Court Opinion

ID: 4183493
Source: CourtListenerOpinion
Date Created: 2017-07-05 15:08:26.231341+00
Date Added: 2024-06-11T14:40:25.996008
License: Public Domain

FILED
                                                                          Jul 05 2017, 8:21 am

                                                                              CLERK
                                                                          Indiana Supreme Court
                                                                             Court of Appeals
                                                                               and Tax Court

ATTORNEYS FOR APPELLANTS                                    ATTORNEYS FOR APPELLEES
Daniel D. Bobilya                                           John J. Thar
Conor S. Slocum                                             Dustin J. Moloy
Bonahoom & Bobilya, LLC                                     Katzman & Katzman, P.C.
Fort Wayne, Indiana                                         Indianapolis, Indiana

                                             IN THE
    COURT OF APPEALS OF INDIANA

401 Public Safety and Lifeline                              July 5, 2017
Data Centers, LLC,                                          Court of Appeals Case No.
Appellants-Defendant,                                       49A02-1609-PL-2132
                                                            Appeal from the Marion Superior
        v.                                                  Court
                                                            The Honorable John F. Hanley,
David Ray and the Committee to                              Judge
Elect David Ray,                                            Trial Court Cause No.
Appellees-Plaintiff                                         49D11-1511-PL-37914

Baker, Judge.

Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017                           Page 1 of 16
[1]   401 Public Safety (401) and Lifeline Data Centers, LLC (Lifeline) (collectively,

      the Appellants), appeal the trial court’s order dismissing their defamation

      complaint against David Ray and the Committee to Elect David Ray (the

      Committee) (collectively, the Appellees) based on the Anti-SLAPP Statute.1

      Finding no error, we affirm.

                                                        Facts     2

[2]   401 is an Indiana limited liability company that owns a portion of what used to

      be the Eastgate Mall, located on North Shadeland Avenue in Indianapolis (the

      Property). Lifeline is an Indiana limited liability company that leases a portion

      of the Property. Alex Carroll is the managing member of both 401 and Lifeline;

      it is unclear whether Carroll also has an ownership interest in the companies.

      Carroll, through Lifeline, supported the campaign of Ben Hunter, who was the

      incumbent City-County Councilman running against Ray.

[3]   In 2010 and 2013, Lifeline made political contributions of $800 and $500,

      respectively, to Hunter’s campaign committee; at that time, Hunter was a

      member of the Indianapolis City-County Council. On May 20, 2011, 401

      entered into a twenty-five-year lease agreement (the Lease) with the City of

      Indianapolis (the City), pursuant to which 401 leased a portion of the Property

      to the City. Hunter strongly advocated in favor of the Lease. The portion

      1
          Ind. Code ch. 34-7-7 et seq. SLAPP is an acronym for Strategic Lawsuits Against Public Participation.
      2
       We held oral argument in Indianapolis on April 27, 2017. We thank counsel for their able written and oral
      presentations.

      Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017                           Page 2 of 16
      leased by the City is commonly referred to as the “Regional Operations Center”

      (ROC).

[4]   Beginning in September 2013, the Indianapolis media began investigating and

      reporting about the physical state of the property that housed the ROC.

      Specifically, there were media reports that the building was unfit and unsafe for

      people to work in. In 2014, media reports indicated an ongoing City-County

      Council investigation into the Lease, which was described as a bad deal for the

      City and its taxpayers. Carroll admitted to receiving notices of violation from

      the City.

[5]   Ray is a lifelong resident of the east side of Indianapolis. In 2015, Ray ran as a

      candidate for the office of the 19th District of the Indianapolis City-County

      Council. The Committee was established to assist with Ray’s campaign, and

      Ray served as the Committee’s chairperson.

[6]   Tim Henderson volunteered as a general consultant for Ray’s campaign.

      Henderson conceptualized a series of flyers to be mailed to eastside

      constituents. The third flyer (the Flyer), which is the subject of this litigation,

      can be described as follows:

          • The first side contains reproductions of two reports of the 2010 and 2013
            contributions made by Lifeline to Hunter’s campaign committee.
          • That side states, “What will $1,300 from a political insider buy? A
            contract with the City. A contract Ben Hunter pushed for. On
            November 3rd vote NO to sweetheart deals for political insiders.”
          • Additionally, that side includes two media quotations. First, from FOX-
            59 on September 12, 2013, “Contract for ROC locks city into 25-year

      Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017     Page 3 of 16
               deal.” Second, from the Indianapolis Star on September 13, 2013, “The
               [ROC] is in Hunter’s district, and Hunter was a champion of the project.
               He filled committee meetings with supporters and organized a public
               campaign to send emails to council members.”
             • The text on the second side is superimposed over a photograph of the
               Property.
             • The second side contains the following original text: “When it came to
               protecting the Eastside’s interests, Ben Hunter let us down. Ben Hunter
               cut a sweetheart deal for a political insider. A deal that cost the city
               millions and ties up the former Eastgate site for 25 years. Code
               enforcement violations. Fire and safety hazards. Investigations.
               Lawsuits. A building so unsafe, it was evacuated. It’s a mess. A mess
               that the Eastside is left to clean up. Vote David Ray for City-County
               Council on November 3rd.”
             • Additionally, the second side includes two media quotations, both from
               the same September 13, 2013, Indianapolis Star article. First, “The
               building was so dangerous that the fire department placed it on ‘fire
               watch,’ which meant a fire marshal had to be on the premises 24 hours a
               day to handle any emergency.” Second, “‘I cannot have people in this
               facility that is deemed unsafe,’ Riggs[3] said.”

      Appellees’ App. Vol. II p. 2-3. At no point does the Flyer mention or implicitly

      refer to 401.

[7]   On November 13, 2015, 401 and Lifeline filed a defamation complaint against

      Ray and the Committee based solely on the Flyer. On February 12, 2016, Ray

      and the Committee filed an answer and affirmative defenses, including an

      affirmative defense based on the Anti-SLAPP Statute. On June 6, 2016, Ray

      and the Committee filed a motion to dismiss based, in relevant part, on the

      3
          At that time, Troy Riggs was the acting Public Safety Director of Indianapolis.

      Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017               Page 4 of 16
      Anti-SLAPP Statute. Following briefing and a hearing, on August 23, 2016,

      the trial court entered an order summarily granting the motion to dismiss based

      on the Anti-SLAPP Statute. Lifeline and 401 now appeal.

                                     Discussion and Decision
                                       I. Standard of Review
[8]   As required by the Anti-SLAPP statute, the trial court treated the motion to

      dismiss as a motion for summary judgment, and we must do the same. Ind.

      Code § 34-7-7-9(a)(1); see also Shepard v. Schurz Commc’ns, Inc., 847 N.E.2d 219,

      224 (Ind. Ct. App. 2006) (acknowledging a conflict between the burden of proof

      in the Anti-SLAPP statute and Trial Rule 56 and concluding that the conflict

      must be resolved in favor of the statute). Our standard of review on summary

      judgment is well established:

              We review summary judgment de novo, applying the same
              standard as the trial court: “Drawing all reasonable inferences in
              favor of . . . the non-moving parties, summary judgment is
              appropriate ‘if the designated evidentiary matter shows that there
              is no genuine issue as to any material fact and that the moving
              party is entitled to judgment as a matter of law.’” Williams v.
              Tharp, 914 N.E.2d 756, 761 (Ind. 2009) (quoting T.R. 56(C)). “A
              fact is ‘material’ if its resolution would affect the outcome of the
              case, and an issue is ‘genuine’ if a trier of fact is required to
              resolve the parties’ differing accounts of the truth, or if the
              undisputed material facts support conflicting reasonable
              inferences.” Id. (internal citations omitted).

      Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). Under the Anti-SLAPP

      statute, the trial court should grant the motion if it finds that the movant has
      Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017    Page 5 of 16
       proved by a preponderance of the evidence that the act on which the claim is

       based is a lawful act in furtherance of the person’s constitutional right of

       petition or free speech. I.C. § 34-7-7-9.

                                  II. The Anti-SLAPP Statute
[9]    The Anti-SLAPP statute protects a person’s right of free speech under the

       federal and state constitutions “in connection with a public issue or an issue of

       public interest[.]” I.C. § 34-7-7-1. The statute provides as follows:

               It is a defense in a civil action against a person that the act or
               omission complained of is:

               (1)      an act or omission of that person in furtherance of the
                        person’s right of petition or free speech under the
                        Constitution of the United States or the Constitution of the
                        State of Indiana in connection with a public issue; and

               (2)      an act or omission taken in good faith and with a
                        reasonable basis in law and fact.

       I.C. § 34-7-7-5.

[10]   The Anti-SLAPP statute is intended to reduce the number of lawsuits brought

       primarily to chill the valid exercise of the constitutional rights of freedom of

       speech and petition for the redress of grievances. Hamilton v. Prewett, 860
N.E.2d 1234, 1241-42 (Ind. Ct. App. 2007). To reduce the number of lawsuits

       brought to chill speech, a defendant who prevails on a motion to dismiss under

       the Anti-SLAPP statute is entitled to recover reasonable attorney’s fees and

       costs. I.C. § 34-7-7-7.

       Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017      Page 6 of 16
[11]   Finally, the Anti-SLAPP Statute does not “supplant the Indiana common law

       of defamation,” but requires the person raising the defense to establish that his

       speech was “lawful.” Shepard, 847 N.E.2d at 224 (citing I.C. § 34-7-7-9(d)).

               To establish a claim of defamation, a plaintiff must prove the
               existence of “‘a communication with defamatory imputation,
               malice, publication, and damages.’” “[T]he actual malice
               standard of proof required in defamation cases involving matters
               of public or general concern applies not only to public figures, but
               to private individuals as well.” This is so because, “in most
               instances, there is little disparity in the ability of private versus
               public individuals to obtain access ‘to the channels of effective
               communication’ in order to ‘counteract false statements’” and
               because “‘[a] citizen . . . assume[s] the risk of media comment
               when he becomes involved . . . in a matter of general or public
               interest.’” Actual malice exists when the defendant publishes a
               defamatory statement “‘with knowledge that it was false or with
               reckless disregard of whether it was false or not.’”

       Id. at 224-25 (internal citations omitted).

                                              A. Public Issue
[12]   Speech is a matter of public concern within the context of the Anti-SLAPP

       statute “if it is addressed to ‘any matter of political, social, or other concern to

       the community,’ as determined by its content, form, and context.” Brandom v.

       Coupled Prods., LLC, 975 N.E.2d 382, 386 (Ind. Ct. App. 2012) (quoting Love v.

       Rehfus, 946 N.E.2d 1, 10 (Ind. 2001)). The Brandom Court found a California

       court’s analysis of this issue to be instructive:

               “[There are] three non-exclusive and sometimes overlapping
               categories of statements that have been given anti-SLAPP

       Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017     Page 7 of 16
               protection. The first category comprises cases where the
               statement or activity precipitating the underlying cause of action
               was ‘a person or entity in the public eye.’ The second category
               comprises cases where the statement or activity precipitating the
               underlying cause of action ‘involved conduct that could affect
               large numbers of people beyond the direct participants.’ And the
               third category comprises cases where the statement or activity
               precipitating the claim involved ‘a topic of widespread, public
               interest.’ Courts have adopted these categories as a useful
               framework for analyzing whether a statement implicates an issue
               of public interest and thus qualifies for anti-SLAPP protection.”
975 N.E.2d at 385 (quoting Cross v. Cooper, 197 Cal. App. 4th 357, at 373 (Cal.

       Ct. App. 2011)) (internal citations omitted). The Brandom Court explained that

       an issue of public interest can be defined as broadly as “any issue in which the

       public is interested . . . and the issue need not be ‘significant’ to be protected by

       the Anti-SLAPP statute.” 975 N.E.2d at 385.

[13]   We have little difficulty concluding that the speech at issue here was made in

       connection with a public issue. The Flyer was mailed in the context of a

       contested political election and raised issues related to a large, formerly

       dilapidated and unsafe building in Indianapolis, taxpayer dollars, political

       donations received by the incumbent candidate, and a twenty-five-year lease to

       which the City was a party for which the incumbent strongly advocated. The

       Lease had been the subject of inquiries by the City-County Council and

       multiple media outlets for years before the Flyer was mailed. The public,

       particularly the citizens and voters in the 19th District, had an undeniable

       interest in all these issues. In fact, we believe that these issues likely fit into all

       Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017        Page 8 of 16
       of the three categories set forth above. Consequently, we find that the trial

       court did not err by concluding that the Appellees met their burden of

       establishing that the speech at issue related to a matter of public concern.

                  B. Without Malice, In Good Faith, and With
                      Reasonable Basis in Law and Fact
[14]   In the context of defamation law, “good faith” has been defined as “‘a state of

       mind indicating honesty and lawfulness of purpose; belief in one’s legal right;

       and a belief that one’s conduct is not unconscionable.’” Nexus Grp., Inc. v.

       Heritage Appraisal Serv., 942 N.E.2d 119, 122 (Ind. Ct. App. 2011) (quoting

       Owens v. Schoenberger, 681 N.E.2d 760, 764 (Ind. Ct. App. 1997)).

               Bad faith, then, appears to require, regardless of truth or falsity, a
               statement the speaker “knew . . . was false or entertained serious
               doubts as to its truth”; even if the speaker is “motivated by self-
               interest,” a statement might not be in bad faith if the speaker
               “genuinely believed that he was being factual and also believed
               that it would be best for his community” to pursue the subject
               matter of the statement.

       Id. at 123.

[15]   “Actual malice exists when the defendant publishes a defamatory statement

       ‘with knowledge that it was false or with reckless disregard of whether it was

       false or not.’” Shepard, 847 N.E.2d at 225 (citations omitted).

               Actual malice is not an objective standard of reasonableness;
               rather, it is a subjective standard that requires one challenging the
               speech, . . . , to prove by clear and convincing evidence that the
               speaker “‘in fact entertained serious doubts as to the truth of his

       Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017      Page 9 of 16
               publication,’ or acted with a ‘high degree of awareness of . . .
               probable falsity.’” A speaker is not required to verify facts before
               speaking unless she has some reason to doubt the veracity of
               those facts. The actual malice standard protects those negligent
               or careless false statements of fact that are inevitable in free
               debate.

       Brandom, 975 N.E.2d at 390 (internal citations omitted).

[16]   First we will consider these issues with respect to 401. The Flyer never once

       mentions 401. It contains a photograph of a building that, in the end, 401

       admitted was not even its building. Appellants’ App. p. 220. Instead, it is a

       photograph of the building that used to be Eastgate Mall, which is partly owned

       by 401. We cannot believe that a viewer of the Flyer would draw any

       connection between 401 and the content of the Flyer. In other words, we

       cannot conclude that the Flyer contained a single even arguably defamatory or

       untrue statement with respect to 401; consequently, the Appellees could not

       have acted with actual malice by including a photograph of a building that is

       not, in fact, 401. The trial court did not err by granting summary judgment

       with respect to 401.

[17]   Next, we must turn to Lifeline and each of the statements contained in the

       Flyer. First, there are reproductions of two reports of the 2010 and 2013

       contributions made by Lifeline to Hunter’s campaign committee. There is no

       dispute that these are true and accurate reproductions. Because the

       reproductions are true and accurate, there is no malice in their inclusion.

       Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017    Page 10 of 16
[18]   Second, the Flyer contains four media quotations. The Appellants make no

       claim that these quotations are false or inaccurate; and each quotation includes

       the date on which it was published.4 As a result, we can only conclude that the

       Appellees acted in good faith and with a reasonable basis in fact when including

       these statements on the Flyer.

[19]   Third, the Flyer states as follows: “What will $1,300 from a political insider

       buy? A contract with the City. A contract Ben Hunter pushed for. On

       November 3rd vote NO to sweetheart deals for political insiders.” Appellees’

       App. Vol. II p. 2-3. As noted above, it is true that Lifeline—which is managed

       by Carroll—donated $1,300 to Hunter’s campaign. It is also true that Hunter

       then strongly advocated for and “champion[ed]” the Lease between 401—also

       managed by Carroll—and the City. Id. at 108. While it may be true that the

       implication that Lifeline “bought” Hunter’s assistance in procuring the Lease

       with the City goes a step farther, we do not find that step sufficient to

       undermine a conclusion that the Appellees acted in good faith and with a

       reasonable basis in fact in making these statements on the Flyer.

[20]   Fourth, the Flyer makes the following statements:

                When it came to protecting the Eastside’s interests, Ben Hunter
                let us down. Ben Hunter cut a sweetheart deal for a political

       4
         The Appellants argue that the articles constitute inadmissible hearsay, but the articles were not designated
       to prove the truth of the matter asserted therein. Instead, they were designated to show that the quotations
       on the Flyer were accurate and that the Appellees acted in good faith and had a reasonable basis in fact for
       the statements made on the Flyer. Therefore, this argument is unavailing.

       Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017                           Page 11 of 16
               insider. A deal that cost the city millions and ties up the former
               Eastgate site for 25 years. Code enforcement violations. Fire
               and safety hazards. Investigations. Lawsuits. A building so
               unsafe, it was evacuated. It’s a mess. A mess that the Eastside is
               left to clean up. Vote David Ray for City-County Council on
               November 3rd.

       Id. Again, each of these statements is either true or an opinion. These issues

       were investigated and reported on by several reputable Indianapolis media

       outlets and were the subject of a City-County Council inquiry. It is undisputed

       that the Lease cost the City millions of dollars and had a term of twenty-five

       years; it is undisputed that the City notified 401 of code violations, that the

       Property was considered to be a fire and safety hazard, and that the building

       was evacuated. The Appellants argue that the safety issues have all been

       cleaned up since 2014, but because a politician’s past actions are always

       relevant to current political campaigns, we do not find that to be an important

       distinction. The fact that these statements are true means that the trial court

       properly concluded that the Appellees acted in good faith and with a reasonable

       basis in fact.

[21]   The Appellees’ designated evidence establishes that the Appellees sent a series

       of five mailers to potential voters to help introduce Ray to the electorate and

       call into doubt Hunter’s record. There is no evidence that their intent was

       malicious; instead, they mailed the Flyer as part of a hotly-contested political

       campaign. See Journal-Gazette Co. v. Bandido’s, Inc., 712 N.E.2d 446, 456 (Ind.

       1999) (holding that a defendant’s actual state of mind is a critical factor in

       Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017   Page 12 of 16
       determining whether he was acting with malice). They intended to question

       Hunter’s political record, but there is no evidence that they intended to harm

       Lifeline. In other words, the evidence establishes that they did not act in bad

       faith or with actual malice.

[22]   In sum, we find that the speech contained in the Flyer constitutes a matter of

       public interest and that the Appellees have established as a matter of law that

       they acted in good faith, without malice, and with a reasonable basis in law and

       fact. Therefore, the trial court properly granted summary judgment in their

       favor.

[23]   The judgment of the trial court is affirmed.

       Kirsch, J., concurs.
       Mathias, J., concurs in part and dissents in part with separate opinion.

       Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017   Page 13 of 16
                                                    IN THE
           COURT OF APPEALS OF INDIANA

       401 Public Safety and Lifeline                              Court of Appeals Case No.
       Data Centers, LLC,                                          49A02-1609-PL-2132

       Appellants-Defendant,

               v.

       David Ray and the Committee to
       Elect David Ray,
       Appellees-Plaintiff.

       Mathias, Judge, concurring in part and dissenting in part.

[24]   I agree with the majority’s conclusion that the speech at issue in this appeal

       relates to a matter of public concern. I also agree that the trial court properly

       granted summary judgment to the Appellees with respect to 401 Public Safety.

       However, I do not agree with the majority’s conclusion that the Appellees

       established as a matter of law that they acted in good faith and with a

       reasonable basis in law and fact with respect to Lifeline Data Centers.

       Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017                 Page 14 of 16
[25]   “[A] State has a legitimate interest in upholding the integrity of the electoral

       process.” Brown v. Hartlage, 456 U.S. 45, 52 (1982). Importantly, “the free

       exchange of ideas provides special vitality to the process traditionally at the

       heart of American constitutional democracy — the political campaign.” Id. at

       52-53.

[26]   Presumably, a candidate for public office does not enter into the fray lightly, but

       rather, armed with the knowledge that he or she may be attacked by a political

       opponent in print, television, and social media. In addition, this case

       demonstrates that a private company or individual who made a prior campaign

       contribution to a candidate or politician can be involuntarily thrown into the

       fray as well. In our current political climate, impugning the integrity of a private

       company or individual is unfortunately considered fair game.

[27]   Politicians can be held accountable for publishing dishonest statements to the

       public with actual malice, i.e. “with knowledge that it was false or with reckless

       disregard of whether it was false or not.” See Shepard v. Schurz Communications,

       Inc. et. al, 847 N.E.2d 219, 225 (Ind. Ct. App. 2006). Requiring political

       campaigns to refrain from publishing defamatory statements does not have a

       chilling effect on responsible freedom of speech.

[28]   Turning to the facts in this appeal, the designated evidence established that Ray

       did not know who owned the former Eastgate Mall site when the flyer was sent

       to his constituents. Appellant’s App. Vol II, p. 106. Henderson, Ray’s campaign

       consultant who created the flyer, admitted that Lifeline’s donations to Hunter’s

       Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017   Page 15 of 16
       campaign had no impact on Hunter’s decision to support the City’s lease of a

       portion of the former Eastgate Mall site. Appellant’s App. Vol. III, pp. 242,

       248. Lifeline did not have a lease with the City, but the flyer implies that

       Lifeline did have a contract with the City, and the contract was obtained by

       donating money to Ben Hunter’s campaign. When considered as a whole, the

       flyer also implies that Lifeline was responsible for the dangerous condition of

       the building.

[29]   After reviewing the flyer and other designated evidence, I would conclude that

       whether Ray made the statements in the flyer without actual malice and in

       good faith is a genuine issue of material fact that must be resolved by the fact

       finder. I would therefore reverse the trial court’s entry of summary judgment for

       Ray with respect to Lifeline’s claims.

       Court of Appeals of Indiana | Opinion 49A02-1609-PL-2132 | July 5, 2017   Page 16 of 16