A permanent injunction against defamation does not violate the First Amendment if the statements in question were found at trial to be defamatory, the Appellate Division ruled Thursday in a case of first impression.

The appeals court, in Chambers v. Scutieri, A-4831-10, affirmed a judge’s injunction against defamation and extortion of entrepreneur and philanthropist Raymond Chambers of Morristown.

Philip Scutieri Jr. sent out thousands of mailings and created a website to accuse Chambers and his private equity firm, Wesray Capital, of defrauding members of his family in business dealings. Scutieri also hired pickets to carry signs at locations around Morristown, accusing Chambers and his company of theft, fraud and tax fraud.

Chambers filed defamation claims against Scutieri and some of the picketers. Since the suit did not seek monetary damages but only prospective monetary relief, Morris County Superior Court Judge Stephan Hansbury granted Chambers’ motion to strike Scutieri’s demand for a jury trial.

After a bench trial in early 2011, Hansbury ruled that Scutieri’s allegations against Chambers and Wesray were untrue and were "published … with malice and with an intent to coerce plaintiff into providing money to defendant."

Hansbury found no evidence that Scutieri’s family assets were stolen by Chambers, and that Scutieri published defamatory statements with a "high degree of awareness of their probable falsity." He also found that Scutieri’s specific purpose in making the statements was to extort money from Chambers.

Finding that if no injunction was issued, continuing damage would befall Chambers and Wesray, Hansbury entered a permanent injunction against continuing acts of defamation and extortion.

On appeal, Scutieri claimed that courts can never "restrain by way of an injunction, an individual’s speech, regardless of whether it is determined to be defamatory."

Judges Francine Axelrad, Michael Haas and Jamie Happas disagreed. They said that although our Supreme Court and Appellate Division have never spoken on whether permanent injunctive relief is appropriate where a plaintiff proves the defamatory nature of a defendant’s statements at trial, our trial courts and courts in other states have.

The panel cited Mayfair Farms, Inc. v. Socony Mobil Oil Co., Inc., 68 N.J. Super. 188 (Ch. Div. 1961), which held that "the power to enjoin libelous and slanderous statements exists and can be used in a proper case, and Barres v. Holt Rinehart & Winston, Inc., 131 N.J. Super. 371 (Law Div., 1974), which said that where a plaintiff was the subject of a continuing course of defamatory conduct, he or she "might be entitled to an injunction against further circulation of the same material."

"The recurring theme of these cases, which sanctioned the issuance of an injunction prohibiting future defamatory conduct, is that the injunctions were issued after a full trial had been held and a finding made that the statements were, in fact, false and defamatory and, therefore, not entitled to First Amendment protection. That is plainly the case here," the court said.

"As Judge Hansbury found after a twenty-day trial, defendant engaged in a demonstrated pattern of repeated defamation in aid of extortion. He continued this conduct up to the very eve of the trial and, absent the current injunction, there can be no question he would resume his campaign," the panel said.

Scutieri submitted two cases to the appeals court in which preliminary injunctions were denied prior to a final adjudication, but those cases are clearly distinguishable from the present one, the panel said.

The panel said a court evaluating an application for permanent injunctive relief should consider seven points:

• the character of the interest to be protected;

• the relative adequacy of the injunction to the plaintiff as compared with other remedies;

• the unreasonable delay in bringing suit;

• any related misconduct by plaintiff;

• the comparison of hardship of plaintiff if relief is denied, and hardship to defendant if relief is granted;

• the interests of others, including the public;

• the practicality of framing the order of judgment.

Hansbury’s injunction satisfies those criteria by specifically listing more than 30 statements, six picket signs and nine pamphlets that are enjoined from further publication, the court said.

Scutieri’s lawyer, Daniel Bushell, a solo in Fort Lauderdale, Fla., says he and his client are considering an appeal. Bushell said that the injunction is a prior restraint on speech, that the First Amendment includes the right to a jury trial in a defamation case and that the proper remedy for defamation is damages, not an injunction.

Bushell adds that he disagrees "with the court’s decision regarding the propriety of enjoining speech based on a trial judge’s findings and the propriety of enjoining defamation."

Chambers’ lawyers, Lawrence Lustberg of Gibbons in Newark and Angelo Genova of Genova, Burns, Giantomasi & Webster in Newark, did not return calls.

But a spokesman for Chambers, James McQueeny of Winning Strategies Public Relations in Newark, says "the ruling today unequivocally supported Mr. Chambers’ contention all along that this was a slanderous attack on him and his family and nothing more than a blatant and brazen attempt to extort money from him. He is pleased and relieved by the judges’ unanimous decision that this was just a poorly disguised, crude and cruel shakedown." •