Reading I’d Like to Hire You Counselor, But First Tell Me What You Contributed to the Judge in the Last Election?

CAFC to Patent Applicant: "Read Our Lips – We Really Don't Like Business Method Patents"

by Lee Gesmer on March 14, 2009

In In re Lewis Ferguson, a March 6, 2009 decision from the Court of Appeals for the Federal Circuit, the applicant sought to patent “a marketing paradigm for bringing products to market.” After the application was denied by the various levels of the Patent Office bureaucracy for lack of patentable subject matter, the applicant appealed. The CAFC court quoted this claim from the application as an example:

A paradigm for marketing software, comprising:

a marketing company that markets software from a plurality of different independent and autonomous software companies, and carries out and pays for operations associated with marketing of software for all of said different independent and autonomous software companies, in return for a contingent share of a total income stream from marketing of the software from all of said software companies, while allowing all of said software companies to retain their autonomy.

Novel and nonobvious? It may just be me, but if this isn’t a distribution system that’s been implemented a million times, I’ll be damned.

The CAFC didn’t like it either, but they didn’t even get that far. Relying on In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), the Court observed:

Applicants’ method claims are not tied to any particular machine or apparatus. Although Applicants argue that the method claims are tied to the use of a shared marketing force, a marketing force is not a machine or apparatus. As this court recently stated . . . a machine is a “‘concrete thing, consisting of parts, or of certain devices and combination of devices.’ This ‘includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result.’” . . . . Applicants’ method claims are not tied to any concrete parts, devices, or combination of devices.

Nor do Applicants’ methods, as claimed, transform any article into a different state or thing. At best it can be said that Applicants’ methods are directed to organizing business or legal relationships in the structuring of a sales force (or marketing company). But as this court stated in Bilski, “[p]urported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”…

Applicants do assert, however, that “[a] company is a physical thing, and as such analogous to a machine.” But the paradigm claims do not recite “a concrete thing, consisting of parts, or of certain devices and combination of devices,” . . . and as Applicants conceded during oral argument, “you cannot touch the company.”

Of course, Bilski is seeking to appeal the CAFC’s decision to the Supreme Court. If the appeal is accepted all bets are off on the “machine or transformation” test established by the CAFC in Bilski and applied here.

Here is a link to the case discussed above: In re Lewis Ferguson.

And here is a link to the Boston Patent Law Association’s (BPLA) brief urging certiorari and reversal in Bilski.

Continue Reading CAFC to Patent Applicant: "Read Our Lips – We Really Don't Like Business Method Patents"

Judge Posner is Not Afraid to Use the "D" Word

by Lee Gesmer on March 12, 2009

Judge Posner is Not Afraid to Use the "D" Word

The redoubtable Seventh Circuit Appeals Court Judge Richard Posner (“the most cited legal scholar of all time”; “probably the greatest living American jurist”), isn’t afraid to call it as he sees it, and given Posner’s brains, experience, and economic cred as an antitrust expert, he may be more credible than your average, run-of-the-mill economist (“economists exist to make astrologers look good”).

In Posner’s newest book, A Failure of Capitalism: The Crisis of ’08 and the Descent Into Depression, he states:

The world’s banking system collapsed last fall, was placed on life support at a cost of some trillions of dollars, and remains comatose. We may be too close to the event to grasp its enormity. A vocabulary rich only in euphemisms calls what has happened to the economy a “recession.” We are well beyond that. We are in the midst of the biggest economic crisis since the Great Depression of the 1930’s. It began as a recession — that is true — in December 2007, though it was not so gentle a downturn that it should have taken almost a year for economists to agree that a recession had begun then. (Economists have become a lagging indicator of our economic troubles.)

The word itself is taboo in respectable circles, reflecting a kind of magical thinking: if we don’t call the economic crisis a “depression,” it can’t be one. But no one who has lived through the modest downturns in the American economy of recent decades could think them comparable to the present situation. It is the gravity of the economic downturn, the radicalism of the government’s responses, and the pervading sense of crisis that mark what the economy is going through as a depression.

Ouch.

Apparently Freakenomics got an advance copy of the book, and was able to post these quotes.

Continue Reading Judge Posner is Not Afraid to Use the "D" Word

Jerry Spence On the Art of Cross Examination

by Lee Gesmer on March 11, 2009

Continue Reading Jerry Spence On the Art of Cross Examination

Judge Stearns: No Market Power, No Illegal Tying

by Lee Gesmer on March 8, 2009

U.S. District Court Judge Richard Stearns has issued a summary judgment decision dismissing AVX Corp.’s claims of an an antitrust violation by Cabot Corporation, based on allegations of illegal tying by Cabot.

A tying arrangement is where a seller says, “I’ll sell you product A, but only if you also buy product B.”  Product B is said to be “tied” to product A, the “tying product.”  A little thought and common sense would cause even an economist to conclude that if the seller doesn’t have market power in product A, rather than be forced to buy product B a rationale buyer will look around for another seller, who can sell it product A without the “tie.”  In fact, this is just the conclusion the Supreme Court reached in the Illinois Tool case in 2006.

In the AVX v. Cabot case Judge Stearns noted that “AVX offers no evidence that Cabot had a sufficiently dominant market position to ‘force’ it into a multi-year purchase agreement for a product that it did not want.”  The fact that AVX was unable to satisfy this element of an illegal tying arrangement doomed its antitrust claim.

If this wasn’t enough, Judge Stearns also found that AVX was unable to produce reliable evidence of damages, another essential element of its claim.

Based on Judge Stearns’ opinion, it appears that AVX missed the mark in this case by a large margin.  While the case doesn’t break new ground, it is a good reminder of the burden a plaintiff faces when it claims illegal tying, especially following the Supreme Court’s 2006 decision in Illinois Tool.

Here is a link to the case, AVX Corporation v. Cabot Corporation.

Continue Reading Judge Stearns: No Market Power, No Illegal Tying

Not Every Great Idea Is a Trade Secret

by Lee Gesmer on March 7, 2009

Not Every Great Idea Is a Trade Secret

You have a brainstorm: there is a market for dumpster rentals, and what better place to make the rentals than The Home Depot? You go to Home Depot and have it sign a non-disclosure agreement before you disclose this idea to it. You disclose the dumpster idea to Home Depot executives, but after much discussion and a great deal of back and forth over several years with many Home Depot employees, Home Depot turns you down. The next thing you know, Home Depot is renting dumpsters, using a business model not too different from the one you proposed.

You cry foul. You sue Home Depot in Massachusetts state court for misappropriation of trade secrets. Home Depot removes the case to Massachusetts federal district court where it grinds through a couple of years of discovery. During that process you claim that the damages you’ve suffered are between $19 and $60 million.

Home Depot files a motion for summary judgment. U.S. District Court Judge Douglas Woodlock grants summary judgment. Judge Woodlock observes that the idea of renting dumpsters through Home Depot is not a trade secret.

(1) the idea of Home Depot renting and (2) the idea of renting dumpsters [was not a trade secret] . . . anyone even vaguely familiar with the home improvement industry could have put these two concepts together easily based upon information in the public domain.

Essentially, the court relied on the hoary Massachusetts trade secret doctrine which state that a confidentiality agreement cannot make secret that which is not secret. Case dismissed.

Here is a link to the decision.

By the way, most large companies will not sign an NDA in advance of receiving business ideas for this very reason – if they reject the idea and adopt it later, they are vulnerable to suit. They then have to show that either the idea is not a “secret” (as Home Depot did here) or that it was already under consideration somewhere within their company prior to disclosure. Most companies conclude that rather than take that risk, it’s better to just refuse to sign NDAs. Without the NDA, this case would never have been filed or, it would have been dismissed much earlier. Home Depot learned that lesson the hard way.

Continue Reading Not Every Great Idea Is a Trade Secret

Key Legal Issues Involving Downsizing and Corporate Officers in Troubled Companies

by Lee Gesmer on March 6, 2009

While I shy away from posting PowerPoint outlines on this blog, the materials from two talks that my partner Sean Gilligan recently gave to attorneys in our firm are sufficiently comprehensive as to be an exception. Both outlines are on scribd.com, and are embedded below:

Issues Facing Officers and Directors in Financially Troubled Companies

Key Issues for Corporations Facing Downsizing, Insolvency or Liquidation

Continue Reading Key Legal Issues Involving Downsizing and Corporate Officers in Troubled Companies

Schumpeter, Creative Destruction and the Golden Age of Capitalism

by Lee Gesmer on March 5, 2009

Schumpeter, Creative Destruction and the Golden Age of Capitalism

In the late 1970s and early 1980s, the American economy was in crisis after years of stagflation. Mortgage rates were 17%, business loans carried 20% interest rates and productivity had collapsed. On April 21, 1980, Time magazine ran a cover story that asked the question: “Is Capitalism Working?” Today, the crisis that the American economic system faces is greater than that during the darkest days of stagflation. In this opinion piece, George M. Taber, former business editor of Time magazine and author of the 1980 cover story, asks and answers the same question — 29 years later. [Continue reading at Knowledge@Wharton]

Taber still agrees with the final sentence of his 1980 article in Time:

For all its obvious blemishes and needed reforms, capitalism alone holds out the most creative and dynamic force that any civilization has ever discovered: the power of the free, ambitious individual.

And, he warns that despite the pain inflicted by the boom and bust business cycle that is the downside of unfettered capitalism — pain that we are suffering from now -

well-intentioned, but unwise, changes in the nature of American capitalism could do damage that will be felt for decades . . . The American brand of capitalism rests on creative destruction, innovation and, ultimately, entrepreneurs. It is impossible to rebuild the superstructure of U.S. prosperity by destroying its foundation.

Continue Reading Schumpeter, Creative Destruction and the Golden Age of Capitalism

What? Marshall, Texas?

by Lee Gesmer on March 5, 2009

What? Marshall, Texas?

It would be nice if lawyers didn’t have to call their clients and tell them that their company had been sued for patent infringement in the Eastern District of Texas (EdTX). “Where? Where’s that?” “What, you’ve never heard of Marshall, Texas?” you reply. “Never been to Tyler, Beaumont or Lufkin? Kind of quiet evenings after the sidewalks are rolled up, but your choice of BBQ rib joints is almost endless, and traffic isn’t a problem.”

As I’ve written before EdTX has evolved into a hotbed of patent litigation, although it has cooled a bit as of late. When you’re talking to a lawyer in Boston and you learn that he or she is heading to Texas, it’s a good bet that the destination is somewhere in the Eastern District. The EdTX has assembled some frightening statistics regarding number of patent cases (large) and the success rate of plaintiffs (high).

The lawyers in that part of the country joke that they used to do PI law (personal injury), and now they do IP law (intellectual property). But, everyone has known for a while that this couldn’t last forever, and that EdTX might lose its hold on patent litigation once W left office.

Indeed, the patent reform litigation just filed in the House and Senate has the EdTX in its crosshairs. The Senate bill states (excerpted):

A party shall not manufacture venue by assignment, incorporation, or otherwise to invoke the venue of a specific district court. Venue is only proper were (a) defendant is incorporated; (b) defendant has its principle place of business; (c) where the defendant is permanently located and has committed substantial acts of infringement; or (d) where the plaintiff resides if the plaintiff is a nonprofit or individual inventor. The court should transfer venue to avoid evidentiary burdens when transfer can be accomplished without causing undue hardship to the plaintiff.

If passed, a provision like this would cut into the patent litigation industry in EdTX, and the lawyers there might have to return to PI once the cases in their pipeline run out. That may make them sad, but it will make lawyers and companies in the rest of the U.S. quite happy.

Continue Reading What? Marshall, Texas?

First Circuit Weighs in on the Law of Unjust Enrichment in Massachusetts

by Lee Gesmer on March 3, 2009

First Circuit Weighs in on the Law of Unjust Enrichment in Massachusetts

The terms “unjust enrichment,” “restitution,” “quasi-contract” and “constructive trust” cause the average lawyer to recoil with apprehension (although she doesn’t show it, of course). We were forced to grapple with some of these ancient legal concepts in law school, but we quickly migrated to more modern legal principles, and although we may have remembered the terms (any lawyer worth his salt can throw around the terms unjust enrichment and restitution), the depth of knowledge of most lawyers on these topics is shallow at best. We were relieved when we could move on to things like the Uniform Commercial Code, which dates back only to the early 1950′s.

In fact, it’s easy to trace “unjust enrichment” and related terms back as far as the 1600s, and earlier. A search on Google Book Search reveals a volume titled “Unjust Enrichment in England before 1600.” References to Roman Law are also not difficult to find. When you start dealing with legal principles forged during the Middle Ages or Roman times, you know it’s going to be difficult.

Imagine, then, how QLT, Inc., a Canadian-based biopharmaceutical company, felt when it learned that it had been sued in federal court in Massachusetts and that the outcome of the case hinged on the application of these ancient legal doctrines? That was the situation that QLT faced. Even worse, QLT found itself in the courtroom of U.S. District Judge William Young, one of those rare judges who never backs down from a challenge, and probably mastered Latin so he could read the ancient legal texts in the original.

In early January the U.S. Court of Appeals for the First Circuit issued a decision, affirming a $100 million-plus judgment against QLT. The facts of the case are complex, but the First Circuit summarized them nicely in the opening paragraph of its 64 page decision:

These appeals require us to grapple with the metes and bounds of Massachusetts unjust enrichment and restitution law. Like many such cases, the present case involves one party’s conferral of a valuable benefit during ongoing contract negotiations, followed by an irreparable breach in the bargaining process. What makes this case unusual is that its subject matter — the development of a blockbuster pharmaceutical — poses challenges in valuing the benefit conferred, . . . . Defendant QLT Phototherapeutics, Inc. (“QLT”) appeals a jury finding that it was unjustly enriched because plaintiff Massachusetts Eye and Ear Infirmary (“MEEI”) conferred on QLT several benefits during the course of the development of Visudyne, a successful (and highly profitable) treatment for age-related macular degeneration (“AMD”), a leading cause of adult blindness.

The Court of Appeals decision is a tour de force on the law of unjust enrichment in Massachusetts, and although not binding on the Massachusetts state courts, is likely to be the guiding case in this area until something more authoritative comes along from the Massachusetts state courts. After a recitation of the well-known legal standard for unjust enrichment (see the three-part standard at bottom**), where the case got interesting was when the court held that:

  • the “benefit conferred” under this doctrine did not require proof of a “trade secret.” The First Circuit affirmed Judge Young’s decision to allow the jury to to proceed to an unjust enrichment verdict based on the plaintiff’s ownership of merely “confidential information.” “Confidential information” and “trade secrets” are two different things, with confidential information generally being things such as pricing or marketing plans – information of some value, but usually ephemeral in nature. Trade secrets tend to be proprietary formulas, algorithms, things that are of lasting value and importance. However, the First Circuit held that mere “confidential information” could be used to support a claim of unjust enrichment. This holding is noteworthy, and it opens to door to a category of claims that would have been precluded had the court held otherwise. Unjust enrichment may not stand where the benefit is publicly available information, but almost anything short of that can be deemed confidential, and will support a claim.
  • The First Circuit held that while a plaintiff may not recover its lost profits under a theory of unjust enrichment, it could force the defendant to disgorge its profits. Although Massachusetts courts have not spoken on the issue of profit disgorgement in the context of quasi-contracts, the First Circuit held that it was “likely” it would rule as described. Thus, the court clarified the measure of damages in unjust enrichment cases, again to the benefit of plaintiffs.

Read the case  here: Mass Eye and Ear Infirmary v. QLT Phototherapeutics, Inc.

(** The elements of unjust enrichment are: (1) a benefit conferred upon the defendant by the plaintiff; (2) an appreciation or knowledge by the defendant of the benefit; and (3) acceptance or retention by the defendant of the benefit under the circumstances that would be inequitable without payment for its value.)

Continue Reading First Circuit Weighs in on the Law of Unjust Enrichment in Massachusetts

Can I Say That? Based on the First Circuit’s Interpretation of a 1902 Law, Maybe Not

by Lee Gesmer on March 3, 2009

It’s perfectly monstrous the way people go about nowadays saying things against one, behind one’s back, that are absolutely true”

Oscar Wilde

“Gossip needn’t be false to be evil – there’s a lot of truth that shouldn’t be passed around.”

Frank A Clark

“The defendant in an action for writing or for publishing a libel may introduce in evidence the truth of the matter contained in the publication charged as libellous; and the truth shall be a justification unless actual malice is proved”

Entire text of Mass. Generals Laws, Chapter 231, Section 92, enacted in 1902

—————————-

“The truth is an absolute defense to a claim of defamation.”  This is something that all lawyers know, and we have told this to clients countless times.  However, we will have to temper this advice following a recent decision from the  First Circuit U.S. Court of Appeals.  The case, for reasons that should be apparent, is attracting a lot of attention.

First the case, then the law, then a few brief observations.

Facts of the Case

Alan Noonan was an employee of Staples. After an investigation, Staples concluded that Noonan had padded his expense account, and terminated him for cause. The day after the termination a Staples executive sent the following email to 1500 Staples employees:

It is with sincere regret that I must inform you of the termination of Alan Noonan’s employment with Staples. A thorough investigation determined that Alan was not in compliance with our [travel and expenses] policies. As always, our policies are consistently applied to everyone and compliance is mandatory on everyone’s part. It is incumbent on all managers to understand Staples['s] policies and to consistently communicate, educate and monitor compliance every single day. Compliance with company policies is not subject to personal discretion and is not optional. In addition to ensuring compliance, the approver’s responsibility to monitor and question is a critical factor in effective management of this and all policies.

Noonan sued for defamation. Staples responded that the statement regarding Noonan was true. The federal U.S. judge found that the statement was true, and dismissed the claim.

The Appeal

On appeal, the Court of Appeals reversed. The court applied the Massachusetts defamation statute, enacted in 1902, which states in its entirety as follows:

The defendant in an action for writing or for publishing a libel may introduce in evidence the truth of the matter contained in the publication charged as libellous; and the truth shall be a justification unless actual malice is proved. (M.G.L. c. 231, Section 92)

The court took as true the lower court’s finding that Noonan had been out of compliance with Staples’ travel and expense policies.  Taking an “originalist” approach to the 1902 statute (a legal philosophy that takes the view that the the text of a written law should be understood according to what was meant by those who drafted and enacted it – think Supreme Court Justice Anton Scalia), the court held that “actual malice” meant “malevolent intent” or “ill will.” The court concluded that whether the Staples executive who published the email did so with “malevolent intent or ill will” was a question of fact, and sent the case back to the trial court for a jury trial.

Observations

This case will be analyzed six ways from Sunday by the defamation experts, of which there are many, so I’ll keep my observations brief.

First, it begs the obvious to observe that sending this email to 1500 Staples employees was poor judgment.  Apparently, there had been other expense account incidents at Staples before this, and one implication that readers could have taken from this email was that Noonan had engaged in fraudulent conduct (or so Noonan argued).  However, for all we know the Staples exec that sent the email had consulted with legal counsel and been told “truth is an absolute defense, ” so don’t worry about it.

Second, when I was studying for the Bar Exam I recall that we touched on this statute.  Our discussion reflected the widely held assumption that the “actual malice” exception to the “truth defense” was likely unconstitutional under the First Amendment. I’m not sure why the First Circuit didn’t address the constitutional legality of the statute before applying it. The law is more than 100 years old, and its enactment precedes the development of defamation in light of First Amendment law, all of which was deemed irrelevant under the court’s approach to statutory construction.

Third, taking the case at its literal meaning, anytime a person gossips about another person in a manner that is damaging to reputation it is actionable if it is accompanied by “ill will,” even if true (I take the “ill will” standard to be much easier to met than “malevolent intent”).  Not to overstate things, but the implications of this could be significant.  If you speak ill of your enemy in such a way that damages her reputation in the community, you may be liable for defamation, whether your statement is true or not.

Some examples:

  • You learn that someone in your community (your town, school community, church or temple, or workplace, for example), was once charged with a crime, and you share this fact with others.
  • You share the fact that someone in the community had been terminated from an earlier job based on suspicion of theft, sexual harassment or other reputation-harming conduct.
  • You share the fact that long ago, one of the attorneys in your law firm failed the bar exam on the first try, before passing it on the second try.
  • You share the fact that one of your co-workers whom no one knows is gay visits the local “gay” bar most weekend nights.

Assuming that the victim of this speech can claim that you bear her ill will, you could be liable for defamation under this decision.  And why would you share these facts if you didn’t hope to to injure the person?  In other words, ill will may not be that difficult to prove.

The issues associated with a decision like this are complex, as is the balance between freedom of speech and the harm that speech can cause.  The Supreme Court has struggled to establish the line between defamation and permissible speech when “public figures” are involved and the speech is false, but much less attention has been paid when the victim of alleged defamation is a private person, as was Mr. Noonan in this case.

The picture is complicated even further by the right of privacy.  In Massachusetts, as in many other states, the right of privacy has been interpreted to encompass a prohibition against the publication of “private facts,” which are facts of a “highly personal or intimate nature” that are “of no business of the public.”  It appears that the Noonan v. Staples decision extends the reach of that protection to a level somewhere beyond “private facts,” although this extension is based on the law of defamation according to the 1902  Massachusetts statute, not the law of privacy.

The First Circuit decision in Noonan v. Staples is here.

An article by Dan Kennedy on MediaNation (“A Chilling Decision About Libel”) critiquing this decision is here.

Continue Reading Can I Say That? Based on the First Circuit’s Interpretation of a 1902 Law, Maybe Not

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