Kennedy v. Children's Service Soc. of Wisconsin
| Decision Date | 24 February 1994 |
| Docket Number | No. 93-2312,93-2312 |
| Citation | 17 F.3d 980 |
| Parties | Michelle KENNEDY and Dale E. Kennedy, Plaintiffs-Appellants, v. CHILDREN'S SERVICE SOCIETY OF WISCONSIN, Frank Gaunt, St. Paul Fire and Casualty Insurance Company, and Colonia Insurance Company, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Robert Sutton, Milwaukee, WI (argued), for Michelle Kennedy and Dale E. Kennedy.
Scott Ritter (argued), Hogan, Ritter, Minix & Comeau, Milwaukee, WI, for Children's Service Soc. of Wisconsin, Frank Gaunt and St. Paul Fire and Cas. Ins. Co.
Donald M. Lieb, Otjen, Vanert, Stangle, Lieb & Weir, Milwaukee, WI, for Colonia Ins. Co.
Before CUDAHY, COFFEY, and KANNE, Circuit Judges.
Children's Service Society of Wisconsin ("CSS") withdrew from facilitating an adoption because it believed the adoptive parents were members of a cult. The parents adopted the child through another agency and sued CSS for defamation, breach of contract and intentional infliction of emotional distress. The district court granted summary judgment for the defendants. We affirm.
Mary Shelby, five months pregnant, planned to give her child up for adoption by the plaintiffs, Dale and Michelle Kennedy of Washington state. Shelby, a Wisconsin resident, contacted CSS in December 1990 to obtain pregnancy counseling and to facilitate termination of her parental rights. CSS agreed to receive guardianship of the child between the time of the termination hearing and the final adoption by the Kennedys. CSS's fees would be paid by the Kennedys.
Under Wisconsin law, the guardianship agency must arrange for a home study of prospective adoptive parents. Wis.Stat. Sec. 48.88(2)(a)(1) (1991). CSS arranged for Norma Spoonemore of Lutheran Social Services of Seattle, Washington to conduct a home study of the Kennedys. In early March 1991, Spoonemore sent her report to Frank Gaunt, the director of CSS. The report listed the Kennedys' religion as "The Way International" ("TWI"). When Gaunt's secretary informed him that TWI was a cult, Gaunt began an investigation. He reviewed the literature about TWI, consulted a cult specialist referred by the Milwaukee Psychiatric Hospital and contacted a member of a national cult awareness group. He did not reveal the plaintiff's identity in these inquiries. Based upon this research, Gaunt believed that TWI was a cult, and that some of the members used mind control, required deprogramming upon leaving and isolated themselves from the rest of society.
On March 5, Gaunt telephoned Spoonemore to ask if she knew about TWI. He told her that he believed TWI was a cult and that some of its members required deprogramming. On March 14, he again called Spoonemore and told her that CSS was considering withdrawing from the Shelby-Kennedy adoption because of CSS's concerns about the Kennedys' involvement in TWI. Shortly thereafter Gaunt sent a letter confirming CSS's withdrawal.
On March 7, Gaunt met with Mary Shelby. He inquired whether she knew the Kennedys were affiliated with a cult and that some TWI members opposed social contacts outside of the group. Shelby testified at her deposition that she was aware of the Kennedys' involvement in TWI but disagreed with Gaunt's characterizations of the group's practices.
On March 12, Gaunt contacted Lincoln Murphy, Shelby's attorney for the adoption. Gaunt informed Murphy that CSS might withdraw from the adoption because of the Kennedys' affiliation with TWI.
CSS withdrew from the process. The Kennedys arranged for a different agency to assume temporary guardianship of the baby after termination of Shelby's parental rights. The Kennedys had to spend approximately $2500 to pay the higher fees at the second agency, approximately $800 in additional attorney's fees to find a new agency and long distance phone bills. The adoption otherwise went forward, and on April 9 Shelby's baby was placed with the Kennedys.
The Kennedys filed suit against CSS, Gaunt and CSS's insurers, St. Paul Fire and Casualty Insurance Company and Colonia Insurance Company, alleging defamation, breach of contract and intentional infliction of emotional distress. They sought $50,000 compensatory damages and $100,000 punitive damages. The district court granted summary judgment in favor of the defendants, 1 finding that the Kennedys had not stated a defamation claim and that the statements in question were privileged; that there was no breach of contract; and that they had failed to state a claim of intentional infliction of emotional distress. The Kennedys appeal the court's grant of summary judgment.
We review the district court's grant of summary judgment de novo. Summary judgment will be granted if there is no genuine issue of material fact requiring trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A dispute over material facts is genuine if "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510.
The Kennedys claim that Gaunt defamed them on three occasions: the March 5 telephone conversation with Norma Spoonemore; the March 7 conversation with Mary Shelby; and the March 12 conversation with Lincoln Murphy. The Kennedys claim that in all three instances Gaunt said they were unsuitable adoptive parents because they belonged to a cult. To state a claim for defamation, the Kennedys must allege: (1) a false statement; (2) communicated by speech, conduct or in writing to a person other than the person defamed; and (3) that the statement is unprivileged and tends to harm one's reputation so as to lower one in the estimation of the community. Munson v. Milwaukee Bd. of School Directors, 969 F.2d 266, 271 (7th Cir.1992); Stoll v. Adriansen, 122 Wis.2d 503, 517, 362 N.W.2d 182, 190 (Ct.App.1984).
The defendants first contend that the Kennedys do not have standing to sue for defamation because any critical remarks referred only to TWI rather than to the Kennedys themselves. In Wisconsin, a statement about a group or class is not defamatory unless it refers to an ascertained or ascertainable person. Ogren v. Employers Reinsurance Corp., 119 Wis.2d 379, 382, 350 N.W.2d 725, 727 (Ct.App.1984). One who publishes a statement about a group is liable to an individual member only if the group is so small that the matter can reasonably be understood to refer to the member, or the circumstances indicate that there is particular reference to the member. Id.
Although Gaunt contends that his statements that TWI members used mind control and isolated themselves from society were neither intended nor understood as referring to the Kennedys themselves, they arose solely in a discussion of the Kennedys' suitability as adoptive parents. In these circumstances, Gaunt's criticisms of TWI and questions about the Kennedys' suitability overlap, and it would have been reasonable for a listener to infer that Gaunt's statements about TWI applied to the Kennedys. The district court found that deposition testimony indicated that Gaunt was not understood to refer to the Kennedys themselves. However, the court found that the Kennedys did have standing to challenge Gaunt's claims that they were unsuitable parents because of their affiliation with TWI. In the end, the result is the same, since it is clear that Gaunt's statements that the Kennedys were unsuitable parents because they belonged to a cult could give rise to a claim of defamation.
The Kennedys' defamation claim fails, however, because they failed to plead or prove special damages. In a libel case (where the defamatory words are written or printed), there is a presumption that the defamed person suffered general damages such as injury to reputation. Williams v. Hicks Printing Co., 159 Wis. 90, 101-02, 150 N.W. 183, 188 (1914). In a slander case (where the defamatory words are spoken), a plaintiff is not entitled to general damages until she has proven special damages, or specific monetary loss. Starobin v. Northridge Lakes Dev. Co., 94 Wis.2d 1, 13, 287 N.W.2d 747 (1980).
The Kennedys alleged that Gaunt's actions caused them stress and harm to reputation, but these general damages cannot be a basis for recovery absent proof of special damages. The only special damages the Kennedys plead are the additional costs incurred securing a new adoption agency: higher agency fees, additional lawyers' fees and long distance telephone bills. None of these special damages, however, stem from the alleged defamatory remarks. Had Gaunt merely withdrawn from the adoption proceedings without giving any reasons or making the alleged defamatory remarks, the plaintiffs would have incurred these same expenses securing a new adoption agency. Conversely, had Gaunt made the defamatory statements yet continued with the adoption, the plaintiffs would not have been injured. At her deposition Michelle Kennedy testified:
And so, see, what I'm saying is it wouldn't have made me happy, you know, it wouldn't have blessed me he thought that. But then you know--if he would have continued with the adoption, we wouldn't have had--the rest of the things wouldn't have ensued.
(Deposition of Michelle Kennedy, at 16-17).
There are, however, four types of slander for which damages will be presumed: imputation of certain crimes; allegations affecting one's...
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