El Omari v. Buchanan

Background

Oussama El Omari brought this action against James E. D. Buchanan, Dechert LLP, Andrew D. Frank a/k/a Andrew [garbled in opinion] Solomon, Neil Gerrard, Amir Ali Handjani a/k/a Amirali Handjani, KARV Communications, Inc., Intelligence Online, and Longview Partners (Guernsey) LTD. El Omari filed the action on March 27, 2020, and filed an amended complaint on May 5, 2020.

Intelligence Online was served on July 7, 2020. Its response was due July 28, 2020, but it did not answer or otherwise respond. The Clerk issued a certificate of default on August 27, 2020. On October 12, 2020, El Omari moved for a default judgment against Intelligence Online, and the court granted that motion the next day. The order reserved damages for a later proceeding.

Motion Before the Court

On October 16, 2020, Dechert filed a premotion letter on behalf of all defendants who had appeared in the case. The court treated that letter as a motion asking it to reconsider or stay the order granting default judgment against Intelligence Online. El Omari opposed the motion.

The appearing defendants argued that Count Three asserted a defamation-per-se claim against all defendants. They relied on the rule commonly associated with Frow v. De La Vega, under which a court generally should not enter judgment against one defendant in a multi-defendant case before resolving the claims against the other defendants when doing so could produce inconsistent outcomes. They also argued that the default judgment appeared to show that the defamation claim was adequately pleaded.

El Omari argued that the Frow rule was no longer applicable. He also argued that the default judgment was not final and did not decide damages, so it did not prejudice the defendants who had appeared.

Court’s Analysis

A motion for reconsideration is an extraordinary request that generally requires the moving party to identify controlling decisions or important information the court overlooked. A stay is a temporary pause in a court order. The party seeking a stay must show a clear case of hardship or unfairness if the stay is denied.

The court concluded that a stay was warranted. It acknowledged that the continued force of the Frow principle had been questioned, but noted that courts in the Second Circuit had continued to apply the principle when a default judgment could create logically inconsistent outcomes for similarly situated defendants.

The court explained that Count Three’s defamation-per-se claim required, among other things, a false statement, publication to a third party without privilege or authorization, and the required level of fault and harm. Although the elements did not necessarily make one defendant’s liability depend on another’s, the court found it inappropriate for Intelligence Online to be held liable while the appearing defendants might ultimately not be liable. The court identified possible issues common to all defendants, including whether the subject matter was of public concern and whether the statements were opinions.

The court did not decide the appearing defendants’ arguments that it lacked jurisdiction over the defamation claim or that the claim failed on its merits. It said those arguments were premature and did not affect the present ruling. The court also stated that the absence of a damages calculation did not eliminate the risk of inconsistent liability rulings.

Disposition

The court denied the motion for reconsideration and granted the alternative motion for a stay. It stayed the earlier order granting default judgment against Intelligence Online. Because the stay addressed the risk of inconsistent outcomes, the court declined to reconsider and vacate the earlier order.