Lou Dibella and Dibella Entertainment, Inc., Plaintiffs-Appellants-Cross-Appellees v. Bernard Hopkins, Defendant-Appellee-Cross-Appellant

Citations: 403 F.3d 102; 66 Fed. R. Serv. 1104; 33 Media L. Rep. (BNA) 1979; 2005 U.S. App. LEXIS 5332Docket: 03-7012

Court: Court of Appeals for the Second Circuit; April 4, 2005; Federal Appellate Court

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Lou DiBella filed a libel lawsuit against Bernard Hopkins, a former business associate, alleging four defamatory statements made by Hopkins. After a jury trial in the Southern District of New York, DiBella received a significant verdict based on one of the statements, while he appealed for the jury's failure to find the other three statements libelous. Hopkins cross-appealed, contesting several evidentiary rulings and the damages awarded. The jury's decision reflected the sentiment expressed by Shakespeare regarding the value of one’s reputation. 

DiBella, previously a key executive at HBO and now leading DiBella Entertainment, negotiated his exit from HBO in 2000, which included securing valuable broadcasting opportunities for boxing events. During his tenure, he arranged for Hopkins, then the IBF middleweight champion, to fight on an HBO undercard. DiBella and Hopkins formed a handshake agreement for DiBella to promote Hopkins after his departure from HBO, with Hopkins agreeing to a $50,000 advance for DiBella's future services. The jury determined that this fee was independent of the HBO arrangement. Additionally, DiBella provided Hopkins with a $30,000 interest-free loan for training expenses, which HBO executives were aware of and did not oppose. The appellate court ultimately affirmed the jury's verdict.

DiBella left HBO on May 12, 2000, and shortly after, Hopkins won an undercard fight on May 13. On May 19, 2000, Hopkins repaid a $30,000 loan to DiBella and prepared a $50,000 check for an advance marketing fee, which was delayed due to DiBella being a potential witness in an ongoing lawsuit involving Hopkins’ former promoter, America Presents, Ltd. After leaving HBO, DiBella advised Hopkins on public image and negotiated future fights, including a December 2000 match against Antwun Echols, after which Hopkins paid DiBella the $50,000 fee in January 2001. DiBella initiated negotiations with promoter Don King for a middleweight title unification match, which required Hopkins to sign a long-term contract with King. The tournament occurred on September 29, 2001, where Hopkins became the undisputed world middleweight champion. 

Following this victory, Hopkins ceased communication with DiBella and made controversial statements in a December 20, 2001, interview with Steve Kim, alleging that DiBella received payments while still employed by HBO. Hopkins questioned the ethical implications of DiBella accepting funds during his HBO employment and suggested that DiBella’s connections at HBO could negatively impact his career. He asserted that every service DiBella provided was compensated and claimed he could substantiate his allegations against DiBella and HBO.

Hopkins made allegations about the boxing industry in various media outlets, asserting that it is a corrupt business driven by greed. He indicated a willingness to pay $50,000 to secure a spot on an HBO card, claiming such practices are common in boxing. In response to Hopkins' statements, DiBella filed a libel lawsuit in the Southern District of New York, initially including claims of breach of contract and quantum meruit, though the latter two claims were later dropped. A jury trial from November 4 to November 19, 2002, resulted in a verdict favoring DiBella on the libel claim related to an interview with Steve Kim, awarding him $110,000 in compensatory and $500,000 in punitive damages. DiBella appealed, arguing that the trial court's jury instruction required a higher burden of proof than he believed necessary. On cross-appeal, Hopkins contested the denial of his motion for a judgment as a matter of law, citing inconsistencies in the jury's verdicts and challenging the constitutionality of the libel judgment against him, along with the sufficiency of evidence and the damages awarded.

Plaintiff DiBella argues on appeal that the district court incorrectly required him to prove the falsity of Hopkins’ statements by clear and convincing evidence, seeking a reversal of the judgment and a new trial with a lower standard of proof. DiBella also requests to strike Hopkins’ motion to supplement the appellate record. On cross-appeal, Hopkins claims the court erred on seven grounds, including a violation of his First Amendment rights, DiBella’s failure to prove falsity and malice, inconsistency in the jury's verdicts, and errors related to the admission of evidence and the exclusion of expert testimony. The review of the record will favor the jury's verdict for DiBella on his major claim while favoring Hopkins on the claims DiBella lost.

Under New York law, which governs the libel claims in this case, a plaintiff must prove five elements: a defamatory written statement, publication to a third party, the defendant's fault, falsity of the statement, and injury. Given DiBella’s status as a public figure in the boxing industry, he must demonstrate actual malice to succeed in his libel claims. Actual malice requires proof that the defendant knew the statements were false or acted with reckless disregard for their truth, with the plaintiff needing to establish this by clear and convincing evidence. The question of whether the Constitution mandates this standard for proving falsity remains unresolved.

The element of falsity in legal proceedings may require different standards of proof, specifically whether it should be established by clear and convincing evidence or by a preponderance of the evidence; however, the court refrains from deciding this issue. It emphasizes the principle of avoiding federal constitutional questions when state law can resolve a case. Under diversity jurisdiction, the court is compelled to apply New York's standard of proof for falsity, provided federal law does not necessitate a higher standard. While states can offer more protection than federal law, if a state standard is insufficient, courts must address federal constitutional standards, as federal law could offer greater protection.

The court believes that New York law requires clear and convincing proof of falsity, thus avoiding the need to discuss federal standards. Notably, the New York Court of Appeals has not established a definitive standard for proof of falsity in defamation cases. Consequently, the court must predict how the New York Court of Appeals would rule or, if necessary, certify the question to the court for a definitive answer. The court decides against certifying the question, asserting that certification should not be used merely to shift burdens or when sufficient precedents exist to make a reasonable prediction. Exceptional circumstances justifying certification are not present in this case, leading the court to rely on existing authorities to inform its prediction on how the New York Court of Appeals would likely decide the issue.

State intermediate appellate court rulings serve as significant indicators for predicting how the highest state court might rule, though federal courts are not strictly bound by them. Such rulings are relevant in determining state law unless compelling evidence suggests otherwise. In New York, appellate divisions, except for the Fourth Department, consistently require public figures to prove falsity by clear and convincing evidence, as established in several cases. However, these cases lack robust citation for the assertion regarding the falsity standard, primarily referencing the requirement for proving actual malice derived from *New York Times Co. v. Sullivan* and its related cases. Additionally, some cited cases did not address the falsity issue directly, rendering their conclusions on the standard of proof as dicta. Only in *Kaplansky v. Rockaway Press, Inc.* was the discussion on the standard of proof for falsity directly relevant, as it pertained to the plaintiff's burden in a libel case. Thus, while the law's requirement for clear and convincing proof of falsity is stated, the rationale and development of this standard remain inadequately documented.

Appellate Division cases serve as persuasive indicators of New York law, particularly concerning the standard of proof for falsity, which is believed by these courts to be "clear and convincing." Federal courts should not dismiss these cases merely due to the absence of authoritative support. Although the Appellate Divisions may not have provided a fully reasoned basis for this conclusion, their consistent viewpoint suggests this standard is appropriate. Additionally, while there is some ambiguity in federal case law on this issue, earlier decisions like Buckley v. Littell established that a public figure must demonstrate with "convincing clarity" both the falsity of statements and the defendant's knowledge or reckless disregard for their truth. This contrasts with the earlier ruling in Goldwater v. Ginzburg, which indicated that other elements of proof could be established by a preponderance of evidence. Despite a lack of decisive New York cases between 1969 and 1976 on this matter, several district courts have aligned with the Buckley standard, asserting that public officials must provide clear and convincing evidence of falsity and actual malice.

Many jurisdictions outside New York have determined that public figures must provide clear and convincing proof of falsity to succeed in libel claims, with some cases also applying this standard to private figures. Notable cases supporting this requirement include Deutcsh v. Birmingham Post Co., Barnett v. Denver Publ'g Co., and Hoch v. Prokop. Courts advocate for a higher standard of proof to favor free speech, as seen in Robertson v. McCloskey, where it was noted that establishing actual malice inherently requires proof of falsity. The inconsistency in standards—where a plaintiff must prove falsity by a preponderance of the evidence while also proving actual malice by a higher standard—could lead to jury confusion. Some jurisdictions, however, such as those in the District of Columbia, Massachusetts, and Texas, allow plaintiffs to prove falsity by a preponderance of the evidence. The Ninth Circuit has adopted a similar view, though it relies on earlier interpretations of New York law that are no longer current. The discussion acknowledges that while the majority and minority views exist, many cases express these rules in dicta without authoritative citations. The insights from other jurisdictions could influence how the New York Court of Appeals would address this issue in the future.

The Committee on Pattern Jury Instructions in New York has adopted the clear and convincing evidence standard for proving falsity in libel cases, as reflected in its Pattern Jury Instructions, specifically N.Y. Pattern Jury Instr. 3:23. This standard requires plaintiffs to demonstrate that allegedly false statements are "substantially untrue." The district court in this case properly instructed the jury to apply this standard. Additionally, the authoritative treatise by Robert D. Sack supports this requirement, noting that public figures must establish falsity with "convincing clarity," a view shared by most courts. Evidence suggests that the New York Court of Appeals would uphold this standard, based on the consensus among New York Appellate Divisions, alignment with the majority of jurisdictions, incorporation into jury instructions, and scholarly consensus.

In the context of Hopkins' cross-appeal, he raises seven claims, focusing initially on the constitutionality of the libel judgment. He argues that his payment to DiBella should be interpreted as expressing an opinion, thus protected under the First Amendment. However, the jury's finding that Hopkins libeled DiBella indicates they believed he knew or should have known his statements were false, leading to a loss of constitutional protection for his speech. Consequently, Hopkins' challenge is more about the sufficiency of evidence rather than a First Amendment violation.

Hopkins also contends that DiBella failed to prove the falsity of his statements and did not demonstrate actual malice, arguing that the district court should have granted his post-trial motion for judgment as a matter of law based on these claims.

In evaluating a post-verdict motion for judgment as a matter of law, the trial court must consider all evidence collectively, favoring the nonmoving party while refraining from making credibility assessments or weighing the evidence. A verdict can only be overturned if there is a complete lack of evidence supporting it, or if the evidence overwhelmingly favors the movant, making it impossible for reasonable jurors to reach a contrary verdict. 

In cases involving libel and the actual malice standard, appellate courts conduct an independent review to determine if actual malice is established with convincing clarity, but they do not act as independent fact-finders or assess all evidence de novo. Instead, they focus narrowly on the statements related to malice and the context in which they were made, ensuring First Amendment protections are upheld.

In this instance, the record indicates that Hopkins claimed he paid DiBella surreptitiously to secure a position on the Jones-Hall undercard. However, witness testimonies, including those from DiBella and HBO executives, contradicted this assertion, revealing that the payment was neither surreptitious nor linked to the undercard placement. The jury found DiBella's witnesses credible and discredited Hopkins. Evidence suggested that Hopkins was aware of the true nature of the payment and that it pertained to future services rather than an immediate quid pro quo. Thus, when viewed favorably towards DiBella, the evidence convincingly indicated that Hopkins's statements were false and made with actual malice, as he knew or recklessly disregarded their truth.

Hopkins' motion for judgment as a matter of law was denied, and he argued that the district court erred by not setting aside the jury's verdicts, which he deemed inconsistent—three in his favor and one against him. He contended it was unreasonable for the jury to find no libel in certain articles and interviews while determining he did libel DiBella in a similar context in another article. However, this claim was waived because Hopkins did not raise the inconsistency objection during the jury's deliberation, only bringing it up in post-trial motions. Established legal precedent dictates that failing to challenge jury verdict consistency at the time results in waiving the objection.

Additionally, Hopkins challenged the admissibility of an order to show cause from a separate litigation, which DiBella used to impeach the testimony of Joseph regarding the credibility of his statements about the relationship between DiBella and Hopkins. The district court correctly allowed this order for impeachment purposes, as Joseph's credibility was at issue due to his testimony about a $50,000 payment to DiBella. The order stemmed from allegations that Joseph misrepresented the nature of the relationship during the prior litigation. The jury was allowed to assess whether Joseph's assertion of no relationship was consistent with his knowledge of the payment, which could imply he had a motive to mischaracterize the payment as legitimate rather than a bribe.

Judge Chin clarified to the jury that the order to show cause from the Colorado district court did not imply that Joseph had lied, providing necessary context for the jury to assess its impeachment value, thus justifying its admission as evidence. Hopkins sought to supplement the record with Judge Kane's recent ruling that Joseph committed "no fraud" on the court, arguing this demonstrated that prejudicial evidence was wrongfully admitted at trial, warranting reversal. However, Rule 28(j) prohibits introducing new evidence on appeal, allowing only for the addition of pertinent authorities discovered after briefs were filed or after oral arguments. Consequently, the factual conclusions from Judge Kane regarding Joseph's honesty were ruled inadmissible.

Additionally, Hopkins claimed the district court erred by reopening the record during summation to allow the unredacted time sheet of attorney Scott Magargee to be presented to the jury. The court found no error in this decision. Magargee testified about a meeting involving Joseph and Hopkins, where DiBella offered to secure Bernard Hopkins for an undercard for a fee of $50,000. Although the initial time sheets submitted were redacted to protect privileged information, they did not document any communication on the relevant date. When cross-examined, objections regarding the redacted material led to a sidebar discussion. Judge Chin later inspected the unredacted time sheet and found it contained references to calls with B. Hopkins, prompting further judicial intervention during the summation.

Judge Chin criticized defense counsel Hayes for not disclosing that attorney Magargee had a phone call with B. Hopkins but did not meet with him on that day. Following a request from attorney Burstein, Judge Chin reopened the record to allow this evidence to be presented to the jury. In his opinion denying the defendant's post-verdict motion for judgment as a matter of law, Judge Chin clarified that there was no privileged communication involved, but rather selective redaction. He chose not to sanction Hayes, instead referring the issue to the district court's Committee on Grievances, a decision that Hayes appealed. However, another panel dismissed Hayes' appeal due to lack of jurisdiction. 

The document outlines two main arguments from Hopkins claiming the district court abused its discretion: first, that the entry "Calls with B. Hopkins" fell outside the scope of Judge Chin's discovery order; second, that the entry was privileged. Both arguments were found unpersuasive. During a pre-trial deposition, Judge Chin had ruled that Magargee should testify about his firm’s work for Hopkins, and that relevant records should be produced to verify the existence of a meeting. The entry "Calls with B. Hopkins" was determined to be relevant to whether such a meeting occurred, fitting within the discovery order. 

Regarding the attorney-client privilege claim, Hopkins argued that the federal common law was improperly applied instead of state privilege law. The court acknowledged that New York law applies to this case. Overall, the district court did not abuse its discretion in requiring the production of the time entry after the evidence had closed.

Federal Rule of Evidence 501 stipulates that in civil actions where state law determines the privilege of a witness, state law will apply. Under New York law, attorney time records and billing statements are not privileged unless they detail legal services rendered. Specifically, records that lack detail and do not reveal trial strategy or legal work, such as the entry "Calls with B. Hopkins," are not protected. Additionally, since Hopkins consented to Magargee’s testimony regarding their communications, he cannot claim privilege based on those conversations. The court found Hopkins’ privilege claim to be an attempt to mislead, particularly in light of inconsistencies regarding the nature of their conversation. Consequently, the trial court's decision to allow the jury access to the unredacted time sheet was within its discretion.

Regarding the exclusion of expert testimony, Hopkins argued it was erroneous to deny W. Michael Hoffman’s testimony on the ethics of DiBella soliciting payment while employed by HBO. Expert testimony must assist the jury beyond a layperson's understanding and is subject to the discretion of the trial judge. The district court found valid grounds to exclude Hoffman's testimony, stating that his report included improper conclusions and speculations, such as characterizing another witness as credible, which fell outside the parameters of appropriate expert testimony.

Expert witnesses cannot testify based on personal views regarding the credibility of lay witnesses, as established in United States v. Scop. Hoffman's testimony improperly included a legal conclusion that DiBella's actions constituted extortion, which exceeds the scope of permissible expert opinion under the Federal Rules of Evidence. The district court appropriately ruled that Hoffman's testimony would confuse the jury, as the critical issues were whether the $50,000 was a bribe and Hopkins' belief regarding it, rather than DiBella's ethical conduct. 

Hopkins contended that the evidence was insufficient to support a $500,000 punitive damages award and claimed it was unconstitutionally excessive. However, he conflated two issues: the support for punitive damages and the constitutionality of the amount. His challenge to the amount was procedurally barred because he did not raise it in his post-trial motion, thereby failing to preserve the issue for appellate review.

The preserved argument regarding insufficient evidence for punitive damages was deemed without merit. Under New York law, punitive damages in defamation cases can be justified by malicious conduct, which requires more than just a finding of "actual malice." The jury had ample evidence of Hopkins’ malicious intent, including testimony and recordings showing he deliberately spread false allegations about DiBella. This evidence supported the jury's decision to award punitive damages. 

Ultimately, all remaining arguments from both parties were found without merit, leading to an affirmation of the judgment and granting of DiBella's motion to strike.