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Feist v. Paxfire, Inc.

United States District Court, S.D. New York

January 17, 2017

BETSY FEIST, Plaintiff,
v.
PAXFIRE, INC., Defendant.

          OPINION AND ORDER

          LORNA G. SCHOFIELD UNITED STATES DISTRICT JUDGE.

         Plaintiff Betsy Feist brought this putative class action against Defendant Paxfire, Inc. (“Paxfire”), alleging Paxfire intercepted and disclosed her internet activity in violation of the Federal Wiretap Act, as amended by the Electronic Communications Privacy Act of 1986, 18 U.S.C. § 2510 et seq. (the “Wiretap Act”), and state law. At issue are Paxfire's two counterclaims for defamation under New York law based on communications made by Feist's attorneys with a journalist in the days before the Complaint was filed. Feist moves for summary judgment on Paxfire's counterclaims and objects to the order of Magistrate Judge Ronald L. Ellis limiting her damages claims as a discovery sanction. Paxfire moves for summary judgment on Feist's claims, which are limited to offsetting Paxfire's counterclaims. For the following reasons, Feist's motion for summary judgment on the counterclaims is granted. Consequently, Paxfire's motion and Feist's objection are denied as moot.

         I. BACKGROUND

         The following facts are taken from the parties' submissions and are undisputed unless otherwise indicated.

         A. Background Regarding Alleged Defamatory Statements

         On August 4, 2011, Feist filed a putative class action against Paxfire alleging that its technology was being used to monitor, intercept and redirect consumers' internet searches. The Complaint asserts claims under the Wiretap Act and state law.

         On August 1, 2011, three days before the Complaint was filed, Feist's attorneys were introduced by email to a reporter at New Scientist magazine, Jim Giles. The next day, Giles asked Feist's attorneys if they could “spare a few minutes to discuss [their] thinking regarding Paxfire's activities.” These are the only communications in the record between Giles and Feist's attorneys on August 1 and 2.

         On August 3, 2011, the day before the Complaint was filed, Michael Reese, one of Feist's attorneys, sent an email to Giles stating:

I'm about to provide a draft complaint to you. First, I have to confirm that this[] [is] off the record and merely to allow you to see the complaint to get your story written. We may have some last minute changes to the complaint, so [we] will need to confirm that what goes in the story about the complaint is correct.

         After Giles confirmed that he would “treat the draft complaint as off the record, ” Reese sent him the document “to be treated off the record.” In addition to asserting claims under the Wiretap Act and state law, the draft complaint included a claim against Paxfire under the Stored Communications Act (“SCA”), 18 U.S.C. § 2701 et seq. Reese included in his email a “sound bite” for Giles to use “on the record”:

[Reese] of Reese Richman LLP, a New York based law firm specializing in Internet class action consumer protection litigation stated that: “This litigation is important for the protection of consumers as well as the integrity of the Internet. My firm, along with co-counsel, Milberg LLP, will vigorously prosecute this matter to vindicate consumers' rights.”

         On August 4, 2011, Reese told Giles that the lawsuit would be filed that day. Giles then sent “the section of the article that summari[z]es [the] lawsuit, ” including that Paxfire allegedly violated the Wiretap Act and the SCA. Reese replied, “we have some revision[s] that need[] to be made because it is inaccurate right now.” Peter Seidman, another of Feist's attorneys, immediately sent an email attaching “a redline.” Because Giles had difficulty reading the attachment, Seidman confirmed that “we dropped the SCA claim” and included in the body of the email a revision of Giles' summary:

Paxfire is named in the lawsuit alongside RCN, [1] based in Herndon, Virginia, one of the ISPs identified by the Berkeley team.[2] The suit was filed by Reese Richman and Milberg, in the Southern District of New York[.] The lawsuit claims alleges [sic] that the two companies violated the privacy safeguards provided for in the Wiretap Act, a 1968 law that regulates electronic communications and prohibits the interception, monitoring and disclosure of Internet transmissions[.]

         All of these communications took place before 1:30 p.m. on August 4, 2011. That evening, Giles sent an email to Feist's attorneys, stating the “story just went live, but we're editing it now to remove the SCA bit.” Paxfire has not included in the record any version of Giles' article that references the SCA.

         Giles' article was published online several hours before the Complaint was filed. The article contained the following statements, which included a portion of the “sound bite” that Reese had provided as well as the reporter's own language:

Reese Richman, a New York law firm that speciali[z]es in consumer protection lawsuits, today filed a class action against one of the ISPs and Paxfire, which researchers believe provided equipment used to hijack and redirect [internet users'] searches. The suit, filed together with Milberg, another New York firm, alleges that the process violated numerous statutes, including wiretapping laws [emphasis added to identify allegedly defamatory portions].
Paxfire is named in the lawsuit filed by Reese Richman and Milberg, alongside RCN, based in Herndon, Virginia, one of the ISPs identified by the Berkeley team. The suit, which was filed in the district court for the southern district of New York, claims that the two companies violated privacy safeguards enshrined in the Wiretap Act, a 1968 law that regulates electronic communications [emphasis added to identify allegedly defamatory portions].

         Feist had previously authorized her attorneys to take the steps they deemed necessary to prosecute the litigation, including speaking to the media. She was unaware of the communications with Giles at the time they occurred.

         B. Factual Background ...


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