Fin. Fiduciaries v. Gannett Co.

• Decision Date: 22 August 2022
• Docket Number: 21-2016
• Parties: Financial Fiduciaries, LLC and Thomas Batterman, Plaintiffs-Appellants, v. Gannett Co., Inc., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Financial Fiduciaries, LLC and Thomas Batterman, Plaintiffs-Appellants, v. Gannett Co., Inc., Defendant-Appellee.

No. 21-2016

United States Court of Appeals, Seventh Circuit

August 22, 2022

ARGUED FEBRUARY 9, 2022

Appeal from the United States District Court for the Western District of Wisconsin. No. 19-cv-874 - Stephen L. Crocker Magistrate Judge.

Before FLAUM, BRENNAN, and ST. EVE, Circuit Judges.

BRENNAN, CIRCUIT JUDGE.

This dispute began when a Wisconsin newspaper owned by Gannett Co., Inc. published an article about Thomas Batterman and his business, Financial Fiduciaries, LLC. The article described a judicial proceeding in which several trust beneficiaries successfully removed Batterman as de facto trustee of a $3 million fund. In that proceeding, the court concluded that Batterman violated his fiduciary duties. And although the court did not rule on whether Batterman committed criminal acts, it ordered him to pay the beneficiaries' litigation expenses because his conduct "amounted to something of bad faith, fraud or deliberate dishonesty."

Batterman promptly sent a retraction letter to the newspaper. A few weeks later, the newspaper revised the article but did not remove it. These revisions did not appease Batterman, who then sued Gannett for defamation. After a series of rulings the district court entered judgment for Gannett. The court reasoned that the allegedly defamatory statements were substantially true and protected by Wisconsin's judicial-proceedings privilege, which protects publishers that report on court activity. See WIS. STAT. § 895.05(1). Batterman asks us to reverse several of the district court's rulings and, ultimately, its judgment. But because the district court decided correctly at each step, we affirm.

I. Background

A. Facts

Gannett owns the Wausau Daily Herald, a local newspaper in central Wisconsin. In August 2018, the Herald published an article titled Wisconsin financial advisor accused of violating a dead man's trust, mishandling $3 million. The article portrayed Joseph Geisler as a frugal farmer who, with help from Batterman, created a trust with assets that eventually totaled $3 million. Upon Geisler's death, those funds were to be distributed equally among four beneficiaries: the Catholic Diocese of Superior, Wisconsin; Bruce High School; the Alzheimer's Association; and the American Cancer Society. When Geisler passed away, Batterman, through an entity called Vigil Asset Management Group ("Vigil"), became trustee and was responsible for administering the trust.

After providing this background, the article relayed the American Cancer Society's allegations. The Herald put it this way:

[T]he financial adviser Joe Geisler entrusted to administer his trust put that money in jeopardy, according to a lawsuit filed in Marathon County. The adviser, Thomas Batterman of Wausau, is accused of defrauding the charities, committing numerous breaches of trust and conspiring with his fiancee to milk the fund for trustee fees.

The article also included the subheading "[w]hat has been alleged." Under that subheading, the article declared "[a]ccording to accusations and judgments made in the court documents, this is what happened." In the ensuing paragraphs, the article summarized the claims made by the American Cancer Society (later joined by the other beneficiaries) in a petition it filed in state court. The article reproduced the core allegations from that petition:

• Batterman's fiancee, Deborah Richards, worked for the American Cancer Society.

• An email exchange showed an agreement between Batterman and Richards, under which Batterman would disburse the Society's trust money in small annual sums rather than one lump sum.

• According to the Society, Richards profited from this arrangement by obtaining salary increases for reaching fundraising goals each year. A large payment, by contrast, would have distorted the charity's expectations for future years and hindered Richards's advancement. Richards claimed her salary increases were random.

• Batterman defended his decision on grounds that a large gift was difficult for the Society to handle, which he said was why he agreed to submit smaller payments.

• He made this decision unilaterally with his fiancee, a lower-level manager, rather than speaking with Society leadership.

• As a result, he collected $30,000 in fees for trust administration between Geisler's death and the day he was removed as de facto trustee.

After presenting these allegations, the article opined that "the essence of the charities' case against Batterman" was that "he sought to hold on to Geisler's money for as long as he could in order to profit from it through monthly fees."

The article recounted the state court's ultimate decision to remove Batterman and install a successor trustee, who disbursed all funds immediately, and the court's order requiring Batterman to pay the beneficiaries' legal fees, based on a finding that his conduct "amounted to something of bad faith, fraud or deliberate dishonesty." The Herald also included a quote from the judge overseeing the case: "[S]o much of this litigation could have been avoided had Vigil followed the plain language of the trust, or if it had been attempted to communicate with the school district or other beneficiaries." (As noted above, the court found that Batterman operated Vigil.)

Several other statements in the article put Batterman in a less than positive light. Under the subheading, "Run-ins with the law," the article told readers about Batterman's two alcohol-related arrests and disclosed that the Securities and Exchange Commission had twice fined him for regulatory vi-olations.^[1] Finally, when viewed online, the article contained various "related" hyperlinks. One of those links directed the reader to an article titled, "[f]ive ways to fight elder abuse, financial exploitation."

Batterman demanded that the Herald retract the article.^[2]Instead, the newspaper updated it the next month with two important changes. First, it included a new paragraph clarifying that "[a]lthough a judge later found that Batterman had not committed fraud, theft or embezzlement, he ruled that the financial adviser had engaged in multiple acts of 'bad faith' and ordered him to be removed from handling the Geisler trust and to pay part of the charities' legal fees." Second, the revised article added the modifier "criminal" before the noun "wrongdoing" in the following sentence: "Neither Batterman nor Richards has been charged with any criminal wrongdoing in the Geisler case."

B. Procedural History

In October 2019, Batterman sued Gannett in federal court for defamation.^[3] Gannett moved to dismiss the complaint for failure to state a claim. See FED. R. CIV. P. 12(b)(6) Along with its motion, Gannett attached copies of several key documents, including the revised article, court documents from the Geisler trust litigation, and the 1997 SEC order involving Batterman.

The district court set April 6, 2020 as the deadline for amending pleadings and advised the parties: "After that, Federal Rule[] of Civil Procedure 15 applies, and the later a party seeks leave of the court to amend, the less likely it is that justice will require the amendment." The scheduling order also stayed discovery until the court ruled on Gannett's motion to dismiss or until the deadline for amended pleadings arrived, whichever came first.

The same day, Batterman moved for summary judgment on liability. With that motion, he filed a "combined response," addressing both Gannett's motion to dismiss and his motion for partial summary judgment. He objected to the version of the article Gannett provided as incomplete because it omitted certain hyperlinks which he thought were defamatory. Batterman attached the online version of the revised article-which included the hyperlinks-and an affidavit explaining that he was unable "to locate a copy of the original publication of the Article." This was pertinent, he continued, because "[t]he original Article contained a video clip which was also defamatory."

Three weeks later, Gannett moved under Federal Rule of Civil Procedure 56(d)(2) for a "continuance to respond to Plaintiff's premature Motion for Summary Judgment as to Liability." Batterman opposed this motion and prefaced his response with a quote: "An old maxim warns: Be careful what you wish for; you might receive it." (quoting Kalamazoo Cnty. Rd. Comm'n v. Deleon, 574 U.S. 1104 (2015) (Alito, J., dissenting from denial of certiorari)). In his view, the extrinsic documents Gannett submitted with its motion to dismiss established liability as a matter of law, so there was no reason to delay adjudication. Despite Batterman's objection, the court granted Gannett an extension and reset the deadline for a response brief to "60 days after the court rules on the pending motion to dismiss or [60 days after] June 5, 2020, whichever comes first."

On June 1, 2020, the district court granted in part and denied in part Gannett's motion to dismiss. The court concluded that it could review the extrinsic documents submitted by Gannett, and it took judicial notice of the 2018 SEC order which Gannett had not provided. It then distilled Batterman's allegations into four statements:

• an implicit statement that Batterman committed criminal acts of fraud, theft, or embezzlement;

• an implicit statement that Batterman committed "elder abuse";

• an explicit statement that Batterman was trustee of the Geisler Trust; and

• an explicit statement that Batterman was "found guilty of wrongdoing by the SEC."

Of these, the district court identified the second-the implicit statement that Batterman committed elder abuse-as the only plausible theory of defamation, and holding...