Alex Jones Loses, Cardi B Wins on Flip Sides of Bankruptcy Law

At first glance, finding a thread linking the rapper Cardi B and the conspiracy theorist Alex Jones might seem an unlikely task.

But both could see their fortunes rise or fall by millions of dollars based on a provision in the federal bankruptcy law that goes mostly unnoticed by the general public.

A judge on Thursday said Jones can’t use bankruptcy to avoid paying $1.1 billion he owes parents of the Sandy Hook massacre victims for airing lies about them on his talk show. That came 13 days after Cardi B scored a big victory in her battle to collect nearly $3 million from a blogger who falsely claimed, among other things, that the singer had been a prostitute and had herpes.

In both cases, judges were asked to consider whether the alleged defamation constituted “willful and malicious injury,” one of the provisions under bankruptcy law that prevents someone from just walking away from their debts.

The issue is not unprecedented, but the Jones and Cardi B cases highlight the intersection of bankruptcy law, defamation, and popular culture at a time when social media has turned everyone into a potential publisher who could be liable for their public pronouncements. They also reinforce a quiet but important part of law that debtors, creditors, and attorneys should keep in mind long before they ever enter bankruptcy court.

“I don’t think people, when they’re defaming others, have in the front of their mind, ‘I could just file for bankruptcy and get out of this,’” said Christopher D. Hampson, a bankruptcy professor at the University of Florida. “But I do think it’s under-appreciated that bankruptcy doesn’t get people out of all these kinds of debts.”

‘An Intentional Act’

Debts unresolved at the end of a bankruptcy case are typically discharged, allowing the individual debtor to walk away. But the bankruptcy code has exceptions to that relief that include some tax claims, fraud, educational loans, divorce payments, as well as debts related to willful and malicious injury.

Whether or not Jones’ lies met that definition was central to his case.

Texas and Connecticut state courts ordered the talk show host last year to pay the Sandy Hook families $1.4 billion for defaming them by repeatedly claiming that the 2012 massacre was a hoax. Jones filed for personal bankruptcy in December.

But the juries in his state cases only weighed in on how much Jones and his Infowars show should pay, not whether his defamation rose to the standard of willful and malicious injury that would prevent him from discharging the debts. Jones and his lawyers contended his comments weren’t malicious but just repeated “common” views of many Americans.

In his rulings this week, Judge Christopher M. Lopez of the US Bankruptcy Court for the Southern District of Texas said Jones must still face $1.1 billion in defamation judgments for his false statements about the Sandy Hook Elementary School shooting.

In two separate decisions, Lopez answered a key question that’s hovered over the bankruptcy since its outset: whether the right-wing provocateur should be able to escape making full payments to families of the shooting victims.

“Here there are findings about a deliberate and intentional act meant to cause injury, not just a deliberate act that leads to injury,” the judge wrote.

The judge’s findings could be appealed, but for now this means Jones is still on the hook for most of the judgment. Absent a settlement, Jones’ creditors could spend the rest of their lives trying to collect. Jones’ attorneys didn’t respond to Lopez’s ruling, but Jones has appealed previous decisions in the case.

During his Infowars broadcast on Friday, Jones promised that appeals in his cases “will take years.” Whatever the results, he said he won’t be able to fully pay his debts.

“It doesn’t matter; it’s all academic,” Jones said. “I don’t have a million dollars. My company has a few million, but that’s just to pay the bills and buy products for the future. So we are literally on empty.”

The rulings weren’t a complete loss for Jones. The judge found that he can ask for new trials to determine whether more than $300 million of the $1.4 billion judgments could be dischargeable.

While bankruptcy courts have found that defamation falls within the allowed exceptions, it can be a complex analysis. A state court judgment may not translate cleanly into non-dischargeability, said Bruce Markell, a Northwestern University law professor and former bankruptcy judge

The US Supreme Court made it harder to prove willful and malicious injury with its 1998 Kawaauhau v. Geiger decision.

In that case, a doctor accused of malpractice sought protection in bankruptcy court after being ordered to pay one of his patients who lost her lower leg to amputation. The high court upheld an appellate ruling that the injury was unintentional and therefore the doctor’s bankruptcy enabled him to discharge the debt. The opinion held that medical malpractice attributable to negligence or recklessness didn’t amount to a “willful and malicious injury.”

That precedent increased the risk that bankruptcy could be used “as an escape hatch from some very, very bad acts"—not just defamation but also acts such as sexual harassment and police brutality, said Melissa Jacoby, a bankruptcy law professor at the University of North Carolina.

It also made it more likely that an injured party would have to pursue and win a second trial on the issue in bankruptcy, particularly because many state trials may not address the “willful and malicious” standard, as the Sandy Hook families have discovered.

“If you get a general verdict on a jury verdict in state court, you may have to retry the whole thing again in bankruptcy court,” Markell said.

Even if Jones can’t discharge the defamation debts, being a resident of Austin, Texas, could allow him to keep some of his assets.

The Texas constitution protects homesteads from forced sale, meaning Jones could still keep his primary home there. Texas is also one of two states that doesn’t permit creditors to garnish wages for ordinary debt, though creditors could still freeze bank accounts. There are also exemptions for motor vehicles, retirement accounts, and certain personal property.

“If, in fact, bankruptcy has worked right, everything’s been swept into the case and distributed,” Markell said. But those exemptions change the calculus, he said.

That’s why some call a creditor’s judgment “a hunting license,” Markell said, “because you’re just holding on to the judgment, waiting until someone gets money or gets an asset that’s not exempt.”

Less Resistance, Less Money

The path for Cardi B, whose real name is Belcalis Marlenis Almanzar, has been much easier than for the Sandy Hook parents.

A bankruptcy judge on Oct. 6 affirmed that the Grammy award-winning artist can collect $3.4 million from entertainment blogger Latasha Transrina Kebe, also known as Tasha K. Cardi B won the judgment in a federal jury trial in Georgia last year after suing Kebe for slander, defamation, and invasion of privacy.

On her “unWinewithTashaK” YouTube channel and other social media platforms, Kebe had falsely accused Cardi B of having herpes and HPV and claimed the rapper was a prostitute, among other accusations, according to court filings.

The appellate affirmation came after Kebe agreed not to contest all but about $500,000 of the judgment against her. It means the rapper can pursue Kebe for $2 million in compensatory and punitive damages, $1.3 million in litigation expenses, and more than $40,000 in post-judgment interest.

Whether she’ll ever collect that amount is unclear. The blogger filed for bankruptcy on May 25, after the rapper began garnishing money from her employer, Google, according to court records.

Kebe has reported a monthly rental income of $9,850 from a Georgia property owned by her spouse, and earned about $27,157 between January and June 2023 from Meta, Google, PayPal and MTV as a content creator.

Chad Van Horn, Kebe’s bankruptcy attorney, told Bloomberg Law that while they recognized that the debts could be found non-dischargeable, they still intend to devise a feasible payment arrangement for all creditors.

“This proposed plan aims to afford the debtor the freedom from incessant creditor harassment, granting her peace of mind, focusing on her career, and allowing her to make a meaningful distribution to all of her creditors,” Van Horn said.

Inconsistent Decisions

Whether defamation judgments can be forgiven in bankruptcy has come up before. And as the Jones and Cardi B cases show, the issue can be complex and lead to partial judgments.

Last year, a Dallas bankruptcy court granted a request by Las Vegas entertainer and ventriloquist Terry W. Fator to enforce a defamation judgment he won against his bankrupt mother, Marie Fator Sligh.

Fator, an “America’s Got Talent” winner, won a $51,603 judgment against her, arguing that she defamed and tried to extort him after he became famous.

Based on Sligh’s admissions and statements, facts in the Nevada judgment, and letters Sligh sent, the issue didn’t even go to trial.

If there’s already been a full and fair trial with the same parties over the same issues, and those issues were determined to be willful and malicious, then often a bankruptcy judge will agree with the creditor, said Seymour Roberts Jr. of Friedman & Feiger LLP, who represented Fator.

But Roberts noted that if pre-bankruptcy findings don’t rise to the level of willful and malicious injury, or there weren’t specific findings, the case could have to be retried.

“Litigators who are pursuing defendants in state and federal court may not be taking the time to wonder, ‘What do I need in my judgment, so that if this defendant files for bankruptcy, it’ll make it easier for me to get a non-dischargeable judgment?” Roberts said.

But not all such claims win in bankruptcy court.

Casey Anthony, who was found not guilty of murdering her 2-year-old daughter Caylee in a blockbuster 2011 trial, was able to avoid two defamation judgments after she filed for bankruptcy in 2013.

One was from Zenaida Gonzalez, who accused Anthony of defaming her by accusing a babysitter with a similar name of kidnapping her daughter in 2008.

The bankruptcy judge in that Florida case agreed to discharge Anthony’s debt because he said Anthony’s description of the babysitter didn’t match Gonzalez and wasn’t targeted to hurt Gonzalez.

In 2019, a bankruptcy court granted Anthony’s push to discharge a separate defamation claim brought by Roy Kronk, a meter reader who led investigators to Caylee’s body and who Anthony’s lawyers suggested could have been a suspect in the toddler’s death.

The court said Anthony never personally said anything to implicate Kronk in the crime, and any statements related to Kronk were made by her criminal attorneys.

The recent high-profile judgments should serve as reminders that bankruptcy can add complexity to defamation judgments for both debtors and creditors.

“If you don’t consider the bankruptcy angles—if you think that’s even a remote possibility—I think that is malpractice because it happens. People know it happens,” Markell said.