Lansing v. Carroll
Filing
277
MEMORANDUM Opinion and Order. Signed by the Honorable Manish S. Shah on 6/29/2015: Carroll's motion to dismiss Stephenson's counterclaim for defamation, 246 , is granted. Because Carroll's comments are not actionable per se, Stephenson's claim must fail because he has not pleaded the special damages necessary to maintain a claim for defamation per quod. [For further detail see attached order.] Notices mailed by Judicial Staff. (psm, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ROBERT T.E. LANSING, et al.,
Plaintiffs,
v.
GEORGE CARROLL and GW CARROLL VI
LLC,
Defendants.
and
No. 11 CV 4153
GEORGE CARROLL and GW CARROLL VI
LLC,
Judge Manish S. Shah
Counter-Plaintiffs,
v.
ROBERT T.E. LANSING, REALTY
PORTFOLIO HOLDINGS LP, MICHAEL
COULTER SMITH, as trustee of CELEBRATE
LIFE TRUST, RICHARD J. STEPHENSON, et
al.,
Counter-Defendants.
MEMORANDUM OPINION AND ORDER
Robert Lansing and George Carroll created a real-estate investment
business. When their relationship soured, each of the partners attempted to buy out
the other. But neither attempt went smoothly, and the parties ultimately became
embroiled in litigation: Lansing filed a breach-of-contract claim against Carroll, and
Carroll brought a series of counterclaims against Lansing and others, including a
man named Richard Stephenson. Carroll, as it turns out, had made several remarks
about Stephenson and the Stephenson family to a few investors when contacting the
latter about the buyout. Stephenson filed a counterclaim against Carroll for
defamation, and Carroll moved to dismiss. For the reasons discussed below,
Carroll’s motion is granted.
I.
Legal Standard
Rule 8(a)(2) of the Federal Rules of Civil Procedure requires that a claim for
relief contain “a short and plain statement of the claim showing that the pleader is
entitled to relief.” The complaint need not include specific facts, but it must provide
the defendant with fair notice of what the claim is, and the grounds upon which it
rests. Olson v. Champaign Cnty., Ill., 784 F.3d 1093, 1098–99 (7th Cir. 2015) (citing
Erickson v. Pardus, 551 U.S. 89, 93 (2007); Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 555 (2007)). The complaint must present enough factual matter, accepted as
true, that the claim to relief “is plausible on its face.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Twombly, 550 U.S. at 570). In considering a motion to
dismiss under Rule 12(b)(6), the district court accepts as true all well-pleaded
factual allegations and draws all reasonable inferences in the (counter-)plaintiff’s
favor. Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 946 (7th Cir. 2013) (quoting
Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010)).
II.
Facts
At bottom, this case is about a business divorce between two individuals,
Robert Lansing and George Carroll. The details of their dispute are set forth in an
2
earlier ruling. [197].1 For the purpose of resolving the present motion, however, a
brief review is helpful.
Lansing and Carroll created together a real-estate investment business. Each
owned an equal number of shares in the business, though the two co-owners worked
out of different offices. (Lansing managed operations in Illinois, while Carroll took
the helm in California.) Ultimately, however, the relationship soured, and in
November 2010 Lansing exercised the “buy/sell” provisions in the business’
governing agreements. Pursuant to those provisions, Lansing offered both to buy
Carroll’s shares and to sell to Carroll Lansing’s own shares for approximately $14.5
million. Carroll chose to buy Lansing’s shares, thus accepting the “sell” portion of
Lansing’s offer. But the closing date for the sale came and went, and Carroll was
unable to raise the money necessary to complete the transaction.
A flurry of action ensued. Lansing sued Carroll for breach of contract, then
purported to take control of Carroll’s shares by executing (unilaterally) a transfer
agreement. Carroll then filed a series of counterclaims based on the alleged
conversion of his interests, including a claim against Lansing for fiduciary breach,
and a claim against Richard Stephenson for aiding and abetting that breach.
Stephenson, according to Carroll, could be held liable under an aiding-and-abetting
theory because it was he who had designated a certain trust (Celebrate Life Trust)
as the funding source for the allegedly-unlawful purchase of Carroll’s shares. After
Citations to the record are designated by the document number as reflected on the district
court’s docket, enclosed in brackets; referenced page numbers are from the CM/ECF header
placed at the top of filings.
1
3
Stephenson’s motion to dismiss the counterclaim was denied, Stephenson filed an
answer and his own counterclaim (against Carroll) for defamation. See [240], later
amended at [254].2
Stephenson claims that when Lansing invoked the buy/sell provisions in
November 2010, and Carroll elected to buy Lansing’s shares rather than to sell his
own, Carroll began to reach out to investors over e-mail about raising the funds to
make the purchase. Although the ostensible purpose of the e-mails was to obtain
money for the buyout, Stephenson contends that in reality the messages served an
alternative objective: to destroy Lansing’s and Stephenson’s reputations by
spreading falsehoods about them. See [254] at 60 ¶¶ 4–5; id. at 64–65 ¶¶ 25–28.
Stephenson claims that Carroll defamed him by making the following (false)
statements about Stephenson to two different investors:
(to Eliot Wadsworth) that “Steve Graver at Graver Capital
Management . . . brought us the Stephensons, and then terminated the
relationship after he found out they were crooks”;
(to Wadsworth) that “I [Carroll] will meet with [Lansing] . . . tomorrow
. . . to discuss some possible solutions that will a) save his reputation;
b) facilitate the transfer; c) reduce the likelihood of him roaming the
streets of Lake Forest with his worldly possessions in a grocery cart; d)
allow me to get rid of and him [sic] to take advantage of the unsavory
Stephenson people . . . .”
(to Wadsworth) that Lansing had drifted to the “dark side,” and that
“[g]iving more money in the form of debt to [Lansing] at this point
would be like giving a case of vodka to an alcoholic”;
Stephenson’s amended answer and counterclaim, as well as the briefs submitted in
support of or in opposition to this motion, were filed under seal. To the extent this opinion
discusses any content previously filed under seal, the party that originally filed that
document must file on the court’s docket a public version of the same. The public version
should leave visible any content referenced below. See City of Greenville, Ill. v. Syngenta
Crop Protection, LLC, 764 F.3d 695, 697 (7th Cir. 2014).
2
4
(to Wadsworth) that Lansing’s investment project with Stephenson
amounted to “deceit”;
(to Jack Humphreville) that “Stephenson appears to be the type that
likes to control things. I wouldn’t be surprised if they eventually
thought they could squeeze Lansing out”; and
(to Humphreville) that “[t]he patriarch [of two other companies] is
Richard J. Stephenson. Google him for more information. . . . You can
be sure any guy with assets in Switzerland and [the Virgin Islands]
has absolutely nothing to hide.”
Id. at 65–66 ¶¶ 30(a)–(f) (citing Exhibits A through F to the counterclaim, [254-1] at
1–27). Stephenson also listed in his counterclaim a series of statements in which
Carroll allegedly accused Lansing of fraud. See id. at 66 ¶¶ 31(a)–(g).
Carroll moved to dismiss the defamation claim on the ground that it fails to
state a proper claim to relief. [246].
III.
Analysis
In Illinois3, defamation is “the publication of any statement that ‘tends to
cause such harm to the reputation of another that it lowers that person in the eyes
of the community or deters third persons from associating with [him].’” Madison v.
Frazier, 539 F.3d 646, 652–53 (7th Cir. 2008) (quoting Seith v. Chicago Sun-Times,
Inc., 371 Ill.App.3d 124, 861 N.E.2d 1117, 1126 (2007)). To succeed on a defamation
This is a diversity action: Stephenson is a citizen of Illinois, while Carroll is a citizen of
California. See [254] at 60–61 ¶¶ 7–8. The parties agree that Illinois law governs
Stephenson’s defamation claim, see [248] at 2; [262] at 3, and it is appropriate to apply
Illinois law in this instance, see Kamelgard v. Macura, 585 F.3d 334, 341–42 (7th Cir. 2009)
(explaining that in modern-day defamation cases it makes sense to apply the law of the
plaintiff’s domicile, because “[t]hat is where the principal injury from a defamation will
occur”); see also Madison v. Frazier, 539 F.3d 646, 652 (7th Cir. 2008) (applying in a
defamation case the substantive law of Illinois, “the state in which th[e] diversity case was
filed” (citing Global Relief Found., Inc. v. New York Times Co., 390 F.3d 973, 981 (7th Cir.
2004)).
3
5
claim, the plaintiff must prove: (1) that the defendant made a false statement
concerning the plaintiff; (2) that there was an unprivileged publication of the
defamatory statement to a third party; and (3) that the plaintiff suffered damages
as a result. Id. at 653 (citing Seith, 861 N.E.2d at 1126); see also Green v. Rogers,
234 Ill.2d 478, 491 (2009) (citing Krasinski v. United Parcel Service, Inc., 124 Ill.2d
483, 490 (1988)). In certain cases, however, a plaintiff need not prove actual
damages in order to recover because the statements “are so obviously and
materially harmful” to the plaintiff’s reputation that his injury may be presumed.
Madison, 539 F.3d at 653 (quoting Bryson v. News America Publ’ns, Inc., 174 Ill.2d
77, 672 N.E.2d 1207, 1214 (1996)) (internal quotation marks omitted). Such
statements are considered defamatory per se. Id.; see also Green, 234 Ill.2d at 491
(explaining that a statement is defamatory per se “if its harm is obvious and
apparent on its face.” (citing Owen v. Carr, 113 Ill.2d 273, 277 (1986)). If a
statement is not defamatory per se, it is defamatory per quod, and the plaintiff must
allege special damages with particularity in order to proceed with his claim. See
Madison, 539 F.3d at 653 (citation omitted).
Illinois considers five categories of statements to be defamatory per se—two of
which Stephenson argues are relevant here, see [262] at 13–14: (1) words that
prejudice a party (or impute a lack of ability) in his trade, profession, or business;
and (2) words that impute the commission of a criminal offense, see Bryson, 174
Ill.2d at 88.
6
A.
Prejudice in a Profession or Business
Stephenson contends that of the six statements listed above, four are
defamatory per se because they are harmful on their face to Stephenson’s business
reputation. The statements allegedly falling into this defamation-per-se category
are: Carroll’s statement to Eliot Wadsworth that Lansing had drifted to the “dark
side”; Carroll’s description (also to Wadsworth) of Lansing’s project with Stephenson
as one involving “deceit”; Carroll’s reference to the Stephensons as “unsavory”
people; and Carroll’s statement to Jack Humphreville that Stephenson “appears to
be the type that likes to control things.” See [262] at 14.
In Illinois, even a statement that might otherwise be considered defamatory
per se is not actionable as such if, when viewing the statement in context and giving
to its words their natural and obvious meaning, the statement may reasonably be
interpreted: (1) in an innocent (non-defamatory) way; or (2) as referring to someone
other than the plaintiff. See Solaia Tech., LLC v. Specialty Publ’g Co., 221 Ill.2d
558, 580 (2006) (citations omitted). Whether a statement is reasonably capable of an
innocent construction is a question of law that the court may decide. See Madison,
539 F.3d at 654 (citing Knafel v. Chicago Sun-Times, Inc., 413 F.3d 637, 640 (7th
Cir. 2005); Kolegas v. Heftel Broad. Corp., 154 Ill.2d 1, 607 N.E.2d 201, 207 (1992)).
Here, neither the statement to Wadsworth about Lansing going to the “dark side,”
nor the statement about Lansing engaging in “deceit,” is actionable per se because
each may reasonably be interpreted to refer to someone other than Stephenson.
7
The first of these two statements is a response by Carroll to an e-mail from
Wadsworth, in which Wadsworth stated (to both Carroll and Lansing):
I have spent a lot of time listening to you both . . . . I cannot but
suspect that both of you, with the bulk of your net worth tied up in
these funds . . . , are experiencing issues of personal liquidity and I, for
one, would be quite willing to be part of a loan accommodation which
would relieve the short term pressure on you . . . .
[254-1] at 10–11. Carroll answered:
This buy-sell was triggered by [Lansing], among other reasons, to
disguise actions by him that were contrary to our Business Code of
Conduct . . . and our investor LP agreements. . . . The real reason, I
believe, for [Lansing’s] drifting to the “dark side” are his own money
problems and obsession with living beyond his means. . . . Your offer of
a loan is gracious, but I don’t need a loan. Giving more money in the
form of debt to [Lansing] at this point would be like giving a case of
vodka to an alcoholic.”
Id. at 8. The natural and obvious meaning of this statement is that Carroll is
accusing Lansing of behaving inappropriately (i.e., by breaking certain of the
partners’ business agreements) in order to accommodate the latter’s personal
spending habits. Carroll says that Lansing drifted to the “dark side” in order to
cover up “actions by him that were contrary to” the partners’ agreements. Id.
(emphasis added). On its face, and even when viewed in context of the larger
discussion, the comment does not address Stephenson or his conduct at all. Thus, it
cannot be defamatory per se.
Stephenson urges that the statement does refer to him because it concerns
Lansing’s business relationship with Stephenson—and thus, in the larger context of
the current litigation (in which Carroll has alleged in his counterclaim that
Stephenson aided and abetted Lansing’s purported fiduciary breach), the comment
8
is actionable per se. See [262] at 8. The specific claims and allegations set forth in
the parties’ present legal dispute are “facts” extrinsic to the above communications.
As such, those facts cannot be used—at least not in support of a claim for
defamation per se—to provide context that Stephenson argues is otherwise missing
from the comments themselves. See Dubinsky v. United Airlines Master Exec.
Council, 303 Ill.App.3d 317, 323 (1999) (explaining that a statement is defamatory
per se only if “extrinsic facts are not needed to explain it” (citing Schaffer v. Zekman,
196 Ill.App.3d 727, 731 (1990))). Because it is not clear from the face of Carroll’s
comment that he is referring to Stephenson, the comment cannot properly support
Stephenson’s claim of defamation per se. (Indeed, even if extrinsic facts could be
used to fill in contextual gaps, Stephenson could not in this instance rely on the fact
of Carroll’s counterclaim against Stephenson. Carroll did not file his counterclaim
until 16 months after he made the above statement to Wadsworth. Compare [254-1]
at 8 (sent on January 9, 2011) with [41] (filed May 29, 2012).)
Carroll’s
next
statement
to
Wadsworth—which
Stephenson
says
characterizes his project with Lansing as one amounting to “deceit,” see [254] at
65—suffers from the same problem. That statement is as follows:
In the deal [Lansing] was presenting to you [Wadsworth] . . . , he had
imputed a $285K value on my interest . . . . He neglected to tell you
about the Apogee deal, which would generate $2MM in cash annually
. . . , all of it net profit. Your 1/3 interest in the buyout fund, of which
you would have paid $95K . . . , would have generated $330K annually,
just from Apogee. Maybe that’s just “shrewd business practice” in your
world. In my world it’s called deceit, and I would want nothing to do
with that individual . . . once I learned he had done such a thing
without proper disclosure.
9
[254-1] at 15. Here again, Carroll is accusing Lansing, not Stephenson, of acting
inappropriately—in this instance, by lying to (and thus “deceiving”) others about
the true value of Carroll’s shares in the real-estate business.
Stephenson argues that the comment necessarily concerns him, and so paints
him as a liar and a deceitful person, because the impact on share values that
Lansing supposedly concealed from Wadsworth stemmed, as Carroll states in his
message, from the Apogee deal—and in his counterclaim against Stephenson,
Carroll refers to the Apogee deal as the “Stephenson/Apogee” project. See [262] at 9.
As already noted, however, Stephenson cannot point to extrinsic facts—including
the pleadings in the present litigation—to establish that a given statement
impliedly refers to him or his conduct and is therefore actionable per se. And even if
Wadsworth (the recipient of Carroll’s message in this instance) otherwise knew that
the Apogee deal involved Stephenson, still the message could not reasonably be read
as defaming Stephenson on its face. The “deceitful” conduct described in Carroll’s
statement is Lansing’s deliberate failure to notify others about the likely impact the
Apogee deal would have on the partners’ business. See [254-1] at 15 (“In the deal
[Lansing] was presenting to you . . . , he had imputed a $285K value on my interest
. . . . He neglected to tell you about the Apogee deal . . . .”) (emphasis added); id. (“I
would want nothing to do with that individual . . . once I learned that he had done
such a thing . . . .”) (emphasis added). Nothing in the statement indicates that
Stephenson had any obligation to disclose information about Apogee to Wadsworth
(or anyone else), or that, by neglecting to do so, he somehow participated in the
10
“deceit” of which Carroll complains. The natural and obvious interpretation of
Carroll’s comment is that he is criticizing only one person’s behavior, and that
person is Lansing. Thus, this comment, too, fails to support Stephenson’s claim of
defamation per se.
Stephenson argues in the alternative that because he alleges in his
counterclaim that the above statement is “of or concerning” him, the court must
accept that allegation as true. See [262] at 9. This argument is unpersuasive. In
Illinois, whether a given statement refers to the plaintiff under the innocentconstruction rule is a question of law, not fact. And the court must accept as true
only well-pleaded factual allegations; a “legal conclusion couched as a factual
allegation” is not entitled to any deference. Beyrer, 722 F.3d at 946 (quoting Iqbal,
556 U.S. at 678). Moreover, even if Stephenson’s allegation (that the comment
concerns him) were a factual one, it need not be accepted as true where, as here, the
allegation is contradicted by exhibits attached to the complaint. See Abcarian v.
McDonald, 617 F.3d 931, 933 (7th Cir. 2010) (“[T]he exhibits trump the allegations.”
(citing N. Ind. Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 455
(7th Cir. 1998))). The e-mail message Stephenson attached to his counterclaim
makes clear that the comments in that message are about Lansing, not Stephenson.
This is enough to overcome Stephenson’s allegation to the contrary.
The next statement underlying Stephenson’s defamation claim does refer to
him, but it suffers from other issues. In this statement, Carroll commented to Jack
Humphreville, another investor:
11
Stephenson appears to be the type that likes to control things. I
wouldn’t be surprised if they eventually thought they could squeeze
Lansing out.
[254-1] at 23. The comment is clearly about Stephenson, but it is not obviously
harmful to his reputation—or obviously prejudicial to him in his profession or
business4—such that it is actionable per se. To be actionable per se in the professionor-business category, typically a statement must “relate[] to job performance.”
Madison, 539 F.3d at 656 (citing Cody v. Harris, 409 F.3d 853, 856–57 (7th Cir.
2005)). “[A]ttacks related to personal integrity and character” are usually
insufficient. Id. (An attack on the plaintiff’s integrity could in some cases constitute
defamation per se if personal integrity is sufficiently “intertwined with job skills,”
id. (citing Kumaran v. Brotman, 247 Ill.App.3d 216, 617 N.E.2d 191, 199 (1993));
but Stephenson does not explain why this exception would apply here.) Carroll’s
comment that Stephenson likes to control things does not, on its face, suggest any
ineptitude on Stephenson’s part, or any inability to perform his job.
But even if Stephenson could state a claim for defamation per se based on an
attack of his personal integrity, the statement here still would not support such a
claim. To have integrity means that you are “honest and fair.” See Merriam-Webster
Stephenson’s counterclaim is silent on what his business or profession actually is. One of
the exhibits to his counterclaim reasonably suggests that Stephenson’s family, at least, is in
the business of managing certain forms of intellectual property and conducting investment
research for select companies. See December 10, 2010 E-mail from George Carroll to Jack
Humphreville, [254-1] at 2 (stating that Rising Tide (www.risingtide.ch) is owned by the
Stephensons); http://www.risingtide.ch/about.php (describing services provided by Rising
Tide) (last visited June 29, 2015). But it is unclear from Stephenson’s counterclaim whether
Stephenson himself is actually involved in this business, and if so, to what extent. Indeed,
Carroll’s e-mail also suggests that Stephenson may not be involved in the company’s day-today operations. See [254-1] at 2.
4
12
Online
Dictionary,
http://www.merriam-webster.com/dictionary/integrity
(last
visited June 29, 2015). To say that someone is controlling, however, does not imply
that he is either dishonest or unfair. Such qualities are not inherently linked.
Carroll’s
statement
is
readily
capable
of
an
innocent,
non-defamatory
interpretation, and so is not actionable per se.5
The final statement that Stephenson says fits within the profession-orbusiness category is Carroll’s comment to Wadsworth that members of the
Stephenson family are “unsavory” people. In a January 11, 2011 e-mail to
Wadsworth, Carroll stated:
I will meet with [Lansing] . . . tomorrow . . . to discuss some possible
solutions that will a) save his reputation; b) facilitate the transfer;
c) reduce the likelihood of him roaming the streets of Lake Forest with
his worldly possessions in a grocery cart; d) allow me to get rid of and
him [sic] to take advantage of the unsavory Stephenson people . . . .
[254-1] at 21. Stephenson argues that this comment, too, impugns his business
reputation and so is defamatory per se. Whether the comment fits within any of the
five recognized per-se categories is ultimately irrelevant, however, because it is a
non-actionable statement of opinion.
Kolegas v. Heftel Broadcasting Corp., on which Stephenson relies, is distinguishable. In
that case, the plaintiff (Kolegas) was in the business of producing and promoting classic
cartoon festivals. 154 Ill.2d 1, 11 (1992). After Kolegas called into a radio program to
promote his upcoming show, the hosts of the program stated (on the air) that Kolegas was
“scamming” them, and that there was no such festival. See id. at 11–12. The Illinois
Supreme Court concluded that these comments implied Kolegas was lying to the public
about the festival, and so the comments “could be found to have damaged [his] integrity and
to have prejudiced him in his business of promoting and promoting classic cartoon
festivals.” Id. at 12. Here, by contrast (and as explained above), there is no suggestion from
Carroll’s statement that Stephenson lied or is dishonest. Thus, unlike in Kolegas, “there is
a reasonable innocent construction” for Carroll’s statement that “remove[s that] statement
from the defamatory per se category,” id.
5
13
The First Amendment protects from defamation liability those who make
statements of opinion—that is, comments “that cannot ‘reasonably [be] interpreted
as stating actual facts.’” Madison, 539 F.3d at 654 (quoting Milkovich v. Lorain
Journal Co., 497 U.S. 1, 20 (1990)); see also Bryson, 174 Ill.2d at 100 (citing, inter
alia, Milkovich, 497 U.S. at 20).6 To determine whether a given statement is one of
fact or opinion, Illinois courts generally rely on three criteria: (1) whether the
statement has a precise and readily understood meaning; (2) whether the statement
is verifiable; and (3) whether its literary or social context signals that it has factual
content. Madison, 539 F.3d at 654 (citing J. Maki Constr. Co. v. Chicago Reg’l
Council of Carpenters, 379 Ill.App.3d 189, 882 N.E.2d 1173, 1183 (2008)); see also
Imperial Apparel, Ltd. v. Cosmo’s Designer Direct, Inc., 227 Ill.2d 381, 398 (2008)
In Imperial Apparel, Ltd. v. Cosmo’s Designer Direct, Inc., the Illinois Supreme Court
explained that the First Amendment protection had been applied only in three types of
defamation actions: those brought by public officials, those brought by public figures, and
those brought by private individuals against media defendants. 227 Ill.2d 381, 398–99
(2008) (citation omitted). The court left open the question of whether the protection may
apply in cases such as this one, where a private individual has sued another private
individual. See id. at 400. The Illinois Court of Appeals, however, has since extended the
doctrine to a private person’s claim against a non-media defendant, observing that it makes
sense to do so because a uniform approach reduces ambiguity, and ambiguity “can
otherwise foster . . . self-censorship and inhibit the free flow of protected expression.” Stone
v. Paddock Publ’ns, Inc., 961 N.E.2d 380, 392 (Ill. App. Ct. 2011) (discussing Imperial
Apparel, 227 Ill.2d at 400); see also id. (“We are persuaded by the policies set forth by the
supreme court that this requirement should not be limited by the status of the speaker or
the person being spoken about.”).
It makes sense to apply the protection in all types of defamation cases for another
reason. To prevail on a defamation claim in Illinois, the plaintiff—regardless of status—
must prove that the defendant “made a false statement concerning [him].” Madison, 539
F.3d at 653 (citing Seith, 861 N.E.2d at 1126) (emphasis added); Solaia Technology, 221
Ill.2d at 579. And only statements of fact—not those of opinion—are capable of being proven
true or false. See Coghlan v. Beck, 984 N.E.2d 132, 145 (Ill. App. Ct. 2013) (citing Moriarty
v. Greene, 315 Ill.App.3d 225, 233 (2000)).
6
14
(citing Solaia Technology, 221 Ill.2d at 581). Whether a statement is one of fact or
opinion is a question of law. Madison, 539 F.3d at 654 (citation omitted).
Under these criteria, Carroll’s comment that the Stephensons are “unsavory”
is a statement of opinion. While the term “unsavory” may be readily understood as
meaning unpleasant or distasteful, these are concepts with no inherent boundaries.
What is unpleasant and thus “unsavory” to some may be perfectly acceptable to
others. The scope of Carroll’s phrasing is thus too far-reaching, and therefore too
imprecise, to “contain objectively verifiable factual assertions” that support a
defamation claim. Lifton v. Bd. of Educ. of the City of Chicago, 416 F.3d 571, 578–79
(7th Cir. 2005) (concluding that references to the plaintiff as “lazy” and “unstable”
were non-actionable opinions); accord Hopewell v. Vitullo, 299 Ill.App.3d 513, 519
(1998) (“Regardless of the fact that ‘incompetent’ is an easily understood term, its
broad scope renders it [imprecise]; one person’s idea of when one reaches the
threshold of incompetence will vary from the next person’s.”); Horrell v. Merrill
Lynch, Pierce, Fenner, & Smith Inc., No. 03 C 4996, 2006 WL 2735448, at *6 (N.D.
Ill. Sep. 22, 2006) (“[The] statement that ‘Mike Horrell and his work associates were
dirty people’ . . . is the sort of name-calling not actionable under Illinois law . . . .”).
Carroll’s reference to the Stephensons as “unsavory” is therefore non-actionable.
B.
Imputation of a Criminal Offense
Stephenson argues that the remainder of Carroll’s statements are
defamatory per se because they accuse Stephenson of committing a crime. See [262]
at 14. Words that impute the commission of a criminal offense are considered
15
defamatory per se. See Bryson, 174 Ill.2d at 88 (citation omitted). Although the
words need not meet the technical requirements necessary for an indictment, they
must “fairly impute the commission of a crime”—specifically, an indictable one,
“involving moral turpitude and punishable by death or imprisonment.” Kapotas v.
Better Gov’t Assoc., 30 N.E.3d 572, 590 (Ill. App. Ct. 2015) (citation omitted); see also
Moore v. People for the Ethical Treatment of Animals, Inc., 402 Ill.App.3d 62, 69
(2010) (citations omitted).
Stephenson first contends that Carroll imputed to Stephenson the
commission of a crime when Carroll wrote to Wadsworth:
Steve Graver at Graver Capital Management . . . brought us the
Stephensons, and then terminated the relationship after he found out
they were crooks.
[254-1] at 5. The innocent-construction rule is used to determine whether a
statement imputes a criminal offense. See Moore, 402 Ill.App.3d at 70 (citing
Kirchner v. Greene, 294 Ill.App.3d 672, 680 (1998)). Under that rule, a term is not
actionable as defamation per se if, in common usage, it has a broader, non-criminal
meaning. See Kapotas, 30 N.E.3d at 590; Moore, 402 Ill.App.3d at 70 (quoting
Kirchner, 294 Ill.App.3d at 680). Such is the case here. As Stephenson points out,
the word “crook” commonly denotes a variety of things—some of which imply
criminal activity, see [262] at 7 n. 1 (noting that “crook” can mean “a criminal” or “a
person who engages in fraudulent or criminal practices” (citing Merriam-Webster
Online Dictionary, http://www.merriam-webster.com/dictionary/crook)), and some of
which do not, see id. (noting that “crook” may also mean “a dishonest person”); see
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also id. at 7 (arguing that calling someone a crook “impugns [his] reputation by
conveying that he is . . . guilty of some sort of financial crime” or by conveying “that
he is a liar”). Because in common usage the term “crook” may suggest mere
dishonesty, Carroll’s statement here does not obviously impute the commission of a
crime—and so is not, as a result, actionable per se.
Indeed, Carroll’s statement about the Stephensons being “crooks” is not
actionable at all, because it is a statement of opinion. The scope of the term “crook,”
as just explained, is quite broad. And unless the term is used in a specific factual
context that lends it a more precise meaning, calling someone a “crook” does not
offer any objectively verifiable information that can support a claim for defamation.
Dubinsky, 303 Ill.App.3d at 329–30. The context of Carroll’s comment here does not
provide the necessary factual boundaries, and the precise meaning of his statement
remains ambiguous. As such, his general reference to the Stephensons as “crooks” is
non-actionable.
Stephenson next argues that another comment by Carroll—this one to Jack
Humphreville—also imputes to Stephenson the commission of a crime and is
therefore actionable per se. But the statement to Humphreville, like the statement
just discussed, is too vague to support on its face a defamation claim.
In a December 2010 e-mail from Humphreville to Carroll, the former asked:
“Who are Risng [sic] Tide (www.risingtide.ch) and International Capital Investment
Company?” [254-1] at 2. Carroll responded:
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Rising Tide (Switzerland) and International Capital (Virgin Islands?)
are owned by the Stephenson family, I believe. The patriarch is
Richard J. Stephenson. Google him for more information. I don’t think
he has much role in day-to-day ops, but you can be sure any guy with
assets in Switzerland and [the Virgin Islands] has absolutely nothing
to hide.
Id. Stephenson contends that the last part of this statement—“you can be sure any
guy with assets in Switzerland and [the Virgin Islands] has . . . nothing to hide”—
insinuates dishonesty, corruption, or “other illicit activities” on Stephenson’s part.
[262] at 6. Each of these interpretations is reasonable, but therein lies the problem:
the meaning of the comment is simply too broad, and therefore too ambiguous, to
support a claim for defamation per se. There are multiple reasons why one might
hold assets abroad—for example, to keep creditors, competitors, relatives, or the
government from knowing about them—but not all of them imply criminal activity
or, more specifically, criminal activity punishable by imprisonment. In context,
Carroll’s comment could reasonably be understood as suggesting merely that
Stephenson is a sketchy person who ought not to be trusted. Stephenson himself
appears to recognize as much, since he argues that Carroll’s statement plausibly
implies illicit conduct or dishonesty. See id.
Illinois courts have repeatedly observed that, to be actionable as defamation
per se (in the commission-of-a-crime category), a statement must directly or
expressly accuse the plaintiff of committing a specific crime. See Dubinsky, 303
Ill.App.3d at 327 (requiring direct accusation of a crime); Kapotas, 30 N.E.3d at 590
(requiring an express accusation); Coghlan v. Beck, 984 N.E.2d 132, 148 (Ill. App.
Ct. 2013) (observing that a statement would be actionable as defamation per se if it
18
imputed the commission of “a specific crime”) (citation omitted); Makis v. Area
Publ’ns Corp., 77 Ill.App.3d 452, 458 (1979) (explaining that a suggestion of
criminal conduct is merely hypothetical—and so not actionable per se—where it
“does not impute any act or specific criminal conduct to [the] plaintiff”) (citation
omitted). Carroll’s statement does not do this. His reference to Stephenson as
“hiding” something does not present an actual violation of the law, and so is not
defamatory per se. See Dubinsky, 303 Ill.App.3d at 328.
The meaning of Carroll’s statement is also too vague for the statement to
constitute a provably false assertion of fact. Stephenson argues that the statement
is verifiable (and verifiably false) because one can determine as a matter of fact that
Stephenson has never been convicted of a felony or, more specifically, of having
committed a financial crime. See [262] at 6. Whether Stephenson was convicted of a
particular crime has no bearing on whether he may have committed one—and so
cannot prove as true or false any accusation that he has done so. But this is neither
here nor there because, as noted above, it is not sufficiently evident from the context
of Carroll’s statement that he is even accusing Stephenson of a crime at all. The
statement is not objectively verifiable because its meaning is too imprecise.
To a certain extent, all opinions imply some facts; but whether a statement of
opinion is actionable is a question of degree: “the vaguer and more generalized the
opinion, the more likely [it] is nonactionable as a matter of law.” Wynne v. Loyola
Univ. of Chicago, 318 Ill.App.3d 443, 452 (2000) (citing Hopewell, 299 Ill.App.3d at
19
521). Carroll’s statement here is ambiguous enough that it falls on the nonactionable side of the line.
C.
Additional Statements About Lansing
In the second part of his counterclaim, Stephenson includes a series of
statements by Carroll that Stephenson says falsely accuse Lansing—not
Stephenson—of fraud. See [254] at 66 ¶¶ 31(a)–(g). Stephenson argues that, even
though these statements are concededly about Lansing, they can still support the
former’s defamation claim when considered in the larger context of the parties’ legal
dispute and Carroll’s own allegations (of aiding and abetting Lansing’s fiduciary
breach) against Stephenson. See [262] at 11.
As already explained, Stephenson cannot properly rely on facts extrinsic to
the communications at issue to demonstrate that certain of their statements are
indeed about Stephenson and thus are defamatory per se as to him. If a statement is
not obviously about Stephenson, it cannot be so obviously harmful to him that his
injury may be presumed. Such a statement is not defamatory per se, but defamatory
per quod. See Madison, 539 F.3d at 653; see also Solaia Technology, 221 Ill.2d at
580 (“If . . . the statement may . . . reasonably be interpreted as referring to
someone other than the plaintiff it cannot be actionable per se.” (quoting Chapski v.
Copley Press, 92 Ill.2d 344, 352 (1982))) (internal brackets omitted). When read in
their appropriate context, the statements in paragraph 31 of Stephenson’s
counterclaim are about Lansing; none is obviously about Stephenson. Consequently,
they cannot support Stephenson’s claim for defamation per se.
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IV.
Conclusion
For the reasons discussed above, Carroll’s motion to dismiss Stephenson’s
counterclaim for defamation, [246], is granted. Because Carroll’s comments are not
actionable per se, Stephenson’s claim must fail because he has not pleaded the
special damages necessary to maintain a claim for defamation per quod.
ENTER:
___________________________
Manish S. Shah
United States District Judge
Date: 6/29/15
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