$125K Libel Punitive Award Excessive When Jury Found No Compensatory Damages

From today’s decision by Magistrate Judge Robert Lehrburger (SDNY) in Webber v. Dash:

At the end of a four-day trial, the jury unanimously found the defendants liable for copyright infringement and defamation. The jury awarded $30,000 in damages to Plaintiff Muddy Water Pictures LLC… for infringement of Muddy’s copyright in the film “The List,” later known as “Dear Frank”…; $400,000 in compensatory damages and $250,000 in punitive damages to Josh Webber … for defamation; and $125,000 in punitive damages, but zero compensatory damages, to Muddy for defamation. Defendants Damon Anthony Dash … and his production company Poppington LLC … have moved … for [reduction] of punitive damages, or, alternatively, a new trial on punitive damages….

Muddy financed and produced the Film. Webber directed it. Muddy retained Dash and his production company for their celebrity cache[t]. The initial dispute between the parties centered on the extent of Dash’s contribution to the Film and who owned the copyright in the Film. As the evidence clearly showed, and as the jury found, Muddy is the sole owner of the Film copyright. Indeed, from the outset of the case, Dash was preliminarily enjoined from marketing and promoting the Film.

During trial, the Plaintiffs put on overwhelming evidence that the Defendants maliciously defamed both Webber and Muddy. {As the jury awarded punitive damages in connection with Plaintiffs’ defamation claims, the Court does not address the aspect of the case other than to the extent it provides context.} Plaintiffs’ defamation claims arose from social media posts Defendants issued in response to the parties’ dispute about who directed the Film and who owned the Film. For instance, in one post, Dash referred to Webber as a “culture vulture” falsely claiming credit for direction of the film, and to Muddy as paying Webber to take credit for Dash’s work. In another post, on which Dash tagged Variety, TMX, and other media outlets, Dash stated that Muddy “is pretending he owns” the Film, and Webber “(pure culture vulture) is pretending directed he” the Film. The most egregious post, however, came just over two weeks after Plaintiffs filed the initial complaint in this case.

On February 5, 2019, a post appeared on both Dash’s personal Instagram page and Poppington’s Instagram page… The post led with an image and embedded video of a child claiming that the child had not been paid for having acted in The Jump Out Boys, a film having no connection with either Webber or Muddy. Despite the absence of any such connection, and despite the fact that the video made no reference to either Webber or Muddy, the post authored by Dash read, in relevant part, as follows:

Now this is Disgusting … apparently @joshawebber […] and their crooked lawyer […] and I suspect @muddfilms robbed a 7 year old on another movie[.] This is crazy and it has to stop[.] there will be a class action suit…who ever got robbed by these clowns holla…lawsuit on me”

Dash never even reached out to Webber or Muddy to ask if they had anything to do with The Jump Out Boys or the child.

Dash’s Instagram page has over one million followers, and when a screenshot of the page was taken, the specific post had already garnered over 26,000 views. The response to Dash’s postings was particularly painful for Webber. In the wake of the postings, Webber’s phone “blew up” with comments, including even death threats. And even though Webber notified Dash that Webber was receiving death threats, Dash “continued to do this very thing online over several weeks.”

The Instagram posts also had financial consequences, especially for Webber. As a direct result of the postings, an investor pulled out of a deal to invest six million dollars in a movie to be made by Webber; Webber lost an offer to direct a movie that would have paid him $275,000; and although Webber had been in discussions on several other projects, his calls were no longer returned….

The jury … found that both Dash and Poppington had defamed Webber. The jury awarded Webber $400,000 in compensatory damages and $250,000 in punitive damages. The jury also found that both Dash and Poppington had defamed Muddy. The jury awarded Muddy no compensatory damages but awarded Muddy punitive damages in the amount of $125,000….

The court upheld, among other things, the award to Webber, but held that the award to Muddy was excessive:

Defendants included Muddy along with Webber in the defamatory postings. For the most part, Defendants’ defamation of Muddy was no less reprehensible than their defamation of Webber.

There is, however, at least one notable distinction. The egregious 2/5/2019 Post qualified reference to Muddy with “I suspect.” By using that phrase only with respect to Muddy, the 2/5/2019 Post suggests a lesser degree of certainty about Muddy’s robbing a seven-year-old child than with regard to Webber. In that sense, the Post may be considered less reprehensible with respect to Muddy than with regard to Webber. The jury’s verdict reflects as much, having awarded Muddy half the amount of punitive damages awarded to Webber.

The ratio of punitive damages to compensatory damages cuts against the jury’s punitive damages award to Muddy. Even if the jury had been awarded only nominal damages of one dollar, the ratio of punitive damages to compensatory damages would be 125,000 to 1. The Supreme Court has acknowledged that a high ratio is not dispositive in cases where conduct is particularly egregious and compensatory damages may be difficult to determine: “[L]ow awards of compensatory damages may properly support a higher ratio than high compensatory awards, if, for example, a particularly egregious act has resulted in only a small amount of economic damages. A higher ratio may also be justified in cases in which the injury is hard to detect or the monetary value of noneconomic harm might have been difficult to determine.” Accordingly, “[A]n award in a defamation case of nominal compensatory damages and substantial punitive damages is within the court’s province under the applicable New York law.”

The parties have not provided, and the Court has not identified any, comparable cases, let alone in the context of a defamation, where a jury found no non-punitive damages, awarded substantial punitive damages, and the defendant waived its right to challenge as a matter of law an award of punitive damages without compensatory or nominal damages. The closest cases, for assessing excessiveness, therefore are those in which a plaintiff claiming defamation received an award of only nominal damages but also received punitive damages. Case law suggests that punitive damages in that context are quite modest. See Celle v. Filipino Reporter Enterprises Inc. (2d Cir. 2000) (upholding an award of $1 nominal damages, and remitting a $15,000 punitive damages to $10,000 where the Court found that only two of the three allegedly defamatory articles were in fact defamatory, totaling $5,000 per defamatory newspaper article published); Fischer v. OBG Cameron Banfill LLP (SDNY 2010) (awarding $1 in nominal damages and $7,500 in punitive damages where defendant used defamatory statements in an email exchange (constituting a single instance) and directed the recipient of his emails to include defendant’s defamatory statements in a letter to Immigration and Naturalization Services in an effort to have plaintiff removed from the United States). {Punitive damages awards on top of no damages in other, less comparable contexts (such as civil rights or a fiduciary relationship), have been substantially greater.}

Also of significance, in contrast to Webber, Muddy did not present at trial any proof of harm incurred as a result of the defamatory Instagram posts. That could well explain why the jury awarded Muddy no compensatory damages. In such circumstances, a punitive damages award of $125,000 cannot be sustained if the Court is to adhere to the Supreme Court’s admonition that “courts must ensure that the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered.”

Taking all factors into account, the Court finds that the punitive damages award of $125,000 in Muddy’s favor is excessive and neither reasonable nor proportionate. Accordingly, Plaintiff Muddy may accept either a remittitur of its punitive damages award to $25,000, or, alternatively, a new trial on punitive damages….

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