In 1935, Erwin Schrödinger famously came up with a thought experiment: Put a cat in a closed steel chamber along with a tiny bit of radioactive substance that will release poison upon possible decay. The Austrian physicist noted that before anyone opens the chamber and makes an observation, that cat exists in an indeterminate state between life and death.
Lawsuits can be like Schrödinger’s cat. As evidence, let’s turn to a defamation “lawsuit” “filed” Monday by Ryan Kavanaugh against the podcaster Ethan Klein. This is no ordinary case, and lawyers, reporters and others would be wise to pay attention as it’s headed toward exploring the quantum state of litigation and the privileges that observers of our legal system think they have about repeating, and commenting on, allegations.
Before getting to what Kavanaugh alleges, it’s necessary to introduce this controversial entertainment industry veteran as well as discuss a quirk of jurisprudence in Los Angeles that hardly anybody knows about.
In 2004, Kavanaugh made a splash by founding an indie studio, Relativity Media, that had supposedly cracked the tough business of moviemaking. Meaning, he had a quantitative approach toward production. Perhaps partly due to the success at the time of Michael Lewis’ Moneyball, Kavanaugh’s methods attracted interest. And the man had a lot of connections, too. Future U.S. Treasury Secretary Steven Mnuchin, for instance, was an investor, and for a brief period, Relativity’s co-chairman. The company burned through hundreds of millions of dollars before one of the most notorious Hollywood bankruptcies ever in 2015. And Kavanaugh, feuding with investors, wound up on the cover of The Hollywood Reporter.
Since Relativity’s bankruptcy, Kavanaugh has been involved in all sorts of projects as well as legal entanglements.
In 2017, Kavanaugh launched a new company, Proxima Media, and along with an individual named Elon Spar, he pursued a new entertainment stock exchange. This endeavor, however, got off to an inauspicious start with Kavanaugh and Spar pointing fingers at each other over funding and secrets. Spar even accused Kavanaugh of operating a “Ponzi scheme,” which Variety picked up for the headline of its own story on the controversy. This will become relevant later; more on what happened in a bit. In the meantime, just know that Kavanaugh and Spar were able to find some sort of resolution.
Kavanaugh’s Proxima then acquired a majority interest in Triller, a social media site that, among other things, has distributed pay-per-view boxing matches featuring notables like Mike Tyson, Roy Jones Jr. and Jake Paul. And when people started pirating those fights, Triller filed many copyright suits. One of the targets was Ethan Klein, whose H3 Podcast used a clip of a Jake Paul fight.
This has led to yet another feud for Kavanaugh, one that has escalated over the past several months. Klein has attacked Kavanaugh mercilessly on his podcast. (For example, just before Thanksgiving, H3 released an episode titled, “Ryan Kavanaugh’s Wikipedia Is a Battlefield.”) And in response to Klein’s response, Kavanaugh has launched other legal grenades, from a tortious interference lawsuit filed in July to a new defamation action just yesterday. Kavanaugh is now being represented by Thomas Clare, who is one of the country’s most famous reputation lawyers.
Kavanaugh’s latest complaint against Klein flags the podcaster for “repeatedly and relentlessly attack[ing], and continu[ing] to attack, Mr. Kavanaugh in a variety of ways but specifically by republishing the defamatory and highly damaging accusation, which they knew to be false, that Mr. Kavanaugh was accused of running a criminal ‘Ponzi scheme.’ … Later, Klein began selling t-shirts to fans online with the slogan ‘Govern yourself accordingly,’ which depicts Mr. Kavanaugh as a criminal defendant in a courtroom, doubling down on Klein’s defamatory suggestion that Mr. Kavanaugh ran a criminal enterprise.”
When it comes to defamation law, most states including California have a defense known as “fair reporting privilege,” which basically means that anyone is free to talk about judicial and other governmental proceedings without fearing liability for repeating allegations made there. The only caveat is that the report has to be both a fair and true account of the public proceeding. The media relies mightily on this privilege. For example, that’s how BuzzFeed beat defamation suits over its publication of the infamous Steele Dossier. The privilege exists to further the First Amendment and help citizens better understand matters of public concern.
But what if a lawsuit filing is not quite as clear-cut an event as people assume? How does that impact how we approach discussion of legal matters?
Two years ago, after Spar submitted a complaint in Los Angeles Superior Court against Kavanaugh, and Kavanaugh submitted his own against Spar, a very weird thing happened. Within hours, Kavanaugh’s rep was calling media outlets and insisting that no lawsuit had actually been filed and that news stories on the matter were defamatory. I know because I was the recipient of one of those phone calls. Kavanaugh even put out a statement at the time accusing Variety and The Hollywood Reporter of having “attempted to smear” him by quoting from Spar’s seeming legal filings.
What actually occurred gets into something that requires a bit of a lifting of the hood on legal journalism and the court system at large.
About a decade ago, an entity called Courthouse News Service began suing local court officials around the nation for not providing immediate or near-immediate online access to court filings. This service experienced some success making the argument that the First and 14th Amendments required nothing short of transparency. As a result, the Los Angeles Superior Court system opened a media portal for reporters.
Here’s where it gets problematic: It takes a bit of time for court filings to be processed. Lawsuits are indexed and assigned. And for the few hours it takes for this to happen, reporters get access to what the L.A. Superior Court calls “unfiled complaints.” Indeed, the court even stamps the word “unfiled” on every page of these, um, filings.
What would happen if a lawyer submitted a complaint into the system and then came to a quick settlement before the complaint got indexed? That’s what happened two years ago. Kavanaugh and Spar quickly withdrew their complaints, but not before media outlets had already written stories about them. The lawsuits were, yes, like Schrödinger’s cat.
Kavanaugh never did sue The Hollywood Reporter nor Variety over stories about his tussle with Spar. Whether he was satisfied by the clarifications appended to the articles or cowered by the admonishment that fair reporting privilege would cover these stories, he backed off.
But now a podcaster is highlighting these old headlines and doing stuff like launching a website titled, “Does Ryan Kavanaugh Look Like Harvey Weinstein? A Comprehensive Analysis.”
And so, Kavanaugh is taking a shot at showing that something that touches the court system needn’t permanently belong there; that repeating the accusation he ran a Ponzi scheme is defamatory. Or at least, that’s what the “unfiled” version of Kavanaugh’s latest salvo attempts.
