Lee Daniels' Business Partner Claims Damon Dash Is 'Libel-Proof'

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Record producer Damon Dash attends a special screening of "The Wrestler" hosted by The Cinema Society and Entertainment Weekly at the Tribeca Grand Screening Room on December 8, 2008 in New York City.

Roc-A-Fella Records co-founder is suing Daniels over profits from 'The Butler' & other projects.

Roc-A-Fella Records co-founder Damon Dash's defamation claim against Canyon Entertainment president Simone Sheffield might best be considered the undercard in a legal match over whether Dash deserves millions of dollars and credits on The Butler, Precious and the upcoming Fox drama Empire. But it deserves some attention in its own right, especially after Sheffield lodged a provocative motion to dismiss in New York Supreme Court on Tuesday. The latest court documents ridicule Dash for possibly defaming himself -- that is, if it was really possible to hurt Dash's reputation.

Sheffield is a talent manager who has worked with clients like Marvin Gaye, Jane Fonda and Greta Garbo. It's her work with film director Lee Daniels, though, that has been most notable of late. She's co-produced many of Daniels' projects, including The Butler.

Damon Dash Moves Forward in Lawsuit Against 'Butler' Director

In September, Dash sued Daniels over an early $2 million investment that the plaintiff claims entitled him to substantial rewards on later films. The lawsuit also included the allegation that "Simone, without any actual knowledge of the truth of the accusations she was making, accused Damon of going to jail in an attempt to further cause economic harm to Damon’s personal and business reputation."

The accusation that Dash was in trouble with the law appears to have been made as the two sides were quarreling with each other in the run-up to the lawsuit. Just one potentially major rub: It might have been Dash himself who said it to others.

In an email Dash sent to Sheffield and other film industry people  on Jan. 10, he wrote:

"I just got a call from I guess lees manager Simone to tell me about the tv project we were speaking about... she then asked me if I was going to jail... I found that to be offensive because I've never in my life read anything implying that I was going to jail because of a tax debt... when I did try to explain exactly what was going on with my tax situation because based on her comment she had to be told that and could never had read that and I wanted to make sure if she was so concerned she had the right story... and if there is anything in those gossip columns that says this please show me so I can deal with it legally..."

So of course, Sheffield is now telling the judge that "Plaintiff’s email identifies Plaintiff – not the Sheffield Defendants – as the publisher of the allegedly defamatory words!"

Sheffield's memorandum emphasizes that the phone call that preceded the email was a private one with no third parties involved, and adds that if Dash "thinks it defamatory to question whether he was facing jail for tax evasion, he should not have restated the question."

In reaction to Dash's email, Sheffield forwarded along various links to media stories about Dash's tax situation. The websites that covered it certainly weren't the most reputable ones out there, but nevertheless, Sheffield's memorandum argues they can't carry a defamation claim thanks to Dash consenting.

"If Plaintiff thinks it is defamatory to forward links of public articles stating that he was facing jail for tax evasion, then Plaintiff should not have demanded that Ms. Sheffield forward the links," says Sheffield's legal papers.

But it gets even better.

Even if Sheffield made statements regarding Dash's failure to pay his taxes and that he was "going to jail," Sheffield says the gist of the statement was true. The defendant points to public records demonstrating that the State of New York has filed six tax liens against Dash, including one on August 6, 2007 for more than $2 million.

"It also true -- as evidenced by the incarceration of the other celebrities for failing to satisfy their obligations, including Martha Stewart, Wesley Snipes and Heidi Fleiss -- that the failure to pay taxes can result in incarceration."

And if this argument doesn't work -- plus ones directed at whether Dash has sufficiently stated a viable libel claim and can meet the "actual malice" standard for public figures -- Sheffield says that Dash still can't win a defamation lawsuit. She says that Dash is "libel-proof," meaning that the hip-hop mogul's reputation is so poor that his reputation can't further be tarnished.

"Here, at the time of Ms. Sheffield's alleged defamatory statement, headlines of Plaintiff's tax issues and potential criminal liability had already been splashed across the Internet by some of the most widely read sites, including: TMZ, Perez Hilton, BET and MediaTakeOut.com, with eye-catching headlines," says the memorandum authored by attorney James Sammataro. "The pre-existing negative publicity regarding Plaintiff's failure to pay taxes has so tarnished his reputation on this topic, that he is barred, as a matter of law, from prevailing on a defamation claim relating to the same subject matter."

This article was originally published by The Hollywood Reporter.