Loughlin v. Goord

Background

Suzanne Loughlin, Harry Rhulen, and James Satterfield sued Glen Goord, asserting claims for breach of fiduciary duty and libel. Goord moved to dismiss the complaint. On September 1, 2021, the court granted Goord's motion to dismiss, holding in part that the libel claim failed to state a claim because the statement at issue in Rekor's August 14, 2019 Form 10-Q was protected by a qualified privilege. A qualified privilege can protect certain statements when they are made for a proper purpose, unless the plaintiff adequately shows the required form of malice.

The plaintiffs moved for reconsideration and asked the court to reinstate their libel claim.

Arguments on Reconsideration

The plaintiffs argued that the court had erred in finding that they failed to plead actual malice. Actual malice means knowledge that a statement was false or reckless disregard for whether it was true or false. They contended that their allegation that Rekor's assertions were false, together with Goord's role in approving Firestorm's first budget, required an inference that Goord knew the statements were false or recklessly disregarded their truth.

The court rejected that argument. Even assuming the alleged falsity was adequately pleaded, the court held that falsity alone did not establish that Goord knew the statement was false or acted recklessly. The court also noted that the amended complaint did not contain the specific allegations about the franchise royalties or Goord's budget-approval role that the plaintiffs relied on in their reconsideration papers.

The plaintiffs separately argued that the court had erred in finding that they failed to plead common-law malice. Common-law malice means spite or ill will, and it defeats a qualified privilege only when it is the sole reason for publication. The court explained that, even if Goord had personal hostility toward the plaintiffs, the statement also served to report information that Rekor believed it had a duty to disclose to shareholders. The plaintiffs had not alleged facts supporting an inference that the reporting obligation was absent or that the report was made in bad faith.

The plaintiffs also argued that the court had raised qualified privilege itself and that they had not received a full opportunity to address it. The court disagreed. It explained that the plaintiffs' written submissions addressed malice in the context of privilege, that the court had notified the parties before the hearing that qualified privilege would be discussed, and that counsel addressed privilege, the cited New York case, and malice during the hearing.

Legal Standard and Ruling

The court described reconsideration as an extraordinary remedy generally available only for an intervening change in controlling law, newly available evidence, or a need to correct clear error or prevent manifest injustice. It concluded that the plaintiffs had identified none of those grounds.

Judge Lewis J. Liman denied the motion for reconsideration. The court directed the clerk to close Docket Numbers 31 and 32 and to close the case.