Julie Hilden

Can A True Statement Form the Basis for a Defamation Lawsuit? In a Controversial Ruling, the U.S. Court of Appeals for the First Circuit Says Yes

By JULIE HILDEN
Monday, March 30, 2009

On February 13, a three-judge panel of the U.S. Court of Appeals for the First Circuit issued a ruling that, one might say, took the "lie" out of libel law. On March 18, the First Circuit denied en banc rehearing (rehearing by a larger panel) in the case.

The three-judge panel wrote, "under Massachusetts law, even a true statement can form the basis of a libel action if the plaintiff proves that the defendant acted with 'actual malice.'" Moreover, the panel added, Massachusetts defines "actual malice" as "actual malevolent intent or ill will."

The implication of these two holdings is that the publication of a truth, with nasty intent, can lead to a large damages award. That's outrageous: Telling the truth can be costly, but it shouldn't be literally so.

Granted, there are some instances in the law where truth-telling can lead to damages, such as breach of a confidentiality contract, a privacy violation, or, in extreme cases, the intentional infliction of emotional distress. But this is not among them – and these instances all require something significantly more than just ill will to transform a spoken or written truth into a viable cause of action.

Moreover, the very purpose of defamation law is to prevent the spread of falsity, in the service of truth. Ironically, however, the First Circuit panel's ruling opens up the possibility that, in Massachusetts, a defamed person would not be able to respond -- for fear that her truthful statements, combined with ill will toward the person falsely accusing her, would constitute defamation too!

The First Circuit made a grievous error when it let this state-law rule stand. And it compounded its mistake by declining to even consult Massachusetts' highest court regarding whether this rule was, in fact, a correct interpretation of state law, and by failing to submit the question to a larger, en banc panel of the Circuit.

How did the court go so wrong?

The "Actual Malice" Holding: A Red Herring

At first glance, readers familiar with libel law may balk at the huge difference between Massachusetts's "actual malice" standard and the "actual malice" standard embraced in U.S. Supreme Court precedents such as New York Times Co v. Sullivan. But in the end, this contrast isn't really the core problem in this case – as a careful examination of the question will show.

Under Supreme Court precedent, a claim of libel -- if made against a public figure or made in other contexts where the public interest is triggered -- requires proof of "actual malice." And "actual malice," in this context, is defined as knowledge of falsity, or reckless disregard as to truth or falsity. In contrast, in private-figure cases, the Supreme Court has held, proof of negligence is sometimes sufficient.

Under the relevant Massachusetts law, in contrast, "actual malice," in this context, means ""actual malevolent intent or ill will" – as noted above.

The key problem here is not that these two bodies of law differ. As the First Circuit panel pointed out, it is not surprising that the Massachusetts law, which long preceded the key U.S. Supreme Court cases, did not somehow psychically anticipate the Court's later, different "actual malice" standard.

Moreover, and more importantly, because this was a private-figure case – involving a fired Staples employee – and one that did not seem to have a public-interest component, Supreme Court precedent does not require that the Court's "actual malice" standard must be applied, regardless of what state law may say.

Instead, the only real question regarding the intent standard here is whether Massachusetts had the option in private-figure cases -- consistent with the First Amendment -- to substitute for the common state-law negligence standard its own "actual malevolent intent or ill will" standard. It's unclear what the U.S. Supreme Court might think of Massachusetts' precise ill-will rule; negligence is a common tort-law standard, while nastiness is not.

The question of whether Massachusetts' particular ill-will rule passes muster is thus an interesting question – and one that the First Circuit did not really address. But it's also a much closer, more debatable question than the one that is really at the heart of this case: Can a defamation claim, consistent with the First Amendment, be based on a true statement?

In my view, it is clear that it cannot. Yet the First Circuit held that it can.

The Real Problem: Allowing Massachusetts to Base Defamation Liability on a True Statement

The facts of the First Circuit case explain how this question could arise – by showing why a plaintiff might end up suing for defamation based on a true statement in the first place. The answer here is that the plaintiff tried to prove the statement false, but failed.

The case was brought by Staples employee Alan Noonan. He claimed the company had libeled him when it told other employees, via a mass email, that he had been fired for violating the company's travel and expense policy. The email also reminded the recipients of the importance of compliance with that policy.

Noonan first argued that the email was false. But the First Circuit ruled that there was no triable issue of fact as to whether Noonan had, in fact, complied with the travel and expense policy. Even viewing the facts most favorably to Noonan, the panel said, it was plain that he had not, in fact, complied with the policy.

But Noonan also argued, in the alternative, that even if the email was true, it was sent with ill will – and therefore was still libelous under Massachusetts law. And here, the First Circuit found sufficient evidence supporting Noonan's claim to allow that claim to be tried.

For instance, the First Circuit pointed out that the email sender had been employed with Staples for twelve years, yet had never before referred to a fired employee by name in an email. It noted that the sender had failed to send out a similar email with respect to a scandal involving another employee, whom it said had been discovered to be an embezzler. And it pointed out that the massive recipient list to which the email was sent included many employees who never traveled, and thus did not need to be reminded about the travel policy.

Overall, the First Circuit saw enough evidence of ill-will – in the singling-out of Noonan, and the sharing of his fate with over a thousand fellow employees -- to send the libel claim to trial. But even if it was unfair and morally wrong for the company to share true statements with so many people, was it also illegal?

Put another way, do companies' and their employees' free speech rights encompass the ability to make bad judgment calls about sharing true, non-private information about their employees via their internal email system?

In my opinion, the First Amendment requires that a company – and an individual -- must have that much leeway. Remember, if the email had been false, Noonan would have had a libel claim; if it had contained his private information, he also would have had a tort claim. Remember, too, that a contrary rule might have the chilling effect of stopping companies from telling employees truthful, non-private information that they actually need to know.

Why the Circuit Was Wrong to Avoid En Banc Rehearing

On March 18, as noted above, the Circuit denied the defendant's request for en banc rehearing of the Noonan v. Staples case on a number of technical grounds – including the ground that Staples had waived several arguments by not raising them. . Interested readers may want to peruse this second, brief order as a not-so-shining example of how a court can wriggle out of deciding a difficult and important constitutional question.

This second decision reads like a list of excuses on the court's part – construing narrowly the arguments that Staples had previously raised, and construing strictly the rules of waiver. The decision even concedes that Staples did raise certain points, but then deems it not to have properly argued them!

Granted, the brief opinion makes it clear that Staples did not argue the case the way the Circuit panel would have preferred, but that kind of criticism is a far cry from a proper finding of waiver. Arguments are often under-argued or poorly made, even at the appeals level. The waiver question is really whether they were made clearly enough for the court to understand and address them, and for the opponent to have had a fair chance to respond to them. Appellate judges, with comparatively few cases to hear, have the time needed to address important questions of federal constitutional law even when the parties' advocacy is not ideal.

In this case, moreover, the First Amendment "chilling effect" of letting the panel decision stand called for lax – not strict – waiver rules. Massachusetts citizens are now on notice that they should never speak the truth if someone else can claim they acted with ill will in doing so. That's a grievous situation – and one that demands quick correction.

Finally, despite the fact that the three-judge panel admitted that it was only giving its "best guess" as to state law (as the applicable standard required), the rehearing panel still declined to certify the question of how to interpret Massachusetts' "actual malice" standard to Massachusetts's Supreme Judicial Court. That may have been the right call. On close examination, the three-judge panel seemed to find the law to be clear enough (although it had initially gotten it wrong in a prior opinion). And ultimately, this is a federal-law issue: Does the First Amendment allow a state to base a defamation claim upon a true statement simply because it was made with ill will? Still, there is a case to be made for a referral to the SJC, based on the chilling effect here and the chance that the SJC might have taken advantage of a chance to revise its own law to be consonant with Massachusetts' own Constitution.

At a minimum, however, the obvious First Amendment question was one the First Circuit should have taken up now, en banc – rather than dodging it, and leaving it for another day. In the First Amendment context, delay can be deadly, for it kills speech in the interim. Until this question again comes before the courts, Massachusetts citizens will speak a bit less freely than those in the other states – and that is a deep shame.



Julie Hilden, who graduated from Yale Law School, practiced First Amendment law at the D.C. law firm of Williams & Connolly from 1996-99 and has been writing about First Amendment issues for a decade. Hilden, a FindLaw columnist, is also a novelist. In reviewing Hilden's novel, 3, Kirkus Reviews praised Hilden's "rather uncanny abilities," and Counterpunch called it "a must read.... a work of art." Hilden's website, www.juliehilden.com, includes free MP3 and text downloads of the novel's first chapter.

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