RM Acquisition, LLC v. One20, Inc. et al

Filing 31

MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 9/18/2017:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

RM ACQUISITION, LLC d/b/a
RAND MCNALLY, a Delaware
Corporation,
Plaintiff,
Case No. 17 C 3019
v.
Judge Harry D. Leinenweber
ONE20, INC., a Minnesota
Corporation and CHRISTIAN
SCHENK, Individually and as
An Agent for One20, Inc.,
Defendants.

MEMORANDUM OPINION AND ORDER
Plaintiff, RM Acquisition, LLC d/b/a Rand McNally (“Rand
McNally”),

filed

against

competitor,

a

Defendant
Chief

a

two-count

Christian

Executive

(Count

II).

Defendant

Schenk

Both

defamation per quod.

One20,

asserting

(Count
counts

Amended

(“Schenk”),

Officer,

defamation/negligence

First

I)

allege

and

Complaint

Inc.

(“FAC”)

(“One20”),

One20’s

and

President

and

alternative

claims

of

defamation/recklessness

defamation

per

se

and

not

Defendants have moved to dismiss pursuant

to Rule 12(b)(6), arguing that the statements alleged are not
defamation

per

construction.

se

or

are

reasonably

capable

of

an

innocent

I.
According

to

the

BACKGROUND

FAC,

Rand

McNally

and

One2020

competitors in the commercial trucking industry.
has

long

been

technology
include

established

startup.

The

computerized

installed

in

in

main

fleet

commercial

the

field,

areas

in

management

trucks

and

that

are

Rand McNally

while

One2020

which

is

a

they

compete

compliance

systems

provide

GPS

navigation,

mobile communication, electronic logging of hours of service,
and other functions to enable transportation companies to manage
their fleets and comply with state regulations.
To

get

its

competing

business

off

the

ground,

One20

launched a free membership program for commercial drivers via an
application for Android and Apple devices (the “One20 App”).
One20

subsequently

began

selling

a

markets as “a tablet for truckers.”

Samsung

tablet

that

it

While the tablet provides

GPS navigation and is preloaded with the One20 App, it does not
provide

the

same

functionality

as

Rand

McNally’s

devices,

including electronic logging of hours of service.
In January 2017, One20 began publishing and advertising on its website and its Facebook, Twitter, and LinkedIn pages –
what

it

referred

to

as

its

“Trade-up

Program.”

Under

this

program, a trucker who bought one of One20’s tablets and turned
in his old Rand McNally device would receive a $100 Visa gift
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card.

One20’s

advertisement
shown

in

for

the

Exhibits

Dismiss.
by

website

1,

Trade-Up
2,

3,

four

versions

Program.

and

4

to

These

of

the

versions

Defendants’

Motion

are
to

Two other versions, Exhibits 5 and 6, were published

Defendants

on

Facebook.

published on Twitter.

“handles”

Another

version,

Exhibit

7,

was

An article and commentary, Exhibit 8, was

published on LinkedIn.
Twitter

contained

At about the same time, four different

began

publishing

See, Exhibits 9 through 17.

and

republishing

Tweets.

Some of these were “fake Tweets”

published under stolen identities of individuals who were not
the actual authors and had nothing to do with the Tweets.

The

fake identities are described in paragraphs 14 and 15 of the
FAC.
The gist of the statements in Exhibits 1, 2, 10, 11, 12,
13, 14, 15, and 16 is that Rand McNally is going bankrupt and
that

its

customers

warranties.
Tilton,

will

be

stuck

with

products

without

Exhibits 4, 8, 9, 13, 14, 16, and 17 reference Lynn

“Distressed

Diva,”

and

Patriarch

Partners.

These

advertisements appear to refer to the trials and tribulations of
Lynn

Tilton,

the

so-called

“Distress

Diva,”

who

is

CEO

of

Patriarch Partners, the owner of Rand McNally, and is apparently
having

problems

with

/wiki/Lynn-Tiuton#Co

the
(last

SEC.

See,

visited
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https://en.wikipedia.org
September

12,

2017).

Exhibits 3, 5, 6, and 7 refer to One20 as having “your best
interests in mind” and to “the Rand McNally product” as “old,”
“outdated,” “junk,” and “can’t connect to favorite apps.”
Defendants take the position that these comments are not
defamatory per se because they do not fit into any of the per se
categories, are reasonably capable of innocent construction, and
don’t claim to be in possession of objectively verifiable facts.
On the other hand, Rand McNally argues that Defendants’ efforts
to

sanitize

One20’s

advertisements

ignore

the

natural

and

obvious meaning by taking specific phrases in isolation and out
of context.

By any reasonable measure, the advertisements were

purposely designed to convey to Rand McNally’s customers that
they better take advantage of One20’s offer to “trade up” to
their devices because Rand McNally is going bankrupt and its
customers will be left with “outdated” and “ratty” old devices
without recourse.
II.
The

parties

do

not

DISCUSSION

disagree

as

to

the

applicable

law.

Defamation per se carries a presumption of damages and is an
exception to the ordinary tort rule that a plaintiff must plead
and prove actual damages.

This is so because the harm from the

defamation

apparent,

is

obvious,

explanation with extrinsic facts.
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and

does

not

require

On the other hand, in cases

of defamation per quod, damages are not presumed and a plaintiff
must plead and prove special damages in order to recover.

Brown

& Williamson Tobacco Corp. v. Jacobson, 713 F.2d 262, 267 (7th
Cir. 1983); Tuite v. Corbitt, 224 Ill.2d 490, 501 (2006).

More

innocuous statements not defamatory on their face only impact a
smaller group of readers who have knowledge of facts that make
the statements defamatory.
In Illinois there are five categories of defamation per se,
of which two are applicable to this case:

(1) statements that

suggest malfeasance or misfeasance in performing one’s job, and
(2) statements to the effect that the subject is unfit to pursue
his

trade

or

reputation.

profession,

i.e.,

an

attack

on

its

business

Haynes v. Alfred A. Knopf, Inc., 8 F.3d 1222, 1226

(7th Cir. 1993); Pippen v. NBCUniversal Media, LLC, 734 F.3d
610,

613

(7th

Cir.

2013).

While

these

two

categories

are

similar, the distinction is that the former implies on-the-job
malfeasance whereas the latter covers lack of ability to perform
one’s trade or profession.

Id.

The standard for proof is the

same for corporate plaintiffs as for individuals.

Jacobson, 713

F.2d at 269.
Several rules of construction apply to defamation per se.
Recovery is not allowed if the statement can reasonably be given
an

“innocent

construction.”

Anderson
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v.

Vanden

Dorpel,

172

Ill.2d 399, 412 (1996).

In applying the innocent construction

rule, the court evaluates the statements “stripped of innuendo
and in the best possible light.”
Corp.,

395

N.E.2d

1185,

1189

Makis v. Area Publications
(Ill.

App.

1979)

(citations

omitted). The relative value of competing constructions is not
weighed, but any “reasonable” non-defamatory interpretation is
adopted.

However,

a

court

need

not

“strain”

to

interpret

allegedly defamatory words in their mildest and most inoffensive
sense in a quest to find them non-defamatory.

Giant Screen

Sports v. Canadian Imperial Bank Of Commerce, 553 F.3d 527, 533
(7th

Cir.

2009).

Whether

a

statement

is

within

category is a question of law for the court.

a

per

se

Lott v. Levitt,

556 F.3d 564, 568 (7th Cir. 2009).
We now apply these rules to the facts of this case.

Rand

McNally argues that the statements alleging that it is going
bankrupt and will therefore leave its customers “stuck without a
warranty,” with “out dated” and “ratty” devices, can only be
interpreted as imputing to Rand McNally an inability to continue
to

provide

statements

services
made

by

and

products

Defendants

to

impugn

its
Rand

customers.
McNally’s

Such
business

reputation and therefore are defamatory per se.
Defendants,

on

the

other

hand,

argue

that

statements

suggestive of bankruptcy “are not actionable per se” because
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there

are

many

bankruptcy.

reasons
As

that

authority

may

for

place

this

a

business

contention,

into

they

cite

Pippen, supra, and In re Dawson, No 12 C 2089, 2012 WL 3067867,
at *6 (C.D. Ill. July 27, 2012).
cases

have

adopted

a

“per

Defendants contend that these

se”

rule

that

suggestions

of

bankruptcy are not defamatory per se.
In

deciding

construction

of

whether

there

Defendants’

is

a

suggestions

reasonable
of

Rand

innocent
McNally’s

imminent bankruptcy, it is important to consider the context of
Defendants’ statements because it differs from the contexts in
Pippen and Dawson.

In both cases, the courts found that a

suggestion of bankruptcy would not affect the ability of either
plaintiff to pursue his or her trade or profession.

The court

in Pippen noted that the plaintiff was employed as a goodwill
ambassador for the Chicago Bulls, a basketball analyst, and a
celebrity product endorser.

A statement that he was bankrupt

did not imply that he lacked the competence or integrity to
perform

any

of

those

jobs.

The

plaintiff

in

Dawson

was

a

hairdresser, and the court felt that a personal bankruptcy would
not affect the public’s view of her abilities as a cosmetician
and

as

a

hairdresser.

(It

should

also

be

noted

that

the

plaintiff in Dawson had in fact filed for bankruptcy and was
therefore subject to a defense of truth as well as innocent
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construction.)

Had

Pippen

and

Dawson

been

investment

counselors, the result might well have been different.
However,

as

Rand

McNally

argues,

the

suggestion

of

bankruptcy and the suggestion of the inability of Rand McNally
to honor its warranties go directly to its ability to remain in
business and continue to provide services and products to its
customers.

Thus, it is clear that the suggestions of bankruptcy

are defamation per se as they go directly to impugn its business
reputation.

Defendants’ Motion is accordingly denied as to the

advertisements shown in Exhibits 1, 2, 10, 11, 12, and 15.
On
remaining

the

other

hand,

the
and

advertisements

Motion

is

Tweets

granted

because

as

they

to

the

require

extrinsic facts to make them defamatory or otherwise constitute
rhetorical hyperbole.

Specifically, Exhibits 4, 8, 9, 13, 14,

16, and 17 all reference Lynn Tilton and Patriarch Partners.
That Patriarch Partners is the owner of Rand McNally and its CEO
is

Lynn

insiders

Tilton

are

involved

undoubtedly

in

the

facts

commercial

known

only

trucking

to

a

industry.

few
The

connection between Patriarch Partners, Tilton, and Rand McNally
is

therefore

are

extrinsic

facts

that

are

necessary

understand the significance of these advertisements.
are

not

defamatory

per

se.

The

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Motion

is

to

Thus, they

granted

without

prejudice as to these advertisements shown in Exhibits 4, 8, 9,
13, 14, 16, and 17.
The remaining advertisements that refer to One20 as having
“your best interests in mind” and to “the Rand McNally product”
as “outdated,” “junk,” and “can’t connect to favorite apps” are
mere statements of opinion and rhetorical hyperbole protected by
the First Amendment.
Cir. 2008).

Madison v. Frazier, 539 F.3d 646, 654 (7th

Therefore, the Motion is granted as to Exhibits 3,

5, 6, and 7 with prejudice.
III.
For

the

reasons

CONCLUSION

stated

herein,

Defendants’

Motion

to

Dismiss [ECF No. 17] is denied as to Exhibits 1, 2, 10, 11, 12,
and

15.

The

Motion

is

granted

without

Exhibits 4, 8, 9, 13, 14, 16, and 17.

prejudice

as

to

The Motion is granted

with prejudice as to Exhibits 3, 5, 6, and 7.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
Dated: September 18, 2017
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