Judge Martha Warner
Judge Martha Warner (Melanie Bell)

MARK A. NORDLICHT AND PLATINUM PARTNERS, ET AL, APPELLANTS, V. ABRAXAS J. DISCALA AND THE BROADSMOORE GROUP, APPELLEES

Case No.: 4D13-2062

Date: June 4, 2014

Case type: Defamation, forum non conveniens

Court: Fourth District Court of Appeal

Author of opinion: Judge Martha C. Warner

Lawyers for petitioners: Robert K. Burlington, Jeffrey B. Crockett and Susan E. Raffanello, Coffey Burlington, Miami

Lawyers for respondents: Daniel M. Samson, Elliot B. Kula and W. Aaron Daniel, Kula & Samson, Aventura, and Jared A. Levy, Dimond, Kaplan & Rothstein, West Palm Beach

Panel: Judges Warner, Cory J. Ciklin and Broward Circuit Judge Jack Tuter

Originating court: Palm Beach Circuit Court

Although the Internet is everywhere, judges in Florida—not New York—should hear a claim about defamatory links to Scott Rothstein, an appellate court ruled.

Abraxas Discala and his New York-based merchant banking firm, an investor victim of Rothstein’s Ponzi scheme, sued another Rothstein investor in Palm Beach Circuit Court. The $100 million suit alleges Mark Nordlicht, Discala’s counterpart at New York’s Platinum Partners funds, libeled Discala by suggesting in an email that he played an active role in the fraud.

Pleading forum non conveniens, Nordlicht and his co-defendants tried to transfer the case to New York, but Judge David Crow refused. On Wednesday the Fourth District Court of Appeal ruled the trial judge hadn’t abused his discretion and kept the case in Florida.

Nordlicht argued New York was the site of the alleged defamation, since the email and a blog that published it came from there.

However, “Discala alleges that Nordlicht knew and intended that the information reach a wider audience,” Judge Martha Warner wrote for the court.

“As this defamation can be considered a tortious act directed at Florida and its residents, the courts of Florida should be open to its resolution,” she wrote.

University of Florida law professor Larissa Lidsky, who read the ruling, said it was important that Discala lived in Florida (Juno Beach) when the email was published.

“To me it seems like of course the public interest favors Florida,” she said. “The Rothstein Ponzi scheme has been an enormous issue for Florida and Floridians.”

Long Arm Of The Law

The Internet challenges modern jurisprudence: how to merge the global highway into concepts based on geography?

Defamation litigation has always been about where a libel is published and the impact within the plaintiff’s community. What if the publication is ubiquitous, making the impact harder to assess?

The nuances are explored in decisions interpreting Florida’s long-arm statute, Section 48.193.

A law review article on one such ruling from 2010, Internet Solutions v. Marshall, blames the Florida Supreme Court for an “unbounded expansion” of jurisdiction.

Tabitha Marshall ran a consumer-watchdog website out of her home in the state of Washington. When she posted a review accusing another website of enabling identity theft, its Florida-based operator sued her for defamation in Orlando federal court.

Could a Florida court summon a woman running a website thousands of miles away? The answer requires two findings, applying the long-arm statute and constitutional due process.

The Florida Supreme Court held that yes, under the long-arm statute, a nonresident commits a tort in Florida when he or she makes defamatory statements about a Florida resident by posting them on a website. The posts must be accessed in Florida; they can’t just be accessible.

“[I]n Marshall, the Court ushered its long-arm ineptitude into the twenty-first century,” Michael Steinberger wrote in the University of Miami Law Review article.

“The long-arm statute, which now applies to anyone who posts a message on the Internet, captures people who certainly would not have been captured under any previous interpretation,” he wrote.

The case played out as a catch-and-release scenario. Back in the Middle District to answer the due process question, it was dismissed a second time. Marshall, who had visited Florida only once, didn’t have enough contact with the state to satisfy due process.

“Even if the long-arm statute gave you jurisdiction, exercising it this way without more would violate due process,” explained Lidsky, who filed an amicus brief supporting Marshall on behalf of Public Citizen. “Due process is the floor below which you cannot drop,” she said.

The Best Court

The Discala opinion construes a third doctrine: Assuming a Florida court has jurisdiction in a particular case, is it the most convenient and best place for the litigation?

Abraxas “A.J.” Discala experienced celebrity beyond Wall Street in 2003, when he married Jamie-Lynn Sigler, the actress who played Meadow on “The Sopranos.” The couple split up two years later and eventually divorced.

In November 2009, weeks after Rothstein’s scam imploded and before the dust settled, Mark Nordlicht sent an email to Hedge Fund Alert. It said “the bigger story was A.J. Discala’s involvement,” according to the lawsuit Discala filed in November 2011.

Platinum Partners called the defamation suit “frivolous.”

Unlike Platinum, Discala’s firm wasn’t named in a clawback suit for losses from the Ponzi scheme, his lawyer said at the time.

Bankruptcy trustee Herbert Stettin’s $400 million suit against Platinum accused fund managers of covering up Rothstein’s fraud while sending millions his way.

In 2012 Platinum and other feeder funds settled with the trustee for $32 million. In exchange, Stettin dropped his suit against Platinum, enabling it to pursue claims in the Chapter 11 case.

The Fourth District opinion lays out the analysis for determining forum non conveniens, adding a twist from a 2013 Florida Supreme Court decision, Cortez v. Palace Resorts. The twist, requiring that “Florida courts always consider the public interests, even where private interests favor the alternative forum,” seems to carry great weight.

“Discala contended that the consequences of the defamation were concentrated in Florida because Discala’s investors are located here,” Warner wrote.

She cites Marshall for the same rationale, “Florida has a general nexus to the defamation as well as the damages ensuing from it.”

Lidsky said the appellate court merely had to find the trial judge acted reasonably in keeping the case. “It definitely seems reasonable to me to make Florida the appropriate forum, even though the plaintiff currently lives in New York.”