Sending emails to clients, co-workers, vendors, and other business-related contacts is a normal part of most anyone’s day, but remembering that any such communications can be used against you in a court of law is not always at the top of the everyone’s mind when quickly hitting the send button. In a recently-decided case in California, the words and tone of certain emails written by an individual cost him over a million dollars, and according to the appellate court, should have cost him over $10 million.
The parties entered into an agreement where the plaintiff was to develop certain software for the defendant to use in his start-up company. The parties were on friendly terms since childhood before the defendant insisted upon no less than 100 changes to the software after it was completed by plaintiff. The defendant stalled paying for the development of the software and would not participate in bug-testing the software, generally acting uncooperatively. He also became very angry, exhibiting his anger in inventive ways. For example, he used derogatory words, translated into Hindu, to describe plaintiff in a newly registered email address with a popular free email service provider. Defendant sent emails from this account to plaintiff’s companies with threats of working around the clock to cause plaintiff’s companies financial harm to “the maximum amount . . . allowed under the law.” Defendant also falsely claimed he never received the software from the plaintiff, and this claim was after requesting the numerous changes to the software that had been delivered. Somehow, defendant obtained a stolen list of email addresses of plaintiff’s companies’ clients and sent an email to those clients and partners that represented plaintiff drained work away from a former employer for himself, that plaintiff did not pay his vendors, and that plaintiff failed to deliver the software to defendant that resulted in “a total loss of $400k”.
After the damaging email, plaintiff’s company experienced a huge loss of clients, approximating $26 million in actual and anticipatory revenue, including ventures involving IBM, Disney and Xerox and other deals that “inexplicably” were not finalized. A jury awarded the plaintiff defamation damages in the amount of $1.23 million dollars for the email correspondence alone. The defendant’s appeal argued lack of causation between the email correspondence and plaintiff’s “speculative” financial losses, but defendant did not appeal the jury’s finding of defamation and did not attempt to argue that the accusations in his emails were actually true, a common defense against defamation allegations.
The appellate court’s opening paragraph is scathing: “All things considered, appellant Dr. Pankaj Karan got off cheaply in the trial court. He appeals from a defamation judgment of $1.23 million when the jury might have awarded plaintiffs mLogica and its owner Amit Okhandiar somewhere between $10 and $20 million. Karan has brought this appeal claiming there was no substantial evidence of causation or amount of damages, but he is mistaken by about $10 million. Maybe more.” The court also noted that defendant’s opening brief indicates that the defendant acted with “patience and continued good faith efforts to obtain the software,” but the profanity-ridden emails showed that defendant was not attempting to resolve the conflict but to intensify it.
The jury’s decision at the trial court was affirmed with costs awarded and a reminder: “We would remind counsel for [defendant], in the future, to take more care with the appellate record. [Defendant]’s luck, however holds. Thanks to [plaintiff]’s commendable forebearance, there has been no request for sanctions in this appeal.”
Email correspondence is an incredibly powerful piece of discovery in lawsuits, and thinking before hitting send could mean the difference in possibly paying out millions of dollars for bad behavior memorialized in electronic correspondence.
(Want to read more about the case? mLogica v Karan (California, 2013))