Lott, John R. v. Levitt, Steven D. ( 2009 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 07-3095
JOHN R. L OTT, JR.,
Plaintiff-Appellant,
v.
S TEVEN D. L EVITT,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 06 C 2007—Ruben Castillo, Judge.
A RGUED O CTOBER 21, 2008—D ECIDED F EBRUARY 11, 2009
Before R IPPLE, E VANS, and SYKES, Circuit Judges.
E VANS, Circuit Judge. John Lott, an academic and econo-
mist, believes that his reputation was sullied by
Freakonomics, 1 the popular and off-beat book written by
Steven Levitt and Stephen Dubner. Lott’s name was
mentioned in one paragraph of the 200-page book, and he
1
Steven D. Levitt & Stephen J. Dubner, Freakonomics: A Rogue
Economist Explores the Hidden Side of Everything (2005).
2 No. 07-3095
understood this passage to be an accusation of scholarly
dishonesty. Offended, he filed suit against Levitt and
HarperCollins, the publisher of the book, claiming that he
had been defamed. The district court dismissed this
claim after concluding that the passage could reasonably
be read as a refutation of Lott’s controversial theories
and not a swipe at his integrity. Lott now appeals.
In Freakonomics, Levitt, a self-described rogue economist,
seeks to explore “the hidden side of everything.” Using
an economist’s analytical tools, Levitt (and his co-author,
Dubner, who is not named in this suit) embarks on a
“treasure-hunt” of “freakish curiosities,” investigating,
for example, the similarities between nylon stockings
and crack cocaine, or the socioeconomic forces at work
when parents name their children. The book, which
became a New York Times Bestseller, tackled one
particular oddity that had left many commentators
baffled—the drop in crime rates in the 1990s. Levitt
devoted a chapter to this topic, debunking several dif-
ferent explanations for this phenomenon (including “gun
buyback” programs) before attributing the decline, at
least in part, to the legalization of abortion, which meant
fewer children being born to mothers who didn’t want
them.
In this chapter, over the span of just one paragraph
(pages 133-34), Levitt addressed Lott’s work. Lott, author
of the book More Guns, Less Crime: Understanding Crime
and Gun Control Laws, contends that allowing law-abiding
citizens to carry concealed weapons contributes to a
drop in crime rates. As a champion of this politically
No. 07-3095 3
charged idea, Levitt writes that Lott became a “lightning
rod for gun controversy,” a status he exacerbated by
creating a pseudonym, “Mary Rosh,” which he used to
defend his theory in debates over the Internet (an embar-
rassing charge, but one that was apparently true as Lott
takes no issue with it in this case). Levitt ends his dis-
cussion of Lott’s work by writing:
Then there was the troubling allegation that Lott
actually invented some of the survey data that sup-
port his more-guns/less-crime theory. Regardless of
whether the data were faked, Lott’s admittedly intrigu-
ing hypothesis doesn’t seem to be true. When other
scholars have tried to replicate his results, they found
that right-to-carry laws simply don’t bring down
crime.
To Lott, these sentences amounted to an accusation that
he falsified his results.
Lott responded by filing a defamation suit against Levitt
and HarperCollins before the district court, invoking
diversity jurisdiction. In his complaint, Lott alleges that
“replicate,” within the “world of academic research and
scholarship,” has “a “clear and unambiguous meaning.”
He reads the term to mean that other scholars performed
the same analysis as Lott, using identical data and method-
ologies. According to Lott, if the others were unable to
reach the same results as him, an assertion he claims is
untrue, then the inescapable conclusion is that he fabri-
cated his findings or was too incompetent to reach the
right ones. Lott added a second defamation claim regard-
ing an e-mail exchange Levitt had with another economist,
4 No. 07-3095
in which Levitt accused Lott of buying support for his
theory by paying for the publication of a journal filled
only with non-peer refereed articles that bolstered his
hypothesis.
Both Levitt and HarperCollins filed motions to
dismiss the suit, arguing that the statements in
Freakonomics were not defamatory and were otherwise
protected by the First Amendment. The defendants
attached a copy of the book to their motions, which the
district court (Judge Ruben Castillo) considered part of
the pleadings because the book was central to Lott’s
claim. See Cont’l Cas. Co. v. Am. Nat’l Ins. Co., 417 F.3d 727,
731 n.3 (7th Cir. 2005). The court, applying Illinois law
upon the parties’ agreement, dismissed the claim after
concluding that the statements could reasonably be read
as a description of an academic dispute regarding con-
troversial theories, not an accusation of academic dishon-
esty. Levitt also sought dismissal of the count regarding
the e-mail exchange, but the court concluded that those
allegations stated a claim for defamation. HarperCollins,
who was not involved in the remaining claim, was dis-
missed from the case.
Seven months after this decision, and shortly before
discovery was set to end, a flurry of activity ensued. A
settlement of the remaining claim was reached, and, at
the same time, Lott (who hired new counsel) filed a
motion to reconsider the district court’s decision to
dismiss the defamation claim based on Freakonomics. In
that motion, Lott argued that Virginia law, and not
Illinois law, should have applied, despite his prior coun-
No. 07-3095 5
sel’s acceptance and reliance on Illinois cases. The district
court denied this motion, reasoning that Lott waived the
choice-of-law argument. At this time, Lott also asked the
court for leave to file an amended complaint, which
reiterated his defamation claim based on Freakonomics, a
request that was denied as untimely and futile. Today
we resolve Lott’s appeal from these decisions.
First things first—we must decide what law to apply.
Lott contends that the district court erred by applying
Illinois law and argues instead that Virginia law should
apply. The defendants first addressed this issue in their
motions to dismiss, in which they argued that Illinois
substantive law should apply, raising and rejecting the
possible application of Virginia law. In Lott’s response, he
stated that he “agree[d] with Defendants that Illinois law
governs this dispute,” made no separate choice-of-law
analysis, and cited no Virginia cases. Accordingly, the
district court decided the motions based on Illinois law.
Seven months later, Lott argued for the first time that
Virginia law should have governed and asked the court
to reconsider its ruling, contending, as he does here, that
he only agreed that Illinois choice-of-law principles
should apply, not that Illinois substantive law should
govern. Under Illinois’s choice-of-law rubric, Lott con-
tends the law of his domicile, Virginia, should control
this case.
This argument is disingenuous. To read Lott’s agreement
to the governance of Illinois law so narrowly robs it of
both its obvious meaning and its context. Lott explicitly
submitted to Illinois law and relied solely on it, and having
6 No. 07-3095
done so, the district court was right to apply it to the
dispute. Whirlpool Fin. Corp. v. Sevaux, 96 F.3d 216, 221 (7th
Cir. 1996); ECHO, Inc. v. Whitson Co., 52 F.3d 702, 707 (7th
Cir. 1995). The principle of waiver is designed to
prohibit this very type of gamesmanship—Lott is not
entitled to get a free peek at how his dispute will shake out
under Illinois law and, when things don’t go his way, ask
for a mulligan under the laws of a different jurisdiction. In
law (actually in love and most everything else in life),
timing is often everything. The time for Lott to ask for
the application of Virginia law had passed—the train
had left the station.
On, then, to Illinois law. Defamation is the publication
of a false statement that “tends to harm a person’s reputa-
tion to the extent that it lowers that person in the eyes
of the community or deters others from associating with
that person.” Tuite v. Corbitt, 866 N.E.2d 114, 121 (Ill. 2006).
To bring a successful claim, a plaintiff must normally
show that the unprivileged communication of a false
statement caused him harm. In Illinois this type of action
is called per quod defamation. Some statements, however,
are so obviously harmful that injury to the plaintiff’s
reputation can be presumed and are considered
actionable per se. In Illinois there are five categories of per
se defamation, two of which are pertinent in this case:
(1) statements imputing an inability to perform or lack of
integrity in one’s duties of employment; and (2) state-
ments that prejudice a party, or impute a lack of ability,
in his profession. Id.But not all statements that fall into one of these five
categories are necessarily actionable per se—the state-
No. 07-3095 7
ment’s only reasonable readings must also be defamatory
in nature. In other words, a statement that is reasonably
capable of an innocent construction is not per se defama-
tory. Tuite, 866 N.E.2d at 121; Bryson v. News Am. Publ’ns,
Inc., 672 N.E.2d 1207, 1215 (Ill. 1996). The Illinois courts
have emphasized that the meaning of a statement is not
a fact for the jury to find, but a “question of law to be
resolved by the court.” Tuite, 866 N.E.2d at 122. To
discern the meaning, courts must draw from the context of
the statement and give the words their “natural and
obvious meaning.” Id. (citing Chapski v. Copley Press, 442
N.E.2d 195, 199 (Ill. 1982)). Courts need not weigh the
relative value of competing constructions; instead, any
reasonable, nondefamatory interpretation is the one
that sticks. Id. at 122-23; Mittleman v. Witous, 552 N.E.2d
973, 979 (Ill. 1989).
Lott’s first argument turns this substantiative law on
its procedural head. Lott argues that the district court
erred when it dismissed his defamation claim on the
basis of this innocent construction rule. He notes that the
district court was bound by federal, not Illinois, pleading
standards, and argues that federal standards preclude
a preference for an innocent interpretation over a defama-
tory one at the pleading stage. Instead, Lott argues that
his claim should have survived the motions to dismiss
because the passage in Freakonomics is reasonably sus-
ceptible to a defamatory interpretation, notwithstanding
any equally reasonable innocent interpretations that
may exist.
It is true that federal courts sitting in diversity are
bound by federal procedural rules, but those rules
8 No. 07-3095
impose no impediment for a judge to decide the
natural and obvious meaning of an allegedly defamatory
passage at the pleading stage. Courts, when reviewing a
motion to dismiss, are indeed required to accept as true
the facts alleged in the complaint, including the words
used in the allegedly defamatory statement, and make
all reasonable inferences in favor of the plaintiff. But that
does not mean that the court must take the plaintiff’s
interpretation of the allegedly defamatory words at face
value. Figuring out the meaning of a statement and
whether it is reasonably susceptible to an innocent con-
struction is a question of law for the courts to resolve.
Madison v. Frazier, 539 F.3d 646, 654 (7th Cir. 2008); Knafel
v. Chicago Sun-Times, Inc., 413 F.3d 637, 641 (7th Cir.
2005); Republic Tobacco Co. v. N. Atl. Trading Co., 381
F.3d 717, 727 (7th Cir. 2004). Our reliance on federal
procedural rules does not allow us to ignore Illinois
substantiative law, and shortly before the district court
rendered its decision, the Illinois Supreme Court rejected
the same argument Lott raises here. Tuite, 866 N.E.2d at
124-26. Instead, the high court reaffirmed that any rea-
sonable, innocent interpretation sounds the death knell
to a per se defamation claim. In doing so, the high court
acknowledged that this rule puts a thumb on the scale
for defendants but deemed this warranted in per se
actions, where damages are presumed. Id. at 125. It is not
our place to water down the Illinois high court’s policy
decision.
Now, on to the alleged defamation. Lott contends that
Levitt’s refutation of his more-guns/less-crime hypothesis
can be read only as a smear of his professional reputation
No. 07-3095 9
and is therefore defamatory per se. Using an academic
definition of “replicate,” Lott maintains that the passage
means that others repeated, to a tee, his technical
analysis but were unable to duplicate his results, sug-
gesting that he either faked his data or performed his
analysis incompetently.
But this technical reading is not the only reasonable
interpretation of the passage. After all, Freakonomics
didn’t become a bestseller by targeting just academics. The
book takes into account the lay reader, breaking down
technical terms into easily understandable, if imprecise,
ideas. For example, the technicalities of regression
analysis are explained by an analogy to a golfer’s handicap,
since both even the playing field so that variables (or
golfers) can be compared on all fours. The book relies on
anecdotal evidence and describes with only the broadest
strokes the statistical methodologies used. In this
context, it is reasonable to read “replicate” in more
generic terms. That is, the sentence could mean that
scholars tried to reach the same conclusion as Lott, using
different models, data, and assumptions, but could not
do so. This reading does not imply that Lott falsified his
results or was incompetent; instead, it suggests only
that scholars have disagreed with Lott’s findings about
the controversial relationship between guns and crime.
By concluding that this more generic definition of “repli-
cate” is reasonable, we are not assuming that the reader
is a simpleton. After all, econometrics is far from con-
ventional wisdom. We are, however, taking into account
the context of the statement and acknowledging that the
natural and obvious meaning of “replicate” can lie outside
the realm of academia for this broadly appealing book.
10 No. 07-3095
A closer look at the paragraph where the contested
sentence is found supports this innocent reading. The
paragraph describes and critiques Lott’s “idea,” “theory,”
and “hypothesis,” but makes no mention of his methodol-
ogy or what data set he used. In this context, it is natural to
read Levitt’s statement as a critique on his theory, rather
than an accusation of falsifying data. In fact, instead of
weighing in on the rumor that Lott faked some of his
results, Levitt distanced himself from it. Levitt mentioned
the “troubling allegation,” but noted that “[r]egardless of
whether the data were faked, Lott’s admittedly intriguing
hypothesis doesn’t seem to be true.” Far from assailing
Lott’s competence, he acknowledged that Lott’s theory is
“sensible” and “intriguing.” To the extent that Lott is
complaining about an attack on his ideas, and not his
character, he is barking up the wrong tree. The remedy for
this kind of academic dispute is the publication of a
rebuttal, not an award of damages. Dilworth v. Dudley,
75 F.3d 307, 310 (7th Cir. 1996); Underwager v. Salter, 22
F.3d 730, 736 (7th Cir. 1994).
Finally, Lott also contends, couched in two distinct
procedural arguments, that he had a viable claim for pro
quod defamation—that is a defamation claim where
damages cannot be presumed. He first argues that the
district court missed the pro quod claim in his original
complaint and therefore erred by failing to address it.
Alternatively, Lott argues that the district court should
have allowed him to file an amended complaint that
explicitly added a pro quod claim, instead of refusing to
do so on the grounds that the proposed complaint was
untimely and futile.
No. 07-3095 11
Both these arguments fail for the same reason—Lott
neglected to allege any special damages in both his
original complaint and his proposed amended com-
plaint. In Illinois courts and federal courts sitting in
diversity, special damages must be specifically stated in
a pro quod claim. FED. R. C IV. P. 9(g); Muzikowski v. Para-
mount Pictures Corp., 322 F.3d 918, 927 (7th Cir. 2003);
Action Repair, Inc. v. American Broadcasting Cos., 776
F.2d 143, 149-50 (7th Cir. 1985); Schaffer v. Zekman, 554
N.E.2d 988, 992 (Ill. App. Ct. 1990). In his original com-
plaint, which made no explicit pro quod claim, Lott alleged
only “substantial reputational and monetary damages,”
without a specific accounting of those damages or an
explanation of how the purported defamation caused
them. While the proposed amended complaint explicitly
tacked on a claim for pro quod defamation, its allegations
of damages are equally vague. Lott added allegations
that he encountered people in job interviews and at
academic seminars who understood the passage to be a
swipe at his professional reputation but does not describe
what pecuniary losses he suffered as a result. Lott
doesn’t even say what came of the job interviews where
the book was mentioned. Such general allegations, which
make no effort to explain how any reputational damage
translated into actual harm, are not enough. Muzikowski,
322 F.3d at 927; Action Repair, Inc., 776 F.2d 149-50, Brown
& Williamson Tobacco Corp. v. Jacobson, 713 F.2d 262, 269-70
(7th Cir. 1983). Thus, we see no error in the district
court’s dismissal of the defamation claim or its refusal to
accept the futile amended complaint. Johnson v. Dossey,
515 F.3d 778, 780 (7th Cir. 2008).
12 No. 07-3095
Accordingly, the judgment of the district court is
A FFIRMED.
2-11-09