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Class-action lawyers privileged to give information to media

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  1. Libel and Privacy
The plaintiffs’ lawyers in a suit against a title company accused in a mortgage fraud scheme were absolutely privileged to…

The plaintiffs’ lawyers in a suit against a title company accused in a mortgage fraud scheme were absolutely privileged to provide copies of court documents and comments to the press, Maryland’s highest court ruled last Friday in Norman v. Borison.

Stephen Norman, owner of Sussex Title LLC, alleged that two attorneys made defamatory comments to a Baltimore Sun reporter who was covering the filing of a proposed class-action lawsuit against multiple companies, including Sussex, regarding their involvement in a widespread mortgage scam.

The Maryland Court of Appeals affirmed an intermediate appellate court’s decision and rejected Norman's contentions, holding that the lawyers’ actions were taken to promote public awareness of their proposed class-action claim and thus amounted to protected statements made during the course of a proceeding.

Norman also claimed the lawyers defamed him by providing a copy of the complaint to the reporter and publishing it on the Internet.

As a general rule, allegedly defamatory statements contained in court filings or made during judicial proceedings are shielded from liability. In this case, Norman unsuccessfully argued that this litigation privilege did not apply because the attorneys provided a copy of the complaint to the reporter before it was filed with the court and published an incomplete, redacted version online.

Moreover, the complaints posted on the Internet “were not redacted so extensively as to render them fundamentally distinct from the public documents that were filed with the . . . court. It appears [the attorneys] omitted mostly exhibits, rather than substantive averments, from their internet republication,” the court ruled.

The court’s recognition of the “judicially-cognizable purpose” of notifying potential class members of ongoing litigation in which they may have had a stake was particularly important in the court’s consideration of the “verbal sound bites” the lawyers gave the reporter. These included, among others, statements that the defendants in the mortgage suit were “bad people” who “come at you like vultures.”

“The two news articles . . . provided readers (i.e., possible class members) with details about how the mortgage rescue scam worked, when it took place, who was involved potentially, and who was targeted likely.

“[B]ut for the fact that the mortgage rescue scam suit was striving to become a class action, our conclusion might have been different. The . . . adage retains vitality — lawyers who try their cases in the media do so at some peril,” the court said.

The court declined to consider the lawyers’ defense and intermediate appellate court’s ruling that Norman lacked standing to sue because the allegedly defamatory statements concerned his business and not him personally. Norman countered that the statements about his company were indeed “of and concerning” him personally because as the owner of a small, unique company, there is effectively no legal distinction between himself and his business.

The Reporters Committee for Freedom of the Press filed a friend-of-the-court brief in the case, arguing that expansion of the “of the concerning” test as proposed by the plaintiff would threaten media organizations’ ability to report on businesses and their activities free of allegations that statements imputed misconduct to and, therefore, defamed individuals within the company. The brief also urged the court to find that attorneys do not face liability when they provide comments and copies of court documents to reporters.

“Oftentimes the only practical way the news media learn of [official government actions that affect the public interest] and obtain the documents and comments needed to effectively report on them is through information supplied by the people involved in them, including attorneys,” the brief said.