Sometimes, in the interest of fairness, we need to revisit and update an old story. In the past year, we reported extensively on what we coined the “Missing Pink Diamond” case, about Ohio Jeweler John Stafford, who had bought for merely $8,000 a 5.56 carat natural intense fancy pink diamond, which he subsequently valued wholesale at between $1.5 million and $2 million. The stone was never certified in any lab – and seen by only a few (mostly non diamond) people.

The story was weird, albeit not impossible, right from the beginning – when the Ohio jeweler bought the pink diamond at a breakfast in a restaurant in Las Vegas from a complete stranger with German-accent who he had never met before and who was never seen again. Payment was in cash; the seller disappeared before a receipt could be issued and before his identity was ascertained. Many months later, the diamond was shipped by Stafford Jewelers to DTC Sightholder Julius Klein Diamonds in New York so that JKD could obtain a GIA certification of the pink stone, or possibly purchase it and, if not purchased, return the pink diamond with the GIA certificate to Stafford Jewelers. When the Brinks parcel was opened at the JKD premises, it was found that the package was empty. Stafford sued JKD for theft.

We covered the story sporadically, until the U.S. Federal Judge admonished the parties against "trying the case in the media" - as our stories and this writer’s name were cited several times by both plaintiffs and defendants in the case. We voluntarily stopped reporting on the case and waited for the jury to have its word. Our last report was dated November 18, 2008, when a jury in the U.S. District Court for the Southern District of Ohio issued a verdict against JKD. According to a press release issued at the time by plaintiff’s attorney Dianne Marx of the Dayton, Ohio law firm of Sebaly Shillito + Dyer, the jury had unanimously awarded John Stafford and Stafford Jewelers in at least $6.9 million in compensatory damages, plus attorneys' fees.

In fact, the jury awarded three different sums ($8,400, $1.7 million and $2.3 million). The $2.3 million were compensatory damages and, according to Ohio State Law, under the specifically prevailing circumstances, said the lawyers, this amount could be trebled to at least $6.9 million as a matter of law. At that time, Julius Klein Diamonds announced it would seek to overturn the verdict. Its attorney, Stephen E. Chappelear of the Columbus, Ohio Law Firm of Hahn Loeser + Parks dismissed the "reported statements in various Dayton, Ohio publications of an award of $6.9 million, which grossly mischaracterize the jury's verdict.” He was quite right.

Punitive Treble Damages Denied because of Procedural Mistakes

To make a long story short, last week the presiding judge, the Hon. Thomas M. Rose, wrote the final installment of this still most improbable story. Dismissing the compensatory and punitive charges, he “ordered that Plaintiffs Stafford Jewelers and John M. Stafford recover from Defendant Julius Klein Diamonds LLC the amount of $1,708,400.00 plus post judgment interest. The amount, if any, of attorneys’ fees and costs due to the Plaintiffs will be separately determined by this Court.” Though $1.7 million is sizeable, it is a far cry from the $6.9 million which was erroneously reported at the time.

Why didn’t the judge agree to the treble damages? That story is as strange as many other elements in this saga. The plaintiffs argued that someone in the JKD organization had stolen the diamond, which is a criminal offense, that – when found guilty – allows them treble damages. However, if there was an intention to seek treble damages that should have been clearly stated in the complaint before the trial got underway. Though the demand for treble damages was raised in press releases of plaintiff’s lawyer, she apparently failed to inform the court in due time of the intention to seek these punitive damages. They only did so after the trial had commenced. This, says JKD, and the judge agreed, prejudiced the defense. If Julius Klein Diamonds had known from the beginning that plaintiff would have sought treble damages, it might have elected to follow a different defense strategy. The law is also very specific on the timing of such notification.

Thus, the judge ordered last week (May 13, 2009) that “Stafford Jewelers and John Stafford gave no notice of their election of treble damages on the theft claim until after it was tried. As a result, JKD was prejudiced. Therefore, Stafford Jewelers and John Stafford are not entitled to treble damages on their theft claim.” Losing a diamond is one thing; losing millions of dollars because of a procedural oversight is a different story altogether.

Judge Awards only $1.7 Million for Loss of Diamond

Undoubtedly, many legal analyses, books and even movie-scripts will be written on a trial for the loss of a stone which was only valued by its owner – who bought it for $8,000. The Brinks courier insurance company didn’t pay for the loss, as the stone was never correctly recorded, it was charged, in the books of the jewelers. The stone had been kept apart from the jeweler’s regular inventory in a personal safe of the owner. The jury accepted, however, that the stone was worth $1.7 million.

When the jury needed to decide the value of the stone for the “theft” charges, which would have been the basis for the treble damages, it attempted to give a retail value to the stone. This is how the verdict of $2.3 million came all about. The judge, however, decided there was no evidence to justify this valuation. Therefore, $1.7 million for (loss) damage was the maximum the judge agreed to and he set aside the $2.3 million compensatory damage finding by the jury. It is not our intention in these few paragraphs to give a concise legal review of the various arguments. The following links (here and here) to the judgments speak for themselves.

We are coming back to the story because there are some troubling points on which we need to reflect – and when I say “we,” I foremost refer to myself as well. We are coming back to the story because we read and re-read the lawyer’s press releases announcing as a matter of fact that the judgment against Julius Klein Diamonds was (or would be) in excess of $6.9 million – while in fact, there never was such a judgment.

Somehow, as journalists, we like to maintain off-the-record relationships with lawyers who may tip us off, guide us and provide us with the background necessary to write good and authoritative stories. But sometimes, we may be taken “for a ride” – we may be used. We should be reporting about trials; our stories should never become parts of pleadings or citations in the very cases we report about. The story was so incredibly strange that it was hard to stay away from, especially since it was also linked to GIA certification privileges – which at the time was an issue by itself.

A Journalist Should only Blame Himself

Where we used? Or more precisely, did we allow ourselves to be used? Or did we fail to understand some of the legal nuances? That may well be the $6.9 million question. In all fairness, we may not have fully realized that a jury issues a verdict – and not a judgment. A Court does not issue a verdict when a jury is involved; it only does so in non-jury trials. In a jury trial, the Court instead issues a judgment.

This jury issued its verdict and that was correctly and accurately set forth in the press release. The verdict was the jury's to award. The jury does not issue a judgment – and we erroneously failed to appreciate the difference between a “verdict” by a jury, and the subsequent “judgment” by the court. The considerable delay between these two events must, in this instance, be attributed to JKD’s motion to have a new trial as JKD questioned the consistency and logic behind the verdict. It was only last week that the JKD motion was denied. The same day, the court (i.e. Judge Rose) issued the judgment.

The only thing that is left for either parties to consider at this point is whether they will appeal the judgment. If there is no appeal, Julius Klein Diamonds must pay the awarded sum. When reading and re-reading Marx’s press release, it probably was neither inaccurate nor false – it was us who didn’t realize that Stafford was still a very long way from collecting the $6.9 million. From the language of the release, the possibility that it might not happen was never mentioned. When lawyers take the (quite unusual) step of issuing press releases, they must realize that journalists have by-and-large lesser legal skills – and maybe the situation should have been spelled out more fully.

In our secretive diamond business, one of a journalist’s most challenging tasks is to check, double check and triple check information and to assess the trustworthiness of sources. And we should never forget one golden rule: It ain't over 'til the fat lady sings. We may take some inspiration from the "heavy lady" who sings the concluding aria in Wagner's "the Ring Cycle" opera. She is often illustrated with a horned helmet, a spear, possibly a shield and often blond braids. Maybe such outfit would, figuratively speaking, protect us from prematurely assuming an outcome well before the story is actually finished. If none of the parties will appeal Judge Rose's final judgment, this opera may now well be over. We should be prepared, however, for still another final last song.