Tort/Negligence – Defamation – Performer’s DVD – Edited Arrest Recording – Appropriation – Unfair Trade Practices – Civil Practice – Discovery – Admissions – Damages

Nguyen v. Taylor (Lawyers Weekly No. 12-07-0209, 31 pp.) (Ann Marie Calabria, J.) Appealed from Guilford County Superior Court. (A. Moses Massey, J.) N.C. App. Full-text opinion.

Holding: By failing to respond to plaintiffs’ request for admissions, defendant Taylor admitted (1) that he defamed plaintiffs by placing on a DVD a doctored recording that made it appear – falsely – that Taylor was wrongfully arrested and (2) he made more than $10 million from sales of the DVD.

We affirm the award of $5 million in compensatory damages; however, we vacate the $10 million punitive damage award and remand for further proceedings.

On Oct. 28, 2005, the plaintiff-police officers arrested defendant Taylor and charged him with criminal trespass, communicating threats, and disorderly conduct. A member of Taylor’s entourage recorded the arrest with a video camera.

A heavily edited version of that video recording, which made it appear as though Taylor was wrongfully arrested, was included as a bonus feature on a DVD released by Taylor and others.

Plaintiffs sued Taylor and other defendants. Taylor and defendant Bungalo Records, Inc. failed to respond, and default was entered against them.

Taylor also failed to respond to plaintiffs’ request for admissions.

After a bench trial on damages, the court awarded plaintiffs $5 million in compensatory damages and $10 million in punitive damages.

Taylor’s Appeal

Taylor’s admissions pursuant to N.R. Civ. P. 36 established each element of defamation per se, appropriation, and unfair trade practices.

Taylor admitted that the DVD was edited to give the impression that he did nothing wrong during his arrest, in an attempt to defame plaintiffs. Taylor additionally admitted that the edited footage “was intentionally misleading” and that he intended to “characterize the Plaintiffs’ actions [in arresting him] as illegal” even though he “knew the Plaintiffs’ actions were legal.” Finally, Taylor admitted that he intended to “defame the Plaintiffs with the DVD,” and that he intended to “injure the Plaintiffs in their trades or professions.” Based upon these admissions, the trial court properly granted summary judgment to plaintiffs on their defamation per se claim.

North Carolina recognizes a claim for invasion of privacy by means of appropriation, for the defendant’s advantage, of the plaintiff’s name or likeness. Taylor admitted that he appropriated plaintiffs’ likenesses for his own advantage. As a result, the trial court properly granted plaintiffs summary judgment on their appropriation claim against Taylor.

Taylor admitted that the DVD “was commercially released for worldwide distribution” and that he was “involved in all aspects of the filming, editing, directing, producing, and financing, and distribution of the DVD.” He also admitted that he “ma[de] [plaintiffs] unwitting performers in [his] commercial DVD” and “defam[ed] [plaintiffs] while profiting at their expense.” In addition, he admitted that the use of plaintiffs in the DVD directly increased the DVD sales. Based upon these admissions, the trial court properly granted plaintiffs summary judgment against Taylor on their unfair and deceptive practices claim.

Even though Taylor had demanded a jury trial, since he did not appear at trial, he waived his right to a jury trial.

Based upon Taylor’s admissions, the trial court found that “Taylor … made in excess of ten million dollars ($10,000,000.00) in profits on the sale of the DVD, the vast majority of which [he] attribute[d] to the use of Plaintiffs’ likeness[es] and the defamatory statements.”  Thus, the trial court’s binding findings of fact are that Taylor’s actions have caused plaintiffs significant harm in their personal lives and in their careers as police officers, that this harm will continue throughout the remainder of plaintiffs’ careers, and that Taylor profited from the harm he caused plaintiffs in an amount exceeding $10 million. In light of these findings, we cannot say the trial court abused its discretion by awarding each plaintiff one million dollars in compensatory damages.

Where Taylor admitted that he “had personal ill-will and malice towards each of the Plaintiffs in this action and that this ill-will and malice motivated [his] actions,” Taylor’s admission conclusively established and formally conceded the existence of an aggravating factor.

However, we must remand the punitive damages judgment to the trial court so that it may consider whether the evidence of that aggravating factor met the “clear and convincing evidence” standard of proof and so that the judgment may be amended to reflect its determination on this issue.

The trial court specifically found as fact that the DVD which defamed plaintiffs was commercially released. The trial court’s judgment included sufficient findings of fact to support its conclusion of law that Taylor was liable for unfair and deceptive practices, which permitted the trial court to award attorneys’ fees under G.S. § 75-1.1.

Bungalo’s Appeal

Bungalo was served with plaintiffs’ complaint on Nov. 10, 2006. Although Bungalo, due to an agreement with plaintiffs’ counsel, was granted an extension of time until Jan. 2, 2007, an answer was never filed.

Plaintiffs then waited an additional three weeks, until Jan. 23, 2007, to move for entry of default. Thereafter, Bungalo did not file its motion to set aside the default until March 21, 2007. Under these circumstances, we find no abuse of discretion in the trial court’s denial of Bungalo’s motion to set aside default.

However, the punitive damages award against Bungalo was improper, and we grant Bungalo a new trial on the issue of punitive damages.

Even though the complaint did not specifically allege malice as an aggravating factor in support of punitive damages, the complaint complied with N.C. R. Civ. 9(k) because it demanded punitive damages and included an allegation of defamation per se together with an allegation that defendants made the statement “with knowledge that the statement was false.”

However, the trial court improperly considered evidence of Bungalo’s codefendants’ profits and ability to pay punitive damages when it awarded punitive damages against Bungalo. The trial court’s conclusion that defendants made in excess of $40 million from the DVD was based solely upon the admissions of defendants Taylor, Black Wall Street Records, LLC, Black Wall Street Publishing, LLC, and Jump Off Films. Facts admitted by one defendant are not binding on a codefendant. Thus, the trial court improperly used the admissions of Bungalo’s co-defendants to determine the amount of punitive damages to award against Bungalo.

G.S. § 1D-35(2) does not permit the trier of fact to solely consider the co-defendants’ profits and ability to pay when awarding punitive damages against a particular defendant. Since the trial court’s judgment reflects that this is precisely what occurred in the instant case, we must vacate the portion of the judgment awarding punitive damages against Bungalo and remand for a new trial on that issue.

Bungalo’s failure to participate in the instant case does not relieve plaintiffs of their burden to prove their damages. The Rules of Civil Procedure provide the appropriate methods and remedies by which to address Bungalo’s failure to provide any required discovery materials. On remand, plaintiffs are free to use the relevant discovery rules to obtain the information they seek.

Affirmed in part, vacated in part, and remanded.