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October 2015

San Diego Team Obtains Motion to Dismiss with Prejudice in Defamation Claim

Partner Richard Sybert, along with senior counsel Maha Sarah and Sean Flaherty, obtained a dismissal with prejudice of an action in Hawaii state court in Honolulu against their client, a famous international jeweler. The plaintiff, a company that auctions used jewelry to the public, accused the client of defamation, negligent misrepresentation, and unfair competition based on claims that the client had denied an altered watch was “authentic” when the purchaser at auction brought it in for verification. The client examined the watch and truthfully informed the watch owner, an Iraqi war veteran on leave, that the client had never made such a watch dial and that the watch was missing a second hand. The client made no other statements regarding the watch or Plaintiff.

After learning this information, the watch owner demanded a refund from Plaintiff. And when Plaintiff refused to provide the refund, the purchaser disrupted one of Plaintiff's auctions at a local hotel, which then led the hotel to bar the Plaintiff from holding further auctions there. Plaintiff claimed that the disruption also caused Plaintiff to lose numerous pending and future jewelry sales.

Plaintiff alleged that the client had defamed it by stating these observations about the watch; and, further, that this alleged defamation was intended to unlawfully impede Plaintiff's ability to compete with the client in the jewelry market. Meanwhile, until these events, the client had no idea Plaintiff even existed.

Following discovery, we brought a motion to dismiss all claims made against our client, for failure to state sufficient facts. We argued that, as to the defamation claim: (1) any statements made by the client were truthful and therefore a complete defense to defamation; (2) Plaintiff did not, and could not, allege that the client's statements caused any harm to Plaintiff because the client only provided information regarding a watch - not regarding the Plaintiff. As to the negligent misrepresentation claim, we successfully argued a lack of justifiable reliance on any alleged statements, since the client owed no duty to the Plaintiff. Finally, as to the unfair competition claim, we argued that our client was not in the used jewelry business, and therefore there was no competition in the first place.

Sean D. Flaherty
Richard P. Sybert