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. e du/thir dc ir c uit_1999/173Filed June 28, 1999

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NO. 98-3222

BEVERLY ENTERPRISES, INC.;

DONALD L. DOTSON

Appellants

v.

ROSEMARY TRUMP;

SERVICE EMPLOYEES INTERNATIONAL UNION
LOCAL 585

On Appeal From the United States District Court For the Western District of Pennsylvania (D.C. Civil Action No. 97-cv-01490) District Judge: Honorable Gary L. Lancaster

Argued December 11, 1998

BEFORE: BECKER, Chief Judge, and STAPLETON, Circuit Judges, and HARRIS,* District Judge

(Opinion Filed June 28, 1999)

Michael T. McMenamin (Argued)
Walter & Haverfield 50 Public Square
1300 Terminal Tower Cleveland, OH 44113 Attorney for Appellants

___________________________________________________ ______________

*Honorable Stanley S. Harris, United States Distric t Judge for the District of Columbia, sitting by designation.Claudia Davidson

Healey, Davidson & Hornack Law & Finance Building, 5th Floor Pittsburgh, PA 15219

and Harold C. Becker (Argued)
Associate General Counsel Service Employees International
Union
14 West Erie Street Chicago, IL 60610 Attorneys for Appellees

Geraldine R. Gennet

General Counsel Kerry W. Kircher Deputy General Counsel
Office of General Counsel U.S. House of Representatives 219 Cannon House Office Building Washington, D.C. 20515-6601 Attorneys for Amicus Curiae Bipartisan Legal Advisory Group of
the United States House of Representatives

OPINION OF THE COURT

STAPLETON, Circuit Judge:

This diversity-based defamation action arises from statements allegedly made by a union representative about a company official during two separate incidents, o ne at a political rally and another at a "Town Hall meeting ." The District Court dismissed the plaintiffs' complaint after finding the comments at the rally incapable of defa matory meaning and the Town Hall meeting comment protected under the doctrine of absolute testimonial immunity

. Although for somewhat different reasons, we will af firm.

I.

There is a long-standing and acrimonious relationsh ip between Beverly Enterprises, a national provider of nursing

2home care, and the Service Employees International Union

("SEIU"), whose local affiliates represent a substa ntial number of Beverly's employees. Plaintiffs are Bever ly Enterprises and Donald L. Dotson, Beverly's Senior Vice President for Labor and Employment. Before joining Beverly Enterprises, Dotson had a prestigious career in lab or relations, serving as Chairman of the National Labo r Relations Board and as Assistant Secretary for Labo rManagement Relations at the U.S. Department of Labo r. This suit arises from two incidents in which Rosema ry Trump, President of Local 585 of the SEIU, allegedl y made false and defamatory statements about Dotson and Be verly. Plaintiffs allege that, as a result of the statemen ts uttered by Trump, Dotson and Beverly have suffered damage t o their reputations. A district court's order dismiss ing a complaint is subject to plenary review. Pension Ben efit Guar. Corp. v. White Consol. Indus. Inc., 998 F.2d 1192, 1997 (3d Cir. 1993). We accept as true all well-ple aded factual allegations in the plaintiffs' complaint an d all reasonable inferences therefrom. Independent Enterp rises v. Pittsburgh Water, 103 F.3d 1165, 1168 (3d Cir. 1997 ). The parties agree that Pennsylvania law governs this di spute.

II.

The first set of allegedly defamatory statements we re made in August, 1996, at a political rally in Pitts burgh, Pennsylvania, sponsored by the Dole/Kemp presidenti al campaign. Plaintiffs allege that Trump approached D otson in the midst of a large crowd, ascertained his iden tity as a Beverly official, and asked him whether he knew who she was. When Dotson said he did not, Trump became visi bly upset, told Dotson he should know her, identified h erself, and then began to berate Dotson in a loud and angry voice. Specifically, Trump accused Dotson of being a "crim inal" and said that "you people at Beverly are all crimin als." When Dotson tried to respond, Trump cut him off and angrily accused him of "devoting [his] entire caree r to busting unions." Despite Dotson's efforts at reason ed discourse, Trump continued berating Dotson, finally shouting at him: "I know your kind. You're just par t of that World War II generation that danced on the graves o f Jews."

3Plaintiffs allege that these statements were false and

defamatory as to both Dotson and Beverly Enterprise s. Moreover, they allege that Trump uttered the statem ents with actual malice, and that, as a result of these statements, Dotson suffered damage to his reputatio n. The
District Court concluded that each of the three sta tements at the rally were incapable of defamatory meaning b ecause they constituted mere hyperbole and insulting rheto ric, all too common in labor disputes.

We begin by addressing Trump's alleged statements accusing Dotson of "union-busting" and referring to Dotson and others at Beverly as "criminals." By statute in Pennsylvania, a plaintiff in a defamation action ha s the burden of proving:

(1) the defamatory character of the communic ation, (2) its publication by the defendant, (3) its ap plication to the plaintiff; (4) the understanding by the recipient of its defamatory meaning; (5) the understandin g by the recipient of it as intended to be applied to the plaintiff; (6) special harm resulting to the plaintiff from its publication, and (7) abuse of any conditiona l privilege.

42 Pa. C. S. S 8343(a) (West 1999).

The Pennsylvania Supreme Court has held that "[i]n an action for defamation, it is the court's duty to de termine if the publication is capable of the defamatory meanin g ascribed to it by the party bringing suit." MacElre e v. Philadelphia Newspapers, Inc., 674 A.2d 1050, 1053 (Pa. 1996). "A communication is defamatory if it tends s o to harm the reputation of another as to lower him in t he estimation of the community or deter third persons from associating or dealing with him." Id. at 1055 (quot ing Thomas Merton Center v. Rockwell Int'l Corp., 442 A .2d 213, 215 (Pa. 1981)).

Appellants contend that Trump's references to "crim inals" and "union busting" were defamatory per se because they imputed criminal conduct to both Dotson and Beverly . 1

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1. Insofar as plaintiffs' allegations can be constr ued as alleging slander per se, plaintiffs are excepted from the requiremen t that they must also allege special damages. Baird v. Dun & Bradstreet, 285 A.2d 166, 171 (Pa. 1971); Clemente v. Espinosa, 749 F. Supp. 672, 677 (E.D. Pa. 1990) (construing Pennsylvania law).

4Moreover, they argue that other attendees at the

Dole/Kemp rally within earshot could reasonably hav e interpreted Trump's statements as alleging actual f acts about Dotson and Beverly.

We disagree. Although Trump's statements were undoubtedly offensive and distasteful, the law of
defamation does not extend to mere insult. Courts i n Pennsylvania and elsewhere have long recognized a
distinction between actionable defamation and mere obscenities, insults, and other verbal abuse. "[S]t atements which are merely annoying or embarrassing or no mor e than rhetorical hyperbole or a vigorous epithet are not defamatory." Kryeski v. Schott Glass Techn., Inc., 626 A.2d 595, 601 (Pa. Super. 1993) (quoting Redding v. Carl ton, 296 A.2d 880, 881 (Pa. Super. 1972)); see also Greenbel t Cooperative Publishing Assoc. v. Bresler, 398 U.S. 6, 14 (1970) (finding that a statement that was "no more than rhetorical hyperbole, a vigorous epithet" was not s lander). As the Restatement (Second) of Torts explains:

A certain amount of vulgar name-calling is f requently resorted to by angry people without any real intent to make a defamatory assertion, and it is prope rly understood by reasonable listeners to amount to nothing more. This is true particularly when it is obvious that the speaker has lost his temper and is merely giving vent to insult. Thus when, in the course of an altercation, the defendant loudly and angrily calls the plaintiff a bastard in the presence of o thers, he is ordinarily not reasonably to be understood a s asserting the fact that the plaintiff is of illegitima te birth but only to be abusing him to his face. No action for defamation
will lie in this case.

Restatement (Second) of Torts S 566, comment e (197 7).

Similarly here, Trump's exclamation that "you peopl e at Beverly are all criminals" is reasonably understood as a vigorous and hyperbolic rebuke, but not a specific allegation of criminal wrongdoing. Trump's accusati on that Dotson "devot[ed] [his] entire career to busting un ions" is equally incapable of a defamatory construction. App ellants describe these statements as "mean-spirited . . .

5accusations of illegal and immoral conduct." First, it is

doubtful at best that an accusation of "union-busti ng" amounts to an insinuation of criminal activity. Eve n if it were so understood, however, the reasonable listene r would recognize this statement as merely a vituperative o utburst which, although undoubtedly offensive, it is not ac tionable in defamation. On this basis, we conclude that thes e two statements are incapable of defamatory meaning and thus cannot support an action in tort.

Plaintiffs' claim based on the third comment Trump allegedly made at the rally -- that Dotson was "par t of that World War II generation that danced on the graves o f Jews" -- fails for a different reason. As a rule, except as to allegations of slander per se, plaintiffs in slande r actions must allege special damages beyond an injury to reputation. 42 Pa. C. S. S 8343(a)(6); Baird, 285 A .2d at 171 ("[i]t is a general rule that defamatory words are not actionable, absent proof of special damage"); Solos ko v. Paxton, 119 A.2d 230, 232 (Pa. 1956) ("[g]enerally speaking, damages for defamatory words when spoken are not recoverable in the absence of proof of special dama ges"); Altoona Clay Prod. Inc., v. Dun & Bradstreet, Inc., 246 F. Supp. 419, 422 (W.D. Pa. 1965), rev'd on other grou nds, 367 F.2d 625 (3d Cir. 1966) ("The Pennsylvania case s require both the allegation and proof of [a] specif ic item of damage to support the recovery."); Restatement (Sec ond) of Torts, S 558(d). Whereas the aforementioned comment s arguably impute criminal conduct to the plaintiff, and thus constitute allegations of slander per se, this accu sation of bigotry does not fall within the narrowly defined c ategories of per se defamation. Clemente, 749 F. Supp. at 677 (citing the four categories of slander per se as words impu ting the commission of a criminal offense, a loathsome disea se, business misconduct, or serious sexual misconduct).

Consequently, as to the alleged statement imputing antiSemitism, to survive a motion to dismiss, the plain tiff must go beyond a claim of injury to reputation and alleg e special damages. Typically considered as a pecuniary loss, special damages are "actual and concrete damages capable of being estimated in money, established by specific instanc es such as actual loss due to withdrawal of trade of partic ular

6customers, or actual loss due to refusal of credit by specific

persons, all expressed in figures." Altoona, 246 F. Supp. at 422; Restatement (Second) of Torts, S 575, comment b (special harm is "the loss of something having econ omic or pecuniary value"). Because plaintiffs have only all eged damage to their reputation, they have failed to mee t this requirement.2

III.

The second incident in which plaintiffs allege that Trump made a defamatory statement was in May, 1997, at a "Town Hall meeting." According to the plaintiffs' complai nt, the SEIU persuaded several members of Congress to conve ne the meeting in the Allegheny County Courthouse to d iscuss an item of federal legislation then pending in Cong ress. The bill, entitled the "Federal Procurement and Assista nce Integrity Act," was designed to preclude businesses that are
in violation of certain federal labor standards fro m obtaining federal contracts. Plaintiffs allege that the "true purpose" of the meeting was to provide a forum for disparaging Beverly Enterprises and, to that end, m embers of Congress were importuned to ask speakers about t he adverse effects that the pending legislation would have on Beverly. Trump, an invited speaker, allegedly made the following statement in response to a question from Congressman Klink:

___________________________________________________ ______________

2. Beverly also argues that it need not allege or p rove special damages because Trump acted with actual malice. But Beverly confuses the requirements of special damages and actual damages. Under Pennsylvania law, where a defendant acts with actua l malice, there is no need to prove actual damages. See Frisk v. News Co. , 523 A.2d 347, 354 (Pa. Super. Ct. 1986) (citing Gertz v. Robert Welch , Inc., 418 U.S. 323 (1974)); Agriss v. Roadway Express, Inc., 483 A.2d 456, 467-68 (Pa. Super. Ct. 1985). This rule requires that, in the a bsence of actual malice, even if the plaintiff need only prove gener al damage to reputation, as in a defamation per se case, he or s he cannot rely on a presumption of damages; he or she must offer actual specific evidence of such general damages. This is different from the pr inciple of special damages (proof of which is excused in defamation pe r se cases, see Agriss, 483 A.2d at 468-75.)

7CONGRESSMAN KLINK: Thank you. To Ms. Trump a nd

Ms. Ford, just to clear up in my mind, why h ave we seen this problem exacerbated so much in Pennsylvania and we haven't seen it at the o ther Beverly locations across the country? What t ranspired in Pennsylvania to make the situation here m uch

worse?

MS. TRUMP: Well, this is one of the most uni onized, heavily unionized Beverly states, if not the most unionized Beverly state. They operate approx imately 42 facilities in Pennsylvania, 20 of which are organized and we have had a history of bargaining that went very well. But quite frankly when President Clint on was elected and a new Chairman of the National L abor Relations [Board] was appointed, the former Chairman, Don Dotson, walked out of his federal govern ment job and knocked on evidently the Beverly door an d said, who knows more about all of your unfair labo r practice cases in Beverly 1 and 2 than me since I hav e been supervising them on behalf of the government and besides which, I could really -- really this is conjecture on my part, but I can only assume that becau se they went out and recruited the former general co unsel for the National Right to Work Committee. They d ecided that you're the largest chain of Beverly fac ilities, if we're able to break unionism in the Beverly chain, then, of course, it will have a ripple effec t in the entire industry and the whole industry will operate nonunion.

Plaintiffs allege that the italicized statement by Trump is defamatory because it accuses Dotson of criminal vi olation of the Ethics in Government Act, 18 U.S.C. #8E8E # 201 et seq. ("EGA"). Specifically, plaintiffs allege that the " gist or sting" of Trump's statement is that Dotson (1) may have negotiated for employment with Beverly while Chairm an of the NLRB, and (2) eventually represented Beverly in matters that were pending before the NLRB during his Chairmanship, both in criminal violation of federal government ethics laws. Further, plaintiffs allege that Trump's statement also implicates Beverly as a part icipant in a criminal conspiracy with Dotson toward these s ame ends. According to plaintiffs, these statements are false,

8defamatory, and slanderous per se, as accusations o f

criminal conduct. On the basis of this statement, D otson and Beverly claim to have sustained damage to their reputations.

The District Court dismissed this claim after concl uding that Trump enjoyed absolute testimonial immunity fo r her statement. Like absolute judicial immunity, the com mon law testimonial immunity provides that:

A witness is absolutely privileged to publis h defamatory matter as part of a legislative proceeding i n which he is testifying or in communications preliminary to the proceeding, if the matter has some relation to the proceeding.

See Jennings v. Cronin, 389 A.2d 1183, 1185 (Pa. Su per. Ct. 1978) (quoting and adopting S 590A of the Resta tement (Second) of Torts). After considering the scope, pu rpose, and format of the meeting, the District Court concl uded that the meeting constituted a "legislative proceed ing" for purposes of testimonial immunity. Moreover, because Trump was an invited speaker and made the allegedly defamatory statement in response to a question pose d by a panel member, the District Court concluded that the statement was "part of " the legislative proceeding . Finding Trump's statement absolutely privileged, therefore, the Court dismissed plaintiffs' claim.

We see no need to consider the contours of absolute testimonial immunity in this case, however, because we find Trump's statement at the Town Hall meeting inc apable of either of the defamatory constructions plaintiff s allege.3

___________________________________________________ ______________

3. Plaintiffs contend that the District Court erred by considering matters outside the pleadings without converting defendants ' motion into one for summary judgment. See Fed.R.Civ.P. 12(b). Specifica lly, plaintiffs contend the District Court erroneously considered a videotape of the meeting and a copy of the pending legislation at is sue. Plaintiffs thus assert that "Dotson and Beverly must be provided th e opportunity to rebut the extrinsic materials relied on by the Dist rict Court, and
discover Rule 56 evidence in support of their claims." Appel lant's Brief at 23.

It is well-settled that in deciding a motion to dis miss, courts generally may consider only the allegations contained in the complaint, exhibits

9Whether a reasonable listener could have construed

Trump's statements as defamatory is a question of l aw to be determined by the court. Pierce v. Capital Citie s Communications, Inc., 576 F.2d 495, 502 (3d Cir. 19 78); Thomas Merton Ctr., 442 A.2d at 215-16; Restatement (Second) of Torts, S 614.

Plaintiffs allege that Trump's statement implicates Dotson and Beverly in violation of two separate provisions of the Ethics in Government Act. Construing the allegation s in the complaint in the plaintiff 's favor, as we must, we nonetheless find neither of these interpretations reasonable. First, the act prohibits an executive b ranch officer from "personally and substantially" partici pating in a quasi-judicial proceeding if the officer is also ne gotiating prospective employment with an organization that ha s a financial interest in that proceeding. See 18 U.S.C . S 208. Plaintiffs' complaint alleges that Trump's statemen t asserts

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attached thereto, and matters of public record. Pen sion Benefit Guar. Corp. v. White Consol. Indus. Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). As the federal bill is a matter of public record, t he District Court did

not err in considering it before deciding defendants' m otion to dismiss.

However, the District Court's opinion also reflects the Court's reliance on the videotape of the meeting, which was relevant to determining whether the meeting constituted a "legislative proc eeding." For example,
the District Court noted the relevance of several d etails only obtained from the videotape, such as one Congressman's openi ng words at the meeting, his reference to the meeting as a "field h earing," and the number of other members of Congress present as well as their relationship to the bill. Although "a court may con sider an undisputedly
authentic document that the defendant attaches as a n exhibit to a motion to dismiss if the plaintiff's claims are bas ed on the document," such exception does not apply here. See id. This ex ception prevents "a plaintiff with a legally deficient claim [from surv iving] a motion to
dismiss simply by failing to attach a dispositive document on which it relied."

Id. In this case, however, defendants offered the video tape (and the District Court considered it) in support of their affirmativ e defense of
testimonial immunity. Because the plaintiff was not given an ad equate opportunity for discovery or to submit rebuttal evidence, we wi ll treat the District Court's decision as a 12(b)(6) dismissal and will d isregard the videotape of the meeting in conducting our plenary review of that decision. See Indep. Enterprises, 103 F.3d at 1168 n.2.

10a violation of this provision insofar as she said t hat "when

President Clinton was elected and a new Chairman of the National Labor Relations [Board] was appointed, the former chairman, Don Dotson, walked out of his federal government job and knocked on evidently the Beverly door . . . ." We find this interpretation of Trump's sta tement unreasonable. Not only is there nothing in Trump's statement to suggest that Dotson simultaneously sou ght employment from Beverly and supervised cases involv ing Beverly, but Trump's statement suggests to us just the opposite: that Dotson did not approach Beverly unti l after he left his government job.

Second, the Ethics in Government Act restricts form er federal officers from representing another individu al or entity in a matter formerly under the officer's sup ervision. See 18 U.S.C. S 207. Plaintiffs contend that Trump accused Dotson of violating this provision when she said,"D on Dotson, walked out of his federal government job an d knocked on evidently the Beverly door and said, who knows more about all of your unfair labor practice cases in Beverly . . . than me since I have been supervising them on behalf of the government . . . ." Trump's statement, accor ding to plaintiffs, amounts to an accusation that Dotson vi olated S 207 of the EGA "by representing Beverly in matter s that had been pending before the NLRB during his Chairmanship." Again, we fail to see how a reasonab le hearer of the statement Trump allegedly made could interpret it as plaintiffs suggest.

Trump's statement undeniably implies that Dotson sought to capitalize on his knowledge of the NLRB's prosecutions of Beverly in an effort to obtain empl oyment with Beverly. Moreover, given that Dotson was a Bev erly Vice President at the time of the alleged statement , Trump's statement implies that Dotson successfully secured his job at Beverly on the basis of his knowledge of their o ngoing litigation with the NLRB. However, none of these implications amounts to a violation of federal law- - civil or criminal. Trump's comment simply does not state or imply that Dotson has done that which the EGA prohibits: making, with an intent to influence, a communicatio n to or appearance before any department, agency, or court in

11connection with matters he previously supervised. S ee 18

U.S.C. S 207(a)(2).

Unless Trump's statement is reasonably susceptible of a defamatory meaning, plaintiffs have failed to state a claim with respect to the Town Hall meeting. See Sarkees v. Warner-West Corp., 37 A.2d 544, 546 (Pa. 1944) ("If the words are not susceptible of the meaning ascribed t o them by the plaintiff, and do not sustain the innuendo, the case should not be sent to a jury."); McAndrew v. Scrant on Republican Pub. Co., 72 A.2d 780, 783 (1950). We co nclude that Trump's statement is incapable of conveying ei ther of the defamatory meanings plaintiffs advance. Moreove r, to the extent the statement is susceptible of another defamatory interpretation that does not constitute an accusation of criminal wrongdoing, such interpretat ion would not constitute slander per se and, as a resul t plaintiff 's complaint would be insufficient for fa ilure to allege special damages.

IV.

Accordingly, we will affirm the order of the Distri ct Court dismissing the plaintiffs' complaint for failure to state a
claim.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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