Memo

QUESTION PRESENTED

Under California Law, does a private business owner have a prima facie claim of libel against an Internet Service Provider when it posts an article stating he is gay, sells marijuana, and contributed money to gain a government position, resulting in damage to his business and reputation?

BRIEF ANSWER

No. Kramer's financial contributions and public endorsements of gubernatorial candidate Rivera make him a limited public figure for California's election. The debate surrounding Rivera and the nature of Kramer's participation make defamatory statements about his sexuality, business, and contributions relevant to his limited public role. However, Kramer is unable to show COL's statements were published with actual malice, and therefore can not show they breached their required standard of care. Therefore, even though Kramer can show COL's statements meet statutory requirements, his inability to show actual malice is fatal to his libel claim.

.STATEMENT OF FACTS

Joshua Kramer retained our firm to see whether he can sue California Online for libel. All facts are based on statements made in Kramer's client interview.

COL, a California based Internet Service Provider with approximately 400,000 subscribers, maintains a website highlighting California issues. On August 26, 2007, they hosted an online political debate centered on the California gubernatorial election. Kramer participated in the debate under his user-name.

Before the debate, Timothy Sullivan, the debate's moderator, knew Kramer from a previous feature he wrote for COL on local small businesses.

During the course of the debate, Sullivan was biased, taking an unreasonable position against gubernatorial candidate Martin Rivera. Kramer defended Rivera because of his views on the legalization of marijuana. In response to Kramer's support of Rivera, Sullivan made comments implying everyone in the chatroom was gay. Sullivan then proceeded to accuse Kramer of supporting Rivera in order to gain a position in his cabinet. Kramer eventually left the chatroom, insulted, when Sullivan referred to his hemp company as a "pot business."

The day after the debate, the article in question (see attachment) appeared on COL's news page. Despite referring to him by his user-name, COL subscribers could identify Kramer because his member profile included personal information including his name and a link to his company's website. The news page received an estimated 100,000 visitors in one day.

COL's article injured Kramer by leading readers to believe he is homosexual, runs an illegal "pot" business and attempted to bribe Rivera for a position in his cabinet. The week COL's publication appeared, Kramer received a large number of derogatory emails and phone calls asking whether he was gay and if he intended to leave his business to become Secretary of Agriculture if Rivera was elected. Kramer's business suffered when a prospective investor also withdrew his money because he believed Kramer would leave the business for Rivera's cabinet.

COL is hostile towards Rivera because he is openly gay and promotes views counter to the mainstream public. Specifically, COL disagrees with Rivera's plans to impose tolls on ISPs and prevent them from leasing phone lines.

Sullivan believes his article was legitimate and accurate. He refused to release his sources and claimed the public had a right to know about Rivera, including the people who supported him. Sullivan stands behind his article, although admits he did not have time to track down every detail.

Kramer is unmarried and has no children. Since 1996 he has run a legitimate hemp business which does a large number of sales over the internet. Kramer received a BS in agriculture from Alabama State and served on the county board of agriculture in Baldwin County, Alabama from Ð''86-Ð''88, and in Yuma County, Arizona, from Ð''90-Ð''92.

In the 1970's Kramer's image appeared on the cover of the Washington post for his role in a protest, advocating the legalization of marijuana. The demonstration was in front of the White House and resulted in Kramer being interviewed by local TV stations and newspapers in his hometown.

Hemp is commonly confused with marijuana and Kramer believed Rivera would help his business because he supports the legalization of marijuana. As a result, Kramer personally made a $1,000 contribution to Rivera's campaign. In addition, Kramer's business contributed $5,000 to a foundation which had connections with Rivera.

Kramer publishes a monthly catalog for his business. The catalog is distribute to 10,000 subscribers and contains a section that highlights different news related to hemp. The August and September issues encouraged people to vote for Rivera. The endorsement was also posted on Kramer's business web page, receiving about 10,000 visits a month.

Kramer is not very bothered with the imputation he is gay. He is concerned the article damaged his ability to do business by making him sound unethical.

DISCUSSION OF AUTHORITY

Joshua Kramer does not have a prima facie claim of libel against California Online. California libel claims are evaluated based on three main criteria; 1) statutory definition 2) status of plaintiff, and 3) standard of Care. Gertz v. Welch, 418 U.S. 323 (1974).

First, a claim must meet California's statutory definition of libel. Cal. Civ Code Ð'§45 (West 2007). Although the purpose of libel is to compensate an individual for harm inflicted on them by defamatory falsehood, punishment of error runs the risk of inducing a restrictive exercise of the constitutionally guaranteed freedoms of speech and press. Gertz, 418 U.S. at 341. Courts resolve the apparent conflict by distinguishing statements of fact from opinion; treating opinion as constitutionally protected. Baker v. LA Herald, 228 Cal.Rptr. 206,209 (Cal. 1986) As a result, libel requires defamatory statements be understood by its intended audience as statements of provably false fact rather than opinion. Id.

Second, a plaintiff must establish status within two general categories, public or private. Status is used to balance free speech with a person's right to a protected reputation. New York Times Co. v. Sullivan, 376 U.S. 254, 269 (1964). Status distinctions exist because a public figure usually has some access to a public medium whereas a private figure does not. Gertz, 418 U.S. at 344-345. Compared to a private figure, a public figure is