MEMORANDUM

To: John Doe, Senior Partner,

From: Alice Marie Beard

Date: 00/00/0000

Re: Burt McDougal: Potential tort claims against Maxine Schlage

______________________________________________________________

QUESTIONS PRESENTED:

Under North Carolina law, the elements for a cause of action under defamation are (1) defendant made false, defamatory statements about the plaintiff; (2) those statements were published to a third person; and (3) the statements caused injury to plaintiff's reputation. Tyson v. L'Eggs Products, Inc., 84 N.C.App. 1, 351 S.E.2d 834 (1987).

Question #1: Under N.C. law does a person commit the tort of defamation against a businessman when, at her personal internet web site, (1) she claims the man had sexual relations with her when she was 16; (2) she claims he had an affair while married; (3) she claims he made a "pass" at his wife's sister while married; (4) she claims he is not living up to his divorce settlement; (5) she claims he has failed to make child support payments; (5) she calls him a "jerk"; (6) she says he is a "mentally unstable monster" and "might resort to violence"?

Question #2: Under N.C. law, if there has been defamation, are damages recoverable when a person's business has lost a major account, and when the person has suffered emotional stress to the point of weight loss, daily therapy sessions, and prescription anti-depressants?

SHORT ANSWER:

Probably yes. Based on the law of defamation and libel as interpreted by North Carolina courts, the case should survive a defense motion for summary judgment, and damages are recoverable.

FACTS:

Our client, Burt McDougal, says that his former sister-in-law, Maxine Schlage, has defamed him on her personal web site. He says that all of her statements are false, that his business has lost a major client because of the defamation, and that the situation has caused him serious distress.

McDougal is divorced from Schlage's sister, Rita Wilder. McDougal and Wilder have a 12-year-old son, Jeremy. McDougal says that the divorce was and remains amicable. He is co-owner of a Charlotte, NC, business that works for high-tech clients and has lost a major client: All-American On-the-Net (AAON). Steve Casey, President of AAON, has told Senior Partner Gunnah that he canceled the account with McDougal's company because Casey does not want to do business with a "questionable individual."

Accusations that Schlage has posted to the internet include the following: (1) that McDougal had sexual relations with her when she was 16; (2) that he had an affair while married; (3) that he made a "pass" at his wife's sister; (4) that he is not living up to his divorce settlement; (5) that he has failed to make child support payments, and (6) that he is a "jerk" and a "mentally unstable monster" who "might resort to violence."

Most of the names on Schlage's web site are pseudonyms. After Casey drew McDougal's attention to the web site (which had been brought to Casey's attention by an AAON employee), McDougal asked Schlage to remove specific reference to his son; she changed the boy's name to a pseudonym. McDougal's name, however, continued to appear in full. Schlage published his e-mail address, his home address, and his home telephone number.

McDougal wrote Schlage asking that information about him be removed, and he told her that he feared her words could cost him financially. Schlage's response was more of the same. She gives no signal that she will remove what she has written or will stop writing more.

McDougal denies all accusations with the exception of the "pass" at his then-wife's sister. He said the event happened, but that the sister misinterpreted it. He believes that Schlage behaves as she does because "she is a little off." He says that Schlage lives off inherited wealth.

McDougal said he has received thousands of angry emails from various people, almost one hundred angry phone calls, and an angry message on a brick that was thrown through a window of his house. He reports that, because of the stress, he has lost thirty pounds. Previous to this situation, he had no troubles with depression. Now, he sees a therapist daily and takes prescription anti-depressants.

DISCUSSION:

The Law:

The U.S. Supreme Court has ruled that "... so long as they do not impose liability without fault, the States may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual." Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974). Under N.C. law, in considering whether an action is defamation, we look to the N.C. state constitution, to chapter 99 of the N.C. General Statutes, to Restatement (2d) of Torts because it is cited as authority in many N.C. appellate cases, and to the common law.

State Constitution

Article I, § 14, of the N.C. state constitution reads, "Freedom of speech and of the press are two of the great bulwarks of liberty and therefore shall never be restrained, but every person shall be held responsible for their abuse."

North Carolina General Statues (N.C.G.S.)

N.C. Gen. Stat. § 99 (1989) deals with defamation, but it does not address the issues that must be considered for McDougal's case.

Restatement (2d) of Torts (1976)

Restatement (2d) at § 558 lists the elements of a cause of action for defamation: "(a) a false and defamatory statement concerning another; (b) an unprivileged publication to a third party; (c) fault amounting at least to negligence on the part of the publisher; and (d) either actionability of the statement irrespective of special harm or the existence of special harm caused by the publication." N.C.'s Court of Appeals cited § 558 of Restatement (2d) in Renwick v. News and Observer Pub. Co., 63 N.C.App. 200, 304 S.E.2d 593 (1983).

Common Law

According to N.C.G.S., "All such parts of the common law as were heretofore in force and use within this State, ... not destructive of, or repugnant to, or inconsistent with ... the form of government therein established, ... are hereby declared to be in full force within this State." N.C. Gen. Stat. § 4-1 (1989). Therefore, N.C. courts rely on common law in defamation actions.

According to N.C. case law, defamation is either libel or slander. "In general, libel is written while slander is oral." Phillips v. Winston-Salem/Forsyth Co. Bd. of Educ., 117 N.C.App. 274, 450 S.E.2d 753, 756 (1994).

"In its most general and comprehensive sense, it may be said that any publication that is injurious to the reputation of another is a libel." Flake v. Greensboro News Co., 212 N.C. 780, 195 S.E. 55 (1938). Flake is the most complete analysis of the law of libel in N.C., and it is the most oft quoted: "Libels may be divided into three classes: (1) Publications which are obviously defamatory and which are termed libels per se; (2) publications which are susceptible of two reasonable interpretations, one of which is defamatory and the other is not; and (3) publications which are not obviously defamatory, but which become so when considered in connection with innuendo, colloquium, and explanatory circumstances. This type of libel is termed libel per quod."

Flake continues, "When an unauthorized publication is libelous per se, malice and damage are presumed from the fact of publication, and no proof is required as to any resulting injury.... In an action upon a publication coming within the second class, that is, a publication which is susceptible of two interpretations, one of which is defamatory, it is for the jury to determine under the circumstances whether the publication is defamatory and was so understood by those who saw it.... In publications which are libelous per quod, the innuendo and special damages must be alleged and proved." Since 1938, Flake has been cited repeatedly as authority in defamation cases: Phillips v. Winston-Salem/Forsyth Co. Bd. of Educ., 117 N.C. App. 274, 450 S.E.2d 753 (1994); Tyson v. L'Eggs Products, Inc., 83 N.C. App. 1, 351 S.E.2d 834 (1987); Roth v. Greensboro News Co., 217 N.C. 13, 6 S.E.2d 882 (1940).

The N.C. Court of Appeals defines libel per se, as "a publication which, when considered alone without explanatory circumstances: (1) charges that a person has committed an infamous crime; (2) charges a person with having an infectious disease; (3) tends to impeach a person in that person's trade or profession; or (4) otherwise tends to subject one to ridicule, contempt or disgrace." Phillips v. Winston-Salem/Forsyth Co. Bd. of Educ., 117 N.C. App. 274, 450 S.E.2d 753, 756 (1994), cited in Gaunt v. Pittaway, 353 N.C. 371, 547 S.E.2d 660 (2000); cited in Aycock v. Padgett, 134 N.C. App. 164, 516 S.E.2d 907.

The standard of fault for private person libel plaintiffs in North Carolina is negligence. Walters v. Sanford Herald, Inc., 31 N.C.App. 233, 228 S.E.2d 766 (1976): "[A] plaintiff in a civil action for libel, if he is a private citizen and not a public official or a public figure, can recover only if he alleges and proves fault, or at least negligence, on the part of the defendant publisher in publishing false and defamatory statements."

Elements of the Tort of Libel:

For a private citizen to prove libel, he must prove six things beyond a preponderance: (1) defamation; (2) falsity; (3) third-party recognition; (4) publication; (5) injury or damage; (6) fault. Defamation, falsity, third party recognition after publication, and injury are the standards as listed in Tyson v. L'Eggs Products, Inc., 84 N.C.App. 1, 351 S.E.2d 834 (1987). Fault is required because of Walters v. Sanford Herald, Inc., 31 N.C.App. 233, 228 S.E.2d 766 (1976).

A plaintiff could face these defenses: (1) the tolling of N.C.'s one-year statute of limitations on defamation; (2) the claim that defendant's statements were true; (3) the claim that the statements were fair reporting and thus a qualified privilege; (4) the claim that the statements were fair comment and criticism; (5) the claim that the statements were opinion and thus protected by the First Amendment of the federal constitution and by Article I, § 14, of N.C.'s constitution.

Analysis:

Our client could prove five of the six elements with ease: Third-party recognition could be proven because Casey's employee happened upon Schlage's web site and recognized McDougal, and after his attention was drawn to it, Casey knew the web site referred to McDougal. Publication could be proven; the common understanding of "publication" is that something has been made known, and Schlage's web site made things known. Both fault and falsity could be proven regarding the child support payments by a deposition from McDougal's former wife and by court records. Financial damage could be proven by deposing Casey to say that that he pulled AAON's account because of the gossip caused by Schlage's online writing. Emotional damage could be proven by deposing McDougal's therapist, whom McDougal sees daily.

It is the element of defamation that would be the most difficult to prove.

Some of what McDougal sees as defamatory would not meet the legal definition of defamation:

(1) Schlage claims that McDougal and she had sexual relations when she was 16. He denies it. At the age of 16, Schlage had reached the age of consent in N.C. N.C.Gen. Stat. § 14-27.7A (1989). Therefore, if the two did have sexual relations, it was not a crime.

(2) Schlage claims that McDougal had an affair while a married man. In N.C., adultery is a Class 2 misdemeanor. N.C.Gen. Stat. § 14-184. The law stipulates that the admissions or confessions of one participant shall not be evidence against the other. Thus, even if Schlage's claim were that McDougal had an affair with her while married, her word alone could not be used to prove the act. Additionally, proving that the accusation of adultery would injure another's reputation may be difficult. Donovan v. Fiumara, 114 N.C. App. 524, 442 S.E.2d 572 (1994), dealt with calling someone "gay" or homosexual. The court noted, "[A]s North Carolina progresses through the mid 1990s, we are unable to rule the bare allegation that an individual is 'gay' or 'bisexual' constitutes today an accusation which, as a matter of law and absent any 'extrinsic, explanatory facts' . . . per se holds that individual up to 'disgrace, ridicule or contempt.'"

"At common law, ... an infamous crime is one whose commission brings infamy upon a convicted person, rendering him unfit and incompetent to testify as a witness, such crimes being treason, felony, and crimen falsi." State v. Clemmons, 100 N.C. App. 286, 292, 396 S.E.2d 616, 619 (1990) (quoting State v. Surles, 230 N.C. 272, 283-84, 52 S.E.2d 880, 888 (1949). As explained in Aycock v. Padgett, 134 N.C. App. 164, 516 S.E.2d 907 (1999), "[It] is worth noting that there are many Class I felonies of which citizens of this state could be accused that would probably require further explanation before becoming libelous." In Chapman v. Byrd, 124 N.C. App. 13, 475 S.E.2d 734 (1996), the court dismissed a defamation claim that alleged that a group of people had been defamed by the false rumor that they had AIDS. [However, the court did allow the claims of intentional and negligent emotional distress to go forward.] In light of such decisions, proving that the accusation of adultery would injure another's reputation may be difficult.

(3) Schlage claims that McDougal made a "pass" at his wife's sister while married. He admits he did something that was misinterpreted as a "pass." There is no law in N.C. about "making a pass."

(4) She called McDougal a "jerk" and said that he is a "mentally unstable monster." Under Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984), the First Amendment opinion defense protects a defendant who can claim that the statements were hyperbole, exaggeration, and statements that no one would believe. Whether a man is a "jerk" is an opinion. If a person is not trained in psychiatry, whether he is unstable is an opinion.

Other accusations by Schlage would have a better chance of getting to the jury:

(1) Schlage claims that McDougal is not living up to his divorce settlement and accused him of not making child support payments. By N.C. Gen. Stat. § 14-322 (d) (1989), "Any parent who shall willfully neglect or refuse to provide adequate support ... shall be guilty of a misdemeanor." A first offense is a Class 2 misdemeanor; a subsequent offense is a Class 1 misdemeanor. If McDougal is able to prove that he has made all child support payments, and if Casey would testify that he ended the association because he will not have business dealings with people who do not meet their family obligations, defamation is a possibility on this issue.

(2) Schlage said McDougal might resort to violence. "A libel per se is a malicious publication expressed in writing, printing, ... or other device, which upon its face and without aid of extrinsic proof is injurious and defamatory, tending to blacken the ... reputation of one who is alive and expose him to public hatred, contempt, or ridicule." Flake v. Greensboro News. Co., 212 N.C. 780, 195 S.E. 55 (1938). Calling someone violent could result in hatred, and the emails and calls McDougal has received show public hatred. "Simply couching a statement-- 'Jones is a liar'--in terms of opinion--'In my opinion Jones is a liar'--does not dispel the factual implications contained in the statement." Milkovich v. Lorrain Journal, 497 U.S. 1 (1990).

Examples of communications that have been deemed actionable under defamation include allegations that a church's minister "caused trouble amounting to a continuous upheaval, and disrupted the peace and harmony of the church." Kindley v. Privette, 242 N.C. 140, 84 S.E.2d 660 (1954); a statement by one butcher about another that the second had slaughtered a mad dog-bitten cow, Broadway v. Cope, 208 N.C. 85, 179 S.E. 452 (1935); a publication calling a minister an ignorant and uncharitable man, Pentuff v. Park, 194 N.C. 146, 138 S.E. 616 (1927); the allegations that a university employee was "a liar, deceitful, absolutely useless, and does not have a Ph.D., and was a fraud," U v. Duke University, 84 N.C. App. 171, 371 S.E.2d 701 (1988); the charge that a woman employee used illegal drugs on company premises and used the company computer to look at pornography, Barker v. Kimberly-Clark Corp., 136 N.C. App. 455, 524 S.E.2d 821 (2000).

Private v. Public Defendant:

Whether McDougal is a private or a public figure would need to be considered. In Gaunt v. Pittaway, 353 N.C. 371, 547 S.E.2d 810 (2000), the judge ruled that, "Under North Carolina law, an individual may become a limited purpose public figure by his purposeful activity amounting to thrusting of his personality into the vortex of an important public controversy." If McDougal loses his status of "private person," he also loses the protection of Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974). McDougal would then need to prove actual malice. McDougal has his own company. If he worked public relations, publicity, and image building in an effort to build the business, a court could rule that McDougal is a public figure.

CONCLUSION

Based on the law of defamation and libel as interpreted by N.C. courts, the case should survive a defense motion for summary judgment. The best summary is found in the instructions to the Flake jury: "(1) Did the defendants, or any of them, and if so, which defendant or defendants, wrongfully and unlawfully publish or caused to be published of and concerning the plaintiff the matters set forth in paragraph 8 of plaintiff's complaint, as alleged? (2) If so, was such publication, in the light of surrounding facts and circumstances, calculated to bring and did it bring the plaintiff into public ridicule and contempt, as alleged? (3)What damages, if any, is the plaintiff entitled to recover?" With similar instructions, McDougal would have a good case.