Chang v. Michiana Telecasting Corp.

• Decision Date: 24 April 1990
• Docket Number: No. 89-2044,89-2044
• Citation: 900 F.2d 1085
• Parties: 17 Media L. Rep. 1768 Eppie CHANG, Plaintiff-Appellant, v. MICHIANA TELECASTING CORP., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1085

900 F.2d 1085

17 Media L. Rep. 1768

Eppie CHANG, Plaintiff-Appellant, v. MICHIANA TELECASTING CORP., et al., Defendants-Appellees.

No. 89-2044.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 10, 1990.

Decided April 24, 1990.

Thomas J. Brunner, Jr., Richard W. Snyder, Baker & Daniels, South Bend, Ind., Sidney Herman, David Stryker, Kirkland & Ellis, Chicago, Ill., Victor Arko, Elkhart, Ind., Candice A. Lichtenfels, South Bend, Ind., for plaintiff-appellant.

Stephen M. Terrell, Ice, Miller, Donadio & Ryan, Indianapolis, Ind., Philip E. Kalamaros, South Bend, Ind., E. Nelson Chipman, Plymouth, Ind., Robert T. Sanders, III, Elkhart, Ind., Daniel P. Byron, Robert B. Scott, McHale, Cook & Welch, Indianapolis, Ind., Jonathan D. Hart, Robin H. Sangston, Andrew A. Merdek, Dow, Lohnes & Albertson, Washington, D.C., for defendants-appellees.

Before WOOD, Jr., CUDAHY, and EASTERBROOK, Circuit Judges.

EASTERBROOK, Circuit Judge.

On April 28, 1986, station WNDU-TV in South Bend, Indiana, broadcast a story by reporter Teri Meade that Miles Laboratories had charged Eppie Chang, one of its scientists, with stealing its trade secrets. Meade added that according to a confidential source Chang planned to flee to Taiwan, where a firm had offered $1 million for information about Miles' glucometer. Jim Miller, a reporter for The Elkhart Truth, heard the broadcast and prepared a story about the subject. (Miles, a firm with worldwide operations, has its headquarters in Elkhart, Indiana.) As published the next day, the story included this paragraph:

The woman reportedly was offered $1 million by a Taiwan concern to provide the secret information on Miles' glucometer, a device Miles developed to test for sugar in blood.

Chang filed this diversity action charging Meade, Miller, and the corporate owners of WNDU and The Elkhart Truth with libel. Assuming (as do we) that all statements concerning the $1 million offer are false, the district judge granted summary judgment for the defendants, holding that Chang could not establish by clear and convincing evidence that the defendants acted with "actual malice".

The "actual malice" standard comes from New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), in which the plaintiff was a public official. Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974), holds that the Constitution does not require states to employ the "actual malice" standard when a plaintiff who is not a public figure or official seeks actual damages. See also Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749, 105 S.Ct. 2939, 86 L.Ed.2d 593 (1985). Eppie Chang was not a public figure when the story broke. States may elect, however, to give speakers greater protection than the Constitution requires. In Aafco Heating & Air Conditioning Co. v. Northwest Publications, Inc., 162 Ind.App. 671, 321 N.E.2d 580 (3d Dist.1974), a panel of the state's court of appeals held that in Indiana even private figures must establish actual malice, if the statements relate to an issue of public concern.

Aafco puts Indiana among a small minority of states. According to Rodney Smolla, The Law of Defamation Sec. 3.11 (1989 ed.), only four (Alaska, Colorado, Indiana, and New Jersey) require a private-figure plaintiff to prove actual malice. Michigan recently switched to a negligence standard, Rouch v. Enquirer & News, 427 Mich. 157, 398 N.W.2d 245 (1986), and a federal court has predicted that Alaska will follow suit when it has the chance, Sisemore v. U.S. News & World Report, Inc., 662 F.Supp. 1529 (D. Alaska 1987). Moffatt v. Brown, 751 P.2d 939 (Alaska 1988), which rejects the "clear and convincing proof" requirement in private figure cases, suggests that Sisemore may be prescient. Aafco itself was the product of a divided panel, and in a later case, Patten v. Smith, 172 Ind.App. 300, 360 N.E.2d 233 (3d Dist.1977), Judge Garrard, the author of the dissent in Aafco, picked up the support of a newly appointed colleague, Judge Hoffman. Patten did not overrule Aafco, but Chang contends that the state of the law in Indiana is so uncertain, and the support among state courts for the actual malice test so sparse, that we should certify a question to the Supreme Court of Indiana so that it may decide for itself.

We certify questions to ensure that "the law we apply is genuinely state law, and not a federal court's perception of what state judges ought to hold". Covalt v. Carey Canada Inc., 860 F.2d 1434, 1441 (7th Cir.1988) (emphasis in original). We do not reflexively certify when parties dispute the meaning of the state's rules. Law may be knowable even though the topic is contentious. If we had nothing but Aafco and Patten to go on, we would think the law of Indiana muddy. Two subsequent cases have followed Aafco, deeming it authoritative. Cochran v. Indianapolis Newspapers, Inc., 175 Ind.App. 548, 372 N.E.2d 1211, 1218 & n. 3 (2d Dist.1978); Elliott v. Roach, 409 N.E.2d 661, 685-86 (Ind.App. 4th Dist.1980). No Indiana court has disagreed with Aafco, and four years ago we took Aafco to be the established law of Indiana. Woods v. Evansville Press Co., 791 F.2d 480, 483 (7th Cir.1986). See also Gintert v. Howard Publications, Inc., 565 F.Supp. 829, 838-39 (N.D.Ind.1983). We rarely certify a question to state court unless there is disagreement among the inferior state tribunals or unless, as in Covalt, all cases of a given kind have been filed in federal court, so that the state has never had a chance to begin the development of its own jurisprudence.

Aafco has drawn adverse comment from several judges of Indiana--not only Judges Garrard and Hoffman but also the panel in Cochran, which expressed doubts but followed Aafco to maintain uniformity. Yet it does not stand alone, and although the trend in other states is against it, New Jersey adopted the actual malice standard even as Michigan abandoned it. Sisler v. Gannett Co., 104 N.J. 256, 516 A.2d 1083 (1986). New York uses an intermediate approach, Chapadeau v. Utica Observer-Dispatch, Inc., 38 N.Y.2d 196, 379 N.Y.S.2d 61, 341 N.E.2d 569 (1975), and decisions of appellate courts in California go both ways, see Smolla (collecting cases). Skepticism among Indiana's judges is not the same as conflict in decision. Aafco is straightforward and, for the moment, the reigning expression of state law. The Supreme Court of Indiana has had ample opportunity to express a different view and has so far elected not to do so. Our approach is therefore governed by the principle that a litigant whose case depends on a change in state law had best start in state court. Chang could have commenced this suit in a court of Indiana; instead she filed in federal court, lost, and wants a second opinion. "Federal judges are disinclined to make bold departures in areas of the law that we have no responsibility for developing." Afram Export Corp. v. Metallurgiki Halyps, S.A., 772 F.2d 1358, 1370 (7th Cir.1985). We are equally disinclined to afford Chang direct entree to the Supreme Court of Indiana when she could have taken her case there in the regular course. Aafco, Patten, Cochran, Elliott, and Woods all were decided before Chang filed her complaint. She has not been bushwhacked by a surprising interpretation of state law; the district judge applied to her claim the principles Woods held should be applied.

Chang needs a change of Indiana's law to prevail in this case, for the record would not permit a jury to find by clear and convincing evidence that the defendants acted with malice--meaning that they knew that what they wrote was not true, or strongly suspected that it was untrue yet were recklessly indifferent to this. New York Times, 376 U.S. at 280, 84 S.Ct. at 726; St. Amant v. Thompson, 390 U.S. 727, 731, 88 S.Ct. 1323, 1325, 20 L.Ed.2d 262 (1968). (State law has taken over from these cases the definition of "malice". See Cochran, 372 N.E.2d at 1219.) Summary judgment was accordingly proper. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Saenz v. Playboy Enterprises, Inc., 841 F.2d 1309 (7th Cir.1988).

The chain leading to the publications starts with a phone call to Meade on Saturday, April 26, 1986. The caller would not identify himself except to say that he is the son of a senior officer of Miles, and that his father would "kill him" if he knew that he was leaking the facts. (The caller has since made himself known: Grant Ringuette, son of Miles' general counsel. So far as we know, Grant is alive and well.) The caller told Meade that he had a "big story" about "industrial espionage"--Eppie Chang, a scientist at Miles, planned to leave for Taiwan to sell documents, and Miles had gone to court to stop her. In a second call, the tipster told Meade Chang's full name, where she lived and worked, that she was working on a glucometer and had been caught copying trade secrets, which she planned to sell for a million dollars or more. Meade discussed these calls with her producer; they decided to verify the information rather than broadcast immediately. On Monday, April 28, Meade obtained a copy of the complaint from the district court in South Bend. The core allegation of the complaint reads:

On the evening of April 24, 1986, certain Miles employees discovered in Defendant, Chang's, office and at the photocopy machine in close proximity to her office, materials that indicate that Defendant, Chang, had access to and misappropriated protectable trade secrets belonging to Miles. Such material indicated that Defendant, Chang, was preparing for a meeting in Taiwan with potential competitors of Miles at which such protectable trade secrets would be discussed and disclosed. On information and belief, Defendant, Chang, has participated in meetings in this country at which Miles' protectable trade secrets may also have been disclosed.

The complaint also alleged that Chang was a...