Opinion ID: 157914
Heading Depth: 2
Heading Rank: 2

Heading: Moody's Motion to Dismiss the School District's Claim for

Text: Publication of an Injurious Falsehood 28 In this case, the district court began its analysis of Moody's article by considering the phrase negative outlook. Applying Milkovich, it reasoned that, in the context of the entire article, that phrase did not contain a provably false factual connotation. Although the court acknowledged that the reference to the District's ongoing financial pressures might be interpreted as stating actual facts, it said that the District's complaint did not allege that the discussion of these financial pressures was materially false. The court rejected the District's argument that the article implied the existence of undisclosed facts. 29 In challenging the district court's ruling in this appeal, the School District focuses on the statement in Moody's article that its negative outlook was due in part to underfunding of the School Finance Act and Amendment 1. According to the School District, that statement implies that there were other ongoing financial pressures that engendered the negative outlook to which Moody's article refers. It points to the allegation in its First Amended Complaint that Moody's article state[d], imp[ied], and convey[ed] the impression that the School District's financial condition was not credit-worthy and that this statement was based on current information concerning the School District and an analysis sufficient to support that conclusion. Aplt's App. at 8. It contends that this implied assertion is provably false and that, as a result, Moody's article is not a protected statement of opinion under Milkovich. Importantly, the School District acknowledges that it has not challenged the accuracy of the particular factual assertions that are expressly set forth in Moody's article-that Colorado Amendment I and the underfunding of the School Finance Act caused financial pressures on the School District. 30 We review de novo the district court's dismissal of the School District's complaint, applying the same standard as the district court under Fed.R.Civ.P. 12(b)(6). Witt v. Roadway Express, 136 F.3d 1424, 1431 (10th Cir.), cert. denied, --- U.S. ----, 119 S.Ct. 188, 142 L.Ed.2d 153 (1998). As we have noted, we accept as true all well-pleaded facts and view those facts in the light most favorable to the nonmoving party. See id. The district court's dismissal may be upheld only if  'it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'  Gaines-Tabb v. ICI Explosives, USA, Inc., 160 F.3d 613, 619 (10th Cir.1998), quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Applying this standard, we conclude that the sufficiency of the School District's allegations may be assessed by considering the first of line of inquiry identified in Milkovich: whether a reasonable factfinder could conclude that Moody's article implied a false assertion of fact about the School District's financial condition. 31 We begin by examining the allegedly false statements that the School District maintains were implied by the Moody's article. The first of these statements-that the School District was not creditworthy--is no more specific than Moody's statement about the refunding bonds' negative outlook. Like the statement of a product's value, a statement regarding the creditworthiness of a bond issuer could well depend on a myriad of factors, many of them not provably true or false. Cf. Living Will Center, 879 P.2d at 13-14 (discussing the variety of factors involved in assessing a product's value and concluding, as a result, that statements about the products value were not provably false under Milkovich ). For example, one evaluator of the bonds might point to legal developments like those identified by Moody's in concluding that the issuer was not creditworthy. Another evaluator might point to increasing property values in making a more optimistic assessment. The difference in the evaluators' assessments of the bonds could result from differing views about the relative weight to be assigned to those factors or from other philosophical or theoretical disagreements rather than from one evaluator's reliance on inaccurate information. We therefore conclude that, in light of its failure to identify a more specific statement, the School District has failed to demonstrate that Moody's implied statement about its creditworthiness is provably false. 32 Because the alleged statement about a lack of creditworthiness is so vague, the School District's interpretation of Moody's article would be plausible only if it could establish that the article implied some other specific (but as yet unidentified) false assertions about the School District's financial condition. Although the School District maintains that the case should be allowed to proceed because it may be able to identify such statements, the article's use of the phrase ongoing financial pressures undermines that argument. The range of factors that could cause ongoing financial pressures is vast, ranging from constitutional and statutory changes, court decisions, property values, inflation, and labor costs to many other factors too numerous to catalogue. In order for the School District to prove that Moody's article implied an assertion about the factors causing the District's ongoing financial pressures, it would first need to identify one or several of these many possible factors. It would then need to demonstrate that a reasonable reader of Moody's Rating News could discern these assertions from the general references to the refunding bonds' negative outlook and the School District's ongoing financial pressures. Finally, the School District would be required to prove that those specific assertions were false. The allegations of the School District's complaint do not permit such strained inferences. 33 The School District's additional allegation--that the Rating News article implied that it was based on current information--does not remedy the deficiencies of the First Amended Complaint. As Moody's has observed, the School District has not alleged that Moody's evaluation of the factors expressly identified as causing the bonds' negative outlook (Amendment I and the underfunding of the School Finance Act) was based on outdated information. Accordingly, the School District's allegation amounts to a contention that Moody's evaluation was based on unspecified, outdated information about unnamed factors causing the bonds' negative outlook. Again, such speculative conclusions cannot be drawn by a reasonable reader from the text of Moody's article. 34 We emphasize that the phrases negative outlook ongoing financial pressures are not necessarily too indefinite to imply a false statement of fact. If coupled with specific factual assertions, such statements might not be immunized from defamation claims by the First Amendment. Moreover, the fact that Moody's article describes its evaluation as an opinion is not sufficient, standing alone, to establish that Moody's statements are protected. See Milkovich, 497 U.S. at 19, 110 S.Ct. 2695. Moody's sells its opinions much as a title attorney would sell a title opinion. Indeed, in its appellate brief, Moody's refers to the proven objectivity of [its] opinions, which are issued in accordance with Moody's responsibility to investors and subscribers. Aplee's Br. at 22-23 n. 18 (emphasis added). If such an opinion were shown to have materially false components, the issuer should not be shielded from liability by raising the word opinion as a shibboleth. However, in this case, the School District's failure to identify a specific false statement reasonably implied from Moody's article, combined with the vagueness of the phrases negative outlook and ongoing financial pressures indicates that Moody's article constitutes a protected expression of opinion. 3 35 We therefore conclude that the district court properly dismissed the School District claim for publication of an injurious falsehood for failure to state a claim. 36