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Apr 23 2012

NY Court Rules Calling Someone “Extortionist” Is Not Defamatory

The then Mayor of the Village of Freeport was vindicated by the Second Department (a NY Appeals court covering Brooklyn, Queens, Staten Island, Nassau, Suffolk, and parts of Upstate NY), for remarks he made in a public election debate during which he called the plaintiff, a commercial real estate developer, “an extortionist” who was “trying to extort money” by filing a lawsuit seeking $25 Million in damages against the Village. The case, called Melius v. Glacken was handed down on April 17, 2012 and published today.

The mayor’s comments led to the developer Gary Melius filing a defamation action in Nassau County Supreme Court against the mayor and other officials in attendance at the debate. Melius claimed that by calling him an extortionist, the mayor had falsely accused him of a crime – an act which could indeed amount to defamation of character. The mayor had sought dismissal of the lawsuit by arguing that the statements were matters of opinion and therefore protected. The mayor also argued that everyone in attendance knew he meant that by filing a lawsuit far in excess of the true value of any potential claim, the plaintiff was forcing the Village to either pay something towards the lawsuit or force the cash-strapped Village to expend time and money to defend the lawsuit.

The lower court disagreed and ordered the case to proceed to trial. Instead, the mayor took an immediate appeal and the court issued its decision last week which agreed completely with the mayor’s position:

Considering the immediate context, a reasonable listener would have believed that calling the plaintiff an “extortionist” who is seeking “to extort money” was conveying the defendant’s opinion as to the merits of the plaintiff’s lawsuit and was not a factual accusation of criminal conduct. . .. Looking at the broader social context, the statement was made in the midst of a heated political debate, a forum where the audience would “anticipate the use of epithets, fiery rhetoric or hyperbole” . . . and would “arrive with an appropriate amount of skepticism,” “with the expectation that they are, in all probability, going to hear opinion,” and with a reluctance “to conclude—absent clear clues to the contrary from the words or context—that the statements made are to be heard as objective fact”

Righteous Indignation

In other words, any reasonable person would know that the mayor didn’t really mean that the plaintiff was actually extorting money from the Village.” It went further to state that in this context “the defendant recited a true fact forming the basis of his belief that the plaintiff was an “extortionist” who was seeking “to extort money,” i.e., the plaintiff’s lawsuit was seeking an amount “far in excess of the appraised value” of the property.”Since the mayor believed that the suit sought in excess of the potential damages, his use of these terms was an expression of his honest opinion and not actionable defamation.

The reason why this case is important enough for me to write about is that since 2008 I have been the legal commentator on a site called www.extortionletterinfo.com. The site deals with the practice of digital image companies like Getty Images, Masterfile, Corbis, Hawaiian Art Network and others, of sending demand letters to unwitting businesses who have used the companies’ images to decorate their websites. In the vast majority of cases, the company had no idea that anyone owned the image and either had a web developer put the image on their website for them or got the image themselves from a “free image site.” Imagine their surprise when they get a letter from the image company or their lawyer demanding thousands of dollars for use of a thumbnail low-res picture on their site.

Just this morning – before I read this case, I was contacted by a person who received a demand for $35,000 for the use of two low-res images on his company’s site. He was panicked, believing the letter from a person who calls herself “the Photo Attorney” (this scheme has created a cottage industry of lawyers who do nothing more than handle these cases for the image companies) was merely the first step on the road to massive judgment that would put his small company out of business. Of course, had he called the attorney, the settlement offer would have dropped down dramatically and he would have likely have agreed to pay $5,000 to $10,000 – thinking he got a break. So the company gets something like 1,000 times what the image is actually worth and the target thinks he dodges a bullet. That’s extortionist as are many of the other trolling methods I discuss on the site.

Over the years I and publisher Matt Chan (who started the site with me) have been threatened with lawsuits ourselves over the use of the term “extortion” and “extortionist.” Lawyers have threatened to report me to the Bar Association; file grievance complaints against me; file a claim against my malpractice insurance; they have even called the managing partner of my law firm to complain about my use of the terms. Of course, I responded with much of the same arguments that the court in the Melius case put forth and as it turned out, they never followed through on any of their threats anyway. But this case now gives me a firm foundation to continue the use of the term and will hopefully put to bed that I am not actually accusing anyone of the criminal act of extortion but rather using the terms colloquially to mean seeking more money than you are entitled to by seeking to place someone in fear of a large judgment.

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