Court upholds $11 million penalty for Iowan’s Facebook attacks on former boss

By: - May 14, 2021 12:24 pm

The Iowa Court of Appeals has upheld an $11 million jury award in a libel case involving an Iowan who “doggedly and relentlessly” used Facebook and other social media tools to denigrate a former employer. (Creative Commons photo via Pxhere)

The Iowa Court of Appeals has upheld an $11 million jury award in a libel case involving an Iowan who “doggedly and relentlessly” used Facebook and other social media tools to denigrate a former employer.

The case involves an Iowa businessman, Scott Clark, who admitted in court he had a “compulsion” and had repeatedly used Facebook to go after his former boss, Jerry Hoffmann, the CEO of DIY AutoTune, a company that sells automotive tuning products for racing enthusiasts.

After Clark was fired in 2016, he started his own company, called RealTuners. Within a year, Hoffmann had sued Clark, alleging Clark had violated a noncompete agreement and had used confidential information and trade secrets from DIY AutoTune in launching his own business. Hoffmann also sued for statements Clark made on social media disparaging Hoffmann and his products.

With the lawsuit pending, Hoffmann and Clark agreed to a formal court-approved order in which they promised to refrain from making any disparaging comments about each other online, if only to limit the issues that had to be litigated.

Within days, however, Hoffmann was alleging Clark had violated the agreement multiple times by making defamatory statements on Facebook and on a podcast. The court agreed and required Clark to reimburse Hoffmann $3,187 for legal expenses.

Just 48 hours later, Hoffmann was back in court, alleging Clark was continuing to disparage him on his podcast while singing, “Oh, justice for sale.”

After listening to the podcast, the judge in the case told Clark, “This court finds beyond a reasonable doubt that you’re referring to my order, you were referring to the judicial system, and you were referring to plaintiff and his business … Also, I find you beyond a reasonable doubt are actively encouraging others to besmirch and badmouth and do whatever they can to cause distress to his business … You’re attempting to goad the court, and I will not tolerate that.”

The court sanctioned Clark by ordering him to deposit $10,000 into an account that would be forfeited in the event of any additional violations.

Clark failed to make the deposit and failed to pay other penalties, while continuing to post Facebook comments about the case and his former employer. He appeared again before the judge, who noted that court rules allow a judge to simply set aside, or strike,  the pleadings of a “disobedient” party in a civil case. The judge opted to strike Clark’s answer to Hoffmann’s lawsuit, as well as Clark’s counterclaims.

Clark then was found to have violated a court order requiring him to disclose his login credentials for his various Facebook accounts, some of which were associated with an alias, all while continuing to make Facebook posts.

In one such post, Clark wrote that “judges are lawyers. Lawyers are a tight knit group,” and said of Hoffmann, “they hired local lawyers who have lunch with all the judges here.”

At a hearing on that issue, the judge told Clark, “You may not go online and post anything, any comments about Mr. Hoffmann’s business, not through your own identity, not through another person’s identity. If there is a person related to you, you better ask them to do you a big favor and not post any negative comments about this. I will not have any further delays or any further increase in damages in this case.”

Clark continued with the Facebook posts, referencing “distracting and harassing legal activity” by his former employer. At yet another hearing on his conduct, Clark was asked about his progress in disclosing his Facebook data to Hoffmann’s lawyers. “Facebook is not ever going to happen,” Clark told the judge. “That’s simply not going to happen, OK?”

Clark was ordered to spend 30 days in jail and fined $500. When Clark continued to defy court orders, he was ordered to turn himself into the local jail and serve a 10-day sentence for contempt of court and to serve “an indefinite term” until he disclosed the information sought by Hoffmann’s lawyers.

Clark did not turn himself in to the jail, and continued to post on Facebook. A warrant was issued for his arrest, at which point Clark posted on Facebook that he was leaving Iowa to avoid being jailed — adding to his post a link to the judge’s personal Facebook page with the comment, “Here’s my judge. She’s a social media starlet.” He also made an unexplained reference to the prospect of Hoffmann’s legal counsel sustaining a “compound fractured pelvis.”

Clark was again found in contempt, with the judge sentencing him to 60 days in jail and ordering him to pay a $2,000 fine.

In August 2019, the case finally went to a jury whose only task was to calculate damages in the case. The jury returned a verdict for Hoffmann in the amount of $11 million for libel, breach of fiduciary duty and civil extortion.

Clark asked for a new trial, arguing the jury award was too high considering the jury had little evidence of his net worth and that jurors “just felt sorry for Hoffmann and his wife.”

The court denied that request and found that Clark had “doggedly and relentlessly published false, disparaging and damaging information” about Hoffmann in multiple mediums and multiple forums, even after court intervention.

In its ruling upholding the jury award, the Court of Appeals said Clark had “knowingly and purposely violated the consent order a number of times, he mocked the court and the ongoing litigation in the public, he refused to turn over discovery he was repeatedly ordered to produce, and, by the end, he stopped attending all hearings and even skipped trial — apparently because he did not want to serve the jail time he was ordered to serve for his repeated violations.”

The court said “nothing slowed or stopped” Clark’s behavior, and “through it all, he continued to post damaging comments about Hoffmann, his products, and his businesses.”

Acknowledging “this jury award is extremely large,” the court said it was Clark’s “relentless behavior that warranted such a punishment.”

The court said Clark “knew he had the power to hurt a business over social media.” After he was fired by Hoffmann, the court found, Clark told a former colleague he “could make a single post on FB” about a company and “wipe them out” through what he called the “Court of Social Media.”

“Private persons face the real risk of harm through the modern ease of defamatory publications now possible through use of the internet,” the Court of Appeals said in its ruling. “Taken as a whole, Clark engaged in a relentless campaign to destroy and punish Hoffmann.”

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Clark Kauffman
Clark Kauffman

Deputy Editor Clark Kauffman has worked during the past 30 years as both an investigative reporter and editorial writer at two of Iowa’s largest newspapers, the Des Moines Register and the Quad-City Times. He has won numerous state and national awards for reporting and editorial writing. His 2004 series on prosecutorial misconduct in Iowa was named a finalist for the Pulitzer Prize for Investigative Reporting. From October 2018 through November 2019, Kauffman was an assistant ombudsman for the Iowa Office of Ombudsman, an agency that investigates citizens’ complaints of wrongdoing within state and local government agencies.