Smith v. Anonymous Joint Enter., Docket Nos. 138456, 138457, 138458.

• Citation: 793 N.W.2d 533,487 Mich. 102
• Decision Date: 14 September 2010
• Docket Number: Calendar No. 5.,Docket Nos. 138456, 138457, 138458.
• Parties: Derith SMITH, Plaintiff-Appellant, v. ANONYMOUS JOINT ENTERPRISE, George Preston, Mary Barrows, Village of Suttons Bay, and Charles Stewart, Defendants, and Donald Barrows, John Stanek, and Noel Flohe, Defendants-Appellees.
• Court: Supreme Court of Michigan

487 Mich. 102
793 N.W.2d 533

Derith SMITH, Plaintiff-Appellant,
v.
ANONYMOUS JOINT ENTERPRISE, George Preston, Mary Barrows, Village of Suttons Bay, and Charles Stewart, Defendants,
and
Donald Barrows, John Stanek, and Noel Flohe, Defendants-Appellees.

Docket Nos. 138456, 138457, 138458.
Calendar No. 5.

Supreme Court of Michigan.

Argued March 9, 2010.
Decided July 30, 2010.
Order Denying Rehearing Sept. 14, 2010.

793 N.W.2d 536

Mark Granzotto, P.C. (by Mark Granzotto), Royal Oak, and Parsons Ringsmuth PLC (by Grant W. Parsons), Traverse City, for Derith Smith.

Garan Lucow Miller, P.C. (by Rosalind Rochkind, Detroit, and Michael J. Swogger, Traverse City), for Donald Barrows.

Collins, Einhorn, Farrell & Ulanoff, P.C. (by Deborah A. Hebert), Southfield, for John Stanek.

Noel Flohe, in propria persona.

Butzel Long (by James E. Stewart, Leonard M. Niehoff, Ann Arbor, and Mary M. Mullin) for Amici Curiae the Detroit News, AnnArbor.com, the Bay City Times, the Flint Journal, the Grand Rapids Press, the Jackson Citizen Patriot, the Kalamazoo Gazette, the Muskegon Chronicle, the Saginaw News, and Scripps Media, Inc.

Opinion

WEAVER, J.

487 Mich. 106

In this case, we decide whether plaintiff, Derith Smith, presented clear and convincing evidence at trial to support the jury's finding that defendants John Stanek, Donald Barrows, and Noel Flohe defamed plaintiff by mass-mailing copies of a personnel report containing false information about her. After conducting an independent review of the record, we conclude there exists clear and convincing evidence that Stanek and Barrows acted with "actual malice," but that plaintiff has failed to meet her evidentiary burden as to Flohe.

Accordingly, we affirm the result reached by the Court of Appeals as to Flohe, but reverse the result it reached as to Stanek and Barrows. We remand this matter to the Court of Appeals for consideration of defendants' other issues, including whether the handwritten caption on the mailed report constitutes a non-defamatory statement of opinion when considered in its context within the report as a whole, whether the caption is provable as false, and whether defendants are entitled to the protection afforded by Michigan's statutory fair reporting privilege.

I. FACTS AND PROCEDURAL BACKGROUND

This defamation action arises from the mass mailing of a personnel report written about plaintiff, Derith Smith. Plaintiff worked for the village of Suttons Bay ("the Village") in Leelanau County. Plaintiff's supervisor, Suttons Bay Village Manager Charles Stewart, composed the personnel report ("the Stewart report"), which includes allegations that plaintiff was an independent contractor but had been compensating

793 N.W.2d 537

herself as an employee. The Stewart report also

487 Mich. 107

includes allegations that plaintiff had never been issued a W-2 form, received benefits to which she was not entitled, paid herself at a higher rate than the rate for which she was approved, and was not a "team player." Stewart presented his report to the Village Personnel Committee, and the Committee voted to terminate plaintiff's employment.

Plaintiff filed a claim for unemployment compensation benefits. The Village opposed plaintiff's claim, arguing that plaintiff was not an employee but rather an independent contractor and, therefore, not entitled to benefits. A subsequent investigation and review revealed that various allegations against plaintiff in the report were false. Accordingly, the Village withdrew its opposition to plaintiff's claim.

Plaintiff believed that she was wrongfully terminated, but did not institute a lawsuit against the Village because she had secured employment as the Elmwood Township supervisor in the November 2004 election. On May 17, 2005, while serving as Elmwood Township Supervisor, plaintiff received an anonymous mailing. The mailing included a copy of the Stewart report, with an additional handwritten caption stating, " Attention: Suttons Bay Villagers Alledged [sic] Misuse of Village Taxpayer Funds?" and "Derrick [sic] Smith." Plaintiff later learned that copies of the Stewart report, including the caption, had been mailed to hundreds of citizens in Leelanau County.

At the time of the mass mailing, defendants Stanek, Barrows, and Flohe were involved in an informal group of concerned Leelanau County citizens. The group met fairly regularly to discuss various issues, including local

487 Mich. 108

politics and elections. It is undisputed that Stanek, Barrows, and Flohe were displeased with plaintiff's performance as township supervisor and were responsible for the mass mailing of the Stewart report.¹

The record establishes that Barrows contacted Suttons Bay Village Treasurer Jerry VanHuystee on several occasions in 2004, asking whether VanHuystee had any information about plaintiff. VanHuystee testified that he told Barrows that he did not know of anything illegal done by plaintiff. After several requests for information from Barrows, VanHuystee retrieved the Stewart report from the Village's records and made a copy of it.² VanHuystee put the copy of the Stewart report in an envelope and marked it with Barrows' name. VanHuystee then dropped off the envelope at his sister-in-law's home, where Barrows was to pick it up. The copy of the Stewart report contained no handwritten caption at this time.

Barrows testified that he picked up the envelope containing the Stewart report and brought a copy of the report to a citizens' meeting held at Stanek's office during the first week of May 2005. Stanek, Barrows, and Flohe were all present at this meeting, although the trial testimony indicated that Flohe arrived late. At this particular meeting, copies of the Stewart

793 N.W.2d 538

report were available for attendees to view, and there was discussion

487 Mich. 109

regarding whether the Stewart report should be mailed to other citizens. The trial testimony establishes that some attendees favored mailing the report, while others did not. George Preston was also present at this meeting, and he testified that he had expressed hesitation about mailing the Stewart report. Preston told the other attendees at the meeting that he would contact Stewart to verify the report's accuracy.

Preston and Stewart testified that Preston had contacted Stewart and informed him of the concerned citizens' intent to mail the Stewart report. Stewart confirmed with Preston that plaintiff had done nothing illegal and that the report should not be distributed. Preston and Stanek both testified that Preston relayed this information to Stanek; however, the trial testimony is somewhat conflicting with regard to exactly when he did so.

Barrows testified that he nonetheless took a copy of the Stewart report to a copy shop and paid to have approximately 500 copies made. Approximately 420 of those copies were placed into envelopes and sealed by the store's staff. The envelopes were placed in boxes along with the remaining 80 copies of the Stewart report. Barrows testified that on May 16, 2005, he took the boxes to Stanek's office where he, Stanek, and Flohe worked together to stamp and label the stuffed envelopes. The envelopes were then taken to the post office and mailed to citizens in Leelanau County. Citizens within the county began receiving the mailings by May 17, 2005, while the remaining copies of the Stewart report were displayed at citizen and township meetings.

Plaintiff subsequently brought a defamation claim against Stanek, Barrows, and Flohe.³ Defendants

487 Mich. 110

moved for summary disposition, arguing that their actions were covered by the fair reporting privilege, MCL 600.2911(3).⁴ The trial court denied summary disposition, ruling that plaintiff had alleged sufficient evidence, which, if believed by a jury, would show that defendants mailed the Stewart report with actual knowledge that it was false or with reckless disregard for the truth of the report.⁵ The trial court additionally concluded that "if a jury finds that the publication was false and not made in good faith and with an honest belief that

793 N.W.2d 539

the report was true, the qualified privilege is defeated and damages may be awarded."

A jury trial was held, and a verdict was reached in favor of plaintiff. The jury awarded plaintiff monetary damages and a public apology in the form of a legal notice. The Court of Appeals reversed and remanded for entry of a judgment of no cause of action, concluding

487 Mich. 111

that defamation could not be established as a matter of law because defendants' failure to investigate the contents of the report did not constitute the "reckless disregard" required for a finding of actual malice,⁶ and defendants could not be held liable for relying on a report that they did not prepare.⁷ The Court of Appeals noted that Stewart prepared the report, and it contained his "erroneous view of the status of plaintiff's employment." ⁸ With respect to the handwritten caption added to the report, the Court of Appeals concluded that it was merely an expression of opinion.⁹

This Court granted plaintiff's application for leave to appeal to address whether the Court of Appeals erred in determining that plaintiff did not present sufficient evidence to support a finding of actual malice.¹⁰

II. STANDARD OF REVIEW

The inquiry into whether evidence in a defamation case is sufficient to support a finding of actual malice presents a question of law. ¹¹ To determine whether the constitutional standard for defamation of a public figure ¹² has been satisfied, a reviewing court must consider

487 Mich. 112

the factual record in full.¹³ The reason for this "independent review" of the record is "[o]ur profound national commitment to the free exchange of ideas, as enshrined in the First Amendment...." ¹⁴ Therefore, we must analyze the alleged defamatory statements at issue and their surrounding circumstances to determine whether those statements are protected under the First Amendment.¹⁵

The importance of protecting First Amendment...