California Developer Sues Homeowners for Libel Over Disparaging Blog Comments

Los Angeles real estate developer Barry Shy and his development company, 5th St Loft, have sued Jessica Jordan and Alan Dylan, who reside in a building developed by Shy and run the website Truedowntown, the "unofficial" site for the Shybary Grand Loft in Los Angeles.  The lawsuit, which plaintiffs filed on June 17, 2008, claims that Jordan and Dylan libeled Shy and damaged his businesses by making disparaging comments about him.

Jordan and Dylan are both owners of units in the SB Grand, a prominent development in downtown Los Angeles.  Jordan also runs the website  Truedowntown, which she created to "inspire positive change at the Shybary Grand by identifying issues that need to be dealt with by the board and management company, especially if those issues have ignored California Law." (The suit claims that Dylan also is connected with the website, but Jordan has stated that is incorrect).

According to plaintiffs' complaint, Jordan and Dylan made a number of disparaging statements about Shy, including accusing him of being a "slum lord", a criminal, and that he is "dishonest" and only cares about "making a profit."  Although the complaint does not identify where the statements appeared, Blogdowntown, a site that describes itself as a "central point for news and discussion of Downtown Los Angeles," noted that all of the statements were drawn from comments on that site's March of 2006 story about Shy's purchase of buildings in Los Angeles' historic core. 

Some of the comments Shy is complaining about were posted pseudonymously, which likely explains why he also named "Does 1-100" as defendants in the suit.  The more than sixty comments to the story on Blogdowntown don't paint a very pretty picture of Shy and, indeed, this isn't the first time he's faced criticism from residents in his buildings. This does appear, however, to be the first time he's filed a lawsuit against his critics.

But it isn't the first time we've seen a real estate developer use a libel lawsuit to silence critical speech. We've collected at least seven such cases in our database of legal threats (see, e.g., Woody v. Carter, Jaeger v. Okon, Veranda Partners v. Giles, Hollo v. Lechuga, Montana Holdings v. Doe, McMann v. Doe 1, and McMann v. Doe 2). While not all of these cases are meritless attempts to stifle legitimate criticism, they invariably pit wealthy and well-connected business owners against individuals and community organizations with limited financial resources to defend themselves.  Not surprisingly, many defendants simply give up when faced with million dollar lawsuits.

Fortunately, The First Amendment Project, a nonprofit advocacy organization dedicated to protecting and promoting freedom of expression, is representing the defendants in this case.  Good lawyering is important in every case, but especially in a case, such as this one, that may not have the legs to make it past the motion to dismiss stage.

First, many of the comments Shy is challenging are protected opinions.  Statements of opinion generally cannot support a cause of action for defamation, even if they are outrageous or widely off the mark.  For example, while the assertion that someone is a "slum lord" is obviously offensive, in the context of a comment to a blog post about complaints leveled against a real estate developer, it's almost certainly a statement of opinion.

Second, a number of the comments Shy cites as the basis for his defamation claims are likely to be time-barred because they were posted in 2006 or early 2007, more than a year before he filed suit.  California's statute of limitations for defamation is one year. See California Code of Civil Procedure 340(c).

Third, it's possible that California's anti-SLAPP law may bar all of Shy's claims. (SLAPP stands for "Strategic Lawsuit Against Public Participation" and refers to lawsuits filed in retaliation against the target's speaking out on a public issue or controversy. ) SLAPPs are typically brought by corporations, developers, or government officials against individuals or community organizations that oppose their actions. To guard against the chilling effect of SLAPPs, twenty-six states have anti-SLAPP laws.

Under California's anti-SLAPP law, a defendant can file a special motion to strike the complaint if it has been filed in response to an "act in furtherance of the [defendant's] right of petition or free speech under the United States or California Constitution in connection with a public issue." Cal. Civ. Proc. Code § 425.16

It is unclear, however, whether the statements at issue here were made "in connection with a public issue."  In making this determination, California courts typically look at factors such as whether the subject of the disputed statement was a person or entity in the public eye, whether the statement involved conduct that could affect large numbers of people beyond the direct participants, and whether the statement contributed to debate on a topic of widespread public interest. (See our legal guide page on California's anti-SLAPP law for more information.)  Certainly, statements educating the public about a controversial development project in downtown Los Angeles would likely qualify, but it's less clear whether the individual criticisms Shy is alleging are defamatory relate to a topic of widespread public interest.  But see Damon v. Ocean Hills Journalism Club, 85 Cal. App. 4th 468 (2000) (finding statements about the governance of a homeowners association entitled to protection under California's anti-SLAPP law).

We'll be eagerly watching this case to see how these legal issues play out.  In the meantime, you can follow further developments by going to our database entry, Shy v. Dylan


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