In the context of a claim objection, the bankruptcy court may determine the allowability of a defamation claim because it is not a “personal injury tort claim,” according to Bankruptcy Judge Stuart M. Bernstein of New York.
Deciding a second issue where the courts are likewise divided, Judge Bernstein ruled that procedural aspects of California’s anti-SLAPP statute will not be enforced because they conflict with some of the Federal Rules of Civil Procedure.
The case involved a $20 million defamation claim filed by a web-based journalist against Gawker Media LLC, the operator of a website. The claimant contended that the claim was a “personal injury tort claim” that the bankruptcy court could not determine under 28 U.S.C. § 157(b)(2)(B).
Tit for tat, debtor Gawker argued that the bankruptcy court must apply the anti-SLAPP statute and summarily expunge the claim.
On personal injury tort claims, Judge Bernstein said the courts are divided three ways. Those with the narrow view require “a trauma or bodily injury or psychiatric impairment beyond mere shame or humiliation,” he said.
The broad view is adopted by courts that in substance equate personal injury torts with tort claims for which there are actions for damages to address such things as libel, slander and mental suffering.
Finally, there is a hybrid approach allowing bankruptcy courts to determine claims with the “earmarks” of a financial or business tort, even though they seem to be personal injury torts under the broad view.
Judge Bernstein adopted the narrow approach and ruled that he could decide the defamation claim. He relied in part on the canon noscitur a sociis, which provides that “‘a word is given more precise content by the neighboring words with which it is associated.’”
Because the statute contains “personal injury tort” in conjunction with “wrongful death,” Judge Bernstein concluded there must be “physical trauma.” He also said that legislative history supported his conclusion, since sponsors of the 1984 amendments said the exception was intended for a “narrow category of cases.”
Ruling on the applicability of California’s anti-SLAPP statute was more complex. The acronym stands for “strategic lawsuits against public participation” and was designed to deal with “generally meritless suits brought by large private interests to deter common citizens from exercising their political or legal rights.”
The statute includes fee-shifting provisions where the loser can be required to pay the winner’s legal fees and costs. In his Aug. 21 opinion, Judge Bernstein dealt with a provision allowing the defendant to file a motion to strike that shifts the burden to the plaintiff to establish a “probability” that the plaintiff will prevail.
Although the anti-SLAPP statute is procedural under California law, Judge Bernstein concluded that it is nonetheless substantive under Erie, because failure to enforce the law in federal court would encourage forum shopping and would lead to different results depending on whether the suit was in state or federal court.
Still, Judge Bernstein said, the statute will not be invoked if it “is displaced by a valid federal law or rule,” such as the Federal Rules of Civil Procedure. The circuit and district courts, he said, are divided on whether some provisions of the anti-SLAPP statute conflict with the FRCP.
Judge Bernstein decided that he could not enforce the state’s special motion procedures because they “conflict with the procedures set forth in Rule 56” and also with Rule 12 should it become applicable. He said that the state statute could force the court to dismiss a suit “that would not be subject to dismissal under Federal Rules 12 and 56.” In addition, the state procedure could have him deciding “factual disputes without the benefit of a trial.”
Consequently, Judge Bernstein said he would not employ the special motion procedures. He said he would rule another day on whether the “fee shifting procedures are severable and survive.”