Douglas v . Pratt CV-98-416-M 09/29/00 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Charles G. Douglas, III and Edward E . Hewson, Plaintiffs
v. Civil N o . 98-416-M Opinion N o . 2000 DNH 199 Shannon Pratt and Associated Press, Defendants
O R D E R
Plaintiffs Charles G. Douglas, I I I , and Edward E . Hewson
allege that the Associated Press (AP) and Shannon Pratt defamed
them in a March 1 5 , 1998, article released by the AP (Count I ) .
Additionally, Counts I I I , IV, and V raise various claims sounding
in negligence and Count VI alleges that the AP’s actions violated
the New Hampshire Consumer Protection Act, N.H. RSA 358-A, et
seq. Douglas further alleges that the statements and the article
place him in a false light (Count I I ) . Defendants have filed
motions for judgment on the pleadings (document nos. 80 and 8 2 ) .
See Fed. R. Civ. P. 12(c). Plaintiffs object. Standard of Review
Federal Rule of Civil Procedure 12(c) provides that,
“[a]fter the pleadings are closed but within such time as not to
delay the trial, any party may move for judgment on the
pleadings.” In reviewing such a motion, the court must credit
all material allegations in the complaint as true and draw all
reasonable inferences in the non-moving party’s favor. See
Feliciano v . State of Rhode Island, 160 F.3d 7 8 0 , 788 (1st Cir.
1998). The court may grant a motion for judgment on the
pleadings only if it appears beyond doubt that the plaintiffs can
prove no set of facts in support of their claims that would
entitle them to relief. See Gaskell v . The Harvard Cooperative
Society, 3 F.3d 495, 497-98 (1st Cir. 1993).
Factual Background1
On March 1 5 , 1998, an article appeared on page A10 of the
Portsmouth Sunday Herald entitled, “Caroline Douglas claims
1 This recitation of facts is based on Plaintiffs’ Third Amended Complaint and Plaintiffs’ memoranda in opposition to the present motion. They are taken as true for the purposes of this motion only.
2 husband owes $500K” (Sunday Herald Article). The article,
written by Katherine Webster, a reporter for the A P , was released
to and published by members of the A P , including the Portsmouth
Herald. The article included statements attributed to Pratt that
concerned Hewson’s appraisal of Douglas & Douglas, the former law
firm of Plaintiff Douglas and his former wife, which was
dissolved on December 3 1 , 1996.
The Sunday Herald article focuses on events involved in the
high profile divorce of Douglas, a former New Hampshire State
Supreme Court Justice and former Member of Congress, from his
former wife, Caroline, an attorney. Hewson prepared an appraisal
of Douglas & Douglas, for use in the divorce proceedings, which
valued the law firm at zero. The report submitted to the court
did not mention $950,211 worth of work pending in the firm, also
referred to as work-in-progress (WIP). The bulk of that figure
consisted of contingency fees the firm might obtain in the
future. In Hewson’s opinion, such contingency fees (paid if the
case is successful but not otherwise) cannot be valued until the
case is complete, and he planned to so testify at trial. The
primary focus of the Sunday Herald article was Mrs. Douglas’s
3 belief that she could not “get a fair divorce in New Hampshire,
because of her husband’s connections and the state’s lack of
safeguards against biased judges” Mrs. Douglas also faulted
Hewson’s appraisal, relied upon by the court in dividing the
marital property in the Douglas’s divorce. Mrs. Douglas is
quoted as saying “I only wonder how may other people in this
state have been hurt by cronyism, fraud and old-boy bias in the
courtroom?” Sunday Herald Article at ¶ 6. The article goes on
to recount the opinions of Mrs. Douglas’s own appraiser, and of
Pratt, regarding the Hewson appraisal report and the judge’s
reliance on i t .
The Douglas divorce trial was set for September 1 5 , 1998.
Mrs. Douglas failed to appear at the trial and the judge refused
to allow her brother, a paralegal who had previously represented
her, to proceed in her absence. Mrs. Douglas was defaulted and a
decree was entered in favor of M r . Douglas. At the time of the
AP article, Mrs. Douglas had appealed the property award,
assigning error to the judge’s refusal to allow her brother to
represent her. She also claimed that Hewson’s opinion – that the
law firm had no value – was incorrect, primarily because the
4 report omitted mention of the $950,211 worth of WIP. Because of
the default, the only valuation evidence presented to the divorce
court was Hewson’s report. Relying on Hewson’s zero valuation of
the couples’ law practice, the trial judge awarded Mrs. Douglas
back pay, but nothing for equity in the practice.
In January or February of 1998, Webster sent Pratt some
information related to Hewson’s appraisal. Mrs. Douglas and her
attorney had also been in contact with Pratt to request his
services in relation to her divorce.2 And, they had been in
contact with Webster. In late February, Pratt, after reviewing
Hewson’s curriculum vitae, wrote to Mrs. Douglas’s attorney. He
stated that Hewson appeared to have no training in business
valuation.
Court orders had been issued in the Douglas divorce
proceedings imposing rules of confidentiality regarding financial
information produced during discovery.
2 The pleadings do not state when this contact took place, other than prior to the publication of the Sunday Herald article.
5 Discussion
Douglas and Hewson allege that Pratt and the AP defamed them
in the article released by the AP and published by, among others,
The Portsmouth Sunday Herald on March 1 5 , 1998. Additionally,
they claim Pratt and the AP were negligent in publishing those
statements. Furthermore, Douglas claims invasion of privacy by
being placed in a false light.
Defendants assert that the statements contained in the March
1 5 , 1998, article are not actionable because they are protected
opinions rather than statements of fact. Defendants also deny
any negligence associated with making the statements or reporting
them. Additionally, Defendants contend that Plaintiff Douglas
cannot maintain a claim for defamation because the allegedly
defamatory statements were not “of and concerning him.” See
Restatement (Second) of Torts, § 564A.
Defamation (Count I )
Plaintiffs point to the latter portion of the Sunday Herald
article and the statements attributed to Pratt as constituting
“[t]he crux of the defamatory ‘sting’.” See Hewson’s Mem. in
6 Opp’n 5 (document n o . 8 3 ) . That portion of the article reads as
follows, with Pratt’s challenged statements underlined:
[T]he main difference between the two appraisals lies in the $950,211 in work in progress.
Hewson did not mention it in his reports, though the amount was listed in a footnote on the balance sheet he used.
Appraisers might disagree about what percentage of the $950,211 could be collected from clients; but “it’s totally improper to ignore it,” said Shannon Pratt of Portland, Ore., a nationally recognized expert. Pratt, managing director of Willamette Management Associates, publisher of a business appraisal newsletter and author of several texts on business appraisal, reviewed Hewson’s and Bishop’s reports for the Associated Press.
After adjusting Chuck’s tax returns and assuming that three-quarters of the work in progress could be collected, Bishop arrived at a value of $1.1 million using the same method Hewson employed, he said. Two other methods yielded slightly different results, but both topped $1 million, he said.
Pratt questioned why Judge Coffey accepted Hewson’s appraisal, since he did not follow accepted standards of business appraisal and his resume shows no training in business valuation.
“If I were a judge ... I would have to think hard about whether I would accept him as an expert or his report as credible evidence,” Pratt said. Pratt said he had no qualms about Bishop’s work.
7 Sunday Herald Article at ¶¶ 22-29. Plaintiffs contend that, in
the context of the whole article, these statements falsely imply,
as fact, that “Mr. Douglas was defrauding the court by using an
incompetent fraud as his expert,” Third Am. Compl. at ¶ 25
(document n o . 6 6 ) .
In order to assert a prima facie case of defamation in New
Hampshire, the “language complained of . . . must tend to lower
the plaintiff in the esteem of any substantial and respectable
group, even though it may be quite a small minority.” Thomson v .
Cash, 119 N.H. 3 7 1 , 373 (1979). Under New Hampshire law, “the
threshold question [in a defamation action] is whether the
published words are reasonably capable of conveying the
defamatory meaning or innuendo ascribed to them by the
plaintiff.” Id. at 374. Whether a statement is capable of
defamatory meaning is a question of law. See id. If it i s , it
is a question for the jury whether such meaning was in fact
conveyed. See id. However, “an action in libel cannot be
maintained on an artificial, unreasonable, or tortured
construction imposed upon innocent words, nor when only
8 ‘supersensitive persons, with morbid imaginations, would consider
the words defamatory.” Id. at 373 (citation omitted).
The First Amendment unquestionably protects opinions from
defamation liability. There is no blanket protection for a
statement framed as an opinion, but, to be actionable, such a
statement must be factual or capable of being proven true or
false. See Milkovich v . Lorain Journal Co., 497 U.S. 1 , 20
(1990); Levinsky’s, Inc. v . Wal-Mart Stores, Inc., 127 F.3d 1 2 2 ,
127 (1st Cir. 1997); Phantom Touring, Inc. v . Affiliated
Publications, 953 F.2d 7 2 4 , 727 (1st Cir. 1992). Generally, a
protected opinion is one that “involves expressions of personal
judgment. . . .” Gray v . S t . Martin’s Press, Inc., 221 F.3d 243,
248 (1st Cir. 2000). This assessment must be made within the
broader context of the statements made. See Milkovich, 497 U.S.
at 2 1 ; Phantom Touring, 953 F.2d at 727; McCabe v . Rattiner, 814
F.2d 839, 842 (1st Cir. 1987). Therefore, “the question is not
whether challenged language may be described as an opinion, but
whether it reasonably would be understood to declare or imply
provable assertions of fact.” Phantom Touring, 953 F.2d at 727.
Importantly, then, “if a statement of opinion either discloses
9 the facts on which it is based or does not imply the existence of
undisclosed facts, the opinion is not actionable.” Riley v .
Harr, Civ. A . N o . 98-712-M, slip o p . at 18 (D.N.H. March 3 , 2000)
(citing Levin v . McPhee, 119 F.3d 189, 197 (2d Cir.
1997))(internal quotations omitted). The statements challenged
by Plaintiffs in this case are plainly protected opinions, and
are not actionable.
A. Appraisers might disagree about what percentage of the $950,211 could be collected from clients; but “it’s totally improper to ignore it,” said Shannon Pratt of Portland, Ore., a nationally recognized expert.
Whether it was “totally improper” for Hewson to give no
weight to the value of work in progress is inherently a
subjective matter, and therefore not capable of being proven true
or false. Furthermore, even if Pratt’s statement could be
interpreted as implying that Hewson did something “wrong,” the
statement is still protected as loose figurative language,
hyperbole and epithet. Because the article outlines the
information on which Pratt based his opinion, his conclusion is
also fully explained by the facts available to him and disclosed
in the article. See Partington v . Bugliosi, 56 F.3d 1147, 1156
10 (9th Cir. 1995) (“when a speaker outlines the factual basis for
his conclusion, his statement is protected by the First
Amendment”).
B. Pratt questioned why Judge Coffey accepted Hewson’s appraisal, since he did not follow accepted standards of business appraisal and his resume shows no training in business valuation.
The second challenged statement, as a whole, describes
Pratt’s own questioning of the judge’s decision to accept
Hewson‘s expert opinion, because Hewson “did not follow accepted
standards of business appraisal” (in Pratt’s opinion) and because
“his resume shows no training in business valuation.” Sunday
Herald Article at ¶ 2 6 . Plaintiffs claim the statement is
actionable because it amounts to defamatory assertions of fact
related to them on which Pratt based his questioning of the
judge’s reliance. However, it is clear from the surrounding
context that the comment was based on Hewson’s review of Hewson’s
reports (which Plaintiffs do not deny failed to include the WIP)
and that Pratt concluded Hewson “did not follow accepted
standards of business appraisal.” Thus, for the same reasons
that an opinion that Hewson did something “totally improper” is
11 protected, Pratt’s conclusion, as described in this statement, is
also protected. See Partington, 56 F.3d at 1156.
The second challenged portion of the statement - “his resume
shows no training in business valuation” - is true. See Third
Am. Compl. at ¶12 (document n o . 6 6 ) . Plaintiffs claim this is
defamatory because they imaginatively interpret it to falsely
attack Hewson’s credentials and, indirectly, Douglas’s own
employment of him as an expert, when Hewson, in fact, has
experience beyond what is included in his resume that would have
been revealed in trial testimony. But his resume did not reveal
that experience and the statement addresses the content of his
resume. Pratt did not falsely attack Hewson’s credentials,
because the reader was provided with information necessary to
fully understand that Pratt’s questioning of the judge’s reliance
on Hewson was based on Pratt’s review of the same limited
information available to the judge at the time the decision was
made to accept Hewson’s expert opinion – his resume.
12 C. “If I were a judge ... I would have to think hard about whether I would accept him as an expert or his report as credible evidence,” Pratt said. Pratt said he had no qualms about Bishop’s work.
The final challenged statement is an expression by Pratt of
what he would have done had he been the judge. That expression
is not actionable.
Despite Plaintiffs claim that the article implies Pratt
“purportedly engaged in a review of all the pertinent data,” see
Douglas Mem. in Opp’n at 25 (document n o . 9 3 ) , when the
challenged portion of the article is read as a whole - that i s ,
the specific statements attributed to Pratt are considered in the
context of the entire article - it is clear that Pratt’s opinion
or conclusion as to what he might have done had he been the judge
were based on his review of the two reports and Hewson’s resume.
Moreover, neither the article nor Pratt’s conclusions suggest
that Pratt based his opinion on anything but the reports and the
resume. Although Plaintiffs contend that the fact that Pratt had
spoken with Mrs. Douglas and her attorney “should have been
revealed” to illustrate his bias, as explained above, to be
actionable, the statement must imply that the opinion rests on
undisclosed facts, a situation not presented in this case. See
13 Levinsky’s, 127 F.3d at 127; Riley, Civ. A . N o . 98-712-M at 1 8 .
Because the court finds the challenged statements constitute
opinions based on disclosed facts and do not imply the existence
of undisclosed defamatory facts, the statements are non-
actionable opinions.
The AP’s publication of Pratt’s opinions in the Herald
Sunday article is similarly protected. The statements are
presented in the article as Pratt’s opinions, based on disclosed
sources, to explain Mrs. Douglas’s belief that she was entitled
to more in the divorce award. Thus, they are protected under
Milkovich.
Because the statements are non-actionable protected
opinions, it is not necessary to determine whether they are “of
and concerning” Douglas, though it would be a stretch to so find.
False Light (Count II)
Plaintiff Douglas also alleges that the Sunday Herald
article amounts to an invasion of privacy, placing him in a false
light. Defendants claim New Hampshire does not recognize the
tort and, therefore, urge the court to dismiss i t .
14 While there is no New Hampshire precedent directly
recognizing the common law tort of false light invasion of
privacy, this court has previously concluded that, “[g]iven its
demonstrated commitment to the protection of privacy rights in
Hamberger [v. Eastman], 106 N.H. 107 [(1964)], it is likely that
the New Hampshire Supreme Court would also recognize the false
light tort.” Riley, Civ. A . N o . 98-712-M at 4 6 . Nevertheless,
Douglas has not sufficiently supported a false light claim. On
the contrary, because false light claims are equally restricted
by constitutional protections, some statements cannot support a
false light claim. See Veilleux v . National Broadcasting Co.,
206 F.3d 9 2 , 134 (1st Cir. 2000); Brown v . Herst Corp., 54 F.3d
2 1 , 27 (1st Cir. 1995). Because the challenged statements are
protected opinions, Douglas cannot rely on them to establish a
false light claim.
Negligence Claims (Counts III, IV, & V )
Plaintiffs also assert a negligence claim against Pratt
under theories of third-party liability and violation of
professional standards. Additionally, Plaintiffs have brought
15 claims for “negligent training and supervision” against the A P ,
and Hewson asserts a claim for “negligent reporting” against the
AP. Defendant AP contends that “dismissal of [these] counts is
subsumed under” the arguments for dismissal of the defamation
claim because these claims are also protected by the First
Amendment.
Negligence consists of the breach of a duty that causes
foreseeable harm. Gilbert v . Essex Group, Inc., 930 F. Supp.
683, 690 (D.N.H. 1993). To avoid judgment on the pleadings,
Plaintiffs must adequately allege each of the elements of
negligence. See Gilbert v . Essex Group, Inc., 930 F. Supp. at
689.
The negligence claim against Pratt alleges breach of a duty
to third parties and violation of professional standards.
Plaintiffs have failed to adequately allege a cognizable duty
owed to them arising from the professional standards applicable
to appraisers, or any breach of duty to third parties. The
professional standards cited in Douglas’ memorandum refer to
duties owed to clients. Douglas was not a client of Pratt, nor
was Hewson. The “obligation to the general public as a third
16 party beneficiary of the work” cited by Plaintiffs, see Third Am.
Compl. at 12 (document n o . 6 6 ) , makes reference to the duty
recognized in Spherex, Inc. v . Alexander Grant & Co., 122 N.H.
898 (1982) – a duty owed by professional accountants to those who
foreseeably may rely on their work. See also Morvey v . Hanover
Insurance Companies, 127 N.H. 723, 726 (1986) (citing Spherex).
Neither Plaintiff claims to have relied on Pratt’s work, or that
Pratt should reasonably have foreseen such reliance. No facts
are pled which support any special circumstances giving rise to a
foreseeable, or actionable, duty owed by Pratt to Douglas or
Hewson. Pratt owed them no cognizable duty beyond those imposed
by the law of defamation and they cannot recover for negligence
based on Pratt’s statements.
Furthermore, to the extent Plaintiffs rest their negligence
allegations on an alleged breach of the confidentiality order
entered in the Douglas divorce proceedings, they have wholly
failed to provide the court with any legal support for the
proposition that such a breach can give rise to a private cause
of action for negligence. The Superior Court’s order was issued
in an equitable proceeding and is injunctive in character. If
17 the order has not been obeyed by someone subject to i t , a civil
contempt proceeding, before the issuing court, might well be
available, but a private common law negligence action is not.
See, e.g., Burke v . Guiney, 700 F.2d 7 6 7 , 769 (1st Cir. 1983);
Eldim, Inc. v . Mullen, 710 N.E.2d 1054, 1057 (Mass. App. 1999).
The civil contempt complaint must be brought before the court
issuing the violated order, since that court is best able to
determine both the scope and intent of the equitable order and
the appropriate sanction(s) for its violation. See, e.g., D.
Patrick, Inc. v . Ford Motor Co., 8 F.3d 455, 459 (7th Cir. 1993).
Turning to Plaintiffs’ claims against A P , the First
Amendment protects newspapers or news services from liability for
damages, except for publication of defamatory material (with
actual malice in the case of public figures). See, e.g., Evans
v . American Federation of Television and Radio Artists, 354 F.
Supp. 823, 839 (S.D.N.Y. 1973), rev’d on other grounds, Buckley
v . American Federation of Television and Radio Artists, 496 F.2d
305 (2d Cir. 1974) (reminding in dicta that “[t]here is no legal
requirement for the press to present a ‘fair’ balance of opinion
and analysis. Subject only to the laws of libel, there is not
18 even a requirement of truthfulness and accuracy.”); Langworthy v .
Pulitzer Publishing Co., 368 S.W.2d 385, 390 (Mo. 1963) ("No
action for damages lies against a newspaper for merely inaccurate
reporting when the publication does not constitute libel.").
Since the Sunday Herald article did not defame plaintiffs, no
cause of action based on that publication can proceed.
Violation of Consumer Protection Act (Count VI)
Finally, Plaintiffs allege the conduct of the AP constitutes
a violation of the New Hampshire Consumer Protection Act, N.H.
RSA 358-A, e t . seq., because the AP disparaged the services or
businesses of the plaintiffs through false or misleading
representations of fact. Because the article did not contain
false or misleading representations of fact, Plaintiffs’ Consumer
Protection claim cannot survive either.
Conclusion
The statements challenged by Plaintiffs are non-actionable
protected opinions. Similarly, the AP’s use of the statements in
the context of the Sunday Herald article is protected because
19 there is no implication of fact. Basically, all of the asserted
claims are without merit. Accordingly, Defendants’ motions for
judgment on the pleadings (document nos. 80 and 92) are granted.
The Clerk of Court shall enter judgment in accordance with
the terms of this order and close the case.
SO ORDERED.
Steven J. McAuliffe United States District Judge
September 2 9 , 2000
cc: Charles G. Douglas, I I I , Esq. Irvin D. Gordon, Esq. Susanna G. Robinson, Esq. William L . Chapman, Esq.