On Monday May 17th the court of appeal of the state of California, second appellate district, division four, reversed the previous ruling in Direct shopping network, LLC (DSN) v. Interweave Press, LLC.
In late 2008, Art Garabedian of Direct Shopping Network, LLC (DSN) filed a law suit against Robert James, Colored Stone Magazine, Colored-Stone.com, Interweave Press, LLC, and Does 1-1000, for trade libel, interference with contract, and intentional and negligent interference with prospective economic advantage. Attorneys for Interweave press responded by filing an anti-SLAPP motion, a motion which would prevent the case from going further as they deemed it a “Strategic Lawsuit Against Public Participation”.
The anti-SLAPP was heard in the Los Angeles County Superior Court by Judge Laura Matz who denied the anti-SLAPP motion on 04/10/2009. Attorneys for Interweave immediately filed an appeal, and yesterday won the case and were awarded costs when Judge Matz’s ruling was “Reversed in Full”. Click to View
The findings of the appellate court are profound and send a message to the gemstone and jewelry industry.
Regarding DSN’s claim for trade libel, the courts find that DSN presented no admissible evidence. Garabedian attempted to stand behind a solitary AGTA report, listing as natural, an Andesine sample purchased from Andegem. The court determined that not only was the test performed on only one sample, but that the AGTA report itself was hearsay, and that the report itself stated it was subject to numerous limitations and conceded that “some treatments commonly applied to gem materials are not currently detectable.”
The courts also outline that statements of opinion are protected speech, and go on to say, “under the first amendment there is no such thing as a false idea. However pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries but on the competition of other ideas.” The court documents point out that “James and Dr. Rossman tested different stones and James offered to make the stones he tested available to DSN.”
The courts found that DSN produced no evidence that the claims of color treatment were false. DSN was also unable to provide proof that it lost sales because of the suggestion of Mexican origin rather than the presence of treatment, nor did DSN provide proof that any contract had been disrupted. It was the courts opinion that the artificial treatment of the gemstones superceded the issue of origin.
The conclusion of the courts:
“DSN presented no evidence that defendants interfered with any particular relationship or expectancy. Moreover, DSN identified no wrongful conduct apart from the allegedly false and defamatory statements made about its product. As we have concluded the statements concerning treatment were not false and the statements concerning origin were not demonstrably defamatory, there is no support for the “wrongful conduct” element of the interference claims”
“The order denying the motion to strike is reversed. Interweave is awarded costs on appeal.”
Click to see the 35 page court ruling
The above article may be reprinted, reproduced and distributed in its entirety, with all copyrights in tact.
Copyright© 2010 Jewelers Ethics Association
On June 10, 2010 National Jeweler ran an article titled, “Unsecured Gems TV creditors to recoup bulk of debt”. This came as a pleasant surprise after the JEA article, “Are you buying stolen goods?” which outlined the sale of yet to be paid for Gems TV goods by JTV.
In its article, National Jeweler states that Gems TV has agreed to a settlement handled by the firm Consensus Advisors in which unsecured creditors could see 95% of what they are owed. However, the bankruptcy court will have to approve the settlement before the creditors see their money. The parties involved are hopeful that the unsecured creditors will be paid by summer’s end.
The article does not mention the $25million owed to DirecTV, but as a listed unsecured creditor, we can only assume at this time that the settlement includes them.
Although this writer remains optimistic that Gems TV will honor its financial obligations, some things just don’t add up. Apparently the bankruptcy filing shows a $3.7million offer from Zalemark Inc. for “the assets used in the operation of Gems TV's television jewelry shopping network and e-commerce business”. As we previously reported, JTV was selling Gems TV assets immediately upon Gems TV’s closure. Additionally, $20million in Gems TV assets (merchandise) is promised to MMCG (JTV) as part of Gems TV’s investment in JTV.
Gems TV has been diligent about posting updates on its investors site; in fact everything that has transpired to date has been posted there, except the information about the settlement to creditors as reported by National Jeweler. The latest update was posted June 6, and outlines the following:
• An orderly liquidation of Gems USA’s remaining assets would maximize the value of such assets for the benefit of creditors and other stakeholders.
• A substantial portion of Gems USA’s inventory was liquidated without a court-appointed liquidator.
• Gems USA has not filed a formal plan of liquidation, but retains the right to do so.
• The Company will make further announcements as and when there are further material developments in relation to the matter.
One would have thought the agreed settlement to creditors pending court approval might be important enough for Gems TV to post to investors. In light of the investment agreement between Gems TV and JTV, good press like the National Jeweler story will certainly impact both parties. I would not want to be selling Gems TV’s assets included as part of a buy-in knowing Gems TV may not have paid for those assets. Let’s hope they pay their bills before throwing $60 million at JTV.