AIDS Counseling and Testing Centers v. Group W Television, Inc.

• Decision Date: 13 June 1990
• Docket Number: No. 89-1492,89-1492
• Citation: 903 F.2d 1000
• Parties: , 17 Media L. Rep. 1893 AIDS COUNSELING AND TESTING CENTERS; John B. Kotmair, Jr.; Andrea Boucher Stringer; David B. Baker; Alva Sayrs Baker, III; Edward L. Kotmair; John B. Kotmair, III; Dorothy M. Dunty; Nathan Fenby; Carol R. Baker; Barbara A. Fillmann; Ronald Stringer, Plaintiffs-Appellants, and Shirley Ann Purkey, Plaintiff, v. GROUP W TELEVISION, INCORPORATED; Stuart Caplan, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1000

903 F.2d 1000

16 Fed.R.Serv.3d 1233, 17 Media L. Rep. 1893

AIDS COUNSELING AND TESTING CENTERS; John B. Kotmair, Jr. Andrea Boucher Stringer; David B. Baker; Alva Sayrs Baker III; Edward L. Kotmair; John B. Kotmair, III; Dorothy M Dunty; Nathan Fenby; Carol R. Baker; Barbara A. Fillmann Ronald Stringer, Plaintiffs-Appellants, and Shirley Ann Purkey, Plaintiff, v. GROUP W TELEVISION, INCORPORATED; Stuart Caplan, Defendants-Appellees.

No. 89-1492.

United States Court of Appeals, Fourth Circuit.

Argued Jan. 9, 1990.

Decided May 22, 1990.

As Amended June 13, 1990.

Mark Lane, Washington, D.C., for plaintiffs-appellants.

Edward Leon Wolf, Arnold & Porter, Washington, D.C., Douglas D. Connah, Jr., Venable, Baetjer & Howard, Baltimore, Md., for defendants-appellees.

Andrew J. Groszer, Jr., Cockeysville, Md., on brief, for plaintiffs-appellants.

Hadrian R. Katz, M. Isabel Medina, Arnold & Porter, Washington, D.C., Kathleen O. Gavin, Venable, Baetjer & Howard, on brief, Baltimore, Md., for defendants-appellees.

Before SPROUSE and CHAPMAN, Circuit Judges, and HOFFMAN, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.

CHAPMAN, Circuit Judge:

This appeal arises out of a suit for defamation and false-light invasion of privacy. In this court, the appellants-plaintiffs contest a number of the district court's rulings that led the court to hold that it had jurisdiction over the matter and to dismiss most of the claims in the complaint. We hold that the appellants have failed to demonstrate that the district court erred in any respect and we therefore affirm the judgment.

I.

Plaintiff AIDS Counseling & Testing Centers (ACT) was an unincorporated business venture organized in Maryland for the purpose of providing AIDS testing to the public as a profit-making enterprise. The individual plaintiffs, ACT's investors, attempted to advertise their business as a faster, easier alternative to the free AIDS testing provided by public agencies in Maryland. The investors touted their business as providing complete confidentiality, as returning test results faster than the public agencies, and as giving customers a written copy of their test results rather than the oral report provided at many other testing centers. One aspect of ACT's operation that proved particularly controversial was its practice of offering an ID card documenting that the bearer had tested negative for AIDS infection.

In order to bring its services to the attention of prospective clients, ACT undertook an aggressive publicity campaign. It distributed over 10,000 flyers in and around Baltimore. It sent information to dating services around the area and actively sought references from these services. It placed advertisements in supermarkets and in several of the local commercial and campus newspapers and it sent press releases to various of the broadcast media in the Baltimore area.

In a turn of events reminiscent of the tale of King Midas, the appellants succeeded in generating far more publicity for their enterprise than they wished. Their publicity activities drew substantial public attention to the operation of the business, but, unfortunately for ACT and its investors, much of the more widespread publicity was not of the positive tenor that they had hoped to generate. The present action arose out of news stories that the Baltimore television station, WJZ-TV, broadcast on October 29 and November 4, 1987. These broadcasts featured Denise Koch, a reporter for WJZ-TV, and were critical of several aspects of ACT's operation. In the first broadcast the reporter made a number of statements that were incorrect. She reported that ACT had closed its office in Cockeysville, Maryland, and was moving its operation to Baltimore. In fact, the Cockeysville office remained open and ACT was merely opening a second office in Baltimore. Ms. Koch also incorrectly stated that ACT would sell ID cards certifying the test results of those individuals who tested negative for AIDS infection. ACT's practice was to "give" ID cards to those with negative test results, once they had paid ACT's fifty-dollar fee for a test that was available free of charge at public health agencies throughout the state. Finally, the story incorrectly stated that ACT's move into Baltimore had led state officials to "take a hard look" at the firm. The investigations had actually been prompted by consumer complaints filed against ACT with the state Attorney General.

These misstatements were not, however, the aspects of the broadcasts that appear to have been the most harmful to ACT. In both the October 29 and the November 4 stories, Ms. Koch stated that ACT was under investigation by both the State Department of Health and the Maryland Attorney General's Office. She stated that ACT appeared to be operating as a blood collection center without the license that state regulations required. Both broadcasts also reported that many members of the public health community strongly opposed the use of ID cards showing AIDS test results. Ms. Koch explained that the opposition to the cards arose because any test for AIDS represented only a snapshot in time. The cards were meaningless from the moment they were issued because they showed only that the subject had not developed antibodies to the virus before submitting to the test. In the story that aired on November 4, Ms. Koch also interviewed Stuart Caplan, a member of the Baltimore County AIDS Task Force. Mr. Caplan also expressed the concern that ACT's cards could create the erroneous belief that an individual was free of the AIDS virus. Neither of the broadcasts mentioned by name or contained any other information about ACT's investors.

ACT and its investors alleged claims against two defendants: Stuart Caplan and Group W Television. Before the subject broadcasts, Caplan had written several letters to different state agencies severely criticizing ACT's operation of a testing center as a profit-making venture. In addition to denouncing ACT's operation on the November 4 broadcast, Caplan had also spoken with and written to an employee of WJZ-TV before the October 29 broadcast. The purpose of these communications appears to have been to create negative publicity for ACT.

Group W Television, the other defendant, is the Delaware corporation that owns WJZ-TV. Two of the station's employees were the primary actors in the production of the two broadcasts. According to the record, Producer Suzanne Collins decided to produce the October 29 story on ACT after receiving ACT's news release announcing the opening of its testing center in downtown Baltimore. Collins assigned Koch to serve as the reporter on the story. During discovery, Collins and Koch both testified that they had received no communication from Caplan before producing the story that aired on October 29. Similarly, Caplan testified that he had neither written to nor spoken with either Koch or Collins before the interview which aired as part of the November 4 story.

ACT and its investors originally filed suit in Baltimore City Circuit Court, alleging defamation and false-light invasion of privacy against both defendants. The complaint stated claims against Caplan for the letters that he had written to state agencies in which he criticized ACT's activities; it stated claims against Group W for the October 29 broadcast; and it stated claims against Caplan and Group W, jointly and severally, for the broadcast of November 4. Based on the diversity of citizenship present in the counts against Group W alone, the defendants successfully sought removal to the District Court for the District of Maryland. After removal, the plaintiffs sought leave to amend their complaint in order to join Caplan as a defendant in the counts that had originally alleged claims only against Group W. They sought to join Caplan in these counts although, according to the record developed during discovery, he was entirely unconnected with the October 29 broadcast on which these counts were based.

At a hearing after the close of discovery, the district court denied the plaintiffs' motion for leave to amend their complaint. On the defendants' motion for summary judgment, the district court dismissed ACT's claims against Group W and it dismissed all claims of the individual plaintiffs. At the same hearing, the court quashed subpoenas that the plaintiffs had served after the close of discovery. After the hearing, the only claims remaining were ACT's claims against Caplan for the letters that he had published criticizing ACT's operation. Since these claims against Caplan involved exclusively state law, the district court exercised its discretion and remanded the case to the state court. With the exception of the remand, the plaintiffs challenge each of the rulings of the district court.

II.

A. Amendment of the Complaint

In the view of the district court, the plaintiffs sought to amend their complaint solely to defeat diversity and to deprive the court of jurisdiction. Only through a series of the most tenuous inferences could the plaintiffs support their argument that Caplan was in any way connected with the broadcast of October 29. The vast majority of the evidence developed during discovery showed that Caplan had played no part in the earlier of the two broadcasts. Judge Niemeyer noted that the plaintiffs had filed their motion to amend shortly after the case was removed to federal court and before they had undertaken any discovery. This, combined with the lack of persuasive evidence that Caplan had participated in the first broadcast, led the court to refuse the amendment under the doctrine of fraudulent joinder. The court reached this ruling after explicitly recognizing that, under Federal Rule of Civil Procedure 15, leave to amend the pleadings is to be freely granted when justice so requires.

When reviewing a district court's refusal of leave to amend the pleadings, a...