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Slander per se must be inherently defamatory

Fine

“Many business people undoubtedly fall within the ambit of employment encompassed by Matchette’s alleged statements to Sherman about Freer and lead proud and productive lives.”

Hon. Ralph Adam Fine
Wisconsin Court of Appeals

Words are not slanderous per se unless they are inherently defamatory, the Wisconsin Court of Appeals held on Sept. 21.

Elizabeth Freer worked for Marshall & Ilsley Bank from 1984 until 1995, when, according to her complaint, “by mutual agreement” her “employment with [Marshall & Ilsley] was terminated.” Freer’s complaint also asserts that she was hired as a “trust sales representative,” and “[a]t the time of the termination [she] was employed as a vice president of sales.”

After leaving Marshall & Ilsley, she became “an equity partner” in Capital Investment Services of America, Inc., and, as such, “solicited business customers in southern California.”

Freer hired Ruth A. Sherman to call M&I, and identify herself as someone who was interested in investing with Freer, and was seeking information and references regarding her.

Joanne Matchette related that Freer was employed as a salesperson. When Sherman stated that she thought Freer was an investment manager, Matchette replied, “Oh no, Elizabeth had no such position. Elizabeth was never anything other than a sales person, although she did some marketing too.”

Matchette further informed Sherman, “Freer had never been a money manager, had never been an investment manager, nor was Freer in any type of management position at M & I.” When Sherman further asked Matchette if Freer had ever held a position at [Marshall & Ilsley] where she managed anyone’s investment portfolio, Matchette replied “Oh, absolutely not.”

Freer brought suit for slander against M&I, but Milwaukee County Circuit Court Judge Kitty K. Brennan dismissed the complaint. Freer appealed, but the court of appeals affirmed in a decision written by Judge Ralph Adam Fine, and joined by Judge Ted E. Wedemeyer. Judge Paul G. Lundsten concurred in the result, but dissented from the reasoning.

Sanctions

Before turning to the substantive issues, the court held that the matter must be remanded to the trial court to determine whether plaintiff’s counsel should be sanctioned.

The complaint alleged that Sherman was an actual potential investor, rather than a party hired to test what response M&I would give if asked for a reference about Freer. Even on appeal, Freer’s briefs contended that Sherman was a bona fide potential investor. However, the court found nothing in the record to support that contention.

Accordingly, citing Rule 802.05, the court remanded the case to the circuit court to determine whether sanctions were appropriate: “we remand this matter to the trial court with directions that it hold a hearing to determine: (1) Sherman’s true role in this case; (2) what and when Freer and her lawyer knew of Sherman’s true role in this case; and (3) whether the statements in Freer’s appellate briefs about Sherman are true, even though they are not supported by the summary-judgment evidentiary record. By virtue of our superintending authority over the circuit court, Wis. Stat. Sec. 752.02 (‘The court of appeals has supervisory authority over all actions and proceedings in all courts except the supreme court.’), we direct the trial court to report its findings to us, and, in connection with items 1 & 2, and, depending on its findings, to impose under Rule 802.05(1)(a) any sanction that in the exercise of its reasoned discretion it believes is appropriate. We retain jurisdiction over this appeal, pending receipt of the trial court’s report.”

Slander Per Se

Nevertheless, even though it appeared from the record that there was no actual slander, because Sherman was a hired tester rather than a regular member of the public, the court addressed whether the statements at issue constitute slander per se, and are therefore actionable, notwithstanding the absence of actual damages.

The court found that Freer failed to demonstrate in her summary judgment submissions that she sustained any actual “special damages.” As noted, the record revealed that Sherman was not a real potential investor, and thus, statements to her could not cause pecuniary loss.

Thus, to sustain a slander action, Freer was required to prove slander per se, in which damages are presumed, notwithstanding proof of actual damages
Slander per se is limited to four circumstances: “imputation of certain crimes” to the plaintiff; “imputation … of a loathsome disease” to the plaintiff; “imputation … of unchastity to a woman” plaintiff; or defamation “affecting the plaintiff in his business, trade, profession, or office.” At issue in the case was the fourth — defamation “affecting the plaintiff in his business, trade, profession, or office.”

The court concluded that the statements by Matchette to Sherman were not slanderous per se, because they were not inherently defamatory, concluding, “It is settled in Wisconsin that words are not slanderous per se if anything other than the words are needed to make them defamatory.

What the court held

Case: Elizabeth Freer v. M&I Marshall & Ilsley Corp., No. 03-3175

Issue: Is it slander per se for a plaintiff’s fo
rmer employer to state that she was not a portfolio manager, but only a salesperson?

Holding: No. Because the statement could be non-defamatory if applied to others, it cannot be deemed defamatory per se.

Holding: James P. Brennan, Milwaukee, for appellant; Mary P. Ninneman, Milwaukee, for respondent.

As authority, the court cited Bauer v. Murphy, 191 Wis. 2d 517, 530, 530 N.W.2d 1, 6 (Ct.App.1995), and Kassowitz v. Sentinel Co., 226 Wis. 468, 472, 476, 277 N.W. 177, 179, 180-181 (1938), for the propositions that the defamation must be “apparent from the words themselves,” and that “Words which are defamatory per se do not need an innuendo, and, conversely, words which do need an innuendo are not defamatory per se.”

The court stated the rule as follows: “This is an inquiry limited to the words themselves without reference to history or gloss.”

The court found the statements of Matchette were not defamatory per se, “because they need context outside of the words themselves to be perceived as defamatory.”

The statements were: that Freer was never “an investment manager”; that Freer “was never anything other than a sales person, although she did some marketing too”; that Freer “had never been a money manager, had never been an investment manager”; and that Freer was never “in any type of management position at M & I.”

Considering those statements, the court concluded, “Simply put, many business people undoubtedly fall within the ambit of employment encompassed by Matchette’s alleged statements to Sherman about Freer and lead proud and productive lives.”

Citing an Illinois case, Anderson v. Vanden Dorpel, 667 N.E.2d 1296, 1301-1302 (Ill.1996), for the holding that “words that could be non-defamatory if applied to others are not defamatory per se,” the court held that Freer is required to prove special damages to prevail, and because she did not do so, summary judgment for M&I was proper.

The Concurrence/Dissent

Judge Lundsten wrote separately for several reasons: to disagree with the conclusion that the statements were not slander per se; to question whether the four categories of slander per se are reasonable; and to question whether a plaintiff should be able to bring suit based on statements made to a tester.

Lundsten wrote, “I join part II.A. of the majority decision in which it remands for a determination of whether sanctions should be imposed under Wis. Stat. Sec. 802.05. I agree that it appears from the record that the ‘potential client’ who called Marshall & Ilsley seeking reference information on Freer was not a potential client at all. Thus, further inquiry, as directed by the majority, is needed.”

However, Lundsten added, “I question the value of the broad and ill-defined defamation per se categories set forth in Martin v. Outboard Marine Corp., 15 Wis. 2d 452, 113 N.W.2d 135 (1962). I do not question the value of having types of defamation that are defamation per se. Rather, I question whether all of the categories listed in Martin make sense and I am concerned with how poorly defined they are,” and added, “Second, I question the legal merit of this particular lawsuit, though not for the reason contained in the majority decision. As the majority points out, the record before us indicates that Freer, through an attorney, hired the person to whom the allegedly defamatory statements were made. Defamation per se is an exception to the general rule that a party alleging defamation must also allege special damages.

The justification for defamation per se is that some false statements are so likely to cause pecuniary loss that `”proof of the defamation itself is sufficient to establish the existence of some damages so that the jury may, without other evidence, estimate the amount of damages.”’ Bauer v. Murphy, 191 Wis. 2d 517, 525-26, 530 N.W.2d 1 (Ct. App. 1995) (quoting Starobin v. Northridge Lakes Dev. Co., 94 Wis. 2d 1, 13, 287 N.W.2d 747 (1980)). That being the justification, it seems odd to permit a defamation per se claim in a case where it appears undisputed that the statements neither caused, nor could cause, pecuniary loss. If I were writing for the majority, I would explore whether defamation per se applies when the audience is a person hired to ‘test’ whether a party will make a defamatory statement. But that topic was not briefed, and I will not venture forth on that path.”

Turning to the issue of what constitutes slander per se, Lundsten rejected the majority’s conclusion that the law directs a “context-free analysis.”

Lundsten reasoned, “Freer alleged that when a prospective investment client telephoned Marshall & Ilsley to inquire about Freer’s experience with managing investments, the caller was falsely told that Freer had no such experience while at Marshall & Ilsley. This allegation falls squarely into the recognized defamation per se category for false statements affecting a plaintiff’s profession. See Restatement (Second) of Torts § 573 cmt. c, at 193 (1977) (‘When peculiar skill or ability is necessary, an imputation that attributes a lack of skill or ability tends to harm the other in his business or profession.’).”

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Case Analysis

Lundsten distinguished the Bauer case for two reasons
: first, the court of appeals there did examine the context in which the statement was made; but, even after extensive consideration of that context, it was not clear whether the allegedly defamatory statement did, in fact, refer to the plaintiff’s lack of chastity — one of the four slander per se categories — or her insubordination — which is not within the slander per se definition.

Lundsten concluded that, while the case law requires that slander per se must be “accomplished by he very words spoken,” it does not contain any suggestion that the “‘very words spoken’ must be divorced from the context in which they were spoken.”

Lundsten added, “In addition to a lack of legal support, I do not see the common sense in the majority’s context-free analysis. If a former employer provides false information about a person’s relevant work experience to a prospective client, why not take into account the reason the prospective client called? I wonder whether the majority would ignore context if it provided an innocent interpretation for words that, viewed in isolation, are defamation per se.”

Lundsten concluded, “I cannot join the majority’s defamation per se discussion because I believe it will be used to defeat defamation per se claims that our Supreme Court intended to cover when it adopted the per se categories. Meaning is commonly derived from context, and I am unable to come up with a good reason to ignore context when deciding whether a statement is defamation per se.”

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David Ziemer can be reached by email.

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