Cody v. Harris

Decision Date31 May 2005
Docket NumberNo. 04-2671.,04-2671.
Citation409 F.3d 853
PartiesMark CODY, Plaintiff-Appellant, v. Taft HARRIS and Dontron, Inc., Defendants-Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

Eugene K. Hollander (argued), Chicago, IL, for Plaintiff-Appellant.

Jeffrey Piell (argued), Mayer, Brown, Rowe & Maw, Chicago, IL, for Defendants-Appellees.

Before RIPPLE, MANION, and KANNE, Circuit Judges.

KANNE, Circuit Judge.

Someone played a dirty cyber-trick on WPWX-FM by posting offensive content on WPWX.com. Mark Cody, who had worked at the station for six months but was terminated right before the offensive posting, was accused of the misdeed by his former boss. Cody, who in fact had nothing to do with the prank, sued his former employer for defamation and interference with contractual relations. Of the nine counts in his complaint, the district court dismissed five and granted summary judgment for the defendants on the remaining four. For the reasons stated herein, we affirm.

I. History

We summarize the facts as pled by Cody. WPWX-FM is an urban-contemporary radio station owned and operated by Dontron, Inc., and broadcast from Crawford Studios in Hammond, Indiana. Cody started working as the station's general sales manager, under general manager Taft Harris, on March 26, 2001. His major responsibilities included hiring and managing the station's sales staff, setting a sales budget, and attaining the sales budget. On October 4, 2001, while he was on paternity leave, Cody received a facsimile informing him that he had been fired by WPWX. The station cited Cody's failure to hire the sales team he had promised and failure to achieve the required sales budget as the reasons for termination.

While acting as general sales manager, Cody thought it would be wise for the station to establish a presence on the internet. He recommended to Harris and other management personnel that the station reserve "WPWX.com" as a domain name, but, in early June 2001, Cody found out that a William Slembarski already owned that domain name. After receiving authorization from management, Cody tried to work out a deal to purchase the domain name from Slembarski. The negotiations were ongoing when Cody was terminated and the purchase was never completed.

At some point after Cody's termination, offensive content including some pornographic images appeared on WPWX.com. Harris viewed the website after a January 2002 sales meeting and said, "This has got to be Mark Cody. I know Mark did this. I know he is responsible for this." Later, at another sales meeting, Harris commented to the sales staff that there was evidence pointing to Cody's involvement in posting the offensive content. Harris also told other WPWX executives that Cody was behind the situation.

Inside Radio, an independent radio industry publication, published two articles having to do with Cody and WPWX. The first, dated October 8, 2001, discussed Cody's termination. The second, published on January 11, 2002, discussed the website incident. It quoted Harris as speculating that "[i]t's got to be a competitor or one particular ex-employee," and went on to describe the website and state that Crawford Broadcasting planned to take legal action against the perpetrator. Harris claims that he never made the statements attributed to him in this article. While he admits to speaking with reporter Jerry Del Colliano, Harris claims that he told Del Colliano he had "no idea" who was responsible for the website, even when specifically asked whether he thought Cody was the culprit.

After some difficulty in finding a new job, Cody accepted a position as independent contractor for WVON-AM in November 2001. In that role, he accompanied WVON's general sales manager, Dan Johnson, to Crawford Studios. Cody alleges that a Crawford Studios employee then placed a call to WVON indicating that Johnson was banned from Crawford Studios because of his relationship with Cody. Cody claims that, as a result of this call, his independent contractor relationship with WVON "disintegrated" in January 2002.

In March 2002, Cody entered into an agreement with Central City Productions, Inc. ("CCP"), which also had a business relationship with Crawford Studios. Cody alleges that, in July 2002, CCP refused to pay Cody per their agreement because of pressure exerted by Crawford Studios. He claims that Harris directed Crawford Studios not to deal with CCP because of its relationship with Cody, and that Harris told CCP's chief executive officer that Cody misrepresented CCP's capabilities to prospective business partners.

Cody initially brought suit against Harris and Dontron in the Circuit Court of Cook County, Illinois, in December 2002. The defendants properly removed the case to federal court based on diversity jurisdiction. See 28 U.S.C. § 1332; 28 U.S.C. § 1441. Cody's nine-count third amended complaint, filed on August 6, 2003, alleged: (1) that Harris's statements about Cody at staff meetings (indicating his involvement in the offensive website postings) constituted defamation per se; (2) that Harris's statements to Inside Radio constituted defamation per quod and defamation per se; (3) that Harris and Dontron intentionally interfered in Cody's contract with CCP; and (4) that Dontron intentionally interfered in Cody's contract with WVON.

The district court granted the defendants' motion to dismiss the five counts related to Harris's statements in staff meetings and contract interference. After discovery, the court granted summary judgment for the defendants on the counts regarding Harris's statements to Inside Radio. Cody appeals both rulings.

II. Analysis

The parties agree that Illinois law applies to each of Cody's substantive claims. For the reasons stated below, we do not believe that Harris's comments to WPWX staff members constituted defamation per se under Illinois law. Cody has also failed to state a claim for interference with contractual relations. Finally, because the district court did not abuse its discretion in ruling that the Inside Radio articles were inadmissible hearsay, summary judgment for Harris and Dontron was proper on the defamation counts related to those articles.

A. Counts I and II: Harris's Statements in Staff Meetings

Count I of Cody's complaint alleges that Harris's comments at WPWX staff meetings, accusing Cody of posting the offensive material on WPWX.com, constituted defamation per se. Count II seeks damages from Dontron for the same statements under the theory of respondeat superior.

Both counts were dismissed by the district court for failing to state a claim under Federal Rule of Civil Procedure 12(b)(6). We review a motion to dismiss de novo. Horwitz v. Bd. of Educ. of Avoca Sch Dist. No. 37, 260 F.3d 602, 618 (7th Cir.2001). In so doing, we must take all well-pled facts in the complaint as true and draw all reasonable inferences in favor of Cody. See id. The complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

Under Illinois law, a statement is defamatory if it harms the reputation of another, lowering him in the eyes of the community, or if it discourages others from associating with him. Bryson v. News Am. Publ'ns, Inc., 174 Ill.2d 77, 220 Ill.Dec. 195, 672 N.E.2d 1207, 1214 (1996). Some statements are considered defamatory per se because they are so obviously and materially harmful to a plaintiff that his injury may be presumed and he does not need to prove actual damages to recover. See id. There are five such categories of statements in Illinois: (1) those imputing the commission of a criminal offense; (2) those imputing infection with a loathsome communicable disease; (3) those imputing an inability to perform or want of integrity in the discharge of duties of office or employment; (4) those imputing a lack of ability, or that prejudice a party in his trade, profession, or business; and (5) those imputing adultery or fornication. Id. at 1214-15.

On appeal, Cody argues that Harris's statements in staff meetings accusing Cody of posting pornography on WPWX. com qualify as defamation per se under the first, third, and fourth categories. In the district court, however, he made arguments based only on the third and fourth categories. An argument raised for the first time on appeal is waived, so we need not discuss whether Harris's statements impute the commission of a crime. See Maciosek v. Blue Cross & Blue Shield United of Wis., 930 F.2d 536, 540 n. 2 (7th Cir.1991).

Whether Harris's statements fall into the third or fourth categories of defamation per se is the question we must answer. We begin by reviewing exactly what the statements were: "This has got to be Mark Cody. I know Mark did this. I know he is responsible for this." Basically, Harris was saying to WPWX staff that Cody, an ex-employee, was retaliating against the station by posting offensive or obscene content on the website bearing the station's call letters in its domain name. He was not disparaging Cody's ability to manage a sales force. A careful study of Illinois caselaw shows that this is not defamation per se.

Statements that have been deemed defamatory per se by Illinois courts under the third and/or fourth categories have always been related to job performance; to succeed, the plaintiff must have been accused of lacking ability in his trade or doing something bad in the course of carrying out his job. See Clarage v. Kuzma, 342 Ill.App.3d 573, 276 Ill.Dec. 995, 795 N.E.2d 348, 356 (2003); Parker v. House O'Lite Corp., 324 Ill.App.3d 1014, 258 Ill.Dec. 304, 756 N.E.2d 286, 296 (2001). For example, in Parker, the plaintiff, whose job was drafting lighting specifications for a new hospital, was accused of rigging the specifications so that only his brothe...

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