Thursday, March 2, 2006

Broker Wins $1 Million in Defamation Claim Against Claimant's Attorney

""When a dog bites a man that is not news. But when a man bites a dog, that is news." -Charles A. Dana, New York Sun publisher,1882.

And this is certainly news. According to two web sites, a former Salomon Smith Barney broker has sued a customer's attorney for defamation - and won a million dollar jury verdict.

Registered Rep magazine is reporting that a claimant's attorney,Stuart Goldberg, has been ordered to pay Philip Spartis, once one of the top producers in the Salomon Smith Barney system, one million dollars in compensatory and punitive damages for defamation.

I have not been able to obtain a copy of the pleadings, but it appears from the article at Registered Rep and at SquawkBlog that Goldberg has been representing Worldcom investors. Spartis is at the center of the Salomon Smith Barney portion of that debacle, and is apparently a respondent.

For whatever reason, it appears that Goldberg posted a number of articles at his web site which were critical of Spartis. Those articles apparently sparked the lawsuit.

I have represented hundreds upon hundreds of brokers over the years. Many of those brokers wanted to sue the claimant's attorney, but that cause of action just doesn't fly. The law considers statements made in the context of a judicial proceeding (including arbitration) to be privileged. You cannot sue someone for defamation for something that they said in the context of a lawsuit.

But apparently Goldberg made these statements on his web site, and by my reading of the law (part of my practice is also representing web site developers and publishers), those statements are not going to be privileged. You can say whatever you want in a pleading (within limits) but not on your website.

This is an interesting outcome, to be sure. I have often advocated taking an aggressive approach to some types of customer claims, (see Fight Back - but suing the customer's attorney is a bit over the top, even for me.

But the details remain to be disclosed, and I am trying to determine what exactly it was that Mr. Goldberg said or wrote about Mr. Spartis that caused a million dollar verdict.

As a securities arbitration attorney, I am interested. As an attorney who posts on the web, I am even more interested. I will post more when I find out.
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