571 B.R. 612
Bankr. S.D.N.Y.2017Background
- Prepetition, Charles C. Johnson and GotNews sued Gawker (and two employees) in California for defamation, injurious falsehood, false light and a §1983 conspiracy; those claims were attached to six proofs of claim filed in Gawker’s chapter 11.
- Each proof of claim sought $20 million; plan confirmation capped recoveries and created a $1.5M reserve for the Claims.
- Debtors filed omnibus objections arguing (inter alia) the claims are not actionable under California law (anti‑SLAPP, CDA §230, opinion defense), and that bankruptcy court can adjudicate the claims because they are not “personal injury torts.”
- Parties agreed the court would first decide (1) whether the Claims are “personal injury tort” claims under 28 U.S.C. § 157(b)(2)(B)/(b)(5), and (2) whether the California anti‑SLAPP special‑motion/discovery rules apply.
- The court concluded the Claims are not personal‑injury torts (no bodily trauma or severe psychiatric impairment alleged) and that California’s anti‑SLAPP special‑motion procedures conflict with Federal Rules (Rule 56/12) and thus do not apply in the bankruptcy contested‑matter disposition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Claims are “personal injury torts” under 28 U.S.C. § 157(b)(2)(B)/(b)(5) | Johnson/GotNews: defamation/false‑light are personal injury claims entitled to Article III adjudication | Debtors: statute limited to bodily injury/trauma; reputational/emotional harms do not qualify | Court: narrow construction — requires bodily injury/serious psychiatric impairment; Claims are not personal injury torts; bankruptcy court may liquidate them |
| Whether California anti‑SLAPP special‑motion/discovery procedures apply in this federal bankruptcy contested matter | Claimants: California would apply anti‑SLAPP to the underlying state action so it should apply here | Debtors: Federal Rules (esp. Rule 56, and Rule 12 if made applicable) control and conflict with anti‑SLAPP procedures | Court: Anti‑SLAPP is substantive under Erie, but its special‑motion/discovery scheme conflicts with federal civil rules (Rule 56/12) and thus is inapplicable to resolving the omnibus objections |
Key Cases Cited
- Stern v. Marshall, 564 U.S. 462 (statutory limits on bankruptcy courts’ ability to enter final judgments in non‑core matters)
- Ron Pair Enters. v. United States, 489 U.S. 235 (textualist approach to statutory interpretation)
- Liberty Synergistics, Inc. v. Microflo Ltd., 718 F.3d 138 (Erie analysis and applicability of California anti‑SLAPP in federal court)
- Adelson v. Harris, 774 F.3d 803 (anti‑SLAPP fee‑shifting and substantive effect under federal law)
- Newsham v. Lockheed Missiles & Space Co., 190 F.3d 963 (Ninth Circuit: California anti‑SLAPP applies in federal diversity cases)
- Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832 (Ninth Circuit: discovery‑limiting anti‑SLAPP provisions conflict with Rule 56)
- Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 559 U.S. 393 (when a Federal Rule answers the question it governs despite state law)