Chapin v. Knight-Ridder, Inc., KNIGHT-RIDDE

Citation993 F.2d 1087
Decision Date19 May 1993
Docket NumberKNIGHT-RIDDE,No. 92-1165,INCORPORATED,92-1165
Parties21 Media L. Rep. 1449 Roger CHAPIN; Help Hospitalized Veterans, Incorporated, Plaintiffs-Appellants, v.; Philadelphia Newspapers, Incorporated; The Philadelphia Inquirer; Frank Greve, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

Norman Roy Grutman, Grutman, Greene & Humphrey, New York City, argued (Jewel Humphrey, Grutman, Greene & Humphrey, New York City, Frank M. Northam, Alan Dye, Webster, Chamberlain & Bean, Washington Kevin Taylor Baine, Williams & Connolly, Washington, D.C., argued (Nicole K. Seligman, Bonnie Robin-Vergeer, Dane H. Butswinkas, Williams & Connolly, Washington, D.C., on the brief), for defendants-appellees.

D.C., Henry Paul Monaghan, New York City, on the brief), for plaintiffs-appellants.

Before RUSSELL, WIDENER, and HALL, Circuit Judges.

OPINION

K.K. HALL, Circuit Judge:

Plaintiffs Roger Chapin and Help Hospitalized Veterans, Inc., appeal the district court's order granting defendants' motion to dismiss this libel action. We must decide whether a newspaper article published by defendants can be reasonably read to express the libelous meanings ascribed to it by the plaintiffs. Concluding that it cannot, we affirm.

I.

Plaintiff Roger Chapin's trade is operating charities. He is the president of Citizens for a Drug-Free America ("CDFA"), Project Drug-Free, and co-plaintiff Help Hospitalized Veterans, Inc. ("HHV"). All of these entities are non-profit organizations, and Chapin and his wife are paid employees of each.

In the fall of 1990, while Iraqi and United Nations troops glowered at one another in the Persian Gulf, Chapin's HHV charity sponsored a program to send "Gift Pacs" to American soldiers in Saudi Arabia. A contributor could send a Gift Pac to the troops for $15, or $25 for two. For another $6, the purchaser could have the Gift Pac delivered to a particular soldier. The items in the Gift Pac were snack-size packages of various junk foods. 1 Promotional materials assured potential purchasers that the retail value of the items was $14.40.

The program flourished; the public purchased 853,699 Gift Pacs. However, at the height of the drive, on December 2, 1990, the Philadelphia Inquirer published a story written by Frank Greve. This story pointedly questioned the finances of the program and the apparent "hefty mark-up" between the wholesale cost of the items in the Gift Pac and the price charged the public. The article wondered aloud "where the rest of the money goes." The article was picked up by other newspapers in the Knight-Ridder chain and so received national exposure.

According to plaintiffs, this article caused sales of Gift Pacs to precipitously decline, and HHV suffered a $1.6 million loss on the project. On August 22, 1991, Chapin and HHV filed this libel suit in district court against Knight-Ridder, the Philadelphia Inquirer, 2 Philadelphia Newspapers, Inc., and Frank Greve. Plaintiffs sought $150 million in damages.

Following discovery, defendants moved to dismiss under Fed.R.Civ.Pr. 12(b)(6) because the statements complained of by the plaintiffs were not actionable as a matter of law. On January 22, 1992, the district court granted the motion to dismiss, with its reasons to be elaborated in a later memorandum opinion. The district court's detailed memorandum was filed on March 17, 1992. Chapin v. Greve, 787 F.Supp. 557 (E.D.Va.1992). The court found that all of the statements plaintiffs identified were either admitted by plaintiffs to be true or were subjective value judgments that could not be true or false. The court also held that the article could not reasonably be read to express several defamatory implications alleged by plaintiffs.

Plaintiffs appeal.

II.

Although Virginia's common law of libel governs this diversity case, 3 the First Amendment's press and speech clauses greatly restrict the common law where the defendant is a member of the press, the plaintiff is a public figure, or the subject matter of the supposed libel touches on a matter of public concern. See New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964). Where, as here, all of these considerations are present, 4 the constitutional protection of the press reaches its apogee.

In Virginia, the elements of libel are (1) publication of (2) an actionable statement with (3) the requisite intent. 5 See generally, Gazette, Inc. v. Harris, 229 Va. 1, 325 S.E.2d 713, cert. denied, 472 U.S. 1032, 105 S.Ct. 3513, 87 L.Ed.2d 643 (1985). To be "actionable," the statement must be not only false, but also defamatory, that is, it must "tend[ ] so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him." Restatement (Second) of Torts § 559. As one court put it, defamatory words are those that "make the plaintiff appear odious, infamous, or ridiculous." McBride v. Merrell Dow and Pharmaceuticals, Inc., 540 F.Supp. 1252, 1254 (D.D.C.1982), rev'd in part on other grounds, 717 F.2d 1460 (D.C.Cir.1983). Merely offensive or unpleasant statements are not defamatory. Whether a statement is actionable is a matter of law to be determined by the court. Chaves v. Johnson, 230 Va. 112, 335 S.E.2d 97 (1985).

The falsity of a statement and the defamatory "sting" of the publication must coincide--that is, where the alleged defamatory "sting" arises from substantially true facts, the plaintiff may not rely on minor or irrelevant inaccuracies to state a claim for libel. AIDS Counseling & Testing Centers v. Group W Television, Inc., 903 F.2d 1000, 1004 (4th Cir.1990).

On a motion to dismiss a libel suit because of no actionable statement, the court must of course credit the plaintiff's allegation of the factual falsity of a statement. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). In this case, however, the complaint couches its allegations of falsity in vague, conclusory terms, and the district court required briefs and heard argument on several occasions in order to clarify which particular factual assertions or connotations the plaintiffs allege are false.

The district court discovered that the plaintiffs primarily allege the falsity of implications, rather than the facts literally related by the Greve article. A defamatory implication must be present in the plain and natural meaning of the words used. Carwile v. Richmond Newspapers, Inc., 196 Va. 1, 82 S.E.2d 588, 591-592 (1954). Moreover, because the constitution provides a sanctuary for truth, 6 a libel-by-implication plaintiff must make an especially rigorous showing where the expressed facts are literally true. The language must not only be reasonably read to impart the false innuendo, but it must also affirmatively suggest that the author intends or endorses the inference. White v. Fraternal Order of Police, 909 F.2d 512, 520 (D.C.Cir.1990).

III.

As did the district court, we reproduce the Philadelphia Inquirer article and Knight-Ridder wire release as appendices to our opinion. However, because repeated references to these appendices would be unwieldy, we quote below in boldface the particular statements in the article from which plaintiffs would infer the libel, with our analysis of each statement directly following its quotation. We then consider the article as a whole.

1. "HEFTY MARK-UPS"

While many American businesses are donating products to GIs stationed in Saudi Arabia for the holidays, a widely promoted charity is charging hefty mark-ups on goods it ships to them.

Plaintiffs complain that the words "hefty mark-ups" imply that they were making a large profit and were pocketing it. "Hefty" is the author's opinion of the mark-up based on his estimate that the wholesale cost of the items in the Gift Pac was under $8. Though opinion per se is not immune from a suit for libel, a statement is not actionable unless it asserts a provably false fact or factual connotation. Milkovich v. Lorain Journal Co., 497 U.S. 1, 19, 110 S.Ct. 2695, 2706, 111 L.Ed.2d 1 (1990); Potomac Valve & Fitting, Inc. v. Crawford Fitting Co., 829 F.2d 1280, 1288 (4th Cir.1987) (presaging Milkovich by placing primary emphasis of erstwhile fact-versus-opinion inquiry on verifiability of the statement). "Hefty" is just too subjective a word to be proved false. The use of the term "mark-up" instead of "profit" or the like makes the pocket-lining inference plaintiffs would draw implausible. 7 In addition, the rest of the article, in some detail, recounts Greve's efforts to estimate the wholesale cost of the items in the Gift Pac. Because the bases for the "hefty mark-up" conclusion are fully disclosed, no reasonable reader would consider the term anything but the opinion of the author drawn from the circumstances related. Potomac Valve, 829 F.2d at 1289-1290 (even statement capable of being proved false would be understood as author's opinion where it was a conclusory punch line following fully-disclosed facts); accord, Phantom Touring, Inc. v. Affiliated Publications, 953 F.2d 724, 729-730 (1st Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 2942, 119 L.Ed.2d 567 (1992).

Finally, though "there is no such thing as a [true] idea," 8 Greve's opinion was certainly defensible. Indeed, when he wrote the article, Greve did not know that the mark-up was even more "hefty" than his estimate. The costs associated with each Gift-Pac, as disclosed in discovery by the plaintiffs, were:

Thus, the mark-up from the wholesale cost of the items and package was over 100%--"hefty" to most minds, we would think. The heavy advertising and solicitation expenses--$7.93 per Pac--are a feature of Chapin-run charities, as we will have cause to mention below.

2. "WHO WILL BENEFIT MORE?"

But one question is hard to answer: Who will benefit more from the project- --GIs or veteran charity entrepreneur Roger Chapin of San Diego and Falls...

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