Court Opinion

ID: 165741
Source: CourtListenerOpinion
Date Created: 2010-08-14 08:58:56+00
Date Added: 2024-06-11T17:24:48.492099
License: Public Domain

F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                          APR 19 2005
                                   TENTH CIRCUIT
                                                                       PATRICK FISHER
                                                                               Clerk

 CENTURY MARTIAL ART SUPPLY,
 INC.,

          Plaintiff-Appellee,
 v.                                                      No. 03-6238
 THE NATIONAL ASSOCIATION OF                      (D.C. No. CIV-02-736M)
 PROFESSIONAL MARTIAL                                   (W.D.Okla.)
 ARTISTS, and INTERNATIONAL
 IKON, INC.,

          Defendants-Appellants.

                                ORDER AND JUDGMENT       *

Before SEYMOUR, ANDERSON              and BRISCOE , Circuit Judges.

      Defendants, the National Association of Professional Martial Artists

(NAPMA) and International IKON, Inc. (IKON), appeal a judgment entered after

a jury verdict in favor of plaintiff, Century Martial Art Supply, Inc. (Century), on

Century’s claims for defamation, tortious interference with existing and/or

      *
       This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
prospective business relationships, deceptive trade practices, and unfair

competition. Defendants contend the judgment must be reversed because (1) the

jury considered protected speech in violation of the First Amendment, (2) the

district court erred in denying their motions for judgment as a matter of law

(JMOL) given Century’s failure to prove defendants’ statements were defamatory

or that special damages were incurred, and (3) the reversal of the jury’s general

verdict on any single claim necessitates reversal of its verdict on all claims. We

exercise jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.

                                         I.

      Century sells martial arts supplies including student uniforms. Its primary

customers are martial arts schools. NAPMA is a martial arts trade association,

founded by John Graden, that provides educational resources for approximately

1,800 subscribing martial arts schools throughout the country. NAPMA

distributes promotional materials and information to assist those who manage and

operate martial arts schools. The Martial Arts Professional Magazine is one of its

monthly publications. NAMPA’s materials have been described as a sort of

“Consumer Reports” for the martial arts industry. Aplt. App. at 1129.

      In 2001 in direct competition with Century, Graden began selling his own

line of martial arts products under the IKON brand name. Both NAPMA and

IKON are corporations wholly owned by Graden, who is also the CEO of both

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corporations.

      In its monthly mailings to martial arts schools (sixty-nine percent of which

were customers of Century), NAPMA included a chart which compared three

IKON uniforms with three Century uniforms. The chart indicated that Century’s

student uniform weighed 5.0 to 5.5 ounces, its wholesale price was ten dollars

ninety-nine cents, it was made of 65% polyester and 35% cotton, and that a

Century customer was required to purchase one thousand dollars worth of

uniforms before receiving a discount. By comparison, the chart indicated IKON’s

uniform weighed seven ounces or more, its wholesale price was nine dollars

ninety-nine cents, it was made of 60% cotton and 40% polyester, and an IKON

customer could receive discounts on purchases of two hundred fifty dollars. The

information about Century’s uniform was false and the discount information was

misleading.

      Frank Silverman, an operator of a martial arts schools, stopped purchasing

from Century after seeing the comparison chart in NAPMA’s mailing. He

explained the importance of the weight and quality of the uniform and their effect

on his buying decision:

      We charge thousands of dollars for martial arts lessons . . . . I want
      to have a good-quality uniform represented in our school. It
      wouldn’t make sense to say that we have this great martial arts
      program, but we give you a cheap uniform. [For] the image of our
      school, it is important that we have a uniform that lays well, does
      well, and durability, as well. A lighter-weight uniform wouldn’t last

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      as long and then I would be refunding people’s money, or giving
      them new uniforms, which would cost me money. Thirdly, really the
      biggest reason is the paper-thin and the lightweight uniform is the
      sweat comes through. There [are] two huge issues . . . with thin,
      paper-thin uniforms. One, . . . in martial arts, you work out with
      other people . . . . [W]hen it bleeds through, you don’t want them
      sweating . . . on you . . . . [Also,] the biggest training tool that we
      have in a martial arts studio are the mirrors so you can see what you
      are doing, you can see the instructor, you can critique yourself.
      When you are in a uniform that the sweat just bleeds right through, it
      almost becomes see-through, which is an issue for everybody. You
      can see underwear, bras, anything.

Id. at 1669-70.

      The President/CEO of Century contacted Graden to ask that he stop

publishing inaccurate information about Century’s uniforms. Graden responded

that “he would print whatever he wanted; it was his magazine.” Id. at 1745.

      Some of the information from the comparison chart was reprinted in an e-

mail NAPMA sent to its web-site subscribers. In turn, that e-mail was reprinted

in Graden’s Martial Arts Professional magazine. NAPMA repeated the

allegations about the fabric content (cotton/polyester percentages) and weight of

Century’s uniforms, but noted that Century stated these figures were false. Id. at

4477. The e-mail also stated: “If the comparison is inaccurate, a letter from

Century is all that was needed. Instead, they use the profits that they get from the

industry to attack us . . .. We receive weekly calls saying Century is out to get us.

I guess this is the first shot. What is Century afraid of?” Id. Century indicated at

trial that it already had sent such a letter when these statement were made. Id. at

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1112.

        In a published article entitled Let Us Lead by Example, Graden referred to

the September 11th attacks and stated, “[s]uddenly we had a much more menacing

enemy to face than the bullies at Century.” Id. at 1118. In his keynote speech at

the NAPMA 2001 World Conference, which was re-printed, Graden stated the

following:

        We believed that the biggest professional association working with
        the biggest supplier would be good for the industry. We thought the
        industry needed more unity and less fragmentation. They chose,
        instead, to threaten us and attack us. . . . Either way, we’re ready for
        them. But we wanted you to know what’s going on. When you see
        these new offers, know that they have nothing to do with helping our
        industry. They only exist to hurt NAPMA, Martial Arts Professional
        magazine and the World Conference. All of our progress on behalf
        of this industry is under attack.

Aplt. App. at 5076.

        Century presented testimony that its sales suffered as a result of the

defendants’ actions. Century presented not only evidence of the loss of a major

customer, but also evidence of a decline in revenue generally. The jury found for

Century on all four claims and found the evidence that the defendants acted with

reckless disregard was clear and convincing. The jury awarded Century both

compensatory and punitive damages.

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                                            II.

                   Privileged or constitutionally protected statements

         Defendants argue for the first time on appeal that the district court erred in

permitting the jury to consider privileged or constitutionally protected statements

in support of Century’s claims, and that the jury’s verdict may have been

influenced by this evidence. “It is clear in this circuit that absent extraordinary

circumstances, we will not consider arguments raised for the first time on

appeal.” McDonald v. Kinder-Morgan, Inc., 287 F. 3d 992, 999 (10th Cir. 2002).

         Defendants argue we should consider these previously unraised arguments

because they present purely legal issues and, if we failed to consider them, a

miscarriage of justice would result. We disagree. Were we to consider these

belated defenses now, it would be Century who could claim a miscarriage of

justice. Century prepared for trial and presented evidence without any notice

from defendants that reference to statements made by Graden would violate his

First Amendment rights or were in some way protected by statutory privilege. An

appeal is not meant to serve as an opportunity to take a second stab at defending a

case. Tele-Communications, Inc. v. C.I.R. 104 F. 3d 1229, 1233 (10th Cir.

1997).

                        Sufficiency of the evidence -- defamation

         Defendants also contend that the district court erred in denying their JMOL

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motion because their statements were not defamatory, were at the most product

disparagement, and were constitutionally protected or otherwise privileged.

       Century argues defendants have waived these arguments. According to

Century, the defendants did not argue to the district court that defendants’

statements were constitutionally protected, otherwise privileged, or non-

defamatory. Nor, Century argues, did defendants argue that their statements and

representations were at most product disparagement and not defamation.

       Defendants, however, insist they repeatedly argued that the evidence was

insufficient to instruct the jury on Century’s defamation claim, and they refer this

court to the following assertion in their renewed motion for JMOL made at the

close of evidence: “The Defendant moves under Rule 50, relative to the claims of

the Plaintiff as a whole, as the evidence taken in the best light is insufficient

relative to their establishing a prima facie case relative to their claims . . . .”

Aplt. App. at 2432. Defendants also cite a similar statement made in objection to

the jury instructions and as part of their initial JMOL motion at the close of

Century’s case. We are left then to decide whether the defendants’ reference to a

failure to sufficiently prove all of the prima facie elements of all claims without

further clarification is sufficient to preserve the more specific arguments they

make on appeal.

       A JMOL motion “shall specify the judgment sought and the law and the

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facts on which the moving party is entitled to the judgment.” Fed. R. Civ. P. 50

(a)(2). Such a motion “made at the close of all the evidence preserves for review

only those grounds specified at the time, and no others.” Vanderhurst v. Colorado

Mountain College Dist., 208 F. 3d 908, 915 (10th Cir. 2000). Further, in the

absence of a Rule 50(b) motion, we have no authority to direct a verdict contrary

to that of the district court, and would be limited to only the grant of a new trial.

Johnson v. New York, N.H. & H.R. Co., 344 U.S. 48, 50-51 (1952). Even though

Rule 50 “does not require technical precision in stating the grounds of the motion,

it does require that they be stated with sufficient certainty to apprise the court and

opposing counsel of the movant's position with respect to the motion.” United

Intern. Holdings, Inc. v. Wharf (Holdings) Ltd., 210 F. 3d 1207, 1229 (10th Cir.

2000). That is, “the motion must be made with enough specificity to allow the

non-movant an opportunity to cure possible defects in proof which might

otherwise make its case legally insufficient.” Atchley v. Nordam Group, Inc., 180

F. 3d 1143, 1147-48 (10th Cir. 1999).

      By incanting a generic argument that there was insufficient evidence to

support any of the claims, the defendants failed to provide guidance to the district

court or the opposing counsel regarding how Century’s evidence fell short as a

matter of law. It is not apparent from the record that either the district court or

Century would have known from defendants’ general arguments in Rule 50

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motions and from their objection to jury instructions that the defendants were

really arguing their statements and representations were at most product

disparagement, and/or their statements were constitutionally protected, otherwise

privileged, or non-defamatory. We therefore conclude defendants’ motion and

other arguments or objections upon which they now rely were not sufficiently

specific to preserve their arguments. F.D.I.C. v. Schuchmann, 235 F. 3d 1217,

1231 (10th Cir. 2000).

                    Sufficiency of evidence -- special damages

      Defendants contend that each of Century’s claims requires proof of special

damages, and that Century failed to establish special damages. Defendants argue

the district court erred in denying their JMOL motion because there was

insufficient evidence to establish special damages.

      We review “de novo the denial of a motion for judgment as a matter of law

. . , applying the same standard as the district court.” O’Tool v. Genmar

Holdings, Inc., 387 F. 3d 1188, 1194 (10th Cir. 2004). In reviewing the district

court’s decision, we draw all reasonable inferences in favor of the nonmoving

party. Id. “The district court’s refusal to grant JMOL will only be reversed if the

evidence points but one way and is susceptible to no reasonable inferences

supporting the party opposing the motion.” Id.

      Defendants point specifically to Century’s defamation claim in support of

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their argument that special damages were not proven. To find for Century on its

defamation claim, the instructions required the jury to find that “[t]he publication

directly caused Plaintiff [Century] to incur special damages.” Aplt. App. at 109.

Special damages were defined as “actual subjective damages that must be proven

by specific evidence as to the time, cause, and amount. Special damages include

out-of-pocket losses, including loss of customers/business, loss of sales, lost

profits, and damages incurred to prevent additional losses.” Id. at 113.

      Under Oklahoma law, more than conclusory allegations are required to

support recovery of special damages in a defamation action. Professional Asset

Mgmt, Inc. v. Penn Square Bank, N.A., 607 F. Supp. 1290, 1295 (W.D. Okla.

1985). Allegations in support of a special damages claim are insufficient if they

are “merely conclusory without foundation or explanation as to how the damages

were occasioned or whether that they occurred as a natural and proximate result

of the publication.” Id. However, proof that “specific accounts were terminated”

or some “concrete impairment of . . . business as a direct result” of the

defamatory conduct is sufficient to establish special damages. Id.

      Although there was additional evidence supporting revenue losses, the

testimony of Frank Silverman was sufficient to support an award of special

damages in this case. Before seeing the comparison chart, Frank Silverman

purchased between one thousand and one thousand-two hundred uniforms a year

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from Century. Aplt. App. at 1667. However, a “NAPMA box” or “NAPMA kit”

containing the chart comparing Century’s uniforms to IKON’s uniforms led him

to believe that he was purchasing an inferior product at a higher price. Id. at

1668-70. Silverman testified he began “purchasing then and continue[s] today to

purchase all [his] student uniforms from Asian World and Martial Arts,” rather

than Century. Id. at 1671-72. Silverman stated “once I saw that in print, was able

to make a direct comparison, it made me feel that the [Century] uniform was a

substandard quality. Even though I had been purchasing for seven years, when

you see it in paper like that directly, one to another, that made me put in question

the quality of the uniform.” Id. at 1686. Losing a major customer such as

Silverman was proof of an actual economic loss, which was directly related to the

defendants’ defamatory conduct. Thus, even assuming arguendo that

insufficiency of proof of special damages was preserved for appeal, Century,

nevertheless, still met the requirement of proving special damages.

                                General verdict form

      Finally, defendants argue that because a general verdict form was used our

reversal of any one claim will require our reversal of the entire verdict. As we

have found no merit in any of the defendants’ contentions, this argument must fail

as well.

      The judgment of the district court is AFFIRMED. Defendants’ motion to

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file a supplemental appendix is GRANTED.

                                           Entered for the Court

                                           Mary Beck Briscoe
                                           Circuit Judge

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