Court Opinion

ID: 4536313
Source: CourtListenerOpinion
Date Created: 2020-05-22 20:00:30.701949+00
Date Added: 2024-06-11T09:27:34.723373
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       MAY 22 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

GERALD PETERS GALLERY, INC.;                    No.    18-16677
GERALD PETERS,
                                                D.C. No. 3:17-CV-00273-MMD-
                Plaintiffs-Appellants,          VPC

 v.
                                                MEMORANDUM*
PETER STREMMEL; STREMMEL
GALLERIES, LTD.; MIKE OVERBY;
COEUR D’ALENE ART AUCTION OF
NEVADA, LLC,

                Defendants-Appellees.

                   Appeal from the United States District Court
                            for the District of Nevada
                  Miranda M. Du, Chief District Judge, Presiding

                     Argued and Submitted November 6, 2019
                                Portland, Oregon

Before: PAEZ, Circuit Judge, RAWLINSON, Circuit Judge, and WU,** District
Judge.

      Gerald Peters Gallery, Inc. and Gerald Peters (“Peters”) (collectively,

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable George H. Wu, United States District Judge for the
Central District of California, sitting by designation.
“Appellants”) appeal from a summary judgment order and judgment entered

against them in this defamation/business disparagement action, which they brought

against Peter Stremmel (“Stremmel”), Stremmel Galleries, Ltd., Mike Overby and

Coeur D’Alene Art Auction of Nevada, L.L.C. (collectively, “Appellees”). We

have jurisdiction pursuant to 28 U.S.C. § 1291 and review de novo. We conclude

that the district court erred in its interpretation and application of Nevada law, and

reverse and remand for further proceedings consistent with this decision.

      This case involves the sale, by Appellants, of a painting titled “The Rain and

the Sun,” represented to be by Frank Tenney Johnson (“Painting”), that was

purchased by R. D. Hubbard (“Hubbard”). When a question arose as to the

Painting’s authenticity, one of Hubbard’s associates sent images of the Painting to

Stremmel, who in a series of emails made comments such as: (1) “Mike Overby

and I” “are absolutely certain” “that [the Painting] is not in fact by Frank Tenney

Johnson,” and (2) “I hope it wasn’t represented to Dee as an FTJ—and I really

hope he didn’t pay a lot for it.”

      Under Nevada law, defamation requires proof of four elements: “(1) a false

and defamatory statement . . . concerning the plaintiff; (2) an unprivileged

publication to a third person; (3) fault, amounting to at least negligence; and (4)

actual or presumed damages.” Rosen v. Tarkanian, 453 P.3d 1220, 1225 (Nev.

2019). Where state law is unclear on a matter because “the highest court of a state

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has not directly spoken” on it, “a federal court sitting in diversity must generally

use its ‘own best judgment in predicting how the state’s highest court would decide

the case.’” T-Mobile USA Inc. v. Selective Ins. Co. of Am., 908 F.3d 581, 586 (9th

Cir. 2018) (quoting Fiorito Bros., Inc. v. Fruehauf Corp., 747 F.2d 1309, 1314 (9th

Cir. 1984)). “In making this prediction, the federal court ‘must ascertain from all

available data what the state law is and apply it.’” Id. (quoting Estrella v. Brandt,

682 F.2d 814, 817 (9th Cir. 1982)). This “data” includes intermediate appellate

court decisions, decisions from other jurisdictions, statutes, treatises, and

restatements as guidance. PSM Holding Corp. v. Nat’l Farm Fin. Corp., 884 F.3d
812, 820 (9th Cir. 2018).

      In granting the Appellees’ motion for summary judgment, the district court

considered only the first element—“a false and defamatory statement concerning

the plaintiff”—finding it to be “dispositive.” The district court initially and

properly looked to Section 564 of the Restatement (Second) of Torts (“the

Restatement”) in approaching the issue because: (a) Nevada law is unclear on the

issue and (b) Nevada courts frequently refer to the Restatement to assess issues

relevant to defamation claims. See e.g., Jesinger v. Nev. Fed. Credit Union, 24
F.3d 1127, 1133 (9th Cir. 1994); Cucinotta v. Deloitte & Touche, L.L.P., 302 P.3d
1099, 1099 (Nev. 2013).

      The district court erred, however, in determining that it would not have been

                                           3
“reasonable for Mr. Hubbard or his associates to understand Stremmel as intending

to refer to [Appellants]” simply on the basis of the fact that Hubbard and his

associates had not told Stremmel of the Appellants’ involvement in the sale of the

Painting at the time of the initial comments. The alleged defamer’s intent—or lack

thereof—in aiming at the particular plaintiff is not controlling (even if it is

relevant), so long as the interpretation of the statement as referring to that plaintiff

is “reasonable in light of all the circumstances.” See Restatement § 564 cmt. b. In

a defamation suit, it matters less “who was aimed at” than “who was hit.”

Corrigan v. Bobbs-Merrill Co., 228 N.Y. 58, 63–64 (1920); see also, e.g., Marr v.

Putnam, 246 P.2d 509, 521 (Or. 1952).

      Given this error, the district court’s ruling could stand if one of two

propositions is correct: 1) it is the law that the speaker must know the specific

identity of the person he or she is allegedly defaming at the time of the statement

(even if the speaker does not identify the person in the statement); or 2) it was, for

some other reason and as a matter of law, not “reasonable in light of all the

circumstances” to associate Stremmel’s statements with Appellants. There is no

law cited in the district court’s order, or that we have discovered, which supports

the former proposition. In contrast, several cases from other jurisdictions

recognize the continued viability of a defamation claim notwithstanding the

defendant’s complete lack of knowledge of the identity of the plaintiff. See Dalbec

                                            4
v. Gentleman’s Companion, Inc., 828 F.2d 921, 925 (2d Cir. 1987); Allied Mktg.

Grp., Inc. v. Paramount Pictures Corp., 111 S.W.3d 168, 173 (Tex. App. 2003);

The Gazette, Inc. v. Harris, 325 S.E.2d 713, 735–39, 742 (Va. 1985); see also

Walker v. Bee-News Pub. Co., 240 N.W. 579, 580 (Neb. 1932).1

      As to whether it was “reasonable in light of all the circumstances” to

associate Stremmel’s statements with Appellants, there is evidence in the record

that supports the conclusion that Stremmel knew there was a seller of the Painting

at the time of his e-mails, even if he did not know the precise identity when he sent

his first two e-mails. Because Nevada law did not require Stremmel to know the

precise identity of the seller, whether his e-mails reasonably implicated Appellants

was a question of fact for the jury and it was error for the district court to decide

this issue as a question of law. See, e.g., Marr, 246 P.2d at 521; The Gazette, 325
S.E.2d at 738; Switzer v. Anthony, 206 P. 391, 392 (Colo. 1922).

      We also: 1) disagree with the district court’s conclusion that a jury could not

conclude that certain of Stremmel’s statements implied “an assertion of objective

1
  The district court’s only attempt to address authority on this topic was its
rejection of the Third Circuit’s decision in Taj Mahal Travel, Inc. v. Delta Airlines,
Inc., 164 F.3d 186 (3d Cir. 1998), dismissing the case as “non-binding precedent”
and “unpersuasive because the facts are readily distinguishable.” Yet, “decisions
from other jurisdictions” are one of the data points that courts are to consult in
predicting uncertain state law. PSM Holding Corp., 884 F.3d at 820. Moreover,
the district court’s attempt to distinguish Taj Mahal on its facts is unconvincing
upon our examination of that decision.
                                           5
fact under the circumstances”; 2) reject Appellees’ argument that an assertion that

a painting is a fake is categorically not a communication that may be defamatory of

a seller who has sold—and warranted—it as authentic, see Clark Cty. Sch. Dist. v.

Virtual Educ. Software, Inc., 213 P.3d 496, 503 (Nev. 2009); and 3) conclude that,

whether or not Stremmel’s assertions might be understood as an opinion, a jury

could easily find otherwise given the language used in his e-mails. These issues

are not appropriate for summary judgment in this case.

      On remand, the district court should be guided by the principles that “words

do not exist in isolation” and “must be reviewed in their entirety and in context to

determine whether they are susceptible of defamatory meaning.” Chowdhry v.

NVLH, Inc., 851 P.2d 459, 463 (Nev. 1993) (omitting internal quotation marks)

(quoting Branda v. Sanford, 637 P.2d 1223, 1226 (Nev. 1981)); see also Ornatek v.

Nev. State Bank, 558 P.2d 1145, 1147 (Nev. 1977); Restatement § 563 cmt. d.

Further, the district court must, in the first instance, determine—with the benefit of

a more-complete evidentiary record than we have here—the scope of that

“context” given the timing and form of the statements in question. See, e.g., John

Doe 2 v. Superior Court, 1 Cal. App. 5th 1300, 1312 (2016); Fluor Enters., Inc. v.

Conex Int’l Corp., 273 S.W.3d 426, 434–35 (Tex. App. 2008).2

2
 We recognize that Restatement § 564 cmt. f discusses the third element of a
defamation claim (i.e., fault, amounting to at least negligence) and, in that context,
considers the defamer’s conduct including “when the recipient knew of extrinsic
                                          6
      Appellants’ defamation claim should have survived summary judgment, and

we therefore reverse and remand. Because the remainder of the claims were

resolved based upon the resolution of the defamation claim, we likewise reverse

the judgment as to those claims.

      REVERSED AND REMANDED.

facts that make the communication defamatory of the plaintiff but these facts were
not known to the defamer.” However, the district court never reached the third
element, having found the first element to be dispositive and basing its ruling
entirely on that factor.
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                                                                               FILED
Gerald Peters Gallery, Inc. v. Stremmel, Case No. 18-16677                      MAY 22 2020
Rawlinson, Circuit Judge, concurring in the judgment:                       MOLLY C. DWYER, CLERK
                                                                              U.S. COURT OF APPEALS

      I concur in the judgment reversing and remanding for further proceedings.

However, I expressly disavow reliance on the out-of-circuit authority cited in the

majority disposition.

      The majority cites two Ninth Circuit cases to support its reliance on out-of-

circuit authority: T-Mobile, USA Inc. v. Selective Ins. Co. of America, 908 F.3d
581, 586 (9th Cir. 2018), and PSM Holding Corp. v. Nat’l Farm Fin. Corp., 884
F.3d 812, 820 (9th Cir. 2018). However, despite some brief language suggesting

consideration of cases from other jurisdictions, neither of those cases cited cases

outside the locale of the district court. In my view, it is not necessary to rely on

out-of-circuit authority to resolve this case, and we should refrain from doing so,

particularly in an unpublished disposition. Rather, we could reach the same result

from the plain language of the Restatement (Second) of Torts and cases from our

court and the Nevada Supreme Court explaining that statements alleged to be

defamatory must be viewed “in their entirety and in context to determine whether

they are susceptible of defamatory meaning.” Chowdhry v. NLVH, Inc., 851 P.2d
459, 463 (Nev. 1993) (citation omitted); see also Lubin v. Kunin, 17 P.3d 422, 425

(Nev. 2001) (same); Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (stating

                                           1
that the court “must take into account all parts of the communication that are

ordinarily heard or read with it”) (quoting Restatement (Second) of Torts § 563

comt.d.) (internal quotation marks omitted).

      I concur in the judgment.

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