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Pan Am Systems Inc. v. Hardenbergh

United States District Court, D. Maine

October 1, 2014

PAN AM SYSTEMS INC., SPRINGFIELD TERMINAL RAILWAY COMPANY, and DAVID ANDREW FINK, Plaintiffs,
v.
CHALMERS HARDENBERGH and ATLANTIC NORTHEAST RAILS AND PORTS, Defendants.

AMENDED ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT[1]

NANCY TORRESEN, District Judge.

The Plaintiffs, Pan Am Systems, Inc., Springfield Terminal Railway Company, and David Andrew Fink, bring claims for defamation and false light against Defendants Atlantic Northeast Rails & Ports and Chalmers Hardenbergh. The Plaintiffs also seek punitive damages. Before the Court is the Defendants' motion (ECF No. 65) seeking summary judgment on all the Plaintiffs' claims. For the reasons that follow, the Court GRANTS the Defendants' motion.

THE PARTIES

Pan Am Systems, Inc. ("Pan Am") is a railroad company with substantial operations in New England. David Andrew Fink[2] served as Pan Am's president and CEO during most times relevant to this suit. Springfield Terminal Railway Company ("Springfield Terminal" or "ST") is Pan Am's subsidiary.

Atlantic Northeast Rails & Ports ("ANR&P") produces an eponymous trade newsletter about the railroad industry. Chalmers Hardenbergh is ANR&P's editor and publisher.

The Plaintiffs claim that four articles written and published by the Defendants defamed them and placed Fink in a false light. Because each article presents a different factual background, the Court will present the facts in the Discussion section of this opinion.

PROCEDURAL HISTORY

The Plaintiffs initiated this suit in September of 2011 when they filed their original complaint (ECF No. 1). There, the Plaintiffs alleged the Defendants had defamed them in six different articles. Compl. 3-5. The Defendants moved to dismiss the Complaint for failure to state a claim, arguing the Plaintiffs had failed to allege falsity or fault and that five of the six statements in question were not capable of conveying a defamatory meaning as a matter of law. Defs.' Mot. to Dismiss (ECF No. 14). The Court granted the motion and dismissed the Plaintiffs' claims without prejudice. Order of May 14, 2012 (ECF No. 20). In its order, the Court determined that, for First Amendment purposes, the Defendants should be treated as "media defendants" and all the speech at issue implicated "matters of public concern." Order of May 14, 2012 at 7-10. The Court held that the issue of whether the Plaintiffs should be treated as "public figures" was not yet ripe for decision. Id. at 10-11.

The Plaintiffs subsequently filed an expanded Amended Complaint (ECF No. 25) based on the same six articles. A standard scheduling order issued (ECF No. 27), and the Defendants objected (ECF No. 31). Concerned that inquiry into the fault element of defamation would require them to reveal confidential sources and threaten First Amendment interests, the Defendants proposed bifurcating discovery according to a procedure laid out by the First Circuit in Bruno & Stillman, Inc. v. Globe Newspaper Co., 633 F.2d 583 (1st Cir. 1980). The Court referred the issue to Magistrate Judge John H. Rich III, who issued an order (ECF No. 42) largely adopting the Defendants' proposal. The Magistrate Judge's order contemplated that the parties would proceed by engaging in discovery on all issues other than fault, followed by summary judgment motion work on those issues, followed by further discovery if necessary.

After the first phase of discovery, the Defendants filed the motion for summary judgment (ECF No. 65) currently before the Court. In their opposition to the Defendants' motion (ECF No. 69), the Plaintiffs represented that they are no longer pressing their claim with respect to two of the six statements identified in their complaints, one from an article published on October 22, 2010 and the other from an article published on November 3, 2010.[3] They continue to assert their claims with respect to the four remaining articles.

LEGAL STANDARD

The Court may grant a motion for summary judgment brought under Federal Rule of Civil Procedure 56 where the movant shows that "there is no genuine dispute as to any material fact" and that it "is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "A "genuine" issue is one that could be resolved in favor of either party, and a "material fact" is one that has the potential of affecting the outcome of the case.'" Jakobiec v. Merrill Lynch Life Ins. Co., 711 F.3d 217, 223 (1st Cir. 2013) (quoting Calero-Cerezo v. U.S. Dep't of Justice, 355 F.3d 6, 19 (1st Cir. 2004).

In deciding a motion for summary judgment, the Court construes the record in the light most favorable to the nonmovant and resolves all reasonable inferences in its favor. See Jakobiec, 711 F.3d at 223. The Court may not weigh the evidence or make credibility determinations and must set aside "conclusory allegations, improbable inferences, and unsupported speculation." Pina v. Children's Place, 740 F.3d 785, 788 (1st Cir. 2014) (quoting Medina-Rivera v. MVM, Inc., 713 F.3d 132, 134 (1st Cir. 2013)). The motion should be denied if the nonmoving party's evidence is strong enough "to support a verdict in her favor." Sensing v. Outback Steakhouse of Fla., LLC, 575 F.3d 145, 153 (1st Cir. 2009) (quoting Calero-Cerezo, 355 F.3d at 19).

Procedures like summary judgment take on added urgency in suits that have the "potential of... chilling constitutionally protected speech." Guilford Transp. Indus., Inc. v. Wilner, 760 A.2d 580, 582, 592 (D.C. Cir. 2000) (citing Washington Post Co. v. Keogh, 385 F.2d 965, 968 (D.C. Cir. 1966). In such cases, "[t]he threat of being put to the defense of a lawsuit... may be as chilling to the exercise of First Amendment freedoms as fear of the outcome of the lawsuit itself.'" Guilford, 760 A.2d at 592 (quoting and affirming oral order entered by lower court).

DISCUSSION

I. Count I: Defamation

A. The Governing Law

1. The Maine Common Law

Under Maine law, the tort of defamation consists of:

(1) a false and defamatory statement concerning another;
(2) an unprivileged publication to a third party;
(3) fault amounting at least to negligence on the part of the publisher;[4]
(4) either actionability of the statement irrespective of special harm or the existence of special harm caused by the publication.

Rippett v. Bemis, 672 A.2d 82, 86 (Me. 1996) (quoting Lester v. Powers, 596 A.2d 65, 69 (Me. 1991). Relevant here, the common law rule provides that "one who repeats or otherwise republishes defamatory matter is subject to liability as if he had originally published it." Restatement (Second) of Torts § 578 (1977).

As discussed above, Magistrate Judge Rich issued a bifurcated discovery order in October of 2012, which postponed discovery on the fault element because it might require the Defendants to reveal confidential sources. The Defendants now move for summary judgment on the grounds that the Plaintiffs cannot establish that the statements at issue are defamatory or false and that two of the statements at issue are protected by the fair report privilege.

If the fair report privilege does apply, as the Defendants contend, the Court would still have to determine whether the Defendants abused the privilege, an inquiry that requires examining the issue of fault. See Restatement (Second) of Torts §§ 600, 611 (common law fair report privilege is conditional, and can be defeated by showing the defendant knew the matter to be false or acted in reckless disregard as to its truth or falsity); Yohe v. Nugent, 321 F.3d 35, 42-45 (1st Cir. 2003) (Massachusetts's fair report privilege is conditional, not absolute, and can be defeated by showing at least some types of malice). Accordingly, the issues of whether Maine law provides for a fair report privilege and whether any of the Defendants' statements are protected by it are not yet ripe for decision. The Court proceeds to the Defendants' remaining arguments for summary judgment, which implicate the first element of defamation and the publication component of the second element of defamation.

2. Interaction of Maine Common Law and First Amendment Law

As the Court explained in an earlier order in this case:

Over the last fifty years, the Supreme Court has imposed various constitutional restrictions on common law defamation actions. The Court, concerned about the chilling effect of defamation actions on free speech, has sought to ensure robust public debate on areas of public concern.

Pan Am. Sys., Inc. v. Hardenbergh, 871 F.Supp.2d 6, 11 (D. Me. 2012). Relevant to this motion, the First Amendment limits how state courts may define what is "defamatory, " see, e.g., Greenbelt Coop. Publ'g Ass'n, Inc. v. Bresler, 398 U.S. 6, 12-13 (1970), and requires a plaintiff bringing a defamation claim against a media defendant (such as ANR&P and Hardenbergh) to prove the falsity of the defendant's statement. Gertz v. Robert Welch, Inc., 418 U.S. 323, 347 (1974).

Given defamation's common law roots and constitutional overlay, this Court must adhere to both the holdings of the Law Court applying Maine law and the holdings of the Supreme Court and the First Circuit applying First Amendment law. See Veilleux v. Nat'l Broad. Co., 206 F.3d 92, 107-108 (1st Cir. 2000).

a. "Defamatory"

Under Maine's common law, a statement is "defamatory" only if "it tends so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him." Schoff v. York Cnty., 761 A.2d 869, 871 n.3 (Me. 2000) (quoting Restatement (Second) of Torts § 559 (1977)) (internal quotation marks omitted). Whether a statement "is capable of conveying a defamatory message at all is a question of law, " to be determined by the Court. Bakal v. Weare, 583 A.2d 1028, 1030 (Me. 1990)). However, "[i]f a court determines that the statement is capable of bearing a defamatory meaning, the matter goes to the factfinder to determine if the statement was understood by the recipient as defamatory." Schoff, 761 A.2d at 871 n.2.

In making these determinations, context matters. Chapman v. Gannett, 132 Me. 389, 398 (1934). As the Law Court has explained:

In determining whether a given publication is libelous, the language thereof must be taken in its ordinary significance and must be construed in the light of what might reasonably have been understood therefrom by the persons who read it. The question is how would persons of ordinary intelligence understand the language. The published article alone must be construed, stripped of innuendo, insinuation, colloquium, and explanatory circumstances. In interpreting the language, it is not a question of the intent of the speaker, or author, or even of the understanding of the plaintiff, but of the understanding of those to whom the words are addressed and of the natural and probable effect of the words upon them. A person is presumed to intend the natural consequences of his acts and defamation consists solely in the effect produced upon the minds of third parties.

Id. (quoting Cooley on Torts (4th Ed.) 503, § 146).

Additionally, "Maine's common law of defamation does not allow recovery for statements of opinion alone, " though "[a] statement of opinion may be actionable... if it implies the existence of undisclosed defamatory facts." Lester, 596 A.2d at 71. "Whether an allegedly defamatory statement is a statement of fact or opinion is a question of law... but if the average reader could reasonably understand the statement as either fact or opinion, the question of which it is will be submitted to the fact-finder." Ballard, 877 A.2d at 1087 (internal citations, quotation marks, and bracketing omitted).

Under the First Amendment, a statement may not be held defamatory "unless in a given context it reasonably can be understood as having an easily ascertainable and objectively verifiable meaning." Levinsky's, Inc. v. Wal-Mart Stores, Inc., 127 F.3d 122, 129 (1st Cir. 1997). Whether a statement has an easily ascertainable and objectively verifiable meaning is question of law, for the court. Gray v. St. Martin's Press, Inc., 221 F.3d 243, 248 (1st Cir. 2000).

Under this rule, only statements that can be proved true or false are actionable. Id. Statements based on "loose, figurative, or hyperbolic language" cannot support a claim. Phantom Touring, Inc. v. Affiliated Publ'ns, 953 F.2d 724, 727-8 (1st Cir. 1992) (statement that production was "fake" and "phony" not actionable). Nor can statements which lack a "precise meaning." McCabe v. Rattiner, 814 F.2d 839, 842-43 (1st Cir. 1987) (statement that timeshare real estate development was a "scam" not actionable).

Making the "easily ascertainable and objectively verifiable" determination requires examining the various potential meanings the statement could have and the context in which the statement was made. Levinsky's, 127 F.3d at 129. In Levinsky's, the First Circuit held that a statement that retail customers were left waiting on the phone for twenty minutes was objectively verifiable, whereas a statement that a store was "trashy" was not. Id. at 130. The court explained that "trashy" could have a number of meanings and that, on the specific facts of the case, its "inherent elusiveness" was "not pinned down by context." Id. In Gray, the First Circuit held that a statement in an article that a public relations firm had "failed" was not defamatory where the writer stated in the same article that the company had sold for $16 million. Id. at 249. In context, the court explained, it was clear that the author was not claiming that the company went bankrupt or lost money, but was rather expressing a subjective, unverifiable viewpoint that the company had not succeeded in spreading its message. Id.

b. "Materially False"

At common law, a defendant pressing the affirmative defense of truth could not be held liable if he proved that his statement was "substantially true, " even if not "technically accurate." McCullough v. Visiting Nurse Serv. of S. Me., Inc., 691 A.2d 1201, 1204 (Me. 1997). It was not necessary for the defendant "to establish the literal truth of the precise statement made." Id. (citing Restatement (Second) of Torts § 581A cmt. f (1977)). "Slight inaccuracies of expression" were "immaterial provided that the defamatory charge" was "true in substance." Id. (statement that nurse was fired due to "several" incidents of misconduct deemed "substantially true" even though in fact nurse was fired due to only two incidents of misconduct). Where, as here, the plaintiff bears the burden of proving falsity, the doctrine of substantial truth remains in force but is flipped on its head; the plaintiff must establish not only that the statement in question was false, but that it was "materially false." Vellieux, 206 F.3d at 105.

B. Presentation of Facts and Application of Facts to Law

1. The Bridge Street Derailment

a. Presentation of Facts

In November 2009, several rail cars derailed while traveling along train tracks owned by Springfield Terminal. Pls.' Statement of Additional Material Facts ¶¶ 10, 11 ("PSMF") (ECF No. 75).[5] Citing to and liberally borrowing from articles which appeared in the Nashua Telegraph and Manchester Union Leader, ANR&P published its own story about the derailment on December 2, 2009. PSMF ¶¶ 1, 3; see also Defs.' Ex. 3 (copy of November 18, 2009 article in Nashua Telegraph by David Brooks). The Court reproduces the entire ANR&P article below, preserving all original spacing and punctuation. The allegedly defamatory portion consists of quotations from Peter Burling, the chair of the New Hampshire Rail Authority, which appear under the header, "Shows need for track investment?" Am Compl. ¶ 10; Pls.' Opp'n to Defs.' Mot. for Summ. J. 14-16 (ECF No. 69).

ST: COAL DERAILMENT
17 November, Nashua. THE LOADED ST BOW COAL TRAIN DERAILED SEVEN CARS of an 87-car train near Bridge Street at about 11 AM. Three turned over, with coal spilling out.
David Fink, ST president, arrived on the scene in the afternoon. He said preliminary investigation showed that one of the truck sides (a truck contains axels, springs, and other equipment for suspension) had fallen off one of the cars. That caused a chain reaction among several subsequent cars. Asked whether he thought there was a problem with the tracks, Fink said, "We're looking at everything, but we don't think so" because of the evidence with the truck. An investigation into the cause of the derailment would likely go on for about a month because of metal that needs to be tested and other factors.
Crews were expected to realign the four upright cars and move them that same day. Most of the train - an estimated 74 cars - continued on to the Merrimack Station power plant in Bow without a problem. (Karen Lovett in Nashua Telegraph 18.Nov.09}
Shows need for track investment?
Peter Burling, chair of the New Hampshire Rail Transit Authority, blamed ST for the accident. "What has happened here is a perfectly predictable accident - but it's hard to describe it as an accident, since the probabilities were so clear it was going to take place. The only thing we didn't know is when and where."
Burling said the accident, occurring on a stretch of line with a speed limit of under 10 miles per hour for large freight trains, made a track upgrade which might have been provided had the state won funding for passenger service to Concord [see 09#10A] more important. "A horrendously dilapidated railroad system has caused a slow-moving coal trail to fall off the tracks."
"The point is not to say I told you so, ' but to say this is why we feel it is so important to get this line upgraded, and to maintain it for passenger and freight operations. We believe there are institutions of the federal government that can move to carry this along. I'm going to Washington in [the] next couple of weeks to have ...

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