Rule 11 Sanctions in “Quackwatch” Libel Case
From Goldman v. Barrett (2d Cir.), decided yesterday by Judges Debra Ann Livingston, John M. Walker, Jr., and Dennis Jacobs:
Plaintiffs-Appellants Robert M. Goldman and Ronald Klatz … are the co-founders of the American Academy of Anti-Aging Medicine. They sued Stephen Barrett over an allegedly defamatory article he posted on the website Quackwatch noting the outcome of a disciplinary proceeding the Illinois Department of Professional Regulation had initiated against them.
After the district court dismissed their original complaint, Goldman and Katz filed an amended complaint newly alleging that Barrett made defamatory statements to Chinese and Malaysian government officials, causing those officials to deny Goldman and Klatz approval to pursue business opportunities in those countries. Barrett told Goldman and Klatz that these new allegations were false. To that end, he provided Goldman and Klatz with telephone records tending to show he had not made or received any calls with any numbers in China or Malaysia. When Goldman and Klatz declined to withdraw the new allegations, Barrett moved for sanctions under Fed. R. Civ. P. 11, arguing that the new allegations lacked factual support.
The district court [granted Barrett’s motion to dismiss the amended complaint and] granted the motion and imposed a sanction of $10,000 on Paul. Goldman and Klatz appeal that order….
Goldman and Klatz alleged that Barrett told Chinese officials that Goldman and Klatz “had violated numerous U.S. laws,” “would likely be criminally prosecuted,” “had tried to silence Dr. Barrett by using physical force and other intimidation tactics,” and “were under further indictment by other countries for distributing drugs to foreign nations,” among other things. Goldman and Klatz alleged that as a result of these statements, Chinese authorities canceled the China Project. The amended complaint also alleged “it is likely Defendant Barrett had a similar conversation with Malaysian officials regarding the Malaysia Project which caused the consulting arrangement to be terminated.”
In litigating the sanctions motion, Goldman and Klatz revealed the basis for these allegations. Goldman submitted a declaration stating that a politically connected colleague in China, Stephanie Kuo, had informed him and Klatz that “the likely reason for [the China Project’s] re
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