Superior Court Suit Alleges Arbitration Claim Is a SLAPP

If a person believes that a defamation claim being asserted against him in a pending arbitration is a SLAPP, can he ask the Superior Court to issue a declaration and an order stopping the claim from being pursued? A new complaint in DC Superior Court asks for exactly that relief.

According to a recently-filed Superior Court Complaint, a former member of a financial services firm (Michael Maurer) has asserted an “employment law action” against his former employer (Steward LLC). The employment law action between Maurer and Steward LLC is being arbitrated before the American Arbitration Association.

According to the Superior Court Complaint, in response to an inquiry from a trade industry reporter about Maurer’s departure from Steward LLC, Maurer’s lawyer, Ari Wilkenfeld, told the reporter:

I want to characterize what has happened here as a rather ugly power grab. There is no coincidence that his removal, which benefits those who remain, has occurred in such close proximity to the excellent forecasts regarding profitability going forward.

According to the Superior Court Complaint, Wilkenfeld’s quote was then included in an article about Marurer’s departure from Steward LLC. The Superior Court Complaint alleges that, as a result, Steward LLC has filed a $10 million defamation claim against Wilkenfeld in the pending arbitration proceeding. The Superior Court complaint claims that Wilkenfeld is not liable for defamation because: (1) the inference that Steward LLC is attaching to Wilkenfeld’s statement is incorrect; and (2) in any event, Steward LLC cannot show that Wilkenfeld made the statement with actual malice. Wilkenfeld is accordingly seeking a declaration that his statement to the reporter falls within the DC anti-SLAPP statute’s scope and for “an injunction compelling Defendants to comply” with the DC anti-SLAPP statute.

I have not previously seen a complaint of this sort filed in the District of Columbia.  The closest example was the complaint filed by the Center for Advanced Defense Studies, seeking a declaration that certain statements it made were not false and defamatory. There, however, there was no defamation claim pending at the time C4ADS filed its declaratory judgment action. Here, there is apparently already a defamation claim pending against Wilkenfeld – in the AAA proceeding.

Some quick research found a California appellate court decision, Sheppard v. Lightpost Museum Fund, which involved similar facts. There, after Sheppard’s employment ended, his wrongful termination claim and his former employers’ breach of contract claims were submitted to binding arbitration. The arbitrator awarded no relief to any party.

The employers thereafter moved for reconsideration, arguing that Sheppard had, after the arbitration, violated a non-disclosure provision and “continued” to possess confidential documents. The arbitration body deemed the request to be a new demand for arbitration, and asked Sheppard to provide a response. He responded by commencing a declaratory judgment suit in California state court, asserting that the defendants’ conduct in the arbitration was a SLAPP. He thereafter filed an anti-SLAPP motion in the California state court, asking the court to strike the then-pending arbitration claim.

The employers argued that, because there was no cause of action pending against Sheppard in the California state court action, his anti-SLAPP motion was fatally flawed. They argued that the anti-SLAPP motion should have been filed in the arbitration proceeding. The trial court disagreed and granted the anti-SLAPP motion.

The appellate court reversed.  It held that the California anti-SLAPP statute applied to complaints, cross-complaints and petitions, and distinguished these judicial pleadings from arbitration filings:

Complaints, cross-complaints and petitions are pleadings, which are filed in courts to initiate judicial proceedings. Arbitration claims filed only in an arbitral forum, while in some ways similar to pleadings, are very different because they are not filed in courts and they do not initiate judicial proceedings. These distinctions indicate that the Legislature did not intend to include such claims within the term “complaint.”

The court buttressed its conclusion by noting that the statute required an anti-SLAPP motion to be filed within a certain time period after “service of the complaint,” which it held was a “term of art that refers to the means by which a court obtains jurisdiction over a defendant.” The court explained that “[a]rbitration claims filed only in private arbitral forums are not subject to these statutory jurisdictional limitations.” Finally, the court reasoned, the purpose of the California anti-SLAPP statute was to prevent abuses of the judicial process and the judicial process is very different than an arbitration proceeding. It accordingly held that the trial court erred by granting the anti-SLAPP motion to strike the arbitration claim.

Sheppard suggests that Wilkenfeld will have an uphill battle persuading a DC Superior Court judge that he/she should enjoin a pending arbitration claim under the DC anti-SLAPP statute. The more interesting question is whether Wilkenfeld could simply file his anti-SLAPP motion in the arbitration proceeding? A question for another post, perhaps…

Two final things. Last month, the defendants in Wilkenfeld’s Superior Court suit (Gold, McMahon and Saporta) sued Maurer in DC federal court, seeking to enjoin him from repeating allegedly defamatory statements at an upcoming meeting with Raymond James, a Steward LLC business partner. The DC federal court appropriately denied their attempted prior restraint. The attorney who successfully opposed that attempt: Wilkenfeld!

Finally, for the attorney representing Wilkenfeld in the Superior Court suit (AJ Dhali), this is not his first encounter with the DC anti-SLAPP statute. Dhali represented David Pitts, who sued several media companies for reporting that he was sentenced for setting fires. After they filed anti-SLAPP motions, Pitts immediately stipulated to the voluntary dismissal of his suit. We’ll see if this encounter with the statute is more successful for Dhali.

Leslie Machado

About: Leslie Machado

Mr. Machado counsels and advises a diverse range of clients on various areas of law. He is also an experienced litigator, having tried cases to verdict in state and federal courts. View all posts by Leslie Machado
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