Loan Center of California v. Krowne [1]

Krowne operates The Mortgage Lender Implode-O-Meter (ml-implode.com, mortgageimplode.com), a Web site that posts information about mortgage lending companies that have gone out of business or are expected to go out of business. On April 18, 2007, Krowne posted an e-mail from an anonymous source claiming to be a recently-laid-off employee of mortgage lender Loan Center of California (“LCC”). The e-mail stated that LCC was shutting down and that only a “skeleton crew” of employees remained to “clean up the mess.” It also accused LCC of fraud and various other improper business activities.

According to Krowne's case filings, an LCC attorney contacted him within hours of the e-mail's posting. Krowne says he was threatened with suit, and thus chose to remove the e-mail and all mention of LCC from his site. (For more information, please see the CMLP Database entry [2] for the related email.) LCC filed suit nonetheless, bringing claims of defamation, unfair business practices, and interference with contract. Among LCC's allegations was that Krowne's actions directly caused the company losses in the form of disrupted lending arrangements, lost business, and harm to the company's reputation. LCC has asked for $50,000 in damages.

LCC included unknown defendants “Does 1-50” in its complaint. It noted that Doe 1 was the anonymous sender of the e-mail that Krowne posted on his site. LCC later determined Doe 2 to be Krowne Concepts -- Krowne's own company that runs the Implode-O-Meter site. It is unclear what Does 3-50 are alleged to have done, given that LCC's complaint does not mention them beyond naming them as defendants.

Krowne filed a motion to strike the complaint based on California's anti-SLAPP (Strategic Lawsuit Against Public Participation) statute (Cal. Code Civ. Proc. § 425.16 [3]). The court denied the motion, determining that LCC had set forth a prima facie case of defamation. The court noted that Krowne had included his own statements with his posting of the e-mail, thus making protection under section 230 of the Communications Decency Act (47 U.S.C. § 230(c) [4]) unavailable. Although it did not change the result, the court did find that Krowne's speech concerned a matter of public interest -- learning about mortgage industry issues.

Update:

12/30/2007 - The case settled. Under the settlement, Loan Center dismissed its claims against ML-Implode, without any admission of liability or any monetary payments. ML-Implode never divulged the identity of the former Loan Center employee who had provided the information "on the principle that the anonymity of news information sources is sacrosanct."