Monday, July 02, 2018

the perils of default judgments against speech: showing up late can prove onerous

Lokosky v. Gass, No. 1 CA-SA 18-0101, 2018 WL 3150499 (Az. Ct. App. Jun. 28, 2018)

Respondents (not Gass, who’s the judge, named for procedural reasons) sued Lokosky for false advertising and related claims seeking to compel Lokosky to "remove from the internet all material pertaining to Respondents and their business,” and obtained a default judgment. Next, they compelled the transfer of ownership of Lokosky’s website to themselves. Lokosky then applied for a restraining order seeking to have ownership of her website returned to her and moved to vacate or set aside the judgment. The superior court granted the TRO and ordered Lokosky to “remove any and all material and/or references pertaining to each Plaintiff” on her website and “refrain from publishing or republishing on the Internet any and all materials and/or references pertaining to each Plaintiff.” Well, that’s incredibly overbroad. Then:

In March 2017, the superior court held the first day of an evidentiary hearing on Lokosky’s motion to vacate judgment. During the month in between hearing days the superior court placed both parties under an order forbidding the parties from engaging in speech regarding each other, counsel, and the instant lawsuit. ... In April 2017, the superior court held the second day of the evidentiary hearing and vacated the default judgment against Lokosky. 

Lokosky filed a motion to dissolve the TRO because there was no longer a default judgment to justify the restraint on her speech. In a sequence of events that would have fit well in Jarndyce v. Jarndyce, the superior court declined to act, waiting on the result of respondents’ pending appeal of the vacation of the default judgment. So Lokosky filed a separate notice of appeal about the superior court’s decision not to decide the motion to set aside the TRO; the court of appeals determined that it lacked jurisdiction. Lokosky then requested that the court of appeals dissolve the TRO by way of a filing in respondents’ appeal. The court of appeals denied the motion because the request was more appropriately raised as a special action. Lokosky then filed a special action petition, and finally her claim was heard on the merits. [Eugene Volokh could use this as a cautionary tale about granting speech restraints in default judgments. They can be very hard to reverse, as it turns out!]

The TRO was a prior restraint on speech and violated the First Amendment. Before any TRO against future speech can issue, the court has to determine that the future speech is unprotected by the First Amendment. “Although the superior court indicated its intent to prevent the parties from engaging in speech which might later increase their own liability in this litigation, the record is devoid of any support for the notion that Lokosky’s speech is not protected.” Respondents argued that they competed with Lokosky and that her speech was commercial (allowing prior restraint). Even assuming that, her speech hadn’t been determined to be misleading and thus couldn’t be restrained, even temporarily.

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