Defamation suit against lawyer, PR firm tossed

Natural gas company that had won dismissal of underlying case later sued opposing counsel over comments made in suit.

A Fulton County, Ga., judge has scuttled a defamation suit brought against a local attorney, his former firm and a public relations company over comments the lawyer made when filing an earlier, unsuccessful suit by an energy company.

The Aug. 9 order by Superior Court Judge T. Jackson Bedford ruled that the comments made by David L. Pardue did not meet the standard of actual malice required to justify a defamation action against Florida-based Infinite Energy. The company, Bedford said, qualified as a public figure by legal standards and thus had to show that Pardue's comments were made with the knowledge that they were false or "with reckless disregard for [their] truth or falsity."

"I'm grateful that Judge Bedford made the right decision," said Pardue. "But I'm not really sure why we had to go through this."

Bedford's ruling means that each side has now had its suit tossed. Pardue's original suit against Infinite -- on behalf of a group of Asian dry cleaners who alleged the gas company had tricked them into signing long-term contracts for overpriced natural gas --failed when a federal judge granted Infinite's motion to dismiss. Earlier this year, the 11th U.S. Circuit Court of Appeals upheld that ruling.

The battle began in 2008, when the 600-plus member Korean Cleaners Association of Atlanta filed a potential class action in federal court alleging that Infinite had deceived them into signing three-year contracts at inflated rates in the months following Hurricane Katrina, when natural gas prices spiked because of damage to offshore drilling platforms, pipelines and other infrastructure.

That case, Cheoun v. Infinite Energy, 1:08-cv-03553, was filed by Pardue, then with Hartman, Simons, Spielman & Wood (now Hartman Simons & Wood). Pardue is now a partner at Swift, Currie, McGhee & Hiers.

Pardue, with Hartman Simons associates Christopher S. Badeaux and Jill R. Johnson, also accused Infinite of switching some other cleaners into the higher-rate contracts without their knowledge and refusing to renegotiate after prices dropped to normal levels. The suit claimed the gas supplier violated rules of the Georgia Public Service Commission and state and federal fair trade laws. It also said Infinite was liable for negligent representation and unjust enrichment.

In July 2009, U.S. District Judge Timothy C. Batten dismissed the suit. Among other things, he ruled that the cleaners' action was filed too late, that the statements Infinite had made in 2005 concerning likely price increases were not actionable, and that the cleaners had failed to perform their own due diligence to determine whether those statements were true. In January, the appellate court agreed.

Infinite was represented in that case by Morris Manning & Martin partners Marguerite E. Patrick and David A. Rabin and associate Kelly L. Whitehart.

Last November, Patrick and associate Stephen M. Vaughn filed the single-count defamation suit against Pardue, the Hartman Simons firm and Atlanta-based Poston Communications. The suit claimed that Pardue made "false, malicious and defamatory statements" that "irreparably damaged" the company.

The company based its claims on a press release Poston distributed for Pardue when he filed the suit. The press release accused Infinite of engaging in "a clear case of wrongdoing" and "deliberate misinformation," and of being "determined to reap illegal profits and extract every penny possible from customers it has deceived, cheated and misled."

Excerpts from the release were published in the Atlanta Business Chronicle; American Drycleaner, a trade magazine and website; and LawyersandSettlements.com, according to the defamation suit.

Pardue and the other defendants moved to dismiss the suit, and in March, Infinite responded by arguing that the statements "were not only false and malicious, but far beyond what could be considered appropriate as their sole purpose was to defame Infinite Energy. The mere existence of a lawsuit does not provide attorneys and publishers carte blanche to defame their opposing party."

But Bedford last week dismissed the case, saying that Infinite had failed to prove the defendants knowingly made false or defamatory statements.

"Pardue has never indicated that he entertained serious doubts as to the veracity of his statements or that he had knowledge that he was likely circulating false information," it said. "Rather, Pardue had some knowledge to support his statements. For example, Pardue was aware of at least 600 dry cleaners who were paying inflated prices for natural gas service."

Further, said Bedford's order, the statements qualified as "speculations" as to Infinite's motivations in its dealings with the dry cleaners.

"Because our appellate court has held that speculations as to the motives of a plaintiff constitute expression of opinion regarding matters on which reasonable men might have differing opinions," it said, " this court holds that defendant's statements cannot be proven false and do not constitute actionable defamation."

Asked whether Infinite will appeal Bedford's order, Patrick said via e-mail that she would consult with her client before responding.

Poston President David Poston, who is also an attorney, replied to a query with an e-mailed response.

"We are very pleased with the decision, because free speech and an open judiciary are critical to our democracy," it said. "We are also thankful for the wise and careful judges, like Bedford, who serve the people of Georgia and its surrounding states every day."

Carlock, Copeland & Stair partner Johannes S. Kingma, who represented both Pardue and Hartman Simons, was engaged in another matter and unable to comment on Bedford's order.

Pardue said that he had been surprised by the defamation suit when it was filed, but that he would not be intimidated when assisting future clients.

"From my perspective, we didn't do anything wrong," he said. "So if there was an intent to chill the speech, that was not effective."

He added that, while he was gratified with Bedford's decision, he was disappointed with the federal court's dismissal of Cheoun and the appeals court's affirmation of that ruling.

"I disagree with the decision dismissing the underlying case, especially on a motion to dismiss," he said. "The upshot of the ruling is that, taking the facts alleged as true, what happened to the Korean dry cleaners was a wrong without a remedy. I do not think that is how the law is supposed to work."

(Published by Law - August 17, 2010)