Opinion ID: 197576
Heading Depth: 1
Heading Rank: 1

Heading: store wars

Text: 2 The events that gave rise to this litigation are controversial but, for the most part, not controverted. We present a balanced synopsis here. 3 The plaintiff, Levinsky's, Inc. (Levinsky's), is a family-owned business that operates three retail clothing stores in Maine. It has deep roots in the community. The defendant, Wal-Mart Stores, Inc. (Wal-Mart), is the nation's largest retailer. It is a relative newcomer to the Maine marketplace. The two compete head to head in the Portland area. 4 In the fall of 1994, Levinsky's decided to run a tongue-in-cheek radio advertisement that forged a comparison between it and Wal-Mart. A snippet from the ad reflects its tone: Levinsky's has a great selection and the lowest prices in Maine on Levi's jeans, Dockers and denim shirts. Wal-Mart doesn't carry Levi's, but we did get a good buy on a toaster. The spot aired in the Portland area for about six weeks during the pre-Christmas shopping season. 5 Intrigued by the unorthodox advertising campaign, Michael Boardman, a free-lance writer for the Portland business magazine Biz, decided to write a David versus Goliath story about Levinsky's aggressive reaction to Wal-Mart's entry into the marketplace. The article appeared in Biz 's January/February 1995 issue under the headline Levinsky's: Leaner and meaner with retail competition. In the text, Boardman compared Levinsky's to a feisty kid who fights the school bully for his lunch money. 6 While researching the story, Boardman telephoned Gilbert Olson, the manager of Wal-Mart's store in Scarborough, Maine (a Portland suburb). Olson testified that he thought Boardman was a college student researching a paper, but Boardman maintained that he clearly identified himself as a journalist and stated the purpose of his call. At any rate, Olson made two statements during his conversation with Boardman that lie at the epicenter of this appeal. First, he described a Levinsky's store as trashy. Second, he stated that when a person called Levinsky's, you are sometimes put on hold for 20 minutes--or the phone is never picked up at all. Biz printed these (and other) remarks, attributing them to Wal-Mart. 7 Shortly thereafter, Levinsky's and several family members sued Wal-Mart for defamation, injurious falsehood, false light, deceptive trade practices, interference with advantageous economic relations, and infliction of emotional distress. Their complaint, filed in the federal district court under diversity jurisdiction, 28 U.S.C. § 1332(a) (1994), sought $40,000,000 in compensatory and presumed damages, plus punitive damages equal to 2% of Wal-Mart's net worth. Most of these claims were weeded out before or during trial. 1 The defamation claims survived. The jury found that the individual family members had not been defamed, but awarded Levinsky's $600,000 for presumed damages to reputation (notwithstanding the lack of any specific evidence of actual pecuniary loss). The jury also determined that Olson had not acted with ill will and declined to award Levinsky's exemplary damages. 8 The district judge upheld the verdict and made several rulings that bear on this appeal. First, the judge found that the verdict did not offend the First Amendment because both the word trashy and the 20 minutes on hold comments stated opinions that implied provably false facts. Second, because Olson's statements related to Levinsky's business, the judge concluded that presumed damages were available. Third, emphasizing Olson's subjective belief that he was not speaking to a reporter but to a university student, the judge determined that Olson's comments did not relate to a matter of public concern, and that, therefore, Levinsky's did not need to show actual malice as a precondition to the award of presumed damages. Fourth, the judge ruled that, under Maine's defamation per se doctrine, a finding of defamation that related to the plaintiff's business established legally sufficient fault and thus obviated any need for a jury instruction on negligence.