Hofmann Co. v. E. I. Du Pont De Nemours & Co.

• Decision Date: 23 June 1988
• Docket Number: No. A035323,A035323
• Citation: 248 Cal.Rptr. 384,202 Cal.App.3d 390
• Parties: The HOFMANN COMPANY, Plaintiff and Appellant, v. E.I. DU PONT de NEMOURS AND COMPANY, et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

Page 384

248 Cal.Rptr. 384

202 Cal.App.3d 390

The HOFMANN COMPANY, Plaintiff and Appellant, v. E.I. DU PONT de NEMOURS AND COMPANY, et al., Defendants and Respondents.

No. A035323.

Court of Appeal, First District, Division 2, California.

June 23, 1988.

As Modified July 20, 1988.

Dan L. Garrett, Martinez, Beatrice Taines, Walnut Creek, for plaintiff and appellant Hofmann Co

Brian L. Cella, San Francisco, for defendants and respondents Du Pont.

KLINE, Presiding Justice.

In statements that appeared in a front-page story in the San Francisco Chronicle and elsewhere, employees of a toxic chemical plant criticized a housing development proposed to be constructed next to the plant. The questions before us are whether the employees' comments included false statements of fact actionable as trade libel and, if not, whether, consistent with the First Amendment, the statements may nonetheless provide the basis for a cause of action for intentional interference with prospective economic advantage.

STATEMENT OF THE CASE

Appellant, the Hofmann Company, filed a complaint alleging that certain employees of respondent E.I. Du Pont de Nemours and Co. made false statements about the housing development appellant proposed to build near Du Pont's chemical plant in Contra Costa County. As pertinent to this appeal, the complaint stated causes of action for trade libel and intentional interference with prospective economic advantage. ¹ The trial court initially granted respondent's demurrer without leave to amend because in "the context in which the alleged defamatory expressions were made, ... they were expressions of opinion, unambiguous as such, and therefore protected speech."

After appellant's attorney filed a declaration stating he had obtained evidence

                showing that at the time respondents made their statements they did not honestly believe the views they expressed and voiced them for the sole purpose of obstructing the housing development, the court allowed appellant to amend the complaint to include a cause of action for intentional interference with prospective economic advantage. 2  The amendment added the allegation that if the statements at issue were found to be opinions, "defendants did not in fact hold a good faith, honest belief in the truth thereof."   Respondents again demurred.  The trial court sustained the demurrer without leave to amend and dismissed the action.  This appeal followed
                

STATEMENT OF FACTS ³

Appellant is a Contra Costa County developer which owns and intends to develop property in Antioch adjacent to and downwind of respondent Du Pont's chemical plant. In its manufacturing operations, the plant uses toxic chemicals that are delivered by trains switched off the main line into the plant yard. One edge of the proposed development lies along the rail spur leading to the plant. Appellant's development plans have been approved by the Contra Costa County Board of Supervisors.

Du Pont offered to purchase the property in question, but appellant demanded too high a price. After the negotiations broke off Du Pont's plant manager at the time, David Gilbert, published through unidentified "news media" the statement that the proposed housing development "was in a place which was unsafe and hazardous for human life and health, and that he 'would not live there.' "

The other statements at issue appeared in the October 23, 1984, edition of the San Francisco Chronicle. A front-page article, entitled "Developers and Contributions: The Contra Costa 'Syndrome,' " discussed the approval of appellant's subdivision plans and the general pattern of development approval in Contra Costa County. Emphasizing the political contributions made by housing developers to most county supervisors, the article noted that the only supervisor who voted against appellant's project received no such contributions.

After discussing the large quantities of toxic chemicals shipped to the plant on the railroad spur that passed by the development project, the article pointed out that the Bay Area Air Quality Management District and the California Air Resources Board both opposed appellant's plans. According to the article, "[These] agencies wrote the county at least six times, and among other things, noted: Toxic releases from DuPont forced three evacuations since 1964, at least 18 releases were recorded since 1977, and the wind blows to the east--toward the proposed homes--70 percent of the time."

Dennis McNamara, who succeeded David Gilbert as plant manager, was quoted: " 'I wouldn't live there.... We run around the clock, we have rail traffic and truck traffic all the time and we handle hazardous chemicals. It's like building homes off the end of a runway. You hope nothing happens, but occasionally it does.' "

The article concluded with a description of the physical effects of a recent leak of toxic sulfur dioxide gas at the plant that required evacuation of a nearby area and the hospitalization of 20 people. Another quote from McNamara ended the article: " 'We've never had what we call a life- When Gilbert and McNamara made the statements just related they allegedly were acting as agents and employees of defendant Du Pont, and within the course and scope of their said agency and employment. The purpose of the statements, according to the complaint, was to prevent completion of the housing development and to thereby depress and diminish the value of plaintiff's land so as to further defendant's plan to acquire said land for a price deemed acceptable to defendant Du Pont.

threatening incident and we don't expect any--but the potential does exist.' "

DISCUSSION

Preliminarily, we note that we must "treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed." ( Serrano v. Priest, supra, 5 Cal.3d 584, 591, 96 Cal.Rptr. 601, 487 P.2d 1241.) Where a demurrer has been sustained without leave to amend, the issue on appeal is whether the pleadings state a cause of action and "whether there is a reasonable probability that the defect can be cured by amendment ...; if not, there has been no abuse of discretion.... [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff." [Citation omitted.] (Blank v. Kirwin (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.)

I. Cause of Action for Trade Libel

Trade libel is " 'an intentional disparagement of the quality of property, which results in pecuniary damage to plaintiff' "; it is accomplished by a false statement. (Polygram Records, Inc. v. Superior Court (1985) 170 Cal.App.3d 543, 548, 216 Cal.Rptr. 252, quoting Erlich v. Etner (1964) 224 Cal.App.2d 69, 73, 36 Cal.Rptr. 256; Rest.2d Torts, §§ 623A, 626.) Because the gravamen of the complaint is the allegation that respondents made false statements of fact that injured appellant's business, the "limitations that define the First Amendment's zone of protection" are applicable. (Blatty v. New York Times Co. (1986) 42 Cal.3d 1033, 1042, 232 Cal.Rptr. 542, 728 P.2d 1177, cert. den. 485 U.S. 934, 108 S.Ct. 1107, 99 L.Ed.2d 268.) "[I]t is immaterial for First Amendment purposes whether the statement in question relates to the plaintiff himself or merely to his property...." (Id., at p. 1043, 232 Cal.Rptr. 542, 728 P.2d 1177, citation omitted.)

If respondents' statements about appellant are opinions, the cause of action for trade libel must of course fail. "Under the First Amendment there is no such thing as a false idea. However pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries but on the competition of other ideas. But there is no constitutional value in false statements of fact." ⁴ (Gertz v. Robert Welch, Inc. (1974) 418 U.S. 323, 339-340, 94 S.Ct. 2997, 3007, 41 L.Ed.2d 789, fn. omitted.) Statements of fact can be true or false, but an opinion--"a view, judgment or appraisal formed in the mind .... [, a] belief stronger than impression and less strong than positive knowledge"--is the result of a mental process and not capable of proof in terms of truth or falsity. (Webster's Third New International Dictionary (1970) p. 1582.)

In most cases "[t]he critical determination of whether the allegedly defamatory statement constitutes fact or opinion is a question of law." (Gregory v. McDonnell Douglas Corp. (1976) 17 Cal.3d 596, 601, 131 Cal.Rptr. 641, 552 P.2d 425; Okun v. Superior Court (1981) 29 Cal.3d 442, 450 175 Cal.Rptr. 157, 629 P.2d 1369; Baker v. Los Angeles Herald Examiner (1986) 42 Cal.3d 254, 260, 228 Cal.Rptr. 206, 721 P.2d 87.) However, where a statement is ambiguous and capable of being understood by the average reader as being either fact or opinion, categorization of the statement is not a question of law and must be left to the jury's determination. (Good Government Group of Seal Beach, Inc. v. Superior Court (1978) 22 Cal.3d 672, 680-682, 150 Cal.Rptr. 258, 586 P.2d 572.) ⁵

"The distinction [between fact and opinion] frequently is a difficult one...." ( Gregory v. McDonnell Douglas Corp., supra, 17 Cal.3d at p. 601, 131 Cal.Rptr. 641, 552 P.2d 425; see also, Bose Corp. v. Consumers Union of the United States, Inc. (1st Cir.1982) 692 F.2d 189, 194, affd. 466 U.S. 485, 104 S.Ct. 1949, 80 L.Ed.2d 502; Prosser & Keeton, The Law of Torts (5th ed. 1984) § 113A, pp. 813-815; Titus, Statement of Fact Versus Statement of Opinion--A Spurious Dispute in Fair Comment (1962) 15 Vand.L.Rev. 1203; Note, Fair Comment, 62 Harv.L.Rev. 1207 (1949).) To make the differentiation "California courts have developed a 'totality of the circumstances' test...." ( Baker v. Los Angeles Herald Examiner, supra, 42 Cal.3d at p. 260, 228 Cal.Rptr. 206, 721 P.2d 87.) The court must put itself in the place of an " 'average reader' " and decide the " 'natural and probable effect' " of the statement. (Id., citing MacLeod...