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Cantu v. Flanigan

April 14, 2010

JOSE RAMIRO GARZA CANTU, PLAINTIFF,
v.
BILLY R. FLANIGAN, UNKNOWN/UNNAMED DEFENDANT, AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Trager, J.

MEMORANDUM AND ORDER

Plaintiff Jose Ramiro Garza Cantu ("Cantu") brought this action against defendant Billy R. Flanigan ("Flanigan"), alleging that Flanigan had defamed Cantu. A jury agreed, awarding Cantu $38,000,000 in economic damages and $150,000,000 in non-economic damages. On appeal, the Second Circuit Court of Appeals upheld the $38,000,000 award for economic damages, but remanded the case for an explanation as to why the non-economic damages award was not excessive. For the reasons stated below, the jury's award for non-economic damages is upheld.

Background

The following facts emerged at trial. Cantu is a businessman who lives in Mexico City, Mexico. Trial Transcript ("Tr.") 282. He works in the petroleum industry, and has produced testimony indicating that he has worked hard to build a world-wide reputation within that industry as a man of integrity. Tr. 217-18, 221, 228, 243.

Cantu began to build his reputation within the industry at an early age. After completing his college education, Cantu purchased a dump truck and started a business selling gravel and sand to refineries. Tr. 275. As the business expanded, Cantu's reputation became more widely known within Mexico. Tr. 275-80. Several years later, an engineer named Hector Lara Sosa ("Hector") approached Cantu with an offer to run a large refinery in the city of Tampico. Tr. 278. The refinery had previously been shut down by the Mexican government due to allegations of corruption among the engineers and contractors, and Hector sought a man with a reputation such as Cantu's to lead the operation. Tr. 278-81. Despite Cantu's relative lack of experience, Hector vouched for Cantu, and his appointment was approved. Tr. 280. Soon, Cantu was managing as many as 6,000 employees. Tr. 281.

After working in Tampico for ten years, Cantu began a new business serving other regions of Mexico. Tr. 281-82. Cantu's new business began by selling gravel and sand, as well as building refineries. Tr. 282. Soon, however, it expanded into on-shore and off-shore drilling, as well as the keeping and maintaining of several ships. Id. This required Cantu to create several separate companies, each designed to perform different types of work. Id. Although Cantu has since conveyed some of the stock interest in these companies to his family members, he has retained the power to absolutely control their activities. Tr. 282-83.

Flanigan is a businessman who served as President of a Bahamian corporation named Arriba, Ltd. Arriba, Ltd. v. Petroleos Mexicanos, 962 F.2d 528, 530 (5th Cir. 1992); Comm'n of Contracts of the Gen. Executive Comm. of the Petroleum Workers Union of the Republic of Mex. v. Arriba, Ltd., 882 S.W.2d 576, 580 (Tex. App. 1994). Over the past two decades, Flanigan has been involved in multiple lawsuits against a Mexican petroleum workers union, among others, and has claimed that he is entitled to collect a default judgment of $800,000,000 against the union. Tr. 101. The parties here have stipulated that Flanigan's corporation once obtained a default judgment against such third parties in 1986. Tr. 71, 73-74, 173. However, as this court has previously noted, "it appears that Flanigan has been stymied in his quest to collect on the default judgment by assertions of foreign sovereign immunity, among other defenses." Cantu v. Flanigan, 05-CV-3580, 2007 WL 2480119, at *4 (E.D.N.Y. August 27, 2007) ("Cantu I") (internal citations omitted). Significantly, an appellate court in Texas has already ruled that the 1986 default judgment against the union was invalid because the union did not have notice of the lawsuit. Comm'n of Contracts, 882 S.W.2d at 587. Therefore, "it is not at all clear that the 1986 Judgment is enforceable." Cantu I, 2007 WL 2480119, at *4.

Despite never having met Cantu, Flanigan believed that Cantu "ha[d] connections with the Mexican government" and "could assist in the settlement of the judgment" that Flanigan had previously attempted to collect from the petroleum workers union. Tr. 104. Therefore, Flanigan engaged in a course of conduct designed to pressure Cantu into either paying Flanigan the amount of the default judgment, or using his position and influence to help Flanigan collect from the union. Tr. 174, 175, 182.

Flanigan began by drafting a document on his personal computer that he titled "amicus brief." Tr. 82. Despite its title, this document was made to resemble a legal complaint, listing Cantu as a defendant and declaring that Flanigan sought monetary damages.*fn1 Id. The "amicus brief" stated that Cantu was the operations manager of a racketeering enterprise, and that he had laundered large sums of money. Tr. 85-86. It further alleged that Cantu had participated in the bribery of government officials who awarded "rigged bid contracts," and that Cantu was personally present when Mexican President Zedillo was awarded a $350 million bribe. Tr. 85, 88. The "amicus brief" continued by alleging that Cantu was involved in drug cartels, that he headed the "Ramiro Garza crime family," that he illegally smuggled oil into the United States, that he had conspired with Iraqi President Saddam Hussein to illegally circumvent sanctions against Iraq and that he was personally responsible for causing the price of gasoline to rise. Tr. 86-91. Flanigan ultimately accused Cantu of having committed mail fraud, wire fraud, tampering, obstruction of commerce, unlawful travel, theft by conversion and extortion. Tr. 91.

After drafting the "amicus brief" containing these allegations, Flanigan met with Antonio Jaquez ("Jaquez"), a reporter from the popular and widely-circulated Mexican magazine Processo. Id. On December 23, 2004, the two men met and, for several hours, discussed the allegations contained in the "amicus brief" Flanigan had drafted. Tr. 94-95. Flanigan also informed Jaquez that he could acquire more information on these allegations by seeking out documents filed in the Eastern District of New York.*fn2 Tr. 119-20.

On January 10, 2005, Flanigan sent a copy of his "amicus brief" to the Eastern District of New York. Cantu I, 2007 WL 2480119, at *1. Flanigan apparently desired to have this document become part of the public record in a separate case,*fn3 despite the fact that he was not a party to the action and had not received permission from the court to file such a document. Id. Because Flanigan never received permission from the court to file such a document, the "amicus brief" never became part of the record. Id. Nonetheless, it was publicly accessible on the electronic database PACER, where it could be obtained by Jaquez. Tr. 84-85.

On February 13, 2005, Jaquez printed an article in Processo (the "Processo article") about Cantu. The story was featured on the front cover, and it repeated Flanigan's allegations against Cantu. Tr. 116, Pl. Ex. D. At times, the Processo article quoted Flanigan's "amicus brief" verbatim. Id. According to the Processo article, Cantu had "become one of the richest men in the world" due to the various illegal activities discussed in Flanigan's "amicus brief." Id.

Due to the wide circulation of Processo magazine, Flanigan's accusations were distributed throughout the world. A Greek businessman named Panaretos Lagos Georgala ("Georgala") learned of the allegations contained in the Processo article and immediately cancelled a multi-million dollar contract for the purchase of several vessels from Cantu's companies. Pl. Ex. E at 22-26. The cancelled contract for the vessels was valued at $289,950,000, resulting in a personal loss to Cantu himself of roughly $35,000,000.*fn4 Tr. at 342; Pl. Ex. E at 19. According to Georgala, the contract had to be cancelled in order to preserve the reputation of his own company, Discoverer ASA, Ltd. Pl. Ex. E at 7, 25. Given the serious and widespread nature of the allegations against Cantu, Georgala did not wish for his company to be associated with Cantu's. Id. at 25.

Cantu also introduced evidence that the damage to his reputation had resulted in an inability to secure other multi-million dollar contracts. Four months after the Processo article published Flanigan's accusations, one of Cantu's companies began to lose contracting bids. Tr. 247-48. Specifically, a business owned by Cantu named Grupo R had attempted to secure a $69,000,000 contract with a company named Petroleos Mexicanos for the lease of drilling equipment. Id. Despite having submitted the lowest bid, Grupo R was not awarded ...


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