Court Opinion

ID: 771200
Source: CourtListenerOpinion
Date Created: 2012-04-18 10:47:11+00
Date Added: 2024-06-11T17:55:55.829559
License: Public Domain

233 F.3d 24 (1st Cir. 2000)
EMERITO ESTRADA RIVERA-ISUZU DE P.R., INC., Plaintiff, Appellant,v.CONSUMERS UNION OF UNITED STATES, INC., Defendant, Appellee.
No. 99-2333.
United States Court of Appeals, First Circuit.
Argued Sept. 6, 2000.Decided November 28, 2000.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO.
Hon. Daniel R. Domnguez, U.S. District Judge.
Lisa I. Fair with whom Michael J. Rovell, Law Offices of Michael J. Rovell,  Charles A. Cuprill-Hernandez and Law Offices of Charles A. Cuprill were on brief  for appellant.
Michael N. Pollet with whom Pollet & Felleman, Ramon E. Bauza-Higuera and Bauza  & Davila were on brief for appellee.
Before Boudin, Circuit Judge, Bownes, Senior Circuit Judge, and Lynch, Circuit Judge.
BOUDIN, Circuit Judge.

1
Consumers Union of United States, Inc. ("Consumers  Union") is a not-for-profit corporation that regularly conducts performance  testing of consumer products. At a press conference on August 20, 1996,  Consumers Union announced the results of its tests of the 1995-1996 Isuzu  Trooper, a sport utility vehicle built by Isuzu Motors Ltd. ("Isuzu").1  Consumers Union called the Trooper "Not Acceptable" because of its "tendency to  roll over in certain situations," and recommended that Isuzu halt sales of the  Trooper and recall vehicles already sold, and that owners of the Trooper "drive  it only when necessary." Consumers Union also criticized Isuzu's limited  response to the test results, suggesting that Isuzu was putting consumers at  risk in the name of profits.

2
Following the August 1996 announcements, Consumers Union published a full-length  article in its magazine, Consumer Reports, which also described its test  results. The article offered further warnings on the Trooper, urging consumers  not to purchase Troopers and recommending that the National Highway  Transportation Safety Administration ("NHTSA") begin a defect investigation.  Over the next year, despite protests from Isuzu and criticisms from NHTSA,  Consumers Union continued to warn of the Trooper's dangers. Consumers Union's  announcements and articles referred only to the Trooper and its manufacturer,  Isuzu; none mentioned Emerito Estrada Rivera-Isuzu de P.R., Inc. ("Emerito"),  the exclusive distributor of the Trooper in Puerto Rico and at least two of the  U.S. Virgin Islands.

3
Nonetheless, on December 31, 1997, Emerito filed suit against Consumers Union in  the federal district court in Puerto Rico, claiming that it had been injured by  Consumers Union's disparagement of Isuzu and the Isuzu Trooper. Emerito sought  damages for lost sales on three separate theories: defamation (count I); product  disparagement (count II); and intentional interference with Emerito's business  relations (count III). In its final count, Emerito sought a declaratory judgment  that Consumers Union's statements about the Trooper were false (count IV).

4
Consumers Union moved to dismiss, and converting the motion to one for summary  judgment, see Garita Hotel Ltd. P'ship v. Ponce Fed. Bank, 958 F.2d 15, 18-19  (1st Cir. 1992), the district court granted summary judgment against Emerito. As  to all of the damages claims, the district court held that the First Amendment  barred recovery because each claim turned on injurious falsehood but, in the  district court's view, none of the alleged falsehoods were "of or concerning"  the plaintiff Emerito. The district court added that the defamation claim failed  under Puerto Rico law for the same reason, and that the intentional interference  claim failed because the complaint did not identify any "specific existing  relationships" interfered with by the Consumers Union statements.

5
On appeal by Emerito from the grant of summary judgment, our review is de novo.  Landrau-Romero v. Banco Popular de Puerto Rico, 212 F.3d 607, 611 (1st Cir.  2000). At the forefront is the district court's constitutional ruling. Starting  with New York Times Co. v. Sullivan, 376 U.S. 254 (1964), the Supreme Court has  prescribed, as First Amendment requirements, numerous substantive and procedural  limitations on defamation and certain related torts. Here, the district court  thought that one such prescribed constitutional rule is that defamation be "of  and concerning" the plaintiff. We are less certain.

6
Traditionally, the "of and concerning" requirement has been shorthand for a  common law rule that a plaintiff in a defamation case must show that the  statement referred to the plaintiff, either explicitly or by implication. E.g.,  Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980). Conceivably defamation  of one person could cause harm to another person who was not defamed; for  example, a wife might suffer emotional distress because her husband was libeled.  But at common law only the defamed person could sue. Keeton, Dobbs, Keeton &  Owen, Prosser and Keeton on Torts  111, at 779-80, 783-85 (5th ed. 1984).2

7
To what extent this "of and concerning" requirement is also imposed by the First Amendment is a different question. The most familiar elements in the New York  Times line of authority are now well-settled. Whatever state law might otherwise  dictate, a public official or "general purpose" public figure cannot recover for  defamation (or certain related torts) unless the plaintiff shows a falsehood  published with "actual malice" by the defendant (meaning a knowing falsehood or  one made recklessly). The burden of proof, also prescribed by the Supreme Court,  is on the plaintiff and the showing must be made by clear and convincing  evidence. A reviewing court does not accord ordinary deference to the fact  finder but reviews the evidence in a more searching manner. Somewhat less  demanding regimes apply where the plaintiff is a "limited purpose" public figure  or not a public figure at all.3

8
Just how the "of and concerning" requirement enters into constitutional history  is a curious story. In New York Times, a jury awarded a large libel judgment  against the newspaper and in favor of a county commissioner for a civil rights  advertisement carried by the paper. 376 U.S. at 256. The advertisement generally  criticized the actions of police in Montgomery, Alabama. Id. at 257-58. The  Court's main basis for setting aside the libel award was that it failed to  conform to the Court's newly announced "actual malice" requirement for  defamation actions brought by public officials. Id. at 285-88. But the Court  then went on to describe a second respect in which "the evidence was  constitutionally defective": it was, said the Court, "incapable of supporting  the jury's finding that the allegedly libelous statements were made 'of and  concerning' [the plaintiff]." Id. at 288.

9
Under Alabama law, the "of and concerning" requirement already existed, and the  Supreme Court may have meant only that the evidence to show that the  advertisement was "of and concerning" the plaintiff did not meet the demanding  evidentiary requirement that the Court had just adopted for free speech cases.  However, whether or not New York Times intended to adopt "of and concerning" as  a constitutional rule, some such requirement was thereafter made  "constitutional" in Rosenblatt v. Baer, 383 U.S. 75, 82-83 (1966). Precisely  what Baer meant is a more difficult question.

10
In Baer the Court was concerned with a newspaper column that criticized  generally the management of a county recreation facility without mentioning the  plaintiff official. In overturning the jury's damage award, the Court said that  the jury instructions

11
permitted the jury to find liability merely on the basis of [the plaintiff's]  relationship to the government agency, the operations of which were the subject  of [the column's] discussion. . . . A theory that the column cast indiscriminate  suspicion on the members of the group responsible for the conduct of this  governmental operation is tantamount to a demand for recovery based on libel of  government, and therefore is constitutionally insufficient.

12
Baer, 383 U.S. at 82-83 (emphasis added). Similarly, New York Times had  condemned the verdict as punishing "criticism of government" by "transmuting"  such criticism, "however impersonal it may seem on its face, into personal  criticism, and hence potential libel, of the officials of whom the government is  composed." 376 U.S. at 292.

13
Perhaps New York Times and Baer, taken together, adopt in full the common law  "of and concerning" requirement as a constitutional norm. Moreover, because  there exists ample precedent for applying New York Times requirements to  falsehood claims beyond defamation, a constitutional "of and concerning" rule  could mean that any recovery for falsehood regardless of the label can be only  by the person identified in the falsehood. Cf. Hustler Magazine, Inc. v.  Falwell, 485 U.S. 46, 56 (1988) (extending New York Times standards to claims  for intentional infliction of emotional distress); Time, Inc. v. Hill, 385 U.S.  374, 386-88 (1967) (same for claims regarding a right to privacy).

14
This is more or less what the district court thought, and its view is supported  by a leading decision of the California Supreme Court, albeit over a dissent,  Blatty v. New York Times Co., 728 P.2d 1177, 1182-85 (Cal. 1986) (en banc),  cert. denied, 485 U.S. 934 (1988), and by a leading treatise writer on  defamation, albeit in a treatise taking a broad view of constitutional  protections, Sack & Baron, Libel, Slander, and Related Problems  11.1.4.3,  11.1.8 (2d ed. 1994). The California Supreme Court view, in turn, has been  followed by several federal district courts. E.g., Isuzu Motors Ltd. v.  Consumers Union of United States, Inc., 12 F. Supp. 2d 1035, 1044-45 (C.D. Cal.  1998); Auvil v. CBS "60 Minutes", 800 F. Supp. 928, 933, 937 (E.D. Wash. 1992).

15
However, there is reason to be cautious. The Supreme Court in New York Times and  Baer was concerned with libel directed against government activities where the  plaintiff was not named in the article or even indirectly distinguished from  other officials. Here, by contrast, "libel of government" by "impersonal  criticism" is certainly not a threat. Instead, knowing falsehoods (or so we must  assume at the summary judgment stage) were directed at a named private target  (Isuzu) but happen quite predictably to cause demonstrable harm (so we must  again assume) to someone closely connected with the defamed person (Emerito).  The problem of generalized criticism addressed in Baer is not present here; the  question in this case is whether the law will permit recovery by a third party  related to the person specifically criticized.

16
This does not mean that constitutional concerns are absent. Consumers Union's  comments on the Trooper were directed to a matter of public concern; and the  threat of repetitive suits by many Isuzu dealers never directly libeled by  Consumers Union doubtless would deter such criticism. (Indeed, when Isuzu itself  sued Consumers Union in Isuzu Motors Ltd., supra, it apparently lost on the  merits although the jury verdict is not reported.) On the other hand, once a  specific private party is the named subject of a defamatory statement and  "actual malice" by the defendant is assumed to be provable by clear and  convincing evidence, see note 2 above, the case for extra constitutional  protection by prohibiting recovery by injured third parties is weaker. How the  Supreme Court will ultimately resolve these competing concerns is not obvious.

17
We thus find it advisable to decide this appeal on local law grounds, even  though Puerto Rico precedents offer uncertainty of their own, and start with the  first count of the complaint, charging Consumers Union with defamation. While Puerto Rico is a civil law jurisdiction and is not bound by common law, the  Puerto Rico Supreme Court has declared that in a defamation action under the  Civil Code, 32 P.R. Laws Ann.  3141-49 (1990), a plaintiff must show "not only  . . . that certain published information was libelous but must also identify  himself as the person libeled." Rodriguez v. El Vocero de Puerto Rico, Inc., 135  D.P.R. 122, 129 (P.R.), cert. denied, 512 U.S. 1237 (1994).

18
Nevertheless, Rodriguez upheld a claim by a wife for emotional and other injury  based on a defamatory statement directed against her police-officer husband. The  court did so by invoking a general tort provision in the Civil Code which  states: "A person who by an act or omission causes damage to another through  fault or negligence shall be obliged to repair the damage so done." 31 P.R. Laws  Ann.  5141 (1991). The court emphasized the sweep of this section as  encompassing any damage caused by fault, and it continued:

19
If the subject of the defamatory information himself is entitled to redress--for  defamation or damage and mental anguish--caused by the published information,  his wife and children, or third persons who suffered damage and mental anguish,  should have a cause of action for damages.

20
We cannot escape the sociological and psychological reality that the wife,  children, or parents of a defamed person, given their relationship with the  person so defamed, could also be affected by the libelous publication.

21
Id. at 134-35 (internal citation omitted).

22
We are unwilling to treat Rodriguez as an open-ended endorsement of third-party  libel actions outside the family context.4 In a commercial context, an almost  unlimited number of plaintiffs could potentially be injured by defamation of a  manufacturer and, on Emerito's reading of Puerto Rico law, bring independent  suits and recover. If damage to Emerito's sales was foreseeable, so was damage  to all of its employees, to the dealers to whom it sells, to their employees, to  companies that supply other goods or services to Emerito or to its dealers, to  garages that specialize in repair of foreign vehicles, and to all current owners  of similar Isuzu vehicles whose resale value may be depressed by unfavorable  stories.

23
As a matter of policy, the law is slow to impose liability in favor of persons  who were not directly injured by a wrong but suffer only derivatively or  secondarily. Sometimes this is done by doctrines limiting "duty" or "right"  (e.g., a stockholder may not sue for injury "to the corporation," In re Dein  Host, Inc., 835 F.2d 402, 405-06 (1st Cir. 1987)), and sometimes by adjustment  of the concept of proximate cause. Prosser and Keeton on Torts, supra,  43  (citing Palsgraf v. Long Island R.R. Co., 162 N.E. 99 (N.Y. 1928)). Exceptions  exist--wrongful death statutes and loss of consortium claims are good  examples--but what is not easy to tolerate, either for society or individuals,  is liability that extends to remote consequences without limits.

24
Despite some general language in Rodriguez helpful to Emerito's position,  extending that decision beyond close family members is enough of a new trail,  and one into hazardous territory, that it should be blazed (if at all) by the  Commonwealth courts. Kassel v. Gannett Co., Inc., 875 F.2d 935, 949-50 (1st Cir.  1989). As for Emerito's suggestion that we certify the issue to the Puerto Rico  Supreme Court, it comes too late, no such request having been made in the  district court. Clarke v. Kentucky Fried Chicken of Cal., Inc., 57 F.3d 21, 24  n.5 (1st Cir. 1995). We affirm the district court's judgment against Emerito on  count I.5

25
Count II of the complaint reasserts the same facts but frames the complaint as  one of product disparagement directed at the Trooper. Puerto Rico, like many  other jurisdictions, does recognize such a tort. Cooperativa de Seguros  Multiples de Puerto Rico v. San Juan, 294 F. Supp. 627, 630 (D.P.R. 1968); see  generally Prosser and Keeton on Torts, supra,  128. In some courts, this is  treated as akin to defamation and often called trade libel; in others, it is  deemed closer to commercial wrongs like interference with advantageous or  contractual relations. Id.  128. And the rules vary among jurisdictions.

26
In all events, on this appeal Emerito has made no effort to distinguish its  count II disparagement claim from its count I defamation claim. Its brief refers  tersely to defamation of Isuzu and the Trooper, but there is no separate  discussion of the elements of disparagement nor any attempt to show that the  disparagement claim might survive even if the defamation claim perished. In  this, Emerito has followed the lead of the district court which treated counts I  and II as a single entity. We are not sure that this is correct, but Puerto Rico  law on product disparagement is scanty and the obligation to show error is upon  the appellant. Thus, on this appeal, count II falls with count I.

27
Count III is a different matter. Under this head, Emerito charged intentional  interference with business relations, claiming (generally) that the statements  by Consumers Union hampered Emerito's "existing or prospective beneficial  economic relationships" with purchasers. In dismissing this claim, the district  court relied not only on the First Amendment but, independently, on Emerito's  failure to identify any specific relationships that were injured or threatened.  Not all jurisdictions adopt this requirement, L&W/Lindco Prods., Inc. v. Pure  Asphalt Co., 979 F. Supp. 632, 639-40 (N.D. Ill. 1997), but the district court  cited a number of cases, including two from Puerto Rico courts, calling for such  specificity.6

28
Emerito did suggest in opposing the motion to dismiss that it wished to amend if  specifics were required. The difficulty is that, despite its awareness that  Consumers Union had called for dismissal on this ground, Emerito never amended  its complaint as of right--as it could have done any time before judgment since  no answer had been filed, Dartmouth Review v. Dartmouth Coll., 889 F.2d 13, 22  (1st Cir. 1989)--nor did it formally ask the district court after judgment to  permit such an amendment. See Fed. R. Civ. P. 59, 60(b); Glenn v. First Nat'l  Bank, 868 F.2d 368, 370 (10th Cir. 1989).

29
Under these circumstances, we cannot say that the district court committed  error, let alone plain error, by failing to invite Emerito to replead. Given  Puerto Rico case law, the obligation to be specific in the complaint was  reasonably apparent and it was underscored by Consumers Union's motion which  sought dismissal on that very ground. It is too late to press a request to amend  for the first time on appeal when either self-help or a post-judgmentmotion in  the district court would almost surely have sufficed.

30
Affirmed.

NOTES:

1
 Consumers Union issued a written press release, made available a videotape  of the tests that were conducted, offered a recorded telephone message that  could be reviewed by the public, and distributed an article via facsimile and  internet services.

2
 In order to recover, a plaintiff did not have to be specifically named in the  defamatory statement so long as a reader by fair implication would understand  the statement to be directed at the plaintiff; but absent special circumstances,  a general condemnation of a large group or class would not normally be taken to  refer to an individual within the class. Id.  111, at 783-84. E.g., Michigan  United Conservation Clubs v. CBS News, 485 F. Supp. 893, 900 (W.D. Mich. 1980),  aff'd, 665 F.2d 110 (6th Cir. 1981).

3
 Under New York Times, public officials must show "actual malice" by clear and  convincing evidence and the reviewing court must "make an independent  examination of the whole record." 376 U.S. at 285. Important extensions are  Curtis Publ'g Co. v. Butts, 388 U.S. 130, 162-72 (1967) (New York Times  requirements extend to public figures who are not public officials); Rosenbloom  v. Metromedia, Inc., 403 U.S. 29, 30-32 (1971) (New York Times standards apply  to a private individual involved in an event of public interest); Gertz v.  Robert Welch, Inc., 418 U.S. 323, 347, 351 (1974) (New York Times standards  apply to "limited purpose" public figures, and liability in private figure  defamation suits requires fault); Bose Corp. v. Consumers Union of United  States, Inc., 466 U.S. 485, 514 (1984) (reviewing judges "must exercise  independent judgment" when reviewing a determination of "actual malice");  Milkovich v. Lorain Journal Co., 497 U.S. 1, 20 (1990) (nonactionability of "a  statement of opinion relating to matters of public concern which does not  contain a provably false factual connotation").

4
 Cases since Rodriguez have recognized its authority, but none of those cited  to us upholds a claim by someone other than a family member or other person  closely tied to the direct victim by affection or love. Bonafont-Solis v.  American Eagle, 97 J.T.S. 86 (P.R. 1997); Maldonado-Rodriguez v. Banco Central  Corp., 138 D.P.R. 268, 274-75 (P.R. 1995); Santini-Rivera v. Serv Air, Inc., 137  D.P.R. 1, 10-11 (P.R. 1994); Garib-Bazain v. Clavell, 135 D.P.R. 475, 491 n.7  (P.R. 1994).

5
 Count I also claimed that the statements defamed Emerito directly, albeit  without mentioning its name, because they implied (the complaint alleged) that  Emerito knowingly distributed an unsafe product. This is plainly something of a  stretch, and Emerito does not press this theory on appeal.

6
 PPX Enters., Inc. v. Audiofidelity Enters., Inc., 818 F.2d 266, 269-70 (2d  Cir. 1987); Kramer v. Pollock-Krasner Found., 890 F. Supp. 250, 258 (S.D.N.Y.  1995); Dolphin Int'l of P.R., Inc. v. Ryder Truck Lines, Inc., 127 D.P.R. 869,  879 (P.R. 1991); General Office Prods. Corp. v. A.M. Capen's Sons, Inc., 115  D.P.R. 553, 558-59 (P.R. 1984).