Mishler v. MAC Systems, Inc.

• Decision Date: 16 July 2002
• Docket Number: No. 27A02-0111-CV-778.,27A02-0111-CV-778.
• Parties: Vron MISHLER and Dianne Mishler, Appellants-Plaintiffs, v. MAC SYSTEMS, INC., Appellee-Defendant.
• Court: Indiana Appellate Court

771 N.E.2d 92

Vron MISHLER and Dianne Mishler, Appellants-Plaintiffs, v. MAC SYSTEMS, INC., Appellee-Defendant.

No. 27A02-0111-CV-778.

Court of Appeals of Indiana.

July 16, 2002.

Jerry R. Shoup, Marion, IN, Attorney for Appellants.

OPINION

HOFFMAN, Senior Judge.

Plaintiffs-Appellants Vron Mishler and Dianne Mishler (collectively, "the Mishlers") appeal the trial court's grant of a preliminary injunction requested by Defendant-Appellee MAC Systems, Inc. ("MAC"). We reverse and remand.¹

The following issue is dispositive: whether the trial court's preliminary injunction is improper because it violates the prohibition against restriction of speech under Article I, Section 9 of the Indiana Constitution.

The Mishlers hired MAC to render certain fire restoration and construction services upon a building owned by the Mishlers in Marion, Indiana. After a dispute arose between the parties, and a stop-work order had been entered by the County Building Department of Grant County, the Mishlers posted messages at the job site that referred to their concerns about the quality of MAC's services. Included as part of these posted messages was an eight foot by eight foot sign on the building. The stop-work order was attached to the sign and circled in red paint. Further, the sign stated:

PUBLIC SERVICE NOTICE

MAC SYSTEMS, INC.

STOP WORK ORDER

CODE VIOLATIONS SEPT. 12, 01

1 2X8S SPANS 15'8" MAX SPAN 13'5"

2 RAFTERS 19' NEED SUPPORTED SHOULD BE 13'9"

3 HEADERS HAVE NO SUPPORTS

4 PIER LOCATION'S [SIC] IN QUESTION

5 SECOND FLOOR DESIGNED INCORRECTLY

6 NAILS HOLDING UP SECOND FLOOR

7 SECOND FLOOR SHOULD BE REMOVED AND REBUILT TO CODE

THEIR CONTRACT STATES QUALITY WORK TO U.S. AND MANY OTHERS[.] THIS IS NOT[.] CLAIMED TO BE A MEMBER OF B.B.B.² NOT.

Appellants' Appendix at 11; Appellants' "Exhibit Volume" at 1.

The Mishlers filed a suit for damages against MAC. MAC answered and raised counterclaims on the basis of breach of contract and libel/slander. MAC also petitioned the court to issue an injunction enjoining the Mishlers from "[m]aking verbal or written statements to members of the public regarding the character, qualifications, workmanship or reputation of MAC" and "[d]isplaying signs referring, in any way, to MAC, its character, qualifications, workmanship or reputation, or to this case." Appellants' Appendix at 8. The trial court held a hearing on the petition and subsequently issued an injunction. The trial court's order did not prohibit the Mishlers from making verbal comments about MAC, but it did direct the Mishlers to remove the sign and to refrain from putting up any other sign referring to MAC.

The Mishlers contend that the trial court's injunction operates as an unconstitutional prior restraint on speech in violation of Article I, Section 9 of the Indiana Constitution and the First Amendment of the United States Constitution. We limit our focus to the Mishlers' contention as it pertains to the Indiana Constitution.³ For purposes of providing a context for our discussion of free speech under the Indiana Constitution, however, we will first discuss the effect of a prior restraint upon free speech. We will then, for the same purpose, look at two recent Indiana cases that discuss the propriety of an injunction against speech under the First Amendment of the United States Constitution. After establishing the context, we will address the state constitutional issue.

The term "prior restraint" is used to describe "administrative and judicial orders forbidding certain communications when issued in advance of the time that such communications are to occur." Alexander v. United States, 509 U.S. 544, 550, 113 S.Ct. 2766, 2771, 125 L.Ed.2d 441 (1993). Restraining orders and injunctions that forbid future speech activities are classic examples of prior restraints. Id. The special vice of a prior restraint is that "communication will be suppressed, either directly or by inducing excessive caution in the speaker, before an adequate determination that it is unprotected by the First Amendment." Pittsburgh Press Co. v. Pittsburgh Commission on Human Relations, 413 U.S. 376, 93 S.Ct. 2553, 2561, 37 L.Ed.2d 669 (1973). The thread running through free speech cases is that prior restraints on speech and publication are the most serious and the least tolerable infringement on free speech rights. Nebraska Press Association v. Stuart, 427 U.S. 539, 96 S.Ct. 2791, 2803, 49 L.Ed.2d 683 (1976). "A criminal penalty or a judgment in a defamation case is subject to the whole panoply of protections afforded by deferring the impact of the judgment until all avenues of appellate review have been exhausted. Only after judgment has become final, correct or otherwise, does the law's sanction become fully operative." Id. A prior restraint, by contrast, and by definition, "has an immediate and irreversible sanction. If it can be said that a threat of criminal or civil sanctions after publication `chills' speech, prior restraint `freezes' it at least for a time." Id. Although a prior restraint is not per se unconstitutional, Southeastern Promotions, Ltd. v. Conrad, 420 U.S. 546, 95 S.Ct. 1239, 1246, 43 L.Ed.2d 448 (1975), it comes to an appellate court with a "heavy presumption" against its constitutional validity. Organization for a Better Austin v. Keefe, 402 U.S. 415, 91 S.Ct. 1575, 1578, 29 L.Ed.2d 1 (1971).

In the recent case of St. Margaret Mercy Healthcare Centers, Inc. v. Ho, 663 N.E.2d 1220 (Ind.Ct.App.1996), this court held that a preliminary injunction was an unconstitutional prior restraint under the First Amendment. In the case, St. Margaret Mercy Healthcare Centers, Inc. (the "Hospital") decided to suspend the privileges of the cardiovascular surgeons on its staff and enter into an exclusive contract with an outside group of surgeons to perform open-heart bypass and valve surgery at the Hospital. In an effort to publicize the contract, the Hospital issued a news release which stated that "[t]he change is expected to improve outcomes, lower mortality rates and reduce costs for coronary artery bypass surgery, the most common and most studied open heart surgery procedure." Id. at 1222. The news release further stated that "[c]osts and quality benchmarks in Northwest Indiana [the Hospital's locale] have been significantly higher than national averages." Id. The issuance of the news release was followed by two articles in local newspapers. The first article was entitled "Death Rate Spurs Doctor Swap," and the second specifically named the staff surgeons whose privileges had been revoked. The Hospital then issued an advertisement stating its goal of improving surgical outcomes by employing the services of the outside surgical group.

The staff surgeons filed a complaint for defamation. The staff surgeons also sought a preliminary injunction that would prohibit the Hospital from issuing any more news releases or advertisements referring to the new contract or mentioning the pre-contract high mortality rate at the Hospital. The trial court issued the injunction.

On appeal, the Hospital asserted that the preliminary injunction acted as a prohibited prior restraint under the First Amendment. After pointing out the particularly pernicious effect of a prior restraint upon free speech, we held that the potential damage to the staff surgeons' reputation did not justify a prior restraint on speech. Id. at 1224. In so holding, we alluded to Better Austin, wherein the United States Supreme Court opined that an injunction prohibiting a group from distributing peaceful literature against a businessman was unconstitutional as the group's free speech rights outweighed the businessman's interest in being free from public criticism of his business practices. Id. We also held that the staff surgeons' remedy for any wrongful conduct was a suit for damages. Id. As an additional ground for setting aside the injunction, we noted that the Hospital's news releases and advertisements were statements of "public interest" and "legitimate public concern." Id. (citing Gilbert v. Medical Economics Co., 665 F.2d 305, 309 (10th Cir.1981); American Broadcasting Companies, Inc. v. Smith Cabinet Manufacturing Co., 160 Ind.App. 367, 312 N.E.2d 85 (1974)).

In a second recent case, Barlow v. Sipes, 744 N.E.2d 1 (Ind.Ct.App.2001), trans. denied, a two-judge panel of this court upheld a trial court's injunction against speech pending resolution of tort claims.⁴ In the case, the owner of an automobile body shop brought an action against an insurance agent and his assistant for intentional interference with a business relationship and defamation, alleging that the insurance agent and his assistant had repeatedly made derogatory comments about the body shop to policy holders and had steered policy holders to another local body shop. The owner requested a preliminary injunction to prevent further harm pending resolution of his action. The trial court issued the injunction, which ordered that the insurance agent and his assistant, among other things, "refrain from making false, negative or disparaging statements about the [body shop]." Id. at 5.

On appeal, the panel analyzed federal cases pertaining to the propriety of damage awards in defamation and/or libel actions. The panel applied these cases in its analysis of the prior restraint case before it, and concluded "that the speech enjoined by the preliminary injunction is of little constitutional import and that the injunction primarily operates to address alleged private wrongs committed by [the agent and his assistant] against [the owner], imputing dishonest business practices and discouraging individuals from patronizing the automobile repair business." Id. at 10. The panel held that the preliminary injunction "passes constitutional muster under the First Amendment." Id.

We now turn our attention to the issue raised by the Mishlers, i.e. whether the trial court's injunction violates the prohibition...