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Court Dismisses Oakland Bank’s Libel Suit Against Craigslist Poster

| May 31, 2012
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(Bay City News) A state appeals court on Wednesday dismissed an Oakland bank’s libel lawsuit against a former executive who posted derogatory comments about the bank online in the “Rants and Raves” section of Craigslist.

Robert Rogers, who was a vice president of Oakland-based Summit Bank and its chief credit administrator in 2007 and 2008, placed the remarks on the Internet site in June and July 2009.

Among other comments, he criticized the bank’s chief executive, said state and federal regulators “are looking at Summit Bank,” noted that the bank’s Hayward branch had closed and urged, “I would suggest that any one that banks at Summit Bank leave before they close.”

The bank sued him for defamation in Alameda County Superior Court, claiming the comments were false and libelous. Rogers contended in pretrial proceedings that his posts were protected free speech.

In Wednesday’s decision, a three-judge panel of the Court of Appeal in San Francisco ordered dismissal of the case and overturned a 2010 ruling in which Superior Court Judge Frank Roesch declined to toss out the lawsuit.

The panel rejected two separate arguments in which the bank sought to keep the lawsuit alive.

In one part of its decision, the court struck down a 1917 state law that made it a misdemeanor, punishable by a $1,000 fine and up to a year in jail, to circulate untrue statements or rumors about the financial condition of a bank.

The law was enacted in the wake of a nationwide financial panic in 1907 and was intended to help prevent runs on banks.

Summit Bank sought to argue that Rogers’ comments weren’t protected by the right of free speech because they were allegedly illegal under the 1917 law.

But the appeals court said the law itself was unconstitutional because it was overly broad and vague and intruded on free speech.

The law “cannot be reconciled with modern constitutional requirements” under both the U.S. and California constitutions, the court said.

The panel rejected the bank’s argument, supported in a friend-of-the-court brief by the California Bankers Association, that courts should be solicitous of preventing derogatory comments about banks in shaky economic times.
“Rather,” wrote Justice Ignazio Ruvolo, “it is precisely because of the current financial climate that we believe the public should be given broad latitude to express a wide range of viewpoints on matters relating to the operation and solvency of our financial institutions.”

In a second part of its ruling, the panel turned down Summit Bank’s claim of defamation. The court said the remarks were either true – as in the statements that the Hayward branch was closed and that regulators had looked at the bank – or were expressions of opinion.

“Readers expect to see strongly worded opinions rather than objective facts” on online message boards such as the Craigslist “Rants and Raves,” the court said.

Lawyers and representatives of Summit Bank were not available for comment today. The decision could be appealed to the California Supreme court.

Scott Mangum, a lawyer for Rogers, said, “We’re very excited and very pleased with the court’s decision.”

Mangum said he could not disclose where Rogers lives or where he is now working.

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Category: Economy, Law, Tech

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