J & J CONSTRUCTION CO. v. Bricklayers & Allied Craftsmen, Docket No. 119357, Calendar No. 4.

• Court: Supreme Court of Michigan
• Writing for the Court: YOUNG, J.
• Citation: 664 N.W.2d 728,468 Mich. 722
• Parties: J & J CONSTRUCTION CO., Plaintiff-Appellant, v. BRICKLAYERS AND ALLIED CRAFTSMEN, LOCAL 1 and Mark King, jointly and severally, Defendants-Appellees.
• Docket Number: Docket No. 119357, Calendar No. 4.
• Decision Date: 09 July 2003

664 N.W.2d 728
468 Mich. 722

J & J CONSTRUCTION CO., Plaintiff-Appellant,
v.
BRICKLAYERS AND ALLIED CRAFTSMEN, LOCAL 1 and Mark King, jointly and severally, Defendants-Appellees

Docket No. 119357, Calendar No. 4.

Supreme Court of Michigan.

Argued November 21, 2002.

Decided July 9, 2003.

664 N.W.2d 729

Brady, Hathaway, Brady & Bretz, P.C. (by Daniel J. Bretz and David A.

664 N.W.2d 730

Hardesty), Detroit, MI, for the plaintiff-appellant

Sachs Waldman, P.C. (by Mary Ellen Gurewitz and Marshall J. Widick), Detroit, MI, for the defendants-appellees.

Michael J. Steinberg and Kary L. Moss, Detroit, MI, for the American Civil Liberties Union Fund of Michigan.

Opinion

YOUNG, J.

Plaintiff appeals the judgment of the Court of Appeals regarding several issues involving the Petition Clause of the First Amendment. We reverse that judgment and reinstate the judgment of the trial court.

I. Facts and Procedural History

Plaintiff, a construction company, submitted a bid to perform a masonry contract for the city of Wayne. Plaintiff was the low bidder for the contract. Pursuant to the Wayne City Charter, the city council was obligated to award the contract to the lowest qualified bidder unless it determined that the public interest would be better served by accepting a higher bid. Wayne City Charter, § 13.1(d).¹

Defendant Mark King,² a Bricklayers & Allied Craftsmen Union field representative with fifteen years experience as a mason, discovered that plaintiff, a nonunion employer, was the low bidder for the masonry contract. He thereafter set out to dissuade the city council from awarding the contract to plaintiff. In this effort, defendant presented privately to the city manager, and to the city council in public session, deceptive photographs of plaintiff's masonry work that suggested plaintiff's workmanship was of poor quality. He also represented that plaintiff might not be able to perform the contract in a timely manner. After plaintiff attempted to respond to these allegations during the public meeting of the council, defendant made reference to the fact that plaintiff was a nonunion contractor that did not pay the prevailing wage to its employees.

Because of its concerns regarding the allegations defendant made against plaintiff, the city council referred plaintiff's bid to the city administration for further review. Following that review, the city council awarded the masonry contract to the second lowest bidder, stating in its resolution that "the Council had concerns as to the low bidder because of claims made about faulty workmanship and because of concerns about noncompliance with the payment of prevailing wages and fringe benefits...."

Having lost the contract bid, plaintiff filed a complaint against defendant for defamation and tortious interference with business expectations. Applying an ordinary negligence standard, the trial court found that defendant's statements regarding the quality of plaintiff's workmanship and plaintiff's prospective ability to complete the job on time were false and defamatory, but that plaintiff failed to meet its burden of proving that defendant's prevailing wage statements were false. Regarding the defamation claim, the trial court rejected defendant's argument that a qualified privilege existed because the

664 N.W.2d 731

statements were made while petitioning the government, reasoning that the qualified privilege "actual malice" standard was inapplicable because plaintiff was a private, not a public, figure. Having found defendant's statements regarding plaintiff's workmanship and prospective ability to timely complete the project to be false, defamatory, and unprivileged, the trial court held defendant liable for defamation under M.C.L. § 600.2911(7).³

In addition, the trial court concluded that the defamation formed the foundation for tortious interference with business expectations. The court declined to protect defendant from liability from this claim on the basis of the principles of the Noerr-Pennington doctrine,⁴ which protect petitioning activity from antitrust violations when the petition concerns legislative or regulatory issues. The court concluded that defendant's statements were not made in an attempt to urge legislative or regulatory policy decisions. In essence, the trial court applied what the Court of Appeals and the parties have termed a "market participant" exception to the Noerr-Pennington doctrine.⁵

The trial court awarded plaintiff damages of $57,888, the loss of expected profits under the contract for both the claim of defamation and the claim of tortious interference with business expectations. Attorney fees of $104,286.95 and interest of $26,044.51 were also awarded to plaintiff.

Defendant appealed, and the Court of Appeals affirmed in part,⁶ reversed in part, and remanded for further proceedings. The Court of Appeals concluded that where petitioning activity is involved, the "actual malice" standard for defamation claims established in New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), applies regardless whether plaintiff is a private or public figure. Because the trial court only issued a finding that defendant's defamatory statements were negligent, the Court of Appeals remanded the case to the trial court for a determination whether defendant's conduct constituted "actual malice."

664 N.W.2d 732

Regarding the claim of tortious interference with business expectations, the Court of Appeals held that "`the Noerr-Pennington doctrine is a principle of constitutional law that bars litigation arising from injuries received as a consequence of First Amendment petitioning activity, regardless of the underlying cause of action asserted by the plaintiffs.'" 245 Mich.App at 730, 631 N.W.2d 42, quoting Azzar v. Primebank, FSB, 198 Mich.App. 512, 517, 499 N.W.2d 793 (1993). Relying on Azzar, the Court of Appeals concluded that defamation is actionable on the basis of petition activity only where the petitioning was actually a "sham." Further, the panel reversed the trial court's application of the "market participant" exception to the Noerr-Pennington doctrine, writing that "[i]t is not obvious why different rights, duties, or immunities should apply when one is lobbying for political action in the form of outright commercial patronage, as opposed to legislation or enforcement actions." 245 Mich.App. at 736, 631 N.W.2d 42

We granted leave to appeal. 466 Mich. 859, 643 N.W.2d 578 (2002).

II. Standard of Review

Plaintiff's appeal raises three issues of federal constitutional law⁷ regarding the Petition Clause: first, whether a private-figure plaintiff must prove "actual malice" in a defamation claim against a defendant whose contested statements were made while petitioning the government; second, considering the Noerr-Pennington doctrine, whether a cause of action exists for tortious interference with business expectations as the result of statements made by a defendant while petitioning the government; and third, whether there exists a "market participant" exception to the Noerr-Pennington doctrine.

The protections provided by the First Amendment, including the Petition Clause, have been extended to the states by the Fourteenth Amendment. Whitehill v. Elkins, 389 U.S. 54, 57, 88 S.Ct. 184, 19 L.Ed.2d 228 (1967). We review de novo issues of constitutional law. McDougall v. Schanz, 461 Mich. 15, 24, 597 N.W.2d 148 (1999).

III. Discussion

A. Defamation

The first issue presented is whether the private-figure and public-figure dichotomy embodied in defamation case law on freedom of speech and freedom of the press from the United States Supreme Court extends to defamation involving the right to petition. The United States Supreme Court has never been squarely presented with, or decided, this question.⁸

664 N.W.2d 733

However, we are guided by the general Petition Clause defamation concepts announced in McDonald v. Smith, 472 U.S. 479, 105 S.Ct. 2787, 86 L.Ed.2d 384 (1985). In rejecting an argument that absolute immunity attaches to the right to petition, the McDonald Court wrote

To accept petitioner's claim of absolute immunity would elevate the Petition Clause to special First Amendment status. The Petition Clause, however, was inspired by the same ideals of liberty and democracy that gave us the freedoms to speak, publish, and assemble. These First Amendment rights are inseparable and there is no sound basis for granting greater constitutional protection to statements made in a petition to the President than other First Amendment expressions. [ McDonald, supra at 485, 105 S.Ct. 2787 (internal citations omitted; emphasis added).]

By this reasoning, at least regarding the constitutional law of defamation immunity, the Court has made clear that it considers the Petition Clause as offering no greater protection than that of the Free Speech Clause and the Free Press Clause. In so concluding, we believe the Court has strongly signaled its view that all the Free Speech Clause and Free Press Clause defamation doctrine developed in the past forty years is to be imported without change to constitutional adjudications arising under the Petition Clause.⁹ Accordingly, an analysis of relevant United States Supreme Court case law on free speech and free press defamation is essential. Production Steel Strip Corp. v. Detroit, 390 Mich. 508, 514, 213 N.W.2d 419 (1973).

Under long-settled constitutional principles concerning the First Amendment rights of freedom of speech and freedom of the press, a public-figure plaintiff must establish that a defendant made defamatory statements with "actual malice" in order to prevail in a defamation action. New York Times, supra (establishing the "actual malice" standard for liability for defamation of public officials); Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967) (extending the "actual malice" standard to public figures). "Actual malice"...