Free Reply to Response to Motion - District Court of Arizona - Arizona

1 Jay A. Zweig (011153) Mark A. Fuller (012149) 2 GALLAGHER & KENNEDY, P.A. 2575 E. Camelback Road, Suite 1100 Phoenix, Arizona 85016-9225 3 (602) 530-8407 4 Attorneys for Defendants 5 6 7 8
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UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Matthew Shaffer, Plaintiff, vs. No. CIV-03-2344-PHX-FJM DEFENDANTS' REPLY IN SUPPORT OF MOTION FOR ENTRY OF JUDGMENT AS A MATTER OF LAW ON THE DEFAMATION CLAIM ­ AND ­ MOTION FOR REMITTITUR, OR ALTERNATIVELY FOR A NEW TRIAL ON DAMAGES

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State of Arizona Citizens Clean Election 11 Commission; Colleen Connor and Chad Jacobs, 12 Defendants 13 14 I. 15

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THERE IS NO "PROCEDURAL DEFICIENCY" Shaffer's response tries to muddle together defendants' two separate motions ­

16 and then seizes on the resulting confusion to argue that the motions are "procedurally 17 deficient." Before addressing the merits, therefore, we take this opportunity to clarify 18 what defendants have asked for, and why Shaffer is wrong in suggesting that defendants' 19 motions are procedurally improper. 20 Defendants' first motion is quite limited; it merely asks the Court to independently

21 review the record on the issue of actual malice, as the First Amendment requires. Shaffer 22
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1 cites authority for the proposition that as a general matter, motions for judgment as a 2 matter of law may be renewed after the verdict only if they were made at the close of all 3 evidence. Resp. at 4. But in cases involving heightened First Amendment protections, 4 the United States Supreme Court has held that the judiciary has an independent obligation 5 to review the record post-trial on this one critical issue. Bose Corp. v. Consumers Union 6 of U.S., Inc., 466 U.S. 485, 511 (1984). "The question whether the evidence in the record 7 in a defamation case is of the convincing clarity required to strip the utterance of First 8 Amendment protection is not merely a question for the trier of fact. Judges, as expositors 9 of the Constitution, must independently decide whether the evidence in the record is 10 sufficient to cross the constitutional threshold that bars the entry of any judgment that is 11 not supported by clear and convincing proof of `actual malice.'" Id. at 511. Accord
nd 12 Celle v. Filipino Reporter Enterprises Inc., 209 F.3d 163, 182-184 (2 Cir. 2000) (under

13 Bose, "[i]n reviewing a finding of actual malice, judges are constitutionally obligated to 14 conduct an independent examination of the whole record"). Shaffer cites no authority for 15 the proposition that the court needs to undertake that review before the verdict is entered, 16 and the idea makes no sense; after all, why would the court conduct such a review before 17 finding out whether such a review would be necessary? Bose itself involved independent 18 review on appeal. 19 Defendants' second motion seeks either a remittitur or a new trial on damages. It

20 does not ask for judgment as a matter of law, as Shaffer's response suggests. Resp. at 5. 21 The distinction is an important one. To quote Shaffer's own authority: "Unlike a 22
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1 motion for judgment as a matter of law, a motion for new trial does not have to be 2 preceded by a Rule 50(a) motion prior to submission of the case to the jury." Freund v.
th 3 Nycomed Amersham, 347 F.3d 752, 765 (9 Cir. 2003). Thus, Shaffer has no basis on

4 which to argue that "[d]efendants waived any argument regarding the sufficiency of 5 evidence." Resp. at 4. Defendants are free to challenge the sufficiency of evidence 6 regarding causation and damages in the form of a motion for remittitur or new trial, 7 exactly as they have done. For a fine illustration of this, one need look no further than 8 another of Shaffer's principal cases, Farley Transportation Co. v. Santa Fe Trial Transp.
th 9 Co., 786 F.2d 1342 (9 Cir. 1985). The defendants in Farley did not move for judgment

10 as a matter of law at the close of evidence, but instead challenged the sufficiency of 11 evidence as to causation and damages through a motion for new trial. The Ninth Circuit 12 held that the motion should have been granted ­ and used precisely the same analysis that 13 is found in defendants' motion here, reasoning that the plaintiff had "failed to present any 14 evidence permitting the jury to parse out which damages are attributable to the unlawful 15 competition" as opposed to damages caused by other sources. Id. at 1351. 16 In short, Shaffer's procedural arguments are unfounded. Defendants' two motions

17 are properly before the Court and must be decided on the merits. 18 II. 19 20 21 22
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SHAFFER'S JURY ARGUMENT IS NO SUBSTITUTE FOR CLEAR AND CONVINCING EVIDENCE AS TO ACTUAL MALICE Shaffer cites the Court's earlier ruling ­ before the defense presented any evidence

­ and argues that "[t]he court already ruled that Shaffer's evidence alone was sufficient"

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1 to establish actual malice. Resp. at 5. But making a provisional ruling based on half the 2 story is not the same as making a fully informed decision after the whole story is told. 3 In fact, the Court itself noted that its ruling might have to be reconsidered later, after 4 hearing more evidence. Tr. 831. And the Court did just that when it dismissed Shaffer's 5 claim for punitive damages. 6 Predictably, Shaffer cites Connor's deposition testimony ­ to the effect that she

7 could not reconstruct what she was thinking when she wrote her memorandum to DPS ­ 8 and argues that the jury did not find Connor "credible," as if that somehow ended the 9 matter. Resp. at 7-8. But the evidence in this case consisted of far more than one snippet 10 of testimony about what Connor could recall. In fact, arguably the most important 11 testimony in the case bearing on actual malice came from two third-party witnesses 12 whose credibility was never questioned ­ Todd Lang and Commissioner Detrick. Lang, 13 who was Shaffer's close friend, testified that Connor could "absolutely" have formed a 14 reasonable belief that Shaffer violated the statutes she cited in her memo. Tr. 1058. And 15 Detrick was even more emphatic, saying that she agreed with everything in the memo, it 16 was "totally appropriate," and that "Connor had to send this memo." Tr. 612-14. Such 17 testimony, coming as it did from third-party witnesses, as opposed to the litigants 18 themselves, must weigh heavily in the Court's determination of whether Shaffer met his 19 constitutional burden of proving actual malice with "convincing clarity." Bose Corp.,
1 20 supra, 466 U.S. at 526.

21 Shaffer claims that "knowing falsity" was demonstrated by the fact that "Connor 22 admitted to knowing that at least one of the statutes she referenced was wrong." Resp. Case 2:03-cv-02344-FJM Document 152 4Filed 11/10/2005 Page 4 of 11
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We have previously noted that statements of opinion are not actionable, Turner v.

2 Devlin, 174 Ariz. 201, 848 P.2d 286 (1993), and, more specifically, that a statement of 3 one's "belief" as to whether a statute has been violated is textbook opinion. Buchholtz v. 4 Dugan, 977 S.W.2d 24 (Ky. App. 1998) (where author recited facts accurately, and then 5 stated his view as to whether statute had been violated, speech was protected opinion). 6 While defendants recognize that the Court previously declined to grant immunity or 7 summary judgment on this ground, it should nonetheless carefully reweigh the nature of 8 the speech in question when conducting its review of the evidence. Whether Connor's 9 statement is considered "pure" opinion or not, there is undeniably an element of opinion 10 involved. In such circumstances, proving actual malice by clear and convincing evidence 11 must require real, substantial evidence that Connor could not have formed a reasonable 12 belief that the statutes in question were violated. There was no such evidence in this case. 13 Shaffer never proved that the underlying facts in Connor's memo were inaccurate ­ in 14 fact, he limited his defamation claim to one sentence only ­ and the only disinterested 15 witnesses familiar with the underlying facts testified that Connor's statement of belief 16 was "absolutely" reasonable under the circumstances. There is no way to square that 17 evidence with a finding that Shaffer met his constitutional burden. 18 19 at 7. Such an argument may well appeal to a jury, but the law is clear that a simple 20 mistake in citation does not equate with actual malice. See, e.g., Coughlin v. Westinghouse Broadcasting and Cable, Inc., 603 F.Supp. 377, 388 (E.D. Pa. 1985) 21 (mistakes do not equate with actual malice, even if plaintiff proves insufficient editorial verification) (citing Marcone v. Penthouse Int'l, 754 F.2d 1072, 1089-90 (3rd Cir. 1985)). 22 Case 2:03-cv-02344-FJM Document 152 5Filed 11/10/2005 Page 5 of 11

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As one Circuit recently explained, a judge conducting this independent review

2 should uphold a verdict only when the record leaves "no apprehension" that the plaintiff 3 introduced clear and convincing proof of actual malice. Celle, supra, 209 F.3d at 182. 4 When viewed as a totality, the evidence in this case does not meet that standard. 5 III. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
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SHAFFER'S RESPONSE EFFECTIVELY CONCEDES THE NEED FOR REMITTITUR OR A NEW TRIAL ON DAMAGES In his response, Shaffer acknowledges that the jury's award of $1.1 million is

"consistent with" his request for "economic damages together with reputation and emotional distress damages." Resp. at 8. In other words, exactly as we argued in our motion, Shaffer concedes that the verdict represents compensation for all of his damages ­ including damages flowing from his lawful termination. That is precisely why remittitur, or a new trial on damages, is necessary. We said it in our motion, but it bears repeating: Shaffer is not entitled to recover one dime for any effects of his termination. Shaffer has no good answer to this argument. In fact, he never even really addresses it head-on. Instead, as if the requirement of proving causation were somehow insignificant (or irrelevant), he focuses on the size of the verdict, by itself, and argues that because he asked for damages exceeding $1 million, the verdict does not indicate that the jury was "whipped into a frenzy." E.g., Resp. at 8-10. This argument misses the point and ignores the law. The relevant question is not whether the amount of the verdict, standing alone, shows "passion and prejudice," or even whether it is "grossly excessive" in light of Shaffer's claimed damages. Rather, the question is whether the evidence proved that Shaffer's claimed "economic . . . reputation and emotional distress" damages 6Filed 11/10/2005
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1 were somehow attributable to one sentence in Connor's memorandum to DPS, or to the 2 CCEC's failure to convene a certain type of hearing ­ as opposed to being caused by his 3 proper termination. Put another way, would Shaffer still have suffered all of his claimed 4 damages even if he had kept his job? Of course not. 5 We have addressed Shaffer's "procedural" arguments above. It is worth noting,

6 however, that Shaffer's own authorities squarely hold that this causation issue is properly 7 raised in a post-trial motion under Rule 59, as we have done here. Farley Transportation, 8 supra, was an antitrust case in which the jury found that some terms in an otherwise 9 legitimate shipping arrangement known as "Plan V" were illegal. "The difficulty in this 10 case," the Ninth Circuit explained, "is that [plaintiff] Farley presented proof of damages 11 in terms of the profit and amount of shipping business they would have achieved `but for' 12 the existence of . . . [the] Plan V arrangement. Farley did not show what damages were 13 attributable to the illegally contracted portion . . . ." Id. at 1349 (emphasis in original). 14 Because the plaintiff "failed to present any evidence permitting the jury to parse out 15 which damages are attributable to the unlawful competition," id. at 1351, the defendant's 16 motion for new trial should have been granted ­ even though the amount of the verdict, 17 by itself, was not otherwise grossly excessive: 18 19 20 21 In sum, although [plaintiff] Farley produced evidence it had suffered some injury due to Santa Fe's antitrust violation, Farley provided no evidence on the amount of damages attributable only to the unlawful conduct. Farley's utter failure to make any segregation between damages attributable to lawful competition and that attributable to the unlawful scheme to deviate from the tariff rate requires reversal of the verdict and remand for a new trial on the amount of damages.

22 Id. at 1352 (emphasis in original).
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Because wrongful termination claims are often coupled with defamation claims or

2 §1983 claims, there is a well-developed body of caselaw applying the Farley 3 Transportation analysis to facts like those in this case. We cited and discussed those 4 cases in our motion. Uniformly, courts around the country have granted appropriate 5 relief ­ in the form of remittitur or a new trial on damages ­ where plaintiffs failed to 6 segregate between damages attributable to lawful termination and damages attributable to 7 defamation or failure to provide an appropriate "name-clearing hearing." Shaffer does 8 not argue that any of those cases are distinguishable ­ in fact, he does not address them at 9 all. His silence speaks volumes. The bottom line is that defendants' motion is supported
2 10 by dozens of cases to which Shaffer cannot even muster an argument in response.

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THE APPROPRIATE AMOUNT OF THE REMITTITUR Because Shaffer's response ignores every reported case on point, there is little

13 more to say on the merits of defendants' second motion. But one question remains: what 14 remittitur is appropriate here? To answer that question, the Court should examine 15 Shaffer's response carefully to see what, if any, evidence he cites as proof that he 16 suffered damages above and beyond the damages flowing from his termination. When 17 the Court does so, it will see the following. 18 The one case that Shaffer does cite, Brady v. Gebbie, 859 F.2d 1543 (9th Cir. 1988), did 19 not even address the issue here. In Brady, the district court eliminated the termination claim before trial, so plaintiffs' evidence at trial was limited to allegations of damage 20 specifically flowing from the defendant's failure to provide an appropriate name-clearing hearing. In other words, unlike Shaffer, the plaintiff in Brady actually proved damages 21 unrelated to his termination. 22
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First, as to the "name-clearing" claim, Shaffer does not cite any evidence of any

2 incremental damages. Nothing. All he offers is the argument that "but-for the denial of 3 his liberty interest hearing, Shaffer would still be employed by the CCEC." Resp. at 2. 4 That argument is directly contrary to the entire record ­ which is presumably why Shaffer 5 does not provide a citation. The fact is that Shaffer was properly terminated, with the full 6 support of the commissioners themselves. Mtn. at 2 (citing trial record). Moreover, 7 because reinstatement is not a remedy for failure to provide a "name-clearing" hearing,
th 8 see Brady v. Gebbie, 859 F.2d 1543, 1551-52 (9 Cir. 1988), the law is clear that

9 recovery of anything more than nominal damages on such a claim requires specific proof 10 of particular harm flowing directly from the denial of the hearing. Carey v. Piphus, 435
th 11 U.S. 247 (1978); Alston v. King, 157 F.3d 1113 (7 Cir. 1998); Alston v. King, 231 F.3d th 12 383 (7 Cir. 2000) ("Alston II").

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Second, as to defamation, Shaffer offers but one citation, to pages 317 and 318 of

14 the transcript. Resp. at 10. That is where Shaffer said "yes" when asked whether he 15 "believed" he had been denied employment opportunities because of the Connor 16 memorandum. That's it. Not a single piece of additional testimony from Shaffer 17 himself, or from any potential employer, and not a single piece of evidence concerning 18 additional "emotional distress" or "reputation damages" attributable in any way to the 19 defamation. And this single question and answer was not even directed to the one 20 21 22
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3 1 sentence in the memorandum that is alleged to have been defamatory!

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In short, Shaffer's own response confirms exactly what we argued in our motion:

3 that there was no competent evidence introduced at this trial to establish damages beyond 4 those that Shaffer suffered as a result of his termination. Under such circumstances, 5 Shaffer can only recover nominal damages on his §1983 claim. Mtn. at 13-16 (citing 6 Carey, supra, and its progeny). And while an appropriate remittitur of the defamation 7 claim is vested to the Court's sound discretion, there is nothing in the record to support 8 anything beyond nominal damages on that count as well. Mtn. at 10-13. 9 In a footnote, Shaffer notes that "[i]f the court does grant remittitur, it must also

10 give Shaffer the option for new trial on damages." Resp. at 12, n. 9. Defendants agree, 11 which is why they have requested alternative relief in the form of a new trial. There is 12 ample authority permitting the Court under these circumstances to conduct a new trial 13 excluding any evidence relating to "termination damages." E.g., Alston II, supra. 14 V. 15 CONCLUSION If this were a case in which Shaffer had prevailed on a wrongful termination

16 claim, then defendants might have some difficulty arguing that a jury verdict of $1.1 17 million was so outrageous and excessive as to shock the conscience of the Court. But 18 Shaffer lost on that claim. And as his own response to this motion effectively concedes, 19 there was no evidence introduced at trial to demonstrate that he suffered any damages in 20 As explained in our motion, only one sentence in Connor's five-page memorandum was 21 alleged to have been defamatory. Mtn. at 3. Shaffer's response does not argue otherwise. 22 Case 2:03-cv-02344-FJM Document 152 10 Filed 11/10/2005 Page 10 of 11
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1 addition to those caused by his lawful termination ­ let alone evidence that could possibly 2 sustain a huge verdict. Put simply, Shaffer did not prove ­ or frankly even argue ­ that 3 he suffered any incremental harm, whether as a result of a single sentence in the DPS 4 memorandum, or by the fact that he did not receive more of a hearing in connection with 5 his firing. The Court's duty on such a record is to either remit the verdict to nominal 6 damages or order a new trial. 7 8 9 10 11 12 13 COPY of the foregoing electronically transmitted via the U.S. District Court 14 Electronic Case Filing system this 10th day of November, 2005 to: 15 Richard J. Harris, Esq. Richard J. Harris Law Offices, P.C. 16 4445 E. Holmes Avenue, Suite 106 Mesa, Arizona 85206-3398 17 Co-Counsel for Plaintiff 18 David C. Larkin, Esq. David C. Larkin, P.C. 19 4645 S. Lakeshore Drive, Suite 6 Tempe, Arizona 85282-3747 20 Co-Counsel for Plaintiff 21 22
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568-0140/1311239

RESPECTFULLY SUBMITTED this 10th day of November, 2005. GALLAGHER & KENNEDY, P.A. By: s/Jay A. Zweig______________ Jay A. Zweig Mark A. Fuller 2575 E. Camelback Road, Suite 1100 Phoenix, Arizona 85016-9225 Attorneys for Defendants

s/Dawn Sylvester