Steven M. Kramer v. Richard Thompson

947 F.2d 666
CourtCourt of Appeals for the Third Circuit
DecidedNovember 14, 1991
Docket90-1488, 90-1640
StatusPublished
Cited by47 cases

This text of 947 F.2d 666 (Steven M. Kramer v. Richard Thompson) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Steven M. Kramer v. Richard Thompson, 947 F.2d 666 (3d Cir. 1991).

Opinion

OPINION OF THE COURT

BECKER, Circuit Judge.

These appeals, from various injunctive orders and a damages judgment of the district court for the Eastern District of Pennsylvania in a bizarre libel case founded upon our diversity jurisdiction, present the interesting question under Pennsylvania law of the ability of a judge to enjoin future libels and to compel the retraction of past libels. For the reasons that follow, we will reverse the district court’s orders enjoining defendant/appellant Richard Thompson from publishing further libels against plaintiff/appellee Steven M. Kramer, his former lawyer, and ordering Thompson to retract past libelous statements. The judgment awarding damages will be reversed and remanded for a new trial on damages for the reasons set forth in a companion opinion filed this day.

I. FACTS AND PROCEDURAL HISTORY

The parties’ relationship began in July 1982, when Thompson retained Kramer to bring a securities fraud claim against Thompson’s former broker, Prudential-Bache, Inc. No question was raised by Thompson concerning Kramer’s stewardship for the next three years. Indeed, during this time, Thompson wrote on several occasions praising Kramer’s performance. 1 Then, in the fall of 1985, Kramer was contacted by an F.B.I. agent to whom Thompson previously had complained about his investment losses at Prudential-Bache. *667 The agent asked Kramer whether the stocks at issue were completely worthless. Kramer responded that Thompson had purchased the stocks for roughly $120,000 and later had sold them for approximately $15,-000. Thus, while informing the agent that Thompson had suffered a very substantial loss, Kramer also informed the agent that technically the stocks were not worthless. When Thompson learned of this conversation, however, he became enraged, and accused Kramer of deliberately dissuading the F.B.I. from investigating the matter. The parties’ relationship deteriorated rapidly thereafter and, in October 1985, Thompson discharged Kramer as his counsel.

Seeking to ensure that he ultimately would be compensated for his services, Kramer refused to return the case files to Thompson until the latter agreed to deposit the proceeds of any future judgment or settlement with the court pending resolution of the attorney’s fees issue. Thompson would not agree, and Kramer secured an order from the district court which provided that any funds recovered would be placed in escrow, and that the fee dispute would be arbitrated. Kramer then made the case files available to Thompson and his new counsel.

On February 4, 1986, Thompson wrote to the Disciplinary Board of the Pennsylvania Supreme Court (the “Disciplinary Board”) alleging that Kramer had failed to represent him effectively in the Prudential-Bache action. 2 At about the same time, Thompson began writing a series of critical and accusatory letters about Kramer to various private attorneys, federal judges, F.B.I. agents, federal and state prosecutors, newspapers, and television stations in the Philadelphia area. 3 With varying degrees of repetition, these letters alleged that Kramer: (1) had “thrown” Thompson’s case; (2) had deliberately destroyed certain documents related to the case; (3) had used drugs and was a member of the highly publicized “Yuppie Drug Ring” organized by Philadelphia dentist Lawrence Lavin; 4 (4) was connected to organized crime; and (5) had committed arson on his own car. Kramer demanded a retraction, but Thompson refused.

Kramer thereupon brought a libel action against Thompson in the Court of Common Pleas of Philadelphia County. Undaunted by Kramer’s suit, Thompson continued his letter-writing campaign. The court eventually entered a default judgment on the issue of liability against Thompson for failure to comply with discovery.

After the default judgment was entered against him, Thompson ceased to write critically about Kramer for approximately two years. In early 1989, however, Thompson became aware of a suit filed by Kramer in federal district court against Mano Arco, a garage that had performed repair work on Kramer’s car. Kramer’s suit alleged that Mano Arco’s negligent workmanship had been responsible for the fire that engulfed his car while it was travelling on the New Jersey Turnpike. Thompson took it upon himself to contact, first by phone and then by letter, the lawyer for Mano Arco. After informing the lawyer of his view that Kramer had committed arson on his own car, Thompson resumed his accusations that Kramer had thrown Thompson’s securities fraud case, and that he was involved in the Yuppie Drug Ring and the underworld. Thompson’s letter to Mano Arco’s attorney purported to be copied to the state Disciplinary Board, the federal judge hearing the case, The Philadelphia Inquirer, the United States Justice Department, and Kramer.

Kramer then filed the instant libel action in the United States District Court for the Eastern District of Pennsylvania, alleging diversity of citizenship. 5 Thompson filed *668 an answer, naming thirteen third-party defendants and asserting counterclaims for libel and slander, legal malpractice, obstruction of justice, malicious prosecution, and civil RICO violations. The district court later dismissed the third-party defendants and the counterclaims, and imposed sanctions on Thompson with respect to one of the third-party defendants.

Trial commenced on April 2, 1990. 6 Having determined that Thompson’s statements were per se libelous in that they were false and made in reckless disregard of their truth or falsity, the court directed a verdict for Kramer at the close of Kramer’s case — i.e., without hearing Thompson’s defense on the issue of liability. The court restricted the scope of Thompson’s case to evidence relevant to the calculation of compensatory and punitive damages. Heeding the court’s suggestion that his only hope for mitigating damages was to demonstrate contrition, Thompson took the witness stand, delivered a grudging and rambling apology, and promised not to publish future defamatory statements. Kramer cross-examined Thompson, challenging the sincerity of his apology, and Thompson rested.

After closing arguments, the court instructed the jury to award damages based only on those libelous statements issued between the filing of the state court action in February of 1986 and the filing of the federal court action in April of 1989, and to render its verdict in the form of special interrogatories on compensatory and punitive damages. During its deliberations, the jury inquired whether it also could require Thompson to send a letter of retraction to all persons who had received the libelous communications. The court responded that it was inappropriate for the jury to do so, but assured the jury that the court would require Thompson to issue a retraction, in addition to whatever damages were awarded.

The jury ultimately awarded Kramer $100,000 in compensatory and $38,000 in punitive damages, and the district court entered judgment accordingly on April 10, 1990.

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947 F.2d 666, Counsel Stack Legal Research, https://law.counselstack.com/opinion/steven-m-kramer-v-richard-thompson-ca3-1991.