Hill v. Petrotech Res. Corp.

• Decision Date: 21 October 2010
• Docket Number: No. 2010-SC-000182-I.,2010-SC-000182-I.
• Citation: 325 S.W.3d 302
• Parties: H.C. “Blue” HILL, Movant, v. PETROTECH RESOURCES CORPORATION and John Burness, Respondents.
• Court: United States State Supreme Court — District of Kentucky

325 S.W.3d 302

H.C. “Blue” HILL, Movant, v. PETROTECH RESOURCES CORPORATION and John Burness, Respondents.

No. 2010-SC-000182-I.

Supreme Court of Kentucky.

Oct. 21, 2010.

Matthew James Baker, Bowling Green, KY, Counsel for Movant.

Michael Scott Vitale, English, Lucas, Priest and Owsley, Bowling Green, KY, Counsel for Respondents.

Opinion of the Court by Justice VENTERS.

The question presented in this case is one of first impression in Kentucky: whether a court may enjoin the expression of certain thoughts and opinions before a final adjudication determining that the expression is unprotected by the federal or Kentucky Constitution. We conclude that the circuit court's broad-sweeping and vaguely worded injunction against future expression, before final adjudication of its defamatory character, constitutes an improper prior restraint on speech in violation of the First Amendment of the United States Constitution and Section Eight of the Kentucky Constitution. Given the heavy presumption against the constitutionality of any prior restraint of expression, the issuance of the temporary injunctionwas an abuse of the circuit court's discretion that presents this Court with extraordinary cause to grant the relief sought by the Movant under CR 65.09. Price v. Paintsville Tourism Com'n, 261 S.W.3d 482, 483 (Ky.2008); National Collegiate Athletic Association v. Lasege, 53 S.W.3d 77, 84 (Ky.2001).

For the reasons set forth below, we grant Hill's motion for relief, and vacate the circuit court's temporary injunction as an impermissible prior restraint on speech.

I. FACTUAL AND PROCEDURAL BACKGROUND

From the limited record before us, the facts appear to be as follows. Respondent John Burness is the sole shareholder of Respondent Petrotech Resources Corporation. Petrotech engages in oil and gas drilling, and to finance its operations, Burness sometimes solicits investments by members of the general public. Among those investors was James Eickman, a resident of Arkansas, who invested $8,500.00 in the Respondents' drilling operations. Believing that there was improper conduct by the Respondents associated with his investment, Eickman sought the return of his funds. With this objective, Eickman retained Movant, H.C. “Blue” Hill, a/k/a Colt Ledger. It appears from the record that Hill's company, Colt Ledger & Associates, seeks to recover investments for its clients using, to put it mildly, highly aggressive collection techniques.

In Hill's initial communication with Respondents he alleged that they were “in violation of several state and federal statutes and regulations.” He threatened to file complaints with authorities in Kentucky and Arkansas, and with the federal government unless Eickman's money was returned. Hill also threatened to “post [his] findings on every known blog site dealing with investment scams,” and to “notify [Respondents'] potential client base of [their] activity.”

When Respondents refused to refund Eickman's investment, Hill began to follow through on his threats. Among other things, he posted on the internet statements that Respondents were engaged in illegal conduct, had violated securities and criminal laws, and that “MOST OF WHAT THEY DO IS CROOKED.” (Capitalization in original). He also directly contacted Respondents' customers, clients, and investors, including the City of Edmonton, with whom Respondents were negotiating a substantial gas contract, claiming that Respondents were engaged in illegal activity.

In response to Hill's activities, on August 13, 2009, Respondents filed a complaint in Barren Circuit Court alleging, among other things, defamation and invasion of privacy, requesting damages and injunctive relief. On November 24, 2009, Respondents filed a motion for a temporary injunction pursuant to CR 65.04 seeking to enjoin Hill from making further defamatory comments relating to them.

On November 30, 2009, the circuit court entered an order that enjoined Hill “from directly and/or indirectly contacting any customers, clients, investors, and/or business associates of [Respondents] for the purpose of defaming the [Respondents], and shall likewise be enjoined from publishing, by any means, manner, or media, or otherwise making [any defamatory] public comments pertaining in any way to the [Respondents] or [their] business dealings.” The injunction was to remain in effect throughout the pendency of the action, or until further orders of the court.

Hill subsequently moved for interlocutory relief in the Court of Appeals pursuant to CR 65.07. The Court of Appeals denied the motion, thereby upholding thetemporary injunction. Hill's petition for relief from the injunction is now before this Court pursuant to CR 65.09.

For the reasons set forth below, we hold that both the United States Constitution and the Kentucky Constitution forbid the issuance of an injunction to restrain allegedly defamatory speech until the falsity of the speech has been finally adjudicated in the trial court. Since there has been no final determination upon that issue in this case, we grant Hill's motion for relief, and vacate the circuit court's injunction as an impermissible prior restraint on speech.

II. ANALYSIS UNDER THE FIRST AMENDMENT OF THE UNITED STATES CONSTITUTION

As explained below, the temporary injunction entered by the circuit court is an improper prior restraint of speech under the First Amendment of the United States Constitution.

A. Rule Against Prior Restraint of Speech

Since New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), the United States Supreme Court has recognized a tension between protection of reputation and protection of freedom of expression. Of course, the tension is strongest when there is a media defendant, ¹ the subject matter is one of public interest, or the plaintiff is a public official or a public figure. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974); Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749, 105 S.Ct. 2939, 86 L.Ed.2d 593 (1985). “This case does not come close to implicating such weighty concerns. Nevertheless, it is clear that even where a purely private matter between private parties is at issue, the defendant's freedom of expression is still implicated, and the First Amendment still affords some, though less substantial, protections.” Innes v. Howell Corp., 76 F.3d 702, 709 (6th Cir.1996) (citing Connick v. Myers, 461 U.S. 138, 103 S.Ct. 1684, 75 L.Ed.2d 708 (1983)) (describing “an employee's false criticism of his employer on grounds not of public concern” as an example of less important but still-protected speech, cited with approval in Dun & Bradstreet, 472 U.S. at 760, 105 S.Ct. 2939).

Moreover, a fundamental principle which has emerged from the cases interpreting the First Amendment is that governmental units and courts may not impose a prior restraint on speech. See Nebraska Press Assn. v. Stuart, 427 U.S. 539, 96 S.Ct. 2791, 49 L.Ed.2d 683 (1976) (“[P]rior restraints on speech and publication are the most serious and the least tolerable infringement on First Amendment rights”); Pittsburgh Press Co. v. Pittsburgh Comm'n on Human Relations, 413 U.S. 376, 93 S.Ct. 2553, 37 L.Ed.2d 669 (1973) (a prior restraint should not “swee[p]” any “more broadly than necessary”). As such, the Constitution forbids it. See Carroll v. President and Comm'rs of Princess Anne, 393 U.S. 175, 183-184, 89 S.Ct. 347, 21 L.Ed.2d 325 (1968) (An “order” issued in “the area of First Amendment rights” must be “precis[e]” and narrowly “tailored” to achieve the “pin-pointed objective” of the “needs of the case”); see also Board of Airport Comm'rs of Los Angeles v. Jews for Jesus, Inc., 482 U.S. 569, 107 S.Ct. 2568, 96 L.Ed.2d 500 (1987) (regulation prohibiting “all ‘First Amendment activities' ” substantially overbroad); Tory v. Cochran, 544 U.S. 734, 738, 125 S.Ct. 2108, 161 L.Ed.2d 1042 (2005).

“Any prior restraint on expression comes to this Court with a ‘heavy presumption’ against its constitutional validity. Respondent[s] thus carr[y] a heavy burden of showing justification for the imposition of such a restraint.” Organization for a Better Austin v. Keefe, 402 U.S. 415, 419, 91 S.Ct. 1575, 29 L.Ed.2d 1 (1971) (citations omitted).

The temporary injunction that prohibits Hill from making future statements about Respondents is a prior restraint on speech. Therefore, our review begins with a presumption that the injunction is invalid.

B. The Traditional Rule Forbidding Injunctions Against Defamation

Aside from the First Amendment's heavy presumption against prior restraints, courts have long held that equity will not enjoin a libel. See Nebraska Press Ass'n, 427 U.S. at, 96 S.Ct. 2791; Kramer v. Thompson, 947 F.2d 666, 677-78 (3rd Cir.1991); Community for Creative Non-Violence v. Pierce, 814 F.2d 663, 672 (D.C.Cir.1987) (“The usual rule is that equity does not enjoin a libel or slander and that the only remedy for defamation is an action for damages.”); American Malting Co. v. Keitel, 209 F. 351, 354 (2d Cir.1913) ( “Equity will not restrain by injunction the threatened publication of a libel, as such, however great the injury to property may be. This is the universal rule in the United States....”); Metropolitan Opera Ass'n, Inc. v. Local 100, Hotel Employees and Restaurant Employees International Union, 239 F.3d 172, 177 (2d Cir.2001); 42 Am.Jur.2d, Injunctions, § 97 (2010) (“The general rule is that equity does not enjoin libel, rather, the only remedy for defamation is an action for damages, and there is a heavy presumption that prior restraints on expression are unconstitutional.”). (footnotes omitted)

“Although the rule has been severely criticized by legal scholars, and the courts have occasionally deviated therefrom in extreme cases or where a collateral ground of equity jurisdiction could be found, it appears to be clearly established by the large majority of the cases...