Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_07-cv-02210/USCOURTS-azd-2_07-cv-02210-2/pdf.json

Nature of Suit Code: 320
Nature of Suit: Assault, Libel, and Slander
Cause of Action: 28:1332 Diversity-Citizenship

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

FreeLife International, Inc., a

Connecticut corporation, 

Plaintiff, 

vs.

Clear Perceptions Marketing, an Iowa

company, et al.,

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

No. CV-07-2210-PHX-DGC

ORDER

Pursuant to the Court’s previous order (Dkt. #60), the parties have filed memoranda

addressing whether Plaintiff must show the falsity of a statement in order to prove breach of

the non-disparagement clause of the parties’ alleged contract. Dkt. ##61, 62. The Court

concludes that falsity is not a necessary element of the breach of contract claim. The Court

also concludes, however, that this ruling does not render the truth or falsity of Defendants’

statements entirely irrelevant in this litigation. 

Plaintiff has sued Defendants for breach of paragraph 10 of the Marketing Executive

Agreement. That clause provides that each Marketing Executive “must not disparage other

Marketing Executives, FreeLife’s products/services, the Compensation Plan, or company

employees.” Dkt. #62 at 1. Plaintiff contends that Defendant Burge breached this obligation

by making disparaging statements about Plaintiff’s products. 

Because this is a breach of contract claim, the relevant question is the meaning of the

contract. The Court word “disparage” in the contract is not ambiguous and should be given

Case 2:07-cv-02210-DGC Document 65 Filed 10/20/08 Page 1 of 3
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 -

its plain and ordinary meaning. See Employers Mut. Cas. Co. v. DGG & CAR, Inc., 183 P.3d

513, 518 (Ariz. 2008). “Disparage means to lower in rank or reputation,” “degrade,” and “to

depreciate by indirect means.” Webster’s New Collegiate Dictionary at 326 (1981). The

ordinary meaning of the term does not require that the disparaging statement be false. 

This meaning is reinforced by the contract itself. Paragraph 9, which appears just

before the non-disparagement clause, provides that Marketing Executives shall not make any

“false and defamatory” statement. Dkt. #61 at 4. This provision shows that the parties knew

how to specify a requirement of falsity when they intended it. Paragraph 9 also stands in

contrast to the non-disparagement agreement, which contains no falsity requirement.

Moreover, if the non-disparagement clause applied only to false statements as Defendants

contend, it would be unnecessary because false statements already are proscribed by

paragraph 9. The Court concludes that most natural reading of the contract, and one that

gives meaning to both paragraphs 9 and 10, is that the non-disparagement clause does not

require false statements.

Defendants cite to case law concerning the tort of product disparagement. Dkt. #62

at 3. As Defendants themselves correctly note, however, Plaintiff “is not making a tort claim

for product disparagement and . . . the meaning of the word ‘disparagement’ must be gleaned

from the intention of the parties.” Id. For reasons stated above, the Court concludes that the

non-disparagement provision was not limited to false statements.

Defendants argue that the non-disparagement provision is void because it violates

constitutionally protected rights to free expression and is found in a contract of adhesion.

Dkt. #62 at 4-5. The Court need not decide these issues. If the non-disparagement clause

is void, Plaintiff’s claim for breach of the clause will fail regardless of whether or not falsity

is proved. Thus, whether or not the clause is void does not address the question of whether

Plaintiff must prove falsity in order to prevail.

The Court concludes, however, that its interpretation of paragraph 10 of the contract

does not render the truthfulness or falsity of Defendants’ statements irrelevant. Plaintiff

seeks punitive damages. Dkt. #1, Ex. 1, Complaint at 8. Plaintiff’s mental state will be

Case 2:07-cv-02210-DGC Document 65 Filed 10/20/08 Page 2 of 3
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

relevant to the question of punitive damages, and the truthfulness or falsity of Defendants’

statements could be relevant to Defendants’ mental state. Moreover, the truthfulness or

falsity of the statements might be relevant to other damages issues to be addressed by the

jury. For this reason, the Court cannot conclude that truthfulness or falsity are irrelevant

considerations during discovery. 

DATED this 20th day of October, 2008.

Case 2:07-cv-02210-DGC Document 65 Filed 10/20/08 Page 3 of 3