Kramer v. Thompson

947 F.2d 666 (3rd Cir. 1991)

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Nature of the Case

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Facts

D retained P to bring a securities fraud claim against Prudential-Bache, Inc. Three years later, in the fall of 1985, P was contacted by an F.B.I. agent to whom D previously had complained about his investment losses at Prudential-Bache. The agent asked P whether the stocks at issue were completely worthless. P responded that D had purchased the stocks for roughly $120,000 and later had sold them for approximately $15,000. P informed the agent that technically the stocks were not worthless. D learned of this conversation, and became enraged, and accused P of deliberately dissuading the F.B.I. from investigating the matter. D discharged P as his counsel. Seeking to ensure that he ultimately would be compensated for his services, P refused to return the case files to D until the latter agreed to deposit the proceeds of any future judgment or settlement with the court pending resolution of the attorney's fees issue. D would not agree, and P secured an order from the district court which provided that any funds recovered would be placed in escrow and that the fee dispute would be arbitrated. P then made the case files available to D and his new counsel. D filed a complaint with the state bar and wrote letters to various private attorneys, federal judges, F.B.I. agents, federal and state prosecutors, newspapers, and television stations in the Philadelphia area alleging that P: (1) had 'thrown' D's case; (2) had deliberately destroyed certain documents related to the case; (3) had used drugs and was a member of the highly publicized 'Yuppie Drug Ring' organized by Philadelphia dentist Lawrence Lavin; (4) was connected to organized crime; and (5) had committed arson on his own car. P demanded a retraction, but D refused. The state bar complaint was dismissed and D sent a total of at least 160 separate letters to 60 different individuals or entities. P sued for libel. The court eventually entered a default judgment on the issue of liability against D for failure to comply with discovery. Things stopped for two years but resumed again. P sued against in libel. The court directed a verdict for P at the close of P's case -- i.e., without hearing D's defense on the issue of liability. The jury ultimately awarded P $100,000 in compensatory and $38,000 in punitive damages, and the district court entered judgment accordingly on April 10, 1990. The court simultaneously entered a permanent injunction, prohibiting D from making further statements about P of the type adjudged libelous, and ordering him to write letters of retraction to all persons who had received prior libelous communications. D's post-trial motions for judgment n.o.v. and for a new trial were denied. D appealed. D was the subject of numerous contempt orders related to the enforcement of the injunction and court orders.