To rub salt in the wound, the appellate court rejected the Plaintiff's
arguments that he should get a new trial

A few years ago, I was in Los Angeles for a professional conference and had a free day, so I visited the Nethercutt Museum in nearby Sylmar. The museum is owned and operated by The Nethercutt Collection, a charitable foundation formed by J. B. Nethercutt, who along with his aunt had founded Merle Norman Cosmetics. After his death, his son, Jack, assumed control of the foundation.

I will long remember the amazing facility, the free admission (thanks to the endowment from J. B. Nethercutt), and the beautiful cars. In particular, I spent quite some time admiring the shapely blue and silver Talbot-Lago T150C SS with the Figoni et Falaschi teardrop body design.

The 1937 Talbot-Lago, s/n 90107, features an all-aluminum body, and is the only one of 16 to be built with covered front wheels. It was given by the Maharajah of Kapurthala to his daughter Brinda, who married Paramjit Singh, Maharajah of India. Singh's third wife, Stella Mudge-an English dancer at the Follies Bergeres-had the car painted several times to match her moods and costumes in the late 1930s. California collector Tommy Lee brought the car to the U.S. after WWII and was timed at 116 mph at Muroc Dry Lake.

Little did I know I would be reading about this very car in a court case. According to the appellate court's opinion, here is what happened.

From museum to court

In 1978, J. B. Nethercutt hired the Plaintiff to manage the museum and the restoration of its cars. The Plaintiff became Vice President, and later President of the foundation. After J. B.'s death in 2004, the Plaintiff and Jack Nethercutt had discussions about the Plaintiff's compensation. According to the Court, the discussions reached an impasse. The Plaintiff pointed out that he had been under budget every year and instrumental in procuring the donation of the Talbot-Lago to the museum, justifying more compensation than his $125,000 per year. Nethercutt agreed, and offered a $10,000 raise. When the Plaintiff objected, Nethercutt upped the raise to $35,000. Still unsatisfied, the Plaintiff requested a "finder's fee" of 10% of the $2.3 million appraised value of the Talbot-Lago.

Nethercutt terminated the Plaintiff, and at an employee meeting afterward, Nethercutt reportedly said that the Plaintiff acted as though he owned the museum, that certain people did not want to work for him, and that people would leave if he stayed. Nethercutt's wife, Helen, also complained that the Plaintiff had said hurtful things about her and said he wanted a $250,000 finder's fee for the Talbot-Lago donation.

The donor of the Talbot-Lago testified that when she asked Nethercutt why the Plaintiff had been terminated, Nethercutt told her that it was for the good of The Nethercutt Collection. He added that the Plaintiff had demanded a finder's fee for the donation of her Talbot-Lago, that the employees couldn't get along with him, or he couldn't get along with the employees, and that staff were threatening to leave if he stayed. Nethercutt said that in his opinion the Plaintiff had been abusive, and if he hadn't fired him, all of the other personnel would have quit.

Claims reduced to wrongful termination and slander

The Plaintiff sued for wrongful termination, slander, and several other claims. In the course of the litigation, the claims were reduced to two-wrongful termination and slander. The alleged slanderous statements that the trial court presented to the jury in the instructions were (1) "[The Plaintiff] demanded a commission or finder's fee of about $230,000, to which he was not entitled," and (2) "The Nethercutt Collection fired [the Plaintiff] because other employees would not work for him, and that other employees would leave if [the Plaintiff] remained employed."

The jury rejected the wrongful termination claim, but determined that the Plaintiff had been slandered. Although the jury found no actual damages, it awarded the Plaintiff $750,000 for assumed harm to his reputation.

The Nethercutt Museum appealed this decision, and prevailed. The appellate court provided a detailed lesson on the law of slander. The critical issue was whether or not the Plaintiff was required to prove actual damages in order to recover anything.

To prove actual damages, the Plaintiff would have to show, for example, that he lost a specific business opportunity because of the defamatory effect of the slander; for example, that specific customers decided against using him to restore their cars because they had heard of the slander, or that he had had a specific amount of lost profits, and so on.

Obviously, it's hard to show what you would have made if something that didn't happen had actually happened. How can one possibly know what might have happened?

The law recognizes this difficulty and provides that certain types of statements are so obviously defamatory that damages are certain to occur. In those circumstances, the injured party does not have to prove any specific amount of actual damages, and damages to his reputation can simply be assumed. These types of statements are considered slander per se.

Did not present evidence of actual damage

Under California law, per se slanders are very specific: those that involve accusations of criminal behavior, infections of loathsome diseases, disqualification to pursue one's chosen business, or impotence or a lack of chastity.

The Plaintiff must have understood the difficulties of proof and did not present any evidence of actual damage in the course of the lawsuit, relying on the position that this was a case of slander per se.

The appellate court carefully considered the alleged slanderous statements. The demand for a finder's fee didn't qualify, as people demand money that others think they aren't entitled to all the time, and doing so doesn't necessarily mean they are bad people. Similarly, other people not wanting to work for someone doesn't necessarily reflect badly on that person.

In the right context, such statements can be very damaging. But they need to be placed in that context for us to know they are damaging. These statements, on their face and without any understanding of their context, background, and secondary meanings, could be harmless.

Because additional facts are needed in order to gauge the character of these statements, they do not fit into the slander per se category, and the appellate court ruled that the Plaintiff could not prove slander without proving actual damages.

To rub salt into the wound, the appellate court rejected the Plaintiff's argument that he should get a new trial in order to present such evidence. The appellate court pointed out that he had a full opportunity to present such evidence in the initial trial, and chose not to do so. Having had the chance, he couldn't get a do-over.

Lessons to be learned here

Although the museum successfully defended itself, the victory certainly didn't come cheaply. There must have been some serious worries after the jury awarded the Plaintiff a $750,000 verdict and during the time that the outcome of the appeal was uncertain.

Clearly, we should always be careful what we say publicly about other people, no matter how accurate it is or how aggrieved we are.

Many readers will probably think this is a good example of a bunch of lawyers arguing about minutiae, all the while billing by the hour. But a very important balance of rights is at play here, and life (and therefore the law) can be very complicated.

Proving damage to one's reputation is hard, but simply assuming damages in every case would be very unfair to the defendant. The law strikes the balance by focusing on the certainty of the defamatory character of the comments, and cutting that fine line leads to a very subtle and theoretical analysis.

Finally, one reason lawsuits are so expensive is that you only get one shot to prove your case. Consequently, you really can't blame a lawyer who protects against an unfortunate outcome by throwing everything that might stick at the other side, no matter the cost in billable hours, since no one has a clear enough crystal ball to know what the "important" points are going to be.

Here, the Plaintiff apparently made the strategic decision not to use the shotgun approach, relying instead on the statements being slanderous per se, perhaps because it would have been too difficult and expensive to try to prove actual damages. That is an understandable decision to make, because it costs more to do more, and one's legal budget is often limited.

On appeal, many months and many thousands of dollars later, he learned that his decision left him without a remedy, as the court wouldn't let him go back and start over using a different tactic. No one can know if the outcome would have been different with another strategy.

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