DEFAMATION-BUSINESS DEFAMATION

LabMD Inc. v. Boback, 2022 U.S. App. LEXIS 24413 (3^rd Cir. August 30, 2022) (Jordan, C.J.)  It is really a complex case.  LabMD alleges that Tiversa, Boback and Johnson violated various laws, including RICO.  It is alleged that they lied about how and where Tiversa found a file, supposedly of compromised names so as to induce LabMD to purchase Tiversa’s incident response services.  Secondly, it is alleged that by using the file of names in Johnson’s research paper on data leaks in the medical field, and third by turning it over to the FTC after Lab refused to hire Tiversa, they committed business torts.  The District Court dismissed the RICO claims of being time-barred and the Circuit Court agreed with that conclusion.  The court went through the elements of a RICO claim.  It is claimed by LabMD that Tiversa used fraudulent representations to cause the FTC to investigate and bring an enforcement action against LabMD, which ultimately shut down LabMD.  The court looked at when this all occurred, and said that LabMD knew or should have known by 2010 that Tiversa was the source of injuries flowing from the FTC’s investigation and subsequent enforcement action.  They suspected Tiversa from the beginning.  Because LabMD knew or should have known by 2010 about its injuries and their source, the RICO claim accrued more than four (4) years before the complaint was filed in 2015.  Thus, unless the statute of limitations was tolled, the RICO claims are time-barred.  RICO claims may be equitably tolled, but here LabMD has not pointed to any independent instances of active misleading that would have equitably tolled its RICO claims.  As to interference with business relationships, it is alleged that Pathology Blawg and the Wall Street Journal interfered with LabMD’s prospective business relationships.  The District Court’s dismissal of the tortious interference claim was proper.  In connection with fraud and negligent misrepresentation, the court agreed with the District Court that LabMD knew or should have known of its fraud and negligent misrepresentation claims by 2011 when it filed its complaint in Georgia.  The Circuit Court affirmed the District Court’s dismissal of those claims.  Defamation.  The Circuit Court directed reinstatement of LabMD’s defamation claim pertaining to number of statements.  The court looked at the statements and found that they were adequately preserved on appeal.  The lower court had rejected Tiversa’s argument that the statements they made were true.  The District Court applied an erroneous analysis to the statements found in the Wall Street Journal.  The court carefully went through the statements in terms of their assertion of facts.  The court then looked at summary judgment.  Here, the District Court abused its discretion when it prohibited LabMD from submitting an expert declaration during the summary judgment phase of the case.  Limits on the type and amount of evidence may be appropriate, but the nature of the accusations here involving computer software functions strongly indicate that resort to expert testimony was to be anticipated and should have been allowed.  The District Court’s Order granting summary judgment was therefore vacated.  On sanctions and contempt, the court took a look at those sanctions imposed against Hawkins and LabMD.  After looking at all the factors, the court vacated the first sanctions order.  It also vacated the second sanctions order, as well as the revocation of Hawkins pro hac vice admission and a contempt order.  They are all based on the District Court’s finding that LabMD and Hawkins had violated the first sanctions order.  That conclusion does not stand on entirely sound footing.  This is not a license for any counsel to disregard the warnings and orders given by district courts.  The District Court in this case overstepped its bounds with its sanctions, but it does not condone the hyper-aggressive behavior that burned through the patience of the thoughtful judge and got Hawkins and LabMD into trouble.  The court is free to keep them on an appropriately designed and well explained short leash.  Attorney withdrawal.  The court vacated and remanded for further consideration the question concerning the motion to withdraw filed by Attorney Davis.  In a second Pennsylvania action, LabMD brought claims primarily against Tiversa’s lawyers Kline and Troutman Pepper for their alleged participation in Tiversa’s extortionate scheme.  None of LabMD’s arguments are persuasive.  The dismissal of the fraud, fraudulent misrepresentation and negligent misrepresentation claims must also therefore be affirmed.  Dismissal without leave to amend.  Action and dismissing complaint in second Pennsylvania action with prejudice and without leave to amend is affirmed.  For the foregoing reasons, we will affirm in part the District Court’s dismissal of the complaint in the First Pennsylvania Action, but will vacate specific rulings regarding the defamation claim and remand, as described above. We will also vacate the District Court’s orders on sanctions and contempt, and the order denying Davies’s motion to withdraw. In the Second Pennsylvania Action, we will affirm the District Court’s dismissal of the complaint.