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Media Company Faces Massive Judgment in Tort Lawsuit, Resulting in Bankruptcy

Video Surveillance Camera“Business torts” typically involve claims for acts that cause economic harm to a business operation, as opposed to tort claims involving physical or emotional harm. Businesses and business owners should be aware, however, that they can also face liability for torts involving physical or various non-economic damages. This extends beyond negligence claims related to accidents involving business property or employees, as demonstrated by a massive jury verdict earlier this year against a media company for invasion of privacy and other claims. The plaintiff, a well-known media personality, sued the company over its publication of a recording of him engaging in sexual activities with another person, commonly known as a “sex tape,” which he claims was made without his knowledge or consent. Bollea v. Gawker Media, et al., No. 12012447-CI-011, 1st am. complaint (Fla. Cir. Ct., Pinellas Cty., Dec. 28, 2012). The verdict could have a significant impact on businesses involved in media or publication of any kind, including many in Silicon Valley.

Business tort claims like tortious interference with a contract or injurious falsehood typically include intent as a required element of the claim. A plaintiff must prove that the defendant acted intentionally or willfully in a way that caused harm. Some business torts, however, are based on a theory of negligence, which requires a plaintiff to prove that the defendant owed a duty of care to the plaintiff or the public, that it breached that duty, and that this breach caused a measurable injury to the plaintiff. Damages in business tort cases may include lost profits, lost business opportunities, and restitution.

“Personal torts” involve direct physical or emotional harm to an individual. Torts like battery require proof of physical contact and harm, while intentional infliction of emotional distress requires proof of outrageous conduct that causes substantial emotional distress and damage. Another category of tort claims, commonly known as “dignitary torts,” involve intentional offenses against a person’s dignity, such as defamation and invasion of privacy. The Bollea case involved both dignitary and personal torts.

The plaintiff’s complaint alleged that the defendant media company published a “sex tape” of him and another person and that he had not consented to the initial recording or its publication. In addition to the media company, he named the woman in the video with him as a defendant on the ground that she made the recording without his knowledge. The complaint asserted claims for “invasion of privacy by intrusion upon seclusion” and “publication of private facts” against each defendant, intentional and negligent infliction of emotional distress against each defendant, and violation of the common-law right of publicity against the media company.

The case essentially pitted an individual’s right to privacy and dignity against the First Amendment’s freedom of the press. An appellate court struck down a preliminary injunction ordering the removal of the video from the defendant’s website, finding it to be an unconstitutional prior restraint. The trial court declined to dismiss the case on First Amendment grounds, however, and the case went to trial in March 2016.

During the trial, an editor employed by the defendant admitted that the newsworthiness of the video, a key component of case law protecting media companies from liability, was “limited.” The jury ruled for the plaintiff, awarding him $55 million in economic damages, $60 million for emotional distress, and $25 million in punitive damages. The media company was found liable for $15 million of the punitive damages award, while the jury found the company’s founder personally liable for the other $10 million.

For the past four decades, business tort lawyer James G. Schwartz has represented Bay Area businesses and business owners in a wide variety of legal matters. To schedule a free and confidential consultation to see how our skilled and experienced team can be of assistance to you, contact us online or at (925) 463-1073 today.

More Blog Posts:

California Appellate Court Affirms Injunction in Business’ Trespass Lawsuit Against Labor Union, Pleasanton Business & Commercial Law Blog, July 15, 2016

California Court Grants Preliminary Injunctions in FTC Case Alleging Violations of Federal Consumer Protection Law, Pleasanton Business & Commercial Law Blog, December 15, 2015

Corporations Are “Persons” Under Federal Debt Collection Statute, According to One Appellate Court, Pleasanton Business & Commercial Law Blog, August 17, 2015

Photo credit: “Video Spy Surveillance Camera” by Mike Mozart [CC BY 2.0], via Flickr.