Schwartz v. American College of Emergency Physicians , 215 F.3d 1140 ( 2000 )

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JUN 15 2000
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
GEORGE R. SCHWARTZ, M.D.,
Plaintiff-Appellant,
v. No. 98-2228
AMERICAN COLLEGE OF
EMERGENCY PHYSICIANS,
AMERICAN MEDICAL
ASSOCIATION, BRIAN
MCCORMICK AND DOES 1
THROUGH 50, INCLUSIVE,
Defendants-Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
(D.C. No. CIV-97-1061-JP/LFG)
Britton D. Monts, Law Offices of Britton D. Monts, P.C., Dallas, Texas for the
Appellant.
Martin R. Esquivel, Dines, Gross & Esquivel, P.C., Albuquerque, New Mexico,
for Appellees American Medical Association and Brian McCormick.
D. Bradley Kizzia, Strasburger & Price, L.L.P., Dallas, Texas, (Emily Franke,
Butt, Thornton & Baehr, Albuquerque, New Mexico with him on the briefs) for
Appellee American College of Emergency Physicians.
Before ANDERSON , McKAY , and HENRY , Circuit Judges.
PER CURIAM.
This diversity action arises out of an article authored by Brian McCormick,
an American Medical Association (“AMA”) employee, in which Mr. McCormick
published statements concerning George R. Schwartz, M.D., made by American
College of Emergency Physician’s (“ACEP”) President, John B. McCabe, M.D.
Contending that the statements made by Dr. McCabe were materially false, Dr.
Schwartz asserted a state law claim against ACEP, AMA and Mr. McCormick for
defamation. The defendants filed substantially similar motions for summary
judgment. Applying Fed. R. Civ. P. 56(c), the district court concluded that
although there was sufficient evidence to show a genuine issue as to whether the
statement was published with actual malice, presumably meaning that the
statements may have been published with reckless disregard for their truth, Dr.
Schwartz nevertheless failed to establish that the published statements were false.
Dr. Schwartz now appeals. For the reasons set forth below, we conclude
that the district court properly granted summary judgment to the defendants.
I. BACKGROUND
Dr. Schwartz is a physician and author specializing in the field of
emergency medicine. In February 1994, Dr. Schwartz published an editorial
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article in the Emergency Medicine News that was highly critical of the care
provided by hospital management companies. He also appeared on the national
television show, The 700 Club , discussing emergency medical issues relevant to
this matter. On April 20, 1994, one such hospital management company, Coastal
Healthcare Group, Inc. (“Coastal”), which is publicly traded, filed a defamation
action against Dr. Schwartz in North Carolina state court, which was later
dismissed.
In September 1994, Mr. McCormick published an article in the American
Medical News titled “Emergency Medicine Contracting at Center of Libel Suit.”
Aplts’ App. at 66. Within the article, Mr. McCormick wrote:
One of the AAEM [American Academy of Emergency Medicine]
tactics that most concerns Dr. McCabe is a solicitation last month to
all board-certified emergency physicians seeking $100 donations to
Dr. Schwartz’ defense fund. “Their letter only mentions half the
story, telling doctors that Dr. Schwartz is being sued for attacking
contracting practices, but failing to mention that he is also being
sued for stock fraud. I can’t very well contact every emergency
physician to tell them the rest of the story, but there is an ethical
question here regarding Dr. Schwartz that physicians should know
about.”
Id. (quoting Dr. McCabe).
On August 11, 1996, Dr. Schwartz filed this defamation action, alleging
statements regarding him in Mr. McCormick’s article were materially false.
Primarily, Dr. Schwartz contends that the allegation that he was “being sued for
stock fraud,” which alluded to the then-ongoing Coastal litigation in North
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Carolina, was materially false in that it indicated that Dr. Schwartz had engaged in
illegal stock trading activity and was being sued for his misconduct. Dr. Schwartz
contends that his having taken a legal “short” position in Coastal’s stock before his
editorial was published, see Aplt’s App. at 208-09, was undeservedly transmogrified
into “stock fraud.” 1
As a result of the negative connotations of the statement, Dr.
Schwartz contends he has been wrongfully, and perhaps irreparably, scorned by his
peers because of his alleged moral turpitude.
In response, the appellees assert that the statement at issue was an
expression of opinion, not fact. They further contend that the statement’s
reference to the Coastal litigation was substantially true, in that Dr. Schwartz
made the statement to influence the price of Coastal’s stock. Finally, they argue
that, as a public figure, Dr. Schwartz is unable to show that Mr. McCormick
published Dr. McCabe’s statement with malice.
1
The selling short of a security is to take advantage of an anticipated
decline in the price of a security, which is an activity regulated by Regulation T
of the Federal Reserve Board. See 12 C.F.R. § 220.1- 220.132; see generally,
John Downes & Jordan Elliot Goodman, Dictionary of Finance & Investment
Terms 523 (4th ed. 1995). For example, to attain a short position, an investor
who anticipates a decline in the price of a security may instruct her broker to sell
short one hundred shares of that security while the security trades at $50.00 per
share. The broker then lends the shares to the investor. The investor now has a
short position. She does not own the securities, and must, at a designated time,
repay the broker. If the price of the security declines by $10.00, she will purchase
the shares for $4,000.00, repay the broker, and claim a $1,000.00 profit. See
Downes & Goodman, supra at 523.
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II. DISCUSSION
A. Standard of Review
“In reviewing a grant or denial of summary judgment, we apply the same
standard applied by the district court under Fed. R. Civ. P. 56(c).” King v. Union
Oil. Co. of Calif. , 117 F.3d 443, 444-45 (10th Cir. 1997). Summary judgment is
appropriate if “there is no genuine issue as to any material fact and . . . the
moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).
As we have noted, “the evidence of the nonmovant is to be believed, and all
justifiable inferences are to be drawn in [the nonmovant’s] favor.” Anderson v.
Liberty Lobby, Inc. 477 U.S. 242, 255 (1986). Applying this standard, we
conclude that Dr. Schwartz is unable to establish a genuine issue for trial. See
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 587
(1986).
B. Elements of Defamation
Under New Mexico law, the elements of defamation include (1) a
publication by the defendant, (2) of an asserted fact, (3) which is defamatory, (4)
communicated to a third person, (5) of and concerning the plaintiff, (6) and
proximately causing injury to the plaintiff. See Newberry v. Allied Stores, Inc. ,
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773 P.2d 1231, 1236 (N.M. 1989) ; see N.M. Stat. Ann. Civ. U.J.I. 13-1007
(Michie 2000) (hereinafter, “U.J.I.”). The fourth, fifth, and sixth elements are
not contested in this appeal, so we shall discuss only the relevant elements as
they are qualified by the facts before us.
But before we analyze the elements as listed above, in order to determine
the correct standard of proof for damages, we must first determine whether or not
the plaintiff is a public figure. See Newberry , 773 P.2d at 1236. If the plaintiff
is not a public figure or public official, the ordinary common law negligence
standard of proof for damages applies. See id. If we determine that the plaintiff
is a public figure, or a public figure for a limited range of issues, the plaintiff
must show the falsity of the statement at issue in order to prevail. See
Philadelphia Newspapers v. Hepps , 475 U.S. 767, 775 (1986); U.J.I. 13-1006. In
addition, a public-figure plaintiff must also establish proof of actual malice,
which is knowledge of the falsity of the statement or reckless disregard of the
truth. See Masson v. New Yorker Magazine, Inc. , 501 U.S. 496, 510 (1991)
(citing New York Times v. Sullivan , 376 U.S. 254, 279-80 (1964)); Newberry ,
773 P.2d at 1236.
In its October 7, 1998 order, the district court concluded that Dr. Schwartz
“is a public figure for a limited range of issues.” Aplt’s App. at 361. We agree.
“Whether or not a person is a public figure is a question of law for the court.”
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Marchiondo v. Brown , 649 P.2d 462, 467 (N.M. 1982); see Ammerman v.
Hubbard Broad., Inc. , 572 P.2d 1258 (N.M. Ct. App. 1977). A public figure is a
person who “‘voluntarily injects himself or is drawn into a particular public
controversy and thereby becomes a public figure for a limited range of issues.’”
Furgason v. Clausen , 785 P.2d 242, 249 (N.M. Ct. App. 1989) (quoting Gertz ,
418 U.S. at 351). Dr. Schwartz testified he “was a spokesperson for the ideas
that were expressed in [his] editorial, and . . . [he] was held in high repute, . . . .”
Aplt’s App. at 110 (Schwartz Depo. at 184). Dr. Schwartz’s pleadings stated that
he:
is a nationally-recognized pioneer in the professionalization of the field
of Emergency Medicine, . . . a nationally recognized author in the
Emergency Medicine profession who is editor-in-chief of a leading
textbook used in medical schools nationwide, a scholar and researcher
in the Emergency Medicine field . . . .
Aplt’s App. at 11-12 (Complaint ¶ 9). Dr. Schwartz does not dispute that he has
injected himself into the public controversy involved in this case. He states that
when he wrote his February 1994 article, he was joining “other medical
magazines and journals, as well as the national news media” who were reporting
on similar practices involving multi-hospital contract management companies.
Id. at 12. As such, we conclude that Dr. Schwartz is a public figure for purposes
of this action.
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1. Publication
Here, the parties do not contest the statement’s republishing by defendants.
Less clear is a republisher’s liability under New Mexico law. Although New
Mexico state courts have not addressed a republisher’s liability for another
party’s defamatory statement, New Mexico generally follows the Restatement’s
approach in its law concerning the tort of defamation. See, e.g. , Andrews v.
Stallings , 892 P.2d 611, 615 (N.M. Ct. App. 1995) (quoting Restatement
(Second) of Torts § 566 (1976)); Dominguez v. Stone , 638 P.2d 423, 425 (N.M.
Ct. App. 1981) (quoting Restatement (Second) of Torts § 559).
The Restatement supports the view that “one who repeats or otherwise
republishes defamatory matter is subject to liability as if he had originally
published it,” “[e]xcept as to those who only deliver or transmit defamation
published by a third person.” Restatement (Second) of Torts § 578. “[T]he
republisher of a defamatory statement made by another remains subject to
liability (Restatement (Second) of Torts § 578 (1977)), but he cannot be held
liable unless he himself knew at the time when the statement was published that
it was false, or acted in reckless disregard for its truth or falsity.” Catalano v.
Pechous , 419 N.E.2d 350, 361 (Ill. 1980). As such, the publication of Dr.
McCabe’s statement in Mr. McCormick’s article could support Dr. Schwartz’s
claim for defamation against Mr. McCormick, ACEP, or AMA.
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2. An asserted fact
In order for there to be liability, we must first confirm that the statement
made is one capable of being defamatory–that is, the statement is factual--and not
merely an expression of opinion. The First Amendment protects opinions under
certain conditions. See Gertz v. Robert Welch, Inc. , 418 U.S. 323 , 339-40
(1974); Jefferson County School Dist. v. Moody’s Investor’s Servs., Inc. , 175
F.3d 848, 852-54 (10th Cir. 1999). Certain expressions of opinion implicitly
contain an assertion of objective fact, and such statements are not exempt from a
defamation claim. See Milkovich v. Lorain Journal Co. , 497 U.S. 1, 18-19
(1990); Gertz , 418 U.S. at 339-40.
New Mexico has adopted the following guidelines in an initial
determination of whether a publication constitutes an opinion:
[T]he crucial difference between statement of fact and opinion depends
upon whether ordinary persons hearing or reading the matter
complained of would be likely to understand it as an expression of the
speaker's or writer's opinion, or as a statement of existing fact.
Machiondo v. Brown , 649 P.2d at 472 (quoting Mashburn v. Collin , 355 So. 2d
879, 885 (La. 1977) (footnote omitted)). Whether the statement in question is
one of fact or opinion is a question of law. See id.
To determine whether the statement is one of fact or opinion, we first
inquire whether a reasonable factfinder could conclude that the quotation of Dr.
McCabe’s statement implied an assertion that Dr. Schwartz had engaged in stock
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fraud. See Jefferson County School Dist. , 175 F.3d at 853 . We also must
consider whether the publication of the statement that Dr. Schwartz was being
sued for stock fraud was “sufficiently factual to be susceptible of being proved
true or false.” Id. ; see Milkovich , 497 U.S. at 21.
The “plain and ordinary meaning” of the statement that Dr. Schwartz was
“being sued for stock fraud” implied that Dr. Schwartz had perhaps engaged in
stock fraud. In addition, the statement is “sufficiently factual to be susceptible of
being proved true or false.” Jefferson County School Dist. , 175 F.3d at 853. We
determine as a matter of law that the statement that Dr. Schwartz was “being sued
for stock fraud” is an unambiguous statement of fact, and that Mr. McCormick
was attempting to convey, not interpret, what Dr. McCabe said.
3. Defamatory statement
“To support a claim for defamation, the communication must be false.”
U.J.I. 13-1006. The burden is on the plaintiff to establish the falsity of the
statement. See Masson, 501 U.S. at 517; Hepps , 475 U.S. at 774-76; U.J.I. 13-
1002(B)(4); Newberry , 773 P.2d at 1237 .
It has long been accepted that “truth is an affirmative defense to an action
for defamation.” Newberry , 773 P.2d at 1237. The law of defamation overlooks
inaccuracies and focuses on substantial truth. See Masson , 501 U.S. at 516;
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U.J.I. 13-1006 “Minor inaccuracies do not amount to falsity so long as ‘the
substance, the gist, the sting of the [defamatory] charge can be justified.’”
Masson , 501 U.S. at 517 (internal citation omitted). If the statement produces
“‘a different effect on the mind of the reader from that which the pleaded truth
would have produced,’” we will consider it to be false. Id. (quoting R. Sack,
Libel, Slander, & Related Problems 138 (1980)). As such, “[s]ubstantial
truthfulness is a defense to an action for defamation.” Ammerman , 572 P.2d at
1262; see U.J.I. 13-1006; Masson , 501 U.S. at 516-17.
Coastal filed claims of libel, slander and unfair and deceptive acts against
Dr. Schwartz in North Carolina state court. See Aplt’s App. at 149-60 (Coastal
Complaint). Specifically, the Coastal complaint alleged that Dr. Schwartz made
“false and defamatory statements” regarding Coastal in his February 1994 article
in the Emergency Medicine News . The complaint also alleges that Dr. Schwartz
made similar “false and defamatory statements” to stock analysts in an effort to
deceive the public, to Coastal’s customers, to Coastal’s patients and potential
patients, and to the public to cast doubt among the professional clinical
community regarding Coastal’s integrity. See id. at 159, ¶ 33. The Coastal
complaint also asserted that Dr. Schwartz made such statements to “affect
negatively (i.e., lower) the price of Coastal’s stock” because, at the time, Dr.
Schwartz held a “short” position in Coastal stock. See id. at 157, ¶ 24.
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If Dr. McCabe had said Dr. Schwartz is “being sued for making deceptive
statements made relating to stock transactions,” this statement would be
unquestionably true. The record indicates that Dr. Schwartz’s counsel conceded
as much. See Aplt’s App. at 365 (Order at 7-8). Mr. McCabe asserts his
statement that Dr. Schwartz was “being sued for stock fraud,” although perhaps
made with inattention to its legal accuracy was, under this record, only his
layman’s interpretation of Coastal’s unfair and deceptive practices claim. See
Aplt’s App. at 142 (McCabe Affid. ¶ 8), 162. Also, even Dr. Schwartz’s experts
testified that a “reasonable interpretation,” from a layman’s perspective, of
allegations of deceit for personal gain may be characterized as “fraud.” Aplt’s
App. at 131, 136. Although technically inaccurate, the “gist” of Dr. McCabe’s
statement is substantially true and, therefore, cannot serve as the basis for a
defamation action. Masson , 501 U.S. at 517; see U.J.I. 13-1006 (“Insignificant
inaccuracies of expression are not sufficient” to support a communication that is
“false in a material way.”).
We agree with the district court that “[v]iewing the facts in the light most
favorable to [Dr. Schwartz],” he is unable to establish the legal falsity of the
statement published by the defendants. Aplt’s App. at 365. As such, the
defendants are entitled to judgment as a matter of law. See Masson , 501 U.S. at
517; U.J.I. 13-1002(B)(4); Newberry , 773 P.2d at 1237. We recognize the
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accuracy of the district court’s observation that the existence of malice is a
factual issue that normally should survive summary judgment, but we are
confused as to its relevance in this proceeding. Dr. Schwartz’s inability to
establish the falsity of the statement, an essential element of a defamation claim,
obviates our consideration of evidence of malice. With this caveat, we AFFIRM
the district court’s grant of summary judgment in favor of the defendants and
against Dr. Schwartz.
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