$50 Million Verdict in South Carolina Libel Case Is an Outlier, Not an Omen
Published Feb. 2021
There is a saying among lawyers that “bad facts make bad law,” meaning that cases in which the litigants (and/or perhaps lawyers) acted strangely or improperly often lead to problematic results, which give a false impression of the law and may become troublesome precedents for future cases.
The libel suit by Bluffton mayor Lisa Sulka against government critic and gadfly Skip Hoagland, which ended with a $50 million jury verdict—$40 million in compensatory damages and $10 million in punitive damages—announced Feb. 3 is just such a case.
The damages award is certainly eye-popping, and is reported to be the highest defamation verdict in South Carolina history. But it’s important to recognize that the specifics of this case are themselves outliers, and the large verdict is a result of those unique circumstances. It is also possible that the damages amount could be reduced on appeal, although the specifics of this case will make filing an appeal difficult.
Skip Hoagland is well-known in the Low Country as a persistent critic of local government and institutions, particularly local chambers of commerce. Two years ago, the South Carolina Supreme Court ruled in a case brought in the name of Hoagland’s company that the state’s Freedom of Information Act does not require the Hilton Head Island-Bluffton Chamber of Commerce to publicly disclose how it spends accommodation tax funds allocated to the chamber for tourism promotion.
Hoagland has also been a persistent critic of Sulka, with the mayor initially citing nine emails in her lawsuit—later pared to seven—which Hoagland sent in 2015 and 2017 in which he claimed that Sulka had acted illegally, had misappropriated funds and was unfit to be mayor. Hoagland initially responded to the lawsuit by claiming that his statements were either opinion or factually true. But he later fired his attorney, who had been hired by his insurance company, and in the end decided to not attend the two-day trial in the case.
Because she is clearly a public official, in order to win the case Sulka had to show that Hoagland had acted with “actual malice:” that he made the statements at issue either with knowledge that they were untrue or with reckless disregard for the truth. Judge Diane S. Goodstein ruled for Sulka on this issue. The jury’s role was to determine the damages amount.
In her testimony during the trial, Sulka explained the impact of the e-mails. “It really hits your psyche, it really affects you,” she said, according to the Associated Press. “I am his target now, personally.”
The $50 million verdict ranks among the highest awards in defamation cases nationwide. The Media Law Resource Center, which tracks media trials against media entities (and where I worked for a decade in the 2000s and prepared these reports), reported in 2018 that the highest award ever in a libel case against the media was a $222.7 million verdict in 2007, which was later entirely vacated. The verdict against Hoagland would fall between the third-highest award, $58 million in a 1991 case (later settled), and the fourth-highest, $40.3 million in 1980 (which was reversed on appeal).
In South Carolina, the report noted 23 trials against media defendants from 1980 through 2017. Plaintiffs won ten of these cases—the second lowest rate of plaintiff victories among the 50 states, after Ohio—and were awarded an average of $732,150, with a median of $177,501. Four of these awards were modified after trial or on appeal, leaving six awards that averaged $134,417, with a median of $37,500. These dollar figures are not adjusted for inflation.
Also, note that the verdict against Hoagland would not actually be included in these statistics, because the e-mails were sent and he was found liable on a personal basis.
But the $50 million verdict, while eye-popping, likely is not an omen of outsized defamation verdicts in future cases in South Carolina. Instead, it is the result of unique circumstances of the particular case.
Hoagland’s reactions to the verdict did not include any mention of an appeal. But he did say that he would recover the $50 million in another lawsuit he will file alleging violations of his First Amendment rights.
Palin Libel Case Fizzles: While the record libel verdict was awarded here in South Carolina, in New York a judge and jury both determined that former Alaska Governor and 2008 vice-presidential candidate Sarah Palin had not proven that The New York Times had acted with “actual malice” in her libel suit over an editorial which claimed that an advertisement by her political action committee had instigated the shooting up of a constituent meeting held by Congresswoman Gabby Giffords, killing six people and injuring 18, including Giffords.
The “actual malice” standard, which applies in libel cases brought by public officials and public figures, requires a showing that the defendant either knew that a statement was false or acted with “reckless disregard for the truth” when publishing the statement. This high standard was created in the landmark New York Times v. Sullivan decision in 1964 but has come under increasing criticism.
There was some concern that the Palin case could provide the U.S. Supreme Court with a chance to reconsider the “actual malice” standard. But while an appeal of the results for the Times is possible, it now seems unlikely that Palin’s case would be one for the High Court to take up and use for such an re-examination.
Gag Order Gone: Reversing—at least for now—another bad precedent, a gag order barring The New York Times from publishing information it had obtained about the conservative activist group Project Veritas was stayed by a New York state appellate court until the newspaper’s appeal of the order is resolved.
The material involves attorneys’ advice to Project Veritas as it undertook sting operations in in 2017 and 2018. Project Veritas claimed that material is protected by attorney-client privilege, and that the Times was barred from publishing because of a libel suit that Project Veritas filed in 2020 against the Times. While the U.S. Supreme Court has held that a newspaper can be barred from publishing materials it obtains in the course of litigation, the Times pointed out that the lawyers’ advice was given in 2017 and 2018 and had nothing to do with the defamation suit.
The order barring publication had been in effect for 85 days. The appeals court will hear arguments regarding the gag order on or before March 11.
Eric P. Robinson focuses on media and internet law as associate professor at the USC School of Journalism and Mass Communication and Of Counsel to Fenno Law in Charleston / Mount Pleasant. He has worked in media law for more than 20 years and is admitted to legal practice in New York and New Jersey and before the U.S. Supreme Court. This column is for educational purposes only; it does not constitute legal advice. Any opinions are his own, not necessarily those of his employers.