Court allows bank manager's defamation claim to proceed

A California appellate court last week affirmed a lower court ruling that a bank manager presented enough evidence to allow his defamation claim against McGraw-Hill to proceed, thus rejecting the publisher's anti-SLAPP argument. The manager alleged that he was defamed by statements about the mortgage crisis in a BusinessWeek article.

The Nov. 28, 2008, article, written by BusinessWeek Associate Banking and Finance Editor Mara Der Hovanesian, was a report on the state of mortgages and the economy. Der Hovanesian reported that state and federal investigators tried to determine if "banks knowingly pushed bad loans through the system." The article alleged that underwriters at the Santa Monica and Beverly Hills branches of Countrywide bank often shredded tax documents they received from borrowers to destroy proof of the borrowers' incomes and extend bigger loans than they could afford, according to the court opinion, which quoted from the article.

The article quoted a Countrywide wholesaler as saying that branch managers told investigators: "Don't put anything in the shredder bins at work. If you're going to shred, take it home," according to the opinion.

Steve Danziger, the branch manager of Santa Monica's Countrywide office, sued Der Hovanesian and BusinessWeek's then-publisher, McGraw-Hill, for defamation. McGraw-Hill, which subsequently sold the magazine to Bloomberg LP, filed a special motion to strike pursuant to the state's anti-SLAPP statute, which is designed to prevent lawsuits generally brought in an attempt to silence critics, known as strategic lawsuits against public participation. The trial court denied the publisher's anti-SLAPP motion.

Although the appellate court affirmed in Danzinger v. McGraw-Hill Companies Inc. the trial court's finding that the challenged article was protected speech because it involved an issue of public interest — as required for dismissal under the anti-SLAPP law — it also upheld the lower ruling that Danziger established a probability of prevailing on his claims because he alleged that the statement that he instructed workers to shred documents at home was false, defamatory and not subject to any privilege. Moreover, the lower court found, and the appellate court affirmed, that Danziger produced sufficient evidence that he is a private figure, meaning he does not have to meet the heavier burden of proving that the statement was made with actual malice, or with knowing falsity or reckless disregard for its truth or falsity.

Regarding the privilege issue, the defendant argued that Danziger had not met his burden of proving falsity because the "sting or gist" of the statement did not render it materially false. The trial and appellate courts disagreed.

"The gist of the article was the national mortgage crisis and the ongoing investigations of events giving rise to or contributing to the crisis," the appellate court wrote. "The challenged statements were directed at Danziger in particular and made him look like a crook . . . The sting or gist of these statements are not the same as, and in fact are markedly worse than, news that Countrywide contributed to the national mortgage crisis as a result of its toxic mortgages."

McGraw-Hill's attorney, Guylyn Cummins, could not be reached for comment on the opinion and her client's plan, if any, to appeal the ruling.