Senator Clinton Wins a Round In Coast Court

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The New York Sun

SAN FRANCISCO – A California state appeals court yesterday ordered a lower court to take another look at Senator Clinton’s effort to be dismissed from a lawsuit filed by a disgruntled campaign donor who claimed President Clinton reneged on a business deal.


The unanimous decision by a three judge panel amounted to a partial victory for Mrs. Clinton over the former Internet entrepreneur who brought the suit, Peter Paul.


Paul’s lawsuit alleges that the Clintons and their allies tricked him into underwriting several fund-raising events for Mrs. Clinton’s Senate campaign in 2000 by promising that, after Mr. Clinton left office, he would go to work for two of Paul’s companies.


Irregularities in the campaign’s financial accounting for one of the events Paul backed, a star-studded fund-raising concert held in Los Angeles in August 2000, led to the federal indictment of Mrs. Clinton’s national finance director, David Rosen. He was tried in May and acquitted on all counts.


The appeals court judges, who heard arguments in Paul’s civil suit last Friday, ruled that the trial judge misinterpreted one provision of the so-called anti-Slapp law, under which the senator sought to be removed as a defendant. The anti-Slapp law, which takes its name from the phrase “Strategic Lawsuits Against Public Participation,” is a mechanism that allows certain lawsuits about matters of public controversy to be dismissed at an early stage.


The appeals court instructed the trial judge to examine again whether Mrs. Clinton’s motion to escape the suit was timely, even though the request was brought nearly five months after she was served in the case. A judge is required to consider such a motion only if it is brought within 60 days.


The court indicated it was not persuaded by arguments put forth by the senator’s attorneys that part of the delay in seeking a hearing on the motion was justified because the only judge familiar with the case was out with back surgery.


“Appellants forget that anti-SLAPP motions to strike are intended to be made early in the proceedings at a time when the judge would most likely not be familiar with the pleadings and the record,” Judge Paul Woods wrote in an opinion joined by Judges Dennis Perluss and Earl Johnson.


The appeals court rejected a request by Mrs. Clinton’s attorneys that the lower court be ordered to discharge the senator from the case immediately.


The senator’s lead lawyer, David Kendall, had no comment yesterday on the court’s action.


Paul said in an interview last night that he was “thrilled” with the decision to return the issue to the trial court. “Because of ambiguities in the judge’s order, it naturally had to be remanded for a clarification,” Paul said. “It could have been a lot worse.”


Paul said he expects the trial judge to stand by his earlier ruling that the senator’s attorneys acted too slowly. “There are rules we’re supposed to abide by, and just because it’s Hillary Clinton, they shouldn’t be able to ignore those rules, and I think that’s what the trial court said,” Paul said.


Paul has a record of federal drug and fraud convictions from the 1970s and 1980s. When that fact became public days after the Hollywood gala, Mrs. Clinton’s campaign returned a $2,000 gift from him. It has never returned the nearly $2 million he said he spent on the gala and other fund-raising events for the senator. A Federal Election Commission investigation into the fund raising is continuing.


Earlier this year, Paul entered a guilty plea to a federal stock fraud charge stemming from the collapse of one of his companies, Stan Lee Media. He is awaiting sentencing.


Most of the California appeals court’s 17-page opinion yesterday was devoted to reviewing and upholding the trial judge’s decision to dismiss Mr. Rosen, the finance director, as a defendant in Paul’s civil suit.


The appeals court found that campaign fund raising is treated as speech for legal purposes and that Paul’s allegations of a business fraud were so closely connected to the political events that the lawsuit could be thrown out under the anti-Slapp law. “Although the representations at issue here were not made during campaign speeches, they were part of the conduct of a political campaign such that the interaction between Paul and the president (or his agents) was not a purely business transaction,” Judge Woods wrote.


The court’s opinion said Paul did not produce enough evidence that the alleged promise that Mr. Clinton would go to work for Paul’s companies was fraudulent, rather than just a contract that fell apart due to external events. The appeals court noted that Stan Lee Media went bankrupt just after Mr. Clinton left office and that Paul became a fugitive in Brazil. “Different circumstances prevailed at the time the promise to work for Paul was broken than when it was made,” the court wrote.


The appeals court also ordered Paul to pay the costs that lawyers for Mrs. Clinton and Mr. Rosen incurred in connection with the appeals.


An attorney for Mr. Rosen, Michael Doyen, said he was delighted with the outcome. “We’re very happy,” Mr. Doyen said. “We don’t think there should have ever been a civil suit. There shouldn’t have been a criminal suit either.”


Paul noted that Mr. Clinton remains a defendant in the civil lawsuit. Last year, the California Supreme Court rejected the former president’s petition seeking to have the claims against him dismissed.


Paul said the appeals court’s ruling about Mr. Rosen should not impact the lower court’s decision regarding Mrs. Clinton. “Rosen may not have had knowledge of the conspiracy or the underlying cause, but he wasn’t sleeping with the president … but Hillary was,” Paul said.


Even if Mrs. Clinton’s motion to be removed from the case is granted, Paul could seek to force her to give a deposition as a witness. That option makes it likely that the case will continue to dog the senator through her re-election campaign next year and, perhaps, beyond.


The New York Sun

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