Cohen et al v. Hansen et al

Filing 380

ORDER Denying Defendants Ross B. Hansen, Northwest Territorial Mint, LLC, and Steven Earl Firebaugh's 348 Motion for New Trial or, in the alternative, Remittitur or Relief Pursuant to Rule 60(b). Signed by Judge James C. Mahan on 04/27/2016. (Copies have been distributed pursuant to the NEF - NEV)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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BRADLEY STEPHEN COHEN, et al.,

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Plaintiff(s),

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Case No. 2:12-CV-1401 JCM (PAL)
ORDER

v.
ROSS B. HANSEN, et al.,

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Defendant(s).

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Presently before the court is defendants Ross B. Hansen, Northwest Territorial Mint, LLC,

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and Steven Earl Firebaugh’s motion for a new trial or, in the alternative, remittitur or relief

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pursuant to Rule 60(b). (Doc. # 348). Plaintiffs Bradley Stephen Cohen and Cohen Asset
Management, Inc. filed a response. (Doc. # 350). Defendants filed a reply. (Doc. # 368).
I.

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Background
Plaintiffs initiated this matter after defendants created a defamatory website comparing

plaintiff Stephen Cohen, an investor, and his real estate investment fund, plaintiff Cohen Asset

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Management, Inc. (“CAM”), to notorious fraudster Bernie Madoff and his investment fund. On

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February 8, 2016, plaintiffs proceeded to trial against defendants on claims for defamation per se

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and false light invasion of privacy. The jury returned a verdict on February 17, 2016. (Doc. # 325).

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The jury found in plaintiffs’ favor on each claim against each defendant and awarded plaintiffs

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damages from each defendant. The court entered judgment on March 1, 2016. (Doc. # 331).

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The discovery process in this matter was contentious. Plaintiffs refused to respond to
certain of defendants’ discovery requests related to the financial condition of CAM. Plaintiffs
repeatedly represented to the court that they had no proof of actual damages or quantifiable

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James C. Mahan
U.S. District Judge

economic harm, that they did not intend to present any theory of such damages, and that they were
only seeking general presumed damages.

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Based on those representations, Magistrate Judge Leen “compelled the [p]laintiffs to

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supplement certain discovery responses that were ambiguous . . . [in order] to require the

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[p]laintiffs to plainly specify that the only damages claimed in this case were presumed damages

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and that [p]laintiffs were not claiming any damages that were capable of mathematical

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calculation.” (Doc. # 178 at 13 (citing doc. # 91)). The court warned the [p]laintiffs that failure to
comply with their discovery obligations would result in preclusion sanctions. (See doc. # 91).
On October 30, 2012, defendants filed a motion for summary judgment as to the claims
requiring actual damages. Plaintiffs then argued, for the first time, that they suffered actual

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damages. (Doc. #135). The court thereafter ordered sanctions precluding plaintiffs from claiming

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or introducing any evidence of “quantifiable economic harm” because of their willful failure to

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provide discovery of the same, in violation of Judge Leen’s prior order. (See doc. #178).

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Based on the fact that plaintiffs could not offer evidence supporting actual damages, the

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court granted summary judgment in favor of defendants on each claim for which actual damages

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are required as a matter of law. (Doc. # 228). Plaintiffs thus proceeded to trial on theories of

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presumed damages only on their claims for defamation per se and false light invasion of privacy.
The jury awarded plaintiffs damages totaling $38.3 million. Defendants have filed a motion
for relief under Federal Rules of Civil Procedure (“Rules”) 59 and 60(b). Defendants ask the court

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to grant a new trial on the issue of damages based on their belief that the jury “likely included in

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its award determination calculations [and] compensation for lost revenues and lost business

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opportunities, which violates the [c]ourt’s prior ruling that such alleged actual damages, also

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[referred to under Nevada law] as special damages, shall not be admissible in this case.” (Doc. #

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348 at 3). Alternatively, the defendants ask the court for remittitur or relief pursuant to Rule

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60(b)(1) and (6).

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II.

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Legal Standard
"A court may, on motion, grant a new trial to all or some of the issues and to any party . . .

after a jury trial, for any reason for which a new trial has heretofore been granted in an action at
law in federal court." FED. R. CIV. P. 59(a)(1)(A). "Rule 59 does not specify the grounds on which
a motion for new trial may be granted." Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir.

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2007). A court may grant a new trial only on “grounds that have been historically recognized." Id.

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"Historically recognized grounds include, but are not limited to, claims that the verdict is

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against the weight of the evidence, that the damages are excessive, or that, for other reasons, the

James C. Mahan
U.S. District Judge

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trial was not fair to the party moving." Id. The Ninth Circuit has also held that, "[t]he trial court

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may grant a new trial only if the verdict is contrary to the clear weight of the evidence, is based

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upon false or perjurious evidence, or to prevent a miscarriage of justice." Passantino v. Johnson

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& Johnson Consumer Prods., 212 F.3d 493, 510 n.15 (9th Cir. 2000).
Erroneous jury instructions, as well as the failure to give adequate instructions, are grounds

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for a new trial unless the error is harmless. Murphy v. City of Long Beach. 914 F.2d 183, 187 (9th
Cir. 1990). To grant a new trial on improperly admitted evidence, the admission must have
constituted prejudicial error. Chalmers v. City of Los Angeles, 762 F.2d 753, 761 (9th Cir. 1985)

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(citing FED. R. CIV. P. 61). The decision whether to grant a motion for new trial is within the district

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court’s discretion. Id.

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III.

Discussion
Defendant’s motion for new trial

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A.

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The defendants’ argument proceeds in several layers. First, they argue that the court

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allowed plaintiffs to violate Judge Leen’s May 8, 2014, order, which precludes plaintiffs from

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“introducing any evidence of quantifiable economic harm attributable to the [d]efendants’ alleged
conduct for any purpose in this case.” Defendants contend that plaintiffs’ presentation of evidence
of the approximate dollar value of lost business opportunities and of the amounts spent by plaintiffs
to combat the defamatory website violates the order. (Doc. # 178); (see doc. # 348). They thus
assert that the court improperly allowed the testimony.

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Second, defendants argue that the court improperly instructed the jury to consider loss of

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business in its consideration of presumed damages. Defendants maintain that Nevada law does not

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contemplate loss of business as a basis for consideration in determining presumed damages, citing

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to K-Mart Corp. v. Washington, 109 Nev. 1180 (1993).

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Third, they suggest that it is probable that the jury’s consideration of the quantifiable
aspects of plaintiffs’ witnesses’ testimony under the court’s instruction to consider loss of business
in its determination of an appropriate award of presumed damages contributed to the high award
in this case. Defendants assert that the damage award was therefore excessive, entitling them to a
new trial.
i.

Nevada law on presumed damages

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As explained above, plaintiffs in this case sought only presumed damages at trial. The

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parties disagree about whether loss of business is a lawful basis for the jury to consider in its

James C. Mahan
U.S. District Judge

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deliberations of such damages. Defendants now argue that loss of business is not a basis under

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Nevada law for presumed damages. They contend that evidence of such was impermissible at trial

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and the court’s instruction informing the jurors that presumed damages could be awarded to

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compensate plaintiffs for, amongst other things, loss of business constituted error.

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The court did not err by instructing the jury to consider loss of business in its
determination of a presumed damages award. Under Nevada’s defamation per se scheme, a
plaintiff who proves that a statement is defamatory per se is entitled to presumed damages “for the

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harm which normally results from such a defamation.” K-Mart Corp. v. Washington, 109 Nev. at

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1195 (quoting Gertz v. Robert Welch, Inc., 94 S. Ct. 2997, 3023, (1974)). “Damages are presumed

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“because of the impossibility of affixing an exact monetary amount for present and future injury

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to the plaintiff’s reputation, wounded feelings and humiliation, loss of business, and any

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consequential physical illness or pain.” Id. (quoting Gertz, 94 S. Ct. at 3023, n. 4) (emphasis

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added).

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The Nevada Supreme Court has thus explicitly stated that loss of business is an appropriate
category of injury for consideration in setting a presumed damages award because of the
“impossibility of affixing an exact monetary amount for [plaintiff’s] present and future . . . loss of
business.” Id. Furthermore, although the damages are presumed because of the “impossibility of

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affixing an exact monetary amount,” a plaintiff seeking only presumed damages is not precluded

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from offering evidence of loss of reputation or business. See Nevada Indep. Broad. Corp. v. Allen,

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99 Nev. 404, 418, (1983) (“The [presumed damages] award must be supported by competent

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evidence, though not necessarily of the kind that “assigns an actual dollar value to the injury.”

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(quoting Gertz, 94 S. Ct. at 301112)).

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Defendants cite to an earlier portion of the K-Mart decision in which loss of business is not

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included in the court’s list of some of the types of injury for which monetary calculation is

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impracticable. See K-Mart, 109 Nev. at 1194 (“General damages in a defamation case represent
the other effects of the defamation on the plaintiff, including loss of reputation, shame,
mortification and hurt feelings.”). First, the K-mart court does not indicate that the list of “other
effects” cited to by defendants is exclusive. See id. Given the fact that the court includes loss of
business as another such effect in the very next paragraph, it is not likely the court intended the list
to be exclusive. See id. at 1195. This court will not interpret the Nevada Supreme Court’s opinion

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James C. Mahan
U.S. District Judge

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to contradict itself, but will instead accept the more natural reading that the first list was not

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exhaustive.

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Moreover, the portion of the opinion cited to by defendants is describing presumed

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damages in the context of a normal defamation claim, in which actual damages must be proved

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before general damages are presumed. See id. Here, plaintiffs brought claims of defamation per
se, which does not require proof of any actual damages because “in many cases of [defamation
that is actionable per se] . . . it is impossible [to] directly trace the effects thereof in loss to the
person defamed.” Id. (quoting Gertz, 94 S.Ct. at 3023).

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Indeed, in the context of a claim for defamation per se, the K-Mart decision holds that the

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“jury is permitted to assess damages considered to be the natural and probable consequences of

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the defamatory words.” Id. (citing Gertz, 94 S.Ct. at 3023). Loss of business is a “natural and

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probable” consequence of a defamatory statement falsely accusing plaintiffs of fraud in their

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business dealings.

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Defendants’ argument is premised on the fact that loss of business is a part of actual
damages, and that, therefore, it is not an appropriate basis for presumed damages. Loss of business
could result in actual damages, but defendants fail to cite to any case law indicating that any injury
that could form a basis for actual damages cannot form a basis for presumed damages. To the
contrary, as explained above, presumed damages are meant to compensate a plaintiff for actual

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damage that does not lend itself to exact monetary calculation. See, e.g., Gertz, 94 S. Ct. at 3023,

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n. 4. Moreover, Nevada case law explicitly lists loss of business as an appropriate basis for

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recovery of presumed damages. See K-Mart, 109 Nev. 1195.

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The K-Mart decision quotes and cites to the U.S. Supreme Court’s Gertz decision

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extensively. See K-Mart, 109 Nev. 119495. The citations and quotes draw primarily from Justice

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White’s dissent therein. See id; Gertz, 94 S. Ct. at 20233025. Defendants argue that in his dissent,

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Justice White laments a change in the law, and that any reference thereto by the K-Mart court was

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similarly describing law that no longer existed.
The argument is feeble at best and disingenuous at worst. Justice White’s dissent criticized
the fact that the majority’s opinion in Gertz limited the application of presumed damages to
defamation cases in which the defendant had acted recklessly or with actual malice. See Gertz, 94
S.Ct. at 3025. In no way did Gertz limit the scope of types of injuries for which presumed damages

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U.S. District Judge

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were applicable, nor did Justice White’s dissent discuss any such limitation. See Gertz, 94 S.Ct. at

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302325. There is no support for defendants’ argument in any part of the Gertz opinion. Id.

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Finally, defendants now complain about a jury instruction that the parties jointly proposed

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to the court. (See doc. # 268 at 43). Moreover, when given an opportunity to object to the

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instructions the court indicated that it would give during the settling of the jury instructions in open
court, defendants failed to object to the jointly proposed presumed damages instruction despite
lodging numerous objections to other instructions. (See doc. # 340, 198232). The court did not
err by reading an instruction proposed jointly by the parties, to which defendants did not object
when given an opportunity, that directly quotes valid authority on Nevada defamation per se law.

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See K-Mart, 109 Nev. at 1195.

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ii.

Judge Leen’s Order

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Judge Leen’s lengthy May 8, 2014, order has a clear ruling: “[p]laintiffs shall be precluded

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from claiming or introducing any evidence of quantifiable economic harm attributable to the

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[d]efendants’ alleged conduct for any purpose in this case, including motion practice and trial.”

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(Doc. # 178 at 17-18, 21). The order also contains a substantial amount of background material

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intended to provide legal and factual context to the order. The effect of the order, however, is
limited to the language quoted above.
Based on that language, as well as a background discussion of the distinction between
actual and presumed damages found earlier in the order (see id. at 5),1 defendants interpret the

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order to preclude any evidence that includes any quantity of money in any context, as well as any

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evidence of loss of business. That interpretation is not supported by the order, however.

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First, defendants appear to read the words “economic harm” out of the phrase “quantifiable

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economic harm.” They object to several instances in which plaintiff Bradley Cohen, while

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testifying as a witness, mentioned the dollar value of missed investment opportunities for his fund,

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plaintiff CAM. First, they object to Cohen’s testimony that CAM’s pursuit of a “$21 million” real

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estate acquisition fell apart after the bank financing the deal visited the defendants’ website. (See
doc. # 342-1 at 27). Second, they object to his testimony that CAM’s partner in another botched

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U.S. District Judge

Nevada defamation law uses the terms special and actual damages interchangeably. The
law gives similar treatment to the terms general and presumed damages. The parties and the court
have used all four names for the varying damages throughout the course of this litigation. To avoid
confusion, the court will use the phrases actual damages and presumed damages exclusively in this
order.
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deal was planning on investing “$110 to $130 million” alongside CAM before it caught wind of

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defendants’ website.

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The testimony certainly contains quantities of money. Neither instance, however, is

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evidence of quantifiable economic harm to the plaintiffs. With respect to plaintiff CAM, a missed

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investment opportunity may have resulted in economic harm or economic benefit, depending on
the outcome of the investment. If the investments would have been successful, then the lost
opportunities represent economic harm. If the investments would have been unsuccessful, then the
lost opportunities would actually represent an economic benefit to the fund. Similarly, plaintiff

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Cohen’s interest in the transactions would have been dependent on whether the investments were

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successful as well as the details of his management fee agreement with CAM.

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Regardless of profit or loss, it is impossible for a court or a jury to divine the extent of the

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success or failure of an investment that never happened. That is what makes the “exact monetary

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[harm]” that flows from such a loss of business impossible for a jury to determine, which is why

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the law presumes damages in defamation per se cases. See, e.g., K-Mart Corp. v. Washington, 109

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Nev. 1180, 1195.
Judge Leen’s order precludes evidence of quantifiable economic harm, not evidence of any
economic quantity. Here, Cohen’s testimony contained only the approximate size of deals that

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didn’t materialize, which is consistent with his counsel’s representations to Judge Leen that “there

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will be no testimony whatsoever with respect to any specific sum of money or sums of money that

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were lost as a consequence” (See doc. # 178 at 11) (emphasis added) and that plaintiffs had no

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damages capable of mathematical computation. (Id. at 12) (emphasis added).

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that Cohen’s testimony did not include any sums of money that were lost as a consequence of

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defendants’ websites, did not include sums of money that supported damages capable of

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mathematical computation, and thus did not violate the spirt of Judge Leen’s order. Cohen did not

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The court finds

testify to any lost revenue or profit that would be amendable to mathematical calculation.
Next, defendants argue that testimony from plaintiff Cohen about the approximate amounts
of money he spent to hire search engine optimization experts—retained to ‘push’ defedants’

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website down in rankings of internet searches for plaintiffs’ names—violated Judge Leen’s order.

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(See doc. # 342-1 at 40). Cohen indicated he had spent around $100,000.00 to $200,000.00 on

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search engine optimization. (Id.) Defendants’ trial counsel, who did object at the time of the

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U.S. District Judge

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testimony on hearsay grounds, failed to object on grounds that the testimony violated Judge Leen’s

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order. (Id.)

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The court specifically instructed defendants that instead of entering a broad ruling on their

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motion in limine to preclude evidence of “quantifiable economic harm,” it would rely on

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defendants’ objections to evidence they believed violated Judge Leen’s order. (Doc. # 350-1 at 40,
45). Here, defendants failed to make such an objection.
Testimony about the approximate amount of money spent to combat the websites’ high

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search rankings is, however, evidence of quantifiable economic harm attributable to defendants’

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websites. Assuming arguendo that defendants’ had objected to such testimony, the court finds that

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any error in allowing the testimony was harmless. See FED. R. CIV. P. 61. Here, as discussed more

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fully below, plaintiffs introduced substantial evidence of loss of business and loss of reputation,

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as well as shame, humiliation, and hurt feelings, all of which are grounds for presumed damages

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and support the jury’s award herein. See supra K-Mart, 109 Nev. 119495.

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To the extent Mr. Cohen’s testimony about search engine optimization fees was considered
at all by the jury, it played an insignificant role in the total amount awarded on each claim.
Admitting such evidence did not affect the substantial rights of defendants and constitutes harmless
error. See FED. R. CIV. P. 61.

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iii.

The awards were not excessive

The jury awarded plaintiffs a total of $38.3 million. Defendants argue that the size of the

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award is “likely” attributable to plaintiffs’ allegedly improper introduction of the evidence of loss

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of business described above. First, the court finds that the evidence of loss of business was properly

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admitted by the court and considered by the jury, as described above. Second, assuming arguendo

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that the evidence should not have been before the jury, defendants do not provide any basis for

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their assumption that the jury’s consideration of a few monetary sums presented during the

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testimony of plaintiffs’ witnesses overrode its consideration of the evidence of loss of reputation,
shame, mortification, hurt feelings, and consequential physical illness presented throughout the
rest of plaintiff’s extensive case in chief.
The record contains substantial evidence of loss of reputation and shame, in particular, to
which defendants do not object. Neither the defendants nor the court can speculate as to how the

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jury calculated its damages award. Given the significant evidence of loss of reputation, shame,

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mortification, and hurt feelings, all of which the parties agree support presumed damages,

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U.S. District Judge

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however, the jury had significant evidence on which to support its determination of presumed

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damages.

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Indeed, “the mere fact that a verdict is large is not in itself ‘conclusive that it is the result

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of passion or prejudice.” Matlock v. Greyhound Lines, Inc., 2010 WL 3171262, at *4 (D. Nev.

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Aug. 10, 2010) (quoting Beccard v. Nevada National Bank, 99 Nev. 63, 657 P.2d 1154, 1156
(Nev.1983)). Any error did not affect defendants’ substantial rights and was therefore harmless.
FED. R. CIV. P. 61.
B.

Defendants’ request for remittitur

If a court determines that a damage award is excessive, it may consider remittitur as an
alternative to granting a motion for new trial:
When the court, after viewing the evidence concerning damages in a light most
favorable to the prevailing party, determines that the damages award is excessive,
it has two alternatives. It may grant defendant's motion for a new trial or deny the
motion conditional upon the prevailing party accepting a remittitur. The prevailing
party is given the option of either submitting to a new trial or of accepting a reduced
amount of damage which the court considers justified.
Fenner v. Dependable Trucking Co., 716 F.2d 598, 603 (9th Cir. 1983) (citing Minthorne v.

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Seeburg Corp., 397 F.2d 237, 244–45 (9th Cir.1968); Linn v. United Plant Guard Workers of

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America, Local 114, 383 U.S. 53, 65–66 (1966)).

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The court has already found that the jury award in this matter was not excessive given the

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substantial, properly admitted evidence of loss of reputation, shame, mortification, and hurt

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feelings offered by plaintiffs at trial. Remittitur is thus not appropriate and the court will not

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consider it as an alternative to granting defendants’ motion for a new trial.
C.

Defendants’ request for relief pursuant to Rule 60(b)

Rule 60(b) provides: “On motion and just terms, the court may relieve a party or its legal
representative from a final judgment, order, or proceeding for the following reasons: (1) mistake,

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inadvertence, surprise, or excusable neglect . . . [or] (6) any other reason that justifies relief.” FED.

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R. CIV. P. 60(b)(1) and (6). As this court recently stated, this is an “extraordinary sanction”

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requiring a showing of “extraordinary circumstances.” United States v. Garcia, 2015 WL 162992,

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at *2 (D. Nev. Jan. 13, 2015) (citing Allmerica Fin. Life Ins. & Annuity v. Llewellyn, 139 F.3d 664,

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666 (9th Cir.1997)).

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As discussed above, the court finds that no mistake, inadvertence, or excusable neglect
exists herein. Furthermore, any error committed was harmless under Rule 61. See FED. R. CIV. P.
61. Defendants have not provided “any other reason that justifies relief.” See FED. R. CIV. P.

James C. Mahan
U.S. District Judge

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60(b)(6). Defendants have not made a showing of “extraordinary circumstances” justifying relief

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under Rule 60. See Allmerica Fin. Life Ins., 139 F.3d at 666.

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IV.

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Conclusion
Defendants have not made a showing sufficient to entitle them to a new trial, remittitur, or

relief pursuant to Rule 60(b).
Accordingly,
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that defendants Ross B.

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Hansen, Northwest Territorial Mint, LLC, and Steven Earl Firebaugh’s motion for a new trial or,

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in the alternative, remittitur or relief pursuant to Rule 60(b) (doc. # 348) be, and the same hereby

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is, DENIED.

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DATED April 27, 2016.

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__________________________________________
UNITED STATES DISTRICT JUDGE

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James C. Mahan
U.S. District Judge

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