APPEALS-COURT-10262021-KS-141

DENVER, CO - OCTOBER 26: A three-judge panel for the Colorado Court of Appeals prepares to hear a case in the Ralph L. Carr Colorado Judicial Center on October 26, 2021 in Denver, Colorado. (Photo By Kathryn Scott)

A prominent civil rights law firm in Colorado may be held liable for the public statements of one of its lawyers, the state's Court of Appeals ruled on Thursday, determining that the First Amendment does not provide a blanket shield for attorneys to make defamatory comments to the media.

Counsel for Killmer, Lane & Newman and one of its more prominent attorneys, Mari Newman, slammed the appellate court's decision for its deterrent effect on law firms that wish to make public statements about class action lawsuits.

"It is common practice for lawyers to issue press releases announcing the filing of public interest litigation. That practice serves the functions of informing the public of such litigation and, in many cases, in causing potential clients and unknown witnesses to come forward," said Tom Kelley, who is also an attorney with KLN. "We believe it bad policy to chill the speech of lawyers who would so inform the public."

A three-judge panel for the Court of Appeals on Thursday found some of the statements Newman made in a May 2018 press conference were constitutionally protected speech, even though they were derogatory toward the defendants, Ella Bliss Beauty Bar. 

However, the panel determined Ella Bliss's defamation lawsuit against Newman for certain other comments — namely her representation that Ella Bliss "forced [nail] technicians to perform janitorial work without pay" — could proceed.

Newman has been involved in numerous civil rights efforts, including the passage of Colorado's landmark police accountability law in 2020 and the recently-settled civil lawsuit against the city of Aurora for the death of Elijah McClain. She and KLN have also received awards for their legal work, including from the Colorado Press Association Network.

The controversy stemmed from the filing of a federal class action complaint by KLN, Newman and the nonprofit law firm Towards Justice on behalf of nail technicians working for Ella Bliss. The named plaintiff, Lisa Miles, alleged she was forced to perform unpaid cleaning work during her downtime between clients.

Upon filing the lawsuit, Newman spoke at a press conference outside one of Ella Bliss's locations on Broadway near downtown Denver. 

“For no pay whatsoever, they [the nail technicians] have to clean the business, including the bathrooms, because Ella Bliss Beauty Bar is simply too cheap to pay its workers the money they deserve," she said.

Newman also alleged Ella Bliss only paid technicians for the hours it felt like compensating them and that such practices were "fairly common" in industries that employ women and immigrants. The attorneys issued a separate press release that further claimed Ella Bliss "forced" technicians to do unpaid janitorial tasks, withheld tips and shortchanged their commissions.

The lawsuit alleged violations of the Fair Labor Standards Act and Colorado's wage law.

Ella Bliss responded by filing a defamation lawsuit in state court, arguing the class action litigation itself did not establish that nail technicians worked for "no pay whatsoever." Instead, the case hinged on "a highly technical application of the FLSA and related state law to Ella Bliss' overall compensation system," the company wrote in court filings. The upshot of Newman's comments was that employees and customers reportedly ended their contracts with Ella Bliss.

Then-Denver District Court Judge Robert L. McGahey Jr. dismissed the defamation case, finding Newman's remarks were either constitutionally-protected opinions or were otherwise shielded by the Noerr-Pennington doctrine, which historically has allowed businesses to petition the government without running afoul of antitrust laws.

But the appellate panel ordered the trial court to reinstate the claim, determining that Newman's specific assertions that Ella Bliss forced employees to work without pay were unprotected by either the First Amendment or the Noerr-Pennington doctrine. Also irrelevant was the concept of litigation privilege, which KLN argued allowed Newman leeway to promote the class action lawsuit to the media in order to alert potential plaintiffs and witnesses about the opportunity.

Because the federal lawsuit noted that the number of affected nail technicians could be determined by looking at Ella Bliss's records, "there was no need to educate potential class members through the press when, to reiterate, the members of the class for the federal lawsuit would be 'easy' to identify," wrote Chief Judge Steve Bernard in the Dec. 2 opinion.

Shortly after McGahey dismissed the case, KLN, Newman and Towards Justice asked to modify their federal lawsuit with additional allegations about Ella Bliss's "meritless legal claims" in the defamation lawsuit. The court granted their request.

"Defendants and their counsel further intended to use Ella Bliss’s baseless claims against Ms. Miles’ attorneys to create a conflict between Ms. Miles and her attorneys that Defendants and their counsel hoped would force Miles’ counsel to withdraw," argues the current version of the class action complaint, filed in October.

It is unclear how the appellate panel's decision will affect those added claims. Kelley, the lawyer for KLN and Newman, said he would be giving serious consideration to asking the Colorado Supreme Court to review the ruling.

Steve Zansberg, a First Amendment attorney who represents media outlets in Colorado, said the Court of Appeals had broken new ground by declining to find that existing legal doctrines protected Newman's comments.

"The outcome, if undisturbed in further litigation, will significantly impact the common practice of lawyers’ issuing a press release announcing the filing of a lawsuit addressing matters of public concern," he said.

The panel's opinion acknowledged the different ways in which other states' courts have answered the question of whether public statements about class action lawsuits could be defamatory. The Arizona Supreme Court said yes, ruling in 1984 that a lawyer's comments to a reporter before the lawsuit was filed were not shielded speech.

On the other hand, Maryland's highest court determined in 2011 that attorneys who called the defendants "vultures" and "bad people" were protected from liability because they were promoting public awareness of their class action lawsuit at the time.

Ella Bliss has also filed claims against Miles in the federal proceedings, alleging she committed fraud by misrepresenting her hours worked. Miles' lawyers have characterized the move as retaliation for the class action lawsuit.

The case is BKP, Inc. et al. v. Killmer, Lane & Newman et al.

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