Action Repair, Inc. v. American Broadcasting Companies, Inc.

• Decision Date: 29 October 1985
• Docket Number: WLS-T,No. 84-2929,D,84-2929
• Parties: , 12 Media L. Rep. 1398 ACTION REPAIR, INC., Plaintiff-Appellant, v. AMERICAN BROADCASTING COMPANIES, INC., d/b/aefendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 143

776 F.2d 143

3 Fed.R.Serv.3d 1399, 12 Media L. Rep. 1398

ACTION REPAIR, INC., Plaintiff-Appellant, v. AMERICAN BROADCASTING COMPANIES, INC., d/b/a WLS-TV Defendant-Appellee.

No. 84-2929.

United States Court of Appeals Seventh Circuit.

Argued May 28, 1985.

Decided Oct. 28, 1985.

As Corrected Oct. 29, 1985.

Richard D. Harris, Dick & Harris, Chicago, Ill., for plaintiff-appellant.

Linda L. Listrom, Jenner & Block, Chicago, Ill., for defendant-appellee.

Before CUMMINGS, Chief Judge, FLAUM, Circuit Judge, and CAMPBELL, Senior District Judge. ^*

WILLIAM J. CAMPBELL, Senior District Judge.

This is an appeal of a Civil Rule 12(b)(6) dismissal of a defamation action. The facts are relatively simple. Plaintiff, Action Repair, Inc. (Action Repair), repairs appliances. On September 16, 1983, WLS-TV (WLS), a Chicago-based affiliate of defendant American Broadcasting Companies, Inc., broadcast a consumer report on appliance repair companies which criticized Action Repair. Action Repair claims statements in the broadcast were false and defamatory. On January 12, 1984 Action Repair filed a complaint in the United States District Court for the Northern District of Illinois citing diversity jurisdiction pursuant to 28 U.S.C. 1332(a) and (c). The complaint contained two counts. One count alleged violation of the Illinois Consumer Fraud Act (Ill.Rev.Stat., ch. 121 1/2 Sec. 262, et seq.) and the Illinois Deceptive Trade Practices Act (Ill.Rev.Stat., ch. 121 1/2 Sec. 311, et seq.). This count was dismissed voluntarily by Action Repair. The remaining and sole count we are concerned with on this appeal alleges per se defamation of Action Repair's business, claiming the WLS-TV broadcast falsely accused Action Repair of negligently repairing refrigeration equipment, overcharging customers, failing to respond to customer calls and defrauding customers through its advertising. District Judge Susan Getzendanner dismissed this count at the Rule 12(b)(6) stage for two reasons: first, because even considered as a per quod defamation count it failed to plead special damages adequately; and secondly, because the natural and obvious meaning of the allegedly libelous statements were reasonably capable of an innocent interpretation, the statements did not constitute libel per se. Action Repair appeals the Rule 12(b)(6) dismissal. For the reasons set forth below, we reverse.

The current Illinois standard employed in examining statements alleged to be defamatory is set forth in Chapski v. Copley, 92 Ill.2d 344, 65 Ill.Dec. 884, 442 N.E.2d 195 (1982):

"We therefore hold that a written or oral statement is to be considered in context, with the words and the implications therefrom given their natural and obvious meaning; if, as so construed, the statement may reasonably be innocently interpreted or reasonably be interpreted as referring to someone other than the plaintiff it cannot be actionable per se. This preliminary determination is properly a question of law to be resolved by the court in the first instance; whether the publication was in fact understood to be defamatory or to refer to the plaintiff is a question for the jury should the initial determination be resolved in favor of the plaintiff." Id. 65 Ill.Dec. at 888, 442 N.E.2d at 199. [Emphasis supplied.]

The current rule is known as the "reasonable innocent construction rule." It should be differentiated from the old "innocent construction rule." The old rule required:

"... that words allegedly libelous that are capable of being read innocently must be so read and declared nonactionable as a matter of law." See John v. Tribune Co., 24 Ill.2d 437, 181 N.E.2d 105, 108 (1962) [Emphasis supplied.]

The old innocent-construction rule was favored because its stiff requirement in order to find a statement libelous was deemed to protect free speech, free press and "the robust discussion of daily affairs." See Dauw v. Field Enterprises, Inc., 78 Ill.App.3d 67, 33 Ill.Dec. 708, 711, 397 N.E.2d 41, 44 (1979). However, over time the old rule created harsh and often unjust results. The Chapski court lamented about the old rule that:

"... [c]ourts generally strain to find unnatural but possibly innocent meanings of words where such a construction is clearly unreasonable and a defamatory meaning is far more probable." Chapski, supra, 65 Ill.Dec. at 887, 442 N.E.2d at 198.

A preliminary determination of whether the statements are actionable is a question of law. See Chapski, 92 Ill.2d at 350, 65 Ill.Dec. 884, 442 N.E.2d 195; American Int'l Hosp. v. Chicago Tribune Co., 120 Ill.App.3d 435, 441, 76 Ill.Dec. 505, 458 N.E.2d 1305 (1983). Today's legal standard under Chapski requires a statement be analyzed with the words and implications given their natural and obvious meaning in as much of a current day context as possible. Implicit in the Chapski test is a balancing of the publisher's right to publish and be protected by First Amendment guarantees versus an individual's or business's right to vindicate their good name and reputation. See Chapski, 92 Ill.2d at 351-352, 65 Ill.Dec 884, 442 N.E.2d 195; American Int'l Hosp. v. Chicago Tribune Co., 120 Ill.App.3d 435, 442, 76 Ill.Dec. 505, 458 N.E.2d 1305 (1983).

For words to be considered libelous per se in situations found in the case sub judice, they must discredit the people in the business by "... imput[ing] ... inability to perform or want of integrity in the discharge of duties of office or employment ... prejudic[ing] a person in his profession or trade." [Emphasis supplied.] See Brown & Williamson Tobacco Corp. v. Jackson, 713 F.2d 262, 268 (7th Cir.1983); American Pet Motels' Inc. v. Chicago Veterinary Medical Association, 106 Ill.App.3d 626, 62 Ill.Dec. 325, 435 N.E.2d 1297, 1300 (1982). Of course, "... a defense of fair comment must be afforded for honest expression of opinion based upon privileged, as well as true, statements of fact." See New York Times Co. v. Sullivan, 376 U.S. 254, 292 n. 30, 84 S.Ct. 710, 732 n. 30, 11 L.Ed.2d 686.

Finally, this case necessarily addresses the issue of when it is appropriate to grant a Rule 12(b)(6) motion to dismiss in libel cases. The standard to be employed here comes from the landmark case of Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), in which it was said, "In appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Id. at 45-46, 78 S.Ct. at 101-102. The district court properly commented that all pleaded facts are to be accepted as true.

Having reviewed the legal criteria surrounding this case we move to an analysis of the statements alleged as defamatory. A few of the statements broadcast by WLS are true and thus not defamatory and can be dismissed summarily. See Sivulich v. Howard Publications, Inc., 126 Ill.App.3d 129, 132, 81 Ill.Dec. 416, 466 N.E.2d 1218 (1984) (statement that plaintiff was charged with battery true when civil battery suit was filed); Antonelli v. Field Enterprises, Inc., 115 Ill.App.3d 432, 435, 71 Ill.Dec. 188, 450 N.E.2d 876 (1983) (statements that plaintiff was "mobster" true when plaintiff had been convicted of numerous crimes). Specifically, the statements that Action Repair was unwilling to talk to the media and that it canceled interviews with the media twice are not defamatory. They are true facts. It appears Action Repair voluntarily decided not to be interviewed for whatever reason. Nothing in the record suggests Action Repair was denied an opportunity to be interviewed by WLS. This fact may be reported. Likewise, the reporter's statement that it would take him ten days to get his refrigerator fixed and that Action Repair's "Yellow Pages" advertisement is the largest ad in the book are more apparent truisms which are reportable. If Action Repair does not like the negative connotation behind the ten-day wait for repairs, then let it as a business do something about it. Action Repair has no right to a favorable review in this instance. If reporting a ten-day wait for service is bad for business, Action Repair must fix the problem, not claim that such a fact has no right to be reported. Further, if the reporting of the large ad in the Yellow Pages did not mix well with the ten-day wait, so be it. The answer is for Action Repair to pay more for personnel--or pay less for the ad. Finally, the reporter's statement that Action Repair "has our money and has shut us out" refers to the fact that Action Repair refused to talk with WLS despite WLS's desire to inquire into the repair services of the company. We see nothing potentially defamatory here.

There are other statements from the broadcast which can be dismissed as honest expressions of opinion. Expressions of opinion are protected by the First Amendment, Gertz v. Robert Welch, Inc., 418 U.S. 323, 339-340, 94 S.Ct. 2997, 3006, 3007, 41 L.Ed.2d 789 and thus are not actionable. Statements of opinion may also fall under the Illinois common law privilege of fair comment and criticism. This doctrine protects opinions in the public interest that fairly depict the acts of an individual. Farnsworth v. Tribune Co., 43 Ill.2d 286, 253 N.E.2d 408 (1969). The WLS reporter's statement that individuals should heed the caution "Buyer Beware" when considering dealing with Action Repair constitutes honest opinion. To rule otherwise would be to rule reporters are not allowed to comment even in the most elementary manner. Additionally, the statement that many people are choosing the wrong repair company when choosing Action Repair is also opinion. It may be unfavorable opinion but it is opinion protected by the First Amendment. Reporters must be given some breathing space and be allowed to reach personal conclusions. Further, Action Repair claims WLS withheld...