Opinion
19-cv-874-slc
06-01-2021
FINANCIAL FIDUCIARIES, LLC, a Wisconsin limited liability company, and THOMAS BATTERMAN, Plaintiffs, v. GANNETT CO., INC., Defendant.
OPINION AND ORDER
STEPHEN L. CROCKER, Magistrate Judge.
In this civil action brought under the court's diversity jurisdiction, plaintiffs Financial Fiduciaries, LLC, and Thomas Batterman (referred to herein collectively as Batterman except as noted) allege that defendant Gannett Co., Inc. (Gannett) defamed them in an article (the Article) published in the Wausau Daily Herald on August 21, 2018 under the headline “Wisconsin financial adviser accused of violating a dead man's trust, mishandling $3 million.” Dkt. 1. Before the court is Gannett's motion to dismiss the complaint in its entirety under Fed.R.Civ.P. 12(b)(6), on the ground that neither the Article's headline nor any of the 20 statements that plaintiffs have identified in the complaint are false or capable of a defamatory meaning. Dkt. 4. In the alternative, Gannett argues that the entire article is privileged as a true and fair report of judicial and other government proceedings.
As discussed below, I am granting Gannett's motion and dismissing the complaint in all respects but one. What survives is Batterman's claim that the Article falsely implied that he had committed elder abuse by financially exploiting elders. I agree with Batterman that an average person reading the Article as a whole could reasonably conclude that it was accusing Batterman of elder abuse. Moreover, unlike Batterman's other allegations, the suggestion that Batterman committed elder abuse is not refuted by the records of the public proceedings that are central to the complaint.
I. OVERVIEW
The Article focuses on a probate matter in the Circuit Court for Marathon County, Wisconsin that had been initiated nearly three years earlier by the American Cancer Society (ACS). ACS claimed that Batterman, in his capacity as trustee for the Geisler Trust, had violated his statutory duties by mismanaging trust funds (the “Geisler Trust litigation”). The Article also reports on two administrative orders filed by the Securities and Exchange Commission in 1997 and 2018 in which the SEC fined Batterman and his related companies for violating certain rules governing financial advisers. Batterman contends that the Article as a whole was defamatory because it reported on allegations in the Geisler Trust litigation that were either “discredited” or “abandoned” by the time the Article was published. This created the false impression that Batterman had engaged in fraud or embezzled funds, when in fact both the successor trustee and the court in the Geisler Trust litigation had explicitly found no fraud, theft or embezzlement. Batterman further contends that the Article was defamatory because: (1) its tactical use of hyperlinks falsely implied that Batterman had committed embezzlement and elder abuse; (2) it inaccurately identified Batterman or an entity controlled by him as the trustee overseeing the administration of the Geisler Trust; and (3) the SEC did not find Batterman “guilty” of any wrongdoing, as reported in the Article.
II. PRELIMINARY PROCEDURAL MATTERS
Before setting out the allegations of the complaint, it is necessary to resolve the parties' dispute about the evidentiary record. When deciding a motion to dismiss under Rule 12(b)(6), a court usually cannot consider materials outside the plaintiff's complaint unless the court treats the motion as one for summary judgment. See Fed.R.Civ.P. 12(d); Reed v. Palmer, 906 F.3d 540, 549 (7th Cir. 2018); Santana v. Cook County Bd. of Review, 679 F.3d 614, 619 (7th Cir. 2012). However, the court may, without treating the motion as one for summary judgment, consider materials outside the complaint when they are mentioned in the complaint, concededly authentic, and central to the plaintiff's claim. See, e.g., Hecker v. Deere & Co., 556 F.3d 575, 582 (7th Cir. 2009). This incorporation-by-reference doctrine prevents a plaintiff from “evad[ing] dismissal under Rule 12(b)(6) simply by failing to attach to his complaint a document that prove[s] his claim has no merit.” Brownmark Films, LLC v. Comedy Partners, 682 F.3d 687, 690 (7th Cir. 2012) (quoting Tierney v. Vahle, 304 F.3d 734, 738 (7th Cir. 2002)).
Relying on this doctrine, Gannett has submitted the following exhibits in support of its motion: (1) a copy of the Article; (2) copies of several records from the Marathon County proceedings concerning the Geisler Trust, including a printout of the court's docket entries as recorded in the Consolidated Court Automation Programs (CCAP) Case Management system; and (3) a copy of the 1997 SEC order referenced in the Article. Spahn Aff., dkt. 6, exhs. 1-11.
These records of the Marathon County proceedings are available on the Wisconsin Circuit Court Access Program, a website that provides public access to the records of the Wisconsin circuit courts for counties using the Consolidated Court Automation Programs (CCAP) Case Management system. The CCAP record reflects summaries of the proceedings entered by court staff, but not the underlying documents such as pleadings or court orders. See wcca.wicourts.gov.
Gannett did not submit a copy of the 2018 SEC Order. However, both orders are publicly available online. In the Matter of Vigil Asset Mgmt. Grp., Inc. & Thomas Batterman, Respondents., Release No. 1621, 64 S.E.C. Docket 294, 1997 WL 120698 (Mar. 17, 1997); In the Matter of Fin. Fiduciaries, LLC & Thomas Batterman, Respondents, Release No. 4863, 118 S.E.C. Docket 4501, 2018 WL 1151582 (Mar. 5, 2018).
Batterman concedes that the Article is central to the complaint and that the court may consider it. However, he argues that the copy submitted by Gannett is missing certain hyperlinks -- presumably which appear solely in the online version of the Article - that contribute to the Article's overall defamatory nature. This is a fair objection. Accordingly, the court will take judicial notice of and consider the online version of the Article, a copy of which Batterman has provided to the court. Batterman Aff., dkt. 20, Exh. 1.
Batterman also objects to the inclusion of the publicly-available records from the Geisler Trust litigation. That objection is unfounded. These records are undisputably central to his claim: Batterman devotes over 30 paragraphs of the complaint to alleged facts that led to the Geisler Trust litigation. Complaint, dkt. 1, ¶¶ 12-46. The complaint includes a table with a column identifying 20 statements in the Article alleged to be false and defamatory. (Dkt. 1, ¶ 56.) In the second column, titled “Why It is False, ” Batterman counters many of these statements by referring to “the court record” or findings by the Marathon County Circuit Court. (Id.) And finally, in the next paragraph, the complaint alleges that:
The entire court record pertaining to No. 15-PR-32, filed September 11, 2015 in Marathon County, Wisconsin, including the affidavit of Thomas Batterman dated October 15, 2015, the reports of successor Trustee Terrence J. Byrne, the September 18, 2017 transcript of the probate court's ruling, the transcripts of the hearings and trial on the beneficiaries' petitions, and the SEC consent decrees were available to Gannett before the article was published.Dkt. 1, ¶ 57.
So, contrary to Batterman's suggestion, the Marathon Circuit Court proceedings are the main focus of the complaint, not merely “background.” Accordingly, absent any claim that the documents submitted by Gannett are not accurate copies of actual pleadings, orders and transcripts from the Geisler Trust litigation, it is proper for this court to consider them without converting the motion to a motion for summary judgment. Parungao v. Cmty. Health Sys., Inc, 858 F.3d 452, 457 (7th Cir. 2017) (courts may take judicial notice of court filings and other matters of public record when the accuracy of those documents reasonably cannot be questioned).
Even so, says Batterman, the court should not consider the “CCAP” summary of the Geisler Trust proceedings because some of the docket summaries do not accurately reflect the court's orders. In particular, Batterman objects to Gannett's reliance on an entry dated October 23, 2015, stating that, after a hearing on the motion for removal of the trustee, the court granted the motion and removed “Vigil Trust/Thomas Batterman as trustee and appoints new trustee as Terrance Byrne.” Dkt. 6, exh. 7, at 37. Batterman insists that entry is inaccurate, noting that the court's follow-up written order, issued on November 10, 2015, states only that Vigil, not Batterman, was removed as trustee. Order, Nov. 10, 2015, attached to Batterman Aff., dkt. 20-2. (This is important to Batterman because he contends that, insofar as the Article named Batterman or suggested that he was trustee for the Geisler Trust, it was false. I address this contention in more detail, below.) Rather than strike the CCAP summary, the court will consider that document and the entirety of the court's November 10, 2015 order in ruling on the motion to dismiss. See Fed.R.Evid. 106.
Finally, Batterman has not objected to consideration of the SEC Orders, which were discussed at some length in the Article and are the proper subject of judicial notice. In the complaint, plaintiffs have alleged that some of the Article's statements with respect to the SEC Order were false. Complaint, dkt. 1, at ¶¶ 56d., 56q., 56r. Accordingly, these orders are central to the complaint and may be considered.
Against this backdrop, I will review the allegations of the complaint, along with the Article, the record from the Geisler Trust litigation, and the SEC Orders:
FACTS
I. The Parties
Plaintiff Financial Fiduciaries, LLC (“Fiduciaries”) is and was at all times relevant to this lawsuit a Wisconsin limited liability company located in Wausau, Wisconsin, a city in Marathon County with a population of approximately 40, 000. Fiduciaries is a registered financial advisor. Plaintiff Thomas Batterman (a resident and citizen of Wisconsin) manages Fiduciaries. Fiduciaries is a wholly owned subsidiary of WTC, Inc., which is a privately-owned Wisconsin corporation in which Batterman owns an interest. Defendant Gannett Co., Inc. is a Delaware corporation headquartered in McLean, Virginia. It publishes a No. of newspapers in Wisconsin, including the Wausau Daily Herald.
II. Background
In 1988, Joseph Geisler established the Geisler Trust and designated himself as the primary trustee, with Vigil Asset Management Group as the successor trustee. Complaint, ¶¶ 15-17. Batterman was the owner of Vigil Asset Management Group. Id., ¶ 17. In 2000, Vigil Asset Management Group's operations were assumed by Vigil Trust. Id. In 2011, in the course of amending the Geisler Trust in other respects, Geisler amended his trust to provide that Vigil Trust would be the successor trustee. Id.
The Geisler Trust provided that, in the event his wife did not survive him, upon Geisler's death, the assets remaining in the Trust, together with any assets received into the Trust, should be distributed equally to four identified charities: the Superior Diocese of the Catholic Church; Bruce High School in northwestern Wisconsin; the Alzheimer's Association; and the American Cancer Society (“ACS”). Id., ¶ 22. After outliving his wife, Geisler died on December 27, 2014. Id., ¶ 26. The assets in the Geisler Trust at the time of his death amounted to $3 million.
III. The Petition to Remove Vigil Trust/Batterman as Trustee of the Geisler Trust
On September 9, 2015, ACS brought a verified petition in the Circuit Court for Marathon County seeking, among other things, to remove Vigil Trust as successor trustee of the Geisler Trust. ACS Petition, dkt. 6-2. ACS alleged that, as successor trustee, Vigil Trust, through its owner and president, Batterman, “grossly breached fiduciary duties owed to the Trust and its charitable beneficiaries.” Id. at 1. ACS alleged that Vigil Trust/Batterman had inappropriately used trust assets for Batterman's own benefit, had concocted a scheme for distributing ACS's funds over a 10-year period rather than in a lump sum in order to increase fees to the trustee, and had provided evasive responses to ACS's inquiries regarding the trust funds. Id. at 1-2. ACS brought five claims: (1) breach of duty to administer trust in good faith; (2) breach of duty of loyalty; (3) breach of duty of prudent administration; (4) breach of duty to inform and report; and (5) removal of trustee. Id. at 18-23. Soon thereafter, the School District of Bruce, the Roman Catholic Diocese of Superior, and the Alzheimer's Association each filed its own petition. See CCAP Summary, dkt. 6-7, at 39. On or about October 15, 2015, Batterman filed a 16-page affidavit and 146 pages of supporting documentation disputing the allegations of the petition. Aff. Of Thomas Batterman, dkt. 6-10.
Judge Michael Moran presided over the case. Following a hearing on October 23, 2015, the court granted the beneficiaries' motion to remove Vigil Trust as trustee of the Geisler Trust and it appointed Terrence Byrne as new trustee. The court formalized its findings and issued amended findings of fact and conclusions of law in a written order entered November 11, 2015. Among other things, the court found that, “[a]s of the date of the hearing, Vigil Trust had not made distributions to the four named charitable beneficiaries of their monies under the Geisler Trust other than $80,000 to ACS.” Dkt. 20-2, at 4. The court further found that, “on or about June 19, 2015, Vigil Trust established the Joseph Geisler Scholarship Trust and transferred monies related to Bruce Schools . . . into that separate Trust. Vigil Trust through Batterman notified Bruce Schools of a scholarship fund at some point thereafter.” Id. The court directed new trustee Byrne to administer the Geisler Trust and “to seek redress of any breach of trust determined by Byrne to have been committed by Vigil Trust or any entities or individuals affiliated therewith or involved in any way in the administration of the Geisler Trust . . . including all officers, employees, agents, and representatives thereof.” Id. at 5.
On or about February 18, 2016, Byrne advised the beneficiaries and the court that “[a] review of the records shows no theft, embezzlement, or false records of any nature.” Complaint, ¶ 42.
The parties continued to litigate the case for more than two years. On or about February 6, 2017, beneficiary Bruce School District served an amended petition naming Batterman, Financial Fiduciaries, and WTC. Complaint, ¶ 44; Docket Entry, 02-06-2017, dkt. 6-7, p. 30. On April 24, 2017, the court entered an order dismissing Financial Fiduciaries and WTC, but it kept Batterman in the case. Docket Entry, 04-24-2017, dkt. 6-7, p. 25.
The court held a bench trial on April 27, 2017 and May 23, 2017. After post-trial briefing, the court issued its findings in an oral ruling on September 18, 2017. The court found that Vigil, through Batterman, had abused its discretion in administering the trust, had breached its duty to inform and report, and had breached its duty of loyalty. Tr. Of Oral Ruling, Sept. 18, 2017, dkt. 6-8. Specifically, the court found that Vigil had failed to notify the beneficiaries within a reasonable time frame, had failed to provide complete and timely information, and had made unilateral decisions about how the gift was to be distributed to the beneficiaries that arguably favored Vigil. Summarizing its conclusions, the court stated:
So much of this litigation could have been avoided had Vigil followed the plain language of the trust document or even attempted to communicate with the school district or other beneficiaries. There is nothing in this record to suggest that Bruce School would have been unable to distribute the scholarship funds in the manner they felt reasonable. While it is possible they may even have had Vigil as the trustee, that decision was not Vigil's to make unilaterally, and by the actions Vigil took by unilaterally creating a separate scholarship trust, refusing to provide any information to the school district and by setting themselves up as a trustee, thus deriving income from the administration of the scholarship trust, Vigil, and Mr. Batterman, acting for Vigil, created a sense of mistrust, not only with Bruce School District but each [of] the beneficiaries to Mr. Geisler's generous gift . . .
The trustee in this case breached his trust and abused his discretions for the reasons I stated and it doesn't - it's not escaping this Court that the beneficiaries would have this mistrust and would, based upon it, want to clarify and get more information and do due diligence to find out exactly what was going on here . . . [u]ltimately it is unfortunate the legacy of Mr. Geisler's gift will be this litigation.Id. at 17-18.
In response to questions posed by Batterman's counsel at the end of the hearing, the court stated: “I am not finding that there is any fraud. I am not finding those other issues. I found [a breach of duty] based on my decision on basically the three different areas that I found here.” Id. at 29.
On July 11, 2018, the court held another hearing for the purpose of issuing an oral ruling on the parties' cross-motions for attorney fees and non-attorney fee damages. Tr. of Oral Ruling, dkt. 6-9, at 7. Summarizing its September 18, 2017 ruling, the court recounted that it had found that “Vigil and Batterman's conduct constituted a breach of trust pursuant to 701.0813 of the Wisconsin Statutes, ” that “so much of this litigation could have been avoided had Vigil followed the plain language of the trust or if it had been attempted to communicate with the school district or other beneficiaries, ” and that “the actions of Vigil and Batterman created a sense of mistrust with the beneficiaries[.]” Id. at 4.
The court then denied Vigil's motion for the Trust to pay its attorneys fees, finding that although the successor trustee found no theft, fraud or embezzlement, Vigil had breached the trust and therefore could not recover its fees. Id. at 10-11. The court further found that the beneficiaries could recover their fees from Batterman, finding that his actions on behalf of Vigil with respect to the Geisler Trust were “what amounted to something of bad faith, fraud or deliberate dishonesty.” Id. at 16. The court further ruled that the Trust could recover damages incurred related to the breach of trust. Id. at 20.
When deciding who was liable for the attorney fees and damages, the court held that:
Mr. Batterman is the trust protector in this case. He owed independent duties to the beneficiaries, and, again, there was little argument on the issue of which entity or whether Midwest Trust Company, through Vigil and Thomas Batterman, is personally liable. The court is going to order each party shall be jointly and severally liable for the damages and attorney fees once final No. are provided. So that means Midwest Trust Company, and Vigil and Mr. Batterman, shall be jointly and severally liable for the damages once we get those No. together.Id. at 26.
IV. SEC Proceedings
Plaintiffs admit that Batterman was the subject of SEC orders in 1997 and 2018. Complaint, ¶ 56.q. In the 1997 order, the SEC found that Vigil, aided and abetted by Batterman, had willfully violated several rules governing financial advisers by: maintaining client funds in an omnibus account over which it retained control of how funds were distributed; taking physical possession of client funds and securities; failing to calculate its quarterly advisory fees in its clients' monthly statements; failing to ask its custodial broker-dealer to send its clients a quarterly statement identifying all disbursements from their accounts; and making “misrepresentations and omissions of material facts to clients regarding the brokerage commission rates charged to clients.” See In the Matter of Vigil Asset Mgmt. Grp., Inc. & Thomas Batterman, Respondents., Release No. 1621, 64 S.E.C. Docket 294, 1997 WL 120698, *1-*3 (Mar. 17, 1997). The SEC specifically found that these acts “were fraudulent, deceptive or manipulative.” Id. at *2. Vigil and Batterman were ordered to cease and desist the rule violations and to pay civil penalties of $15,000 and $10,000, respectively. Id. at *4.
In 2018, the SEC found that Batterman, as principal of Financial Fiduciaries, had caused Financial Fiduciaries to “willfully violate[] Section 206(2) of the Advisers Act, which prohibits an investment adviser from engaging in any transaction, practice, or course of business which operates as a fraud or deceit upon a client or prospective client.” In the Matter of Fin. Fiduciaries, LLC & Thomas Batterman, Respondents, Release No. 4863, 118 S.E.C. Docket 4501, 2018 WL 1151582, *5 (Mar. 5, 2018). The SEC found that Financial Fiduciaries and Batterman had breached their financial duties and violated the “custody rule” from 2012-2014 by having a “dual employee” who worked for both WTC (Financial Fiduciaries' primary shareholder), and for IITC, a Colorado trust company that did business in Wisconsin under the trade name “Vigil Trust & Financial Advocacy.” Id. at *2-*4. As a result of this arrangement, the employee allowed Financial Fiduciaries to have direct access to clients' trust assets for whom IITC was the trustee. Id. In addition to this “dual employee” arrangement, the SEC found that IITC and WTC-who shared the same office space-had financial arrangements concerning the payment of the employee's salary, rent, and office support, that gave rise to a conflict of interest. Id. Batterman and Financial Fiduciaries were ordered to cease and desist their violations of the Advisers Act and to pay a fine of $20,000 and $40,000, respectively. Id. at *5.
In both proceedings, Batterman and Vigil Trust/Financial Fiduciaries made offers of settlement in which they agreed to the SEC's orders without admitting or denying its findings.
V. The Article
On August 21, 2018, the Wausau Daily Herald published an article reporting on the Geisler Trust litigation, under the headline “Wisconsin financial advisor accused of violating a dead man's trust, mishandling $3 million”. Batterman Aff., dkt. 20, exh. 1. The story's lede states: “Joe Geisler spent his life farming and taking care of his father. He was, in the words of one of his nephews, ‘frugal with a capital F.'” The story goes on to explain how, after years of hard work, Geisler had died with $3 million in a trust that he wanted distributed to charities that were important to him. This portion of the Article is accompanied by a photograph of Geisler in advanced age.
The Article pivots to Batterman:
But the financial adviser Joe Geisler entrusted to administer his trust put that money in jeopardy, according to a lawsuit filed in Marathon County. The adviser, Thomas Batterman of Wausau, was accused of defrauding the charities, committing numerous breaches of trust and conspiring with his fiancée to milk the fund for trustee fees.
Although a judge later found that Batterman had not committed fraud, theft or embezzlement, he ruled that the financial adviser had engaged in multiple acts of “bad faith” and ordered him to be removed from handling the Geisler trust and to pay part of the charities' legal fees.
It was not the first time Batterman had been accused of mishandling clients' money. He has been fined thousands of dollars twice by the Securities and Exchange Commission, according to federal records.
The Article explains that Geisler had met Batterman through Geisler's brother, that both men had hired Batterman to “manage their funds, ” and that Joe Geisler had asked Batterman to set up a trust for him. According to the Article, under the terms of the trust, “it would be Batterman's job to honor Geisler's wishes, completing the donations to the four charities. That's where things went awry.”
Under the subheading “What Has Been Alleged, ” the Article discusses ACS's petition, stating: “According to accusations and judgments in the court documents, this is what happened:”. The Article then summarizes or quotes directly from the ACS petition-with attribution-and also reports the responses provided by Batterman and his fiancée to some of ACS's allegations. This portion of the Article concludes with a close-up photograph of Batterman's office, with the names “Financial Fiduciaries” and “Vigil” clearly visible. Immediately below the photo, in font larger than the photo's caption, appear the following two statements, with accompanying hyperlinks:
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Under a new subheading titled “Word spreads about a trust, ” the Article reports about how ACS learned of Geisler's trust, that it filed a petition, and that the petition “began a three-year battle, first for the removal of Vigil as trustee, then for the legal fees accumulated by the charities through the litigation.” The Article then summarizes the Marathon Circuit court's rulings, stating that in November 2015, it “ordered Vigil and Batterman to be removed” and appointed Byrne as successor trustee, and in May had ordered Batterman and associated companies to pay the charities' legal fees.
Under a subheading titled “Run-ins with the law, ” the Article states:
Neither Batterman nor [his fiancée] has been charged with any criminal wrongdoing in the Geisler case. Moran said in court transcripts that the case solely concerned the beneficiaries of the trust, their request that Batterman be removed and the responsibility for legal fees.
But the judge made it clear that he didn't think everything went the way it should have.
“This court found that so much of this litigation could have been avoided had Vigil followed the plain language of the trust, or if it had been attempted to communicate with the school district or other beneficiaries, ” Moran said.
The federal Securities and Exchange Commission did find that Batterman committed wrongdoing for other business practices over a period of three years.
The Article proceeds to paraphrase and quote portions of the SEC's March 5, 2018, report, adding that “[t]his is the second time that Batterman was found guilty of wrongdoing by the SEC. In 1996, he was fined $10,000.” The Article provides a response from Batterman to the SEC's findings. As for the allegations as to Geisler's trust, the Article reports that Batterman had not consented to an interview after several requests to do so.
The Article also reports that Batterman's “legal troubles were compounded” by an April 10, 2018 OWI arrest and provides additional information. However irrelevant this information might be to the main thrust of the Article, Batterman has not challenged its truth.
Towards the end of the Article, the reporter provides the following summary of his interview with Geisler's nephews:
"You just expect that everyone is doing the right thing," Gary Geisler said during a recent interview at Biggby Coffee in Wausau, less than 10 blocks from Batterman's office. Jerry, 58, traveled from his home in Bruce, and Gary, 63, from Ripon to speak to a reporter about the case.
They said that Joe Geisler didn't have anyone to make sure he was making good financial decisions.
"One thing you need to remember is that our dad and Joe were nice guys," Jerry Geisler said.
“You think about his intentions for that money that he saved up: He wanted it to go to good causes, and instead someone else was taking advantage of that, ” Gary said.
Batterman handled funds for their father, John Geisler, for years, but when the brothers were concerned about the returns their father was getting, they got a second opinion. When that financial adviser was concerned about Batterman's investment strategy, the brothers fired Batterman. They said the returns have increased drastically since then.
“I would tell anybody that has older parents, older relatives getting financial advice, that they should be checking in on it and getting second opinions just like I did, ” Gary Geisler said.
On August 30, 2018, Batterman requested the Wausau Herald to retract certain statements in the Article. Gannett determined that no retraction was warranted. However, Gannett updated the online version of the Article to clarify the court's ruling on allegations against Batterman. Gannett also added a graphic which depicted a timeline of Batterman's activities with the Geisler Trust.
ANALYSIS
The parties agree that Wisconsin substantive law applies to this case. Under that law, a defamation claim has three elements: (1) a false statement; (2) communicated by speech, conduct, or in writing to a person other than the one defamed; and (3) the communication is unprivileged and is defamatory, that is, it tends to harm one's reputation, lowering him or her in the estimation of the community or deterring third persons from associating or dealing with him or her. Torgerson v. Journal/Sentinel, Inc., 210 Wis.2d 524, 534 (1997).
In a defamation action brought by a private figure against a media defendant, the plaintiff has the burden of proving that the speech at issue is false; this requirement is imposed in order to avoid the chilling effect that would be “antithetical to the First Amendment's protection of true speech on matters of public concern.” Mach v. Allison, 2003 WI.App. 11, ¶ 13, 259 Wis.2d 686, 656 N.W.2d 766, (quoting Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767, 777 (1986)).
Moreover, to defeat a defamation action, the article or statement in question need not “be true in every particular.” Lathan v. Journal Co., 30 Wis.2d 146, 158, 140 N.W.2d 417, 423 (1966). “All that is required is that the statement be substantially true.” Id. “Minor inaccuracies do not amount to falsity so long as the substance, the gist, the sting, of the libelous charge be justified.” Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 517 (1991) (internal citations and quotations omitted). “Put another way, the statement is not considered false unless it ‘would have a different effect on the mind of the reader from that which the pleaded truth would have produced.'” Id. (quoting R. Sack, Libel, Slander, and Related Problems 138 (1980)).
In arguing for dismissal, Gannett contends that Batterman does not have a plausible defamation claim because all of the statements of which he complains are true, and some are incapable of a defamatory meaning. In addition, Gannet argues that most of the statements are covered by Wisconsin's judicial proceedings privilege, Wis.Stat. § 895.05(1), which provides that newspapers are absolutely privileged when they publish true and fair reports of judicial, police, and other government proceedings. In support of its dismissal motion, Gannett addresses each of the statements identified in Batterman's complaint, relying largely on the Geisler Trust public court record and the SEC orders to show that all of the challenged statements in the Article are substantially true, not capable of a defamatory meaning, or are privileged.
In response, Batterman first argues that the mere fact that he has alleged that the statements are false is enough to stave off dismissal at the 12(b)(6) stage. Br. in Opp., dkt. 18, at 11-12. Batterman misunderstands his burden. To survive a motion to dismiss, a complaint cannot simply provide the defendant with fair notice of the claim and its basis; it must also “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In reviewing the sufficiency of a complaint under the plausibility standard announced in Twombly and Iqbal, the court accepts the well-pleaded facts in the complaint as true, but legal conclusions and conclusory allegations merely reciting the elements of the claim are not entitled to this presumption of truth. Iqbal, 556 U.S. at 678-79.
Importantly, “[w]hen an exhibit incontrovertibly contradicts the allegations in the complaint, the exhibit ordinarily controls, even when considering a motion to dismiss.” Bogie v. Rosenberg, 705 F.3d 603, 609 (7th Cir. 2013). In Bogie, for example, the court found that the trial court had not erred by relying on a backstage video that the plaintiff had attached to her breach-of-privacy complaint as a basis for dismissing the complaint under Rule 12(b)(6). Id. at 608-09. Noting that the video “shows in real time the content and context of the alleged wrongs, ” Id. at 608, the appellate court found that the district court had properly “viewed the recording and weighed its content against the complaint's allegations” to determine whether plaintiff had been recorded in a place that a reasonable person would consider private. Id. at 608-09.
Courts have applied the incorporation-by-reference doctrine to evaluate “the content and context of the alleged wrongs” in defamation cases as well. See, e.g., Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002) (under incorporation-by-reference doctrine, district court reviewed tapes of broadcasts and transcripts of interviews on which broadcasts were based in deciding defendant's motion to dismiss defamation claim); Knafel v. Chi. Sun-Times, Inc., 413 F.3d 637, 640 (7th Cir. 2005) (considering newspaper column attached to complaint pleading defamation claim); Harp v. Glock, No. 18-C-1039, 2019 WL 1859258, at *1-*2 (E.D. Wis. Apr. 25, 2019) (granting, in part, defendant's motion to dismiss defamation case after reviewing crime series episode and finding that not all statements were capable of defamatory meaning). See also Puhr v. Press Pub. Co., 249 Wis. 456, 461-62, 25 N.W.2d 62, 65 (1946) (“[I]t is the duty of the court to determine from the publication itself whether it bears the interpretation given to it by the plaintiff in his complaint.”); Woods v. Sentinel-News Co., 216 Wis. 627, 258 N.W. 166, 167 (1935) (“While liberal rules of pleading are followed in construing a complaint, the pleader's statement that particular words [are defamatory because they] impute a criminal charge cannot in themselves enlarge the reasonable and natural meaning of the words used.”).
Accordingly, this court will not deny Gannett's motion simply because Batterman has alleged that certain statements in the Article are false and defamatory. Rather, it is proper to examine Batterman's allegations against the Article and the records from the Geisler Trust litigation and the SEC - which are central to the complaint-to determine whether Batterman states a plausible claim for defamation.
BATTERMAN'S ALLEGATIONS
Batterman asserts that, “[a]s a whole, the Article is erroneous and paints a false and unfair picture of Mr. Batterman as a thief who, acting as trustee, stole money from a trust, causing four separate charities to lose money, all of which is false.” Complaint, dkt. 1, ¶49. He further alleges that the Article falsely identifies Batterman as the trustee of the Geisler Trust, when the actual trustee was Vigil Trust. Id. at ¶50. In addition, Batterman alleges that the Article plainly implies that “Batterman is a bad financial advisor who takes advantage of elders and cannot be trusted with other people's money.” Id. at ¶52, noting that the online version of the Article contains links to so-called “Related” stories about elder abuse and embezzlement. Id. at ¶ 54.
A review of the complaint reveals that Batterman is not actually contending that the headline and all 20 statements from the Article are false. Some of the statements, he says, are libelous not on their face but because of what they imply. As amplified in his brief in opposition to the dismissal motion, Batterman alleges that in its totality, the Article was defamatory in these respects:
Insofar as this bears on Batterman's claims of actual falsity, I note that Batterman has offered no response to Gannett's argument regarding six of the statements. Accordingly, Batterman has waived his claims on these statements. Citizens for Appropriate Rural Roads v. Foxx, 815 F.3d 1068, 1078 (7th Cir. 2016) (“[B]y failing to respond in any way to any of the arguments advanced by Defendants regarding counts 9, 14, 15, and 16, Plaintiffs have waived their claims.”); G & S Holdings LLC v. Cont'l Cas. Co., 697 F.3d 534, 538 (7th Cir. 2012) (“We have repeatedly held that a party waives an argument by failing to make it before the district court. That is true whether it is an affirmative argument in support of a motion to dismiss or an argument establishing that dismissal is inappropriate.”) (citations omitted).
(1) It falsely implied that Batterman was a thief who “defrauded” the beneficiaries and “embezzled” trust funds;
(2) It falsely stated that Batterman or an entity controlled by him was the trustee overseeing administration of the Geisler Trust;
(3) It falsely stated that Batterman was “found guilty of wrongdoing by the SEC;” and (4) It falsely implied that Batterman was guilty of “elder abuse.”Br. in Opp., dkt. 18, at 14-23.
Thus, of the four allegedly libelous “statements, ” Batterman alleges that two were implicit and two were explicit. I address the implicit statements first.
I. Defamation by Implication
Wisconsin courts have recognized that “[t]he ‘statement' that is the subject of a defamation action need not be a direct affirmation, but may also be an implication.” Mach, 2003 WI.App. 11, ¶ 12 (citing Milkovich v. Lorain Journal Co., 497 U.S. 1, 22 (1990)). See also Frinzi, 30 Wis.2d at 277, 140 N.W.2d at 262 (“One may be libeled by implication and innuendo quite as easily as by direct affirmation.”). The court decides, as a matter of law, whether an alleged defamatory implication is fairly and reasonably conveyed by the words and pictures of the publication. Id. at ¶ 32 (citing Puhr v. Press Publ'g Co., 249 Wis. 456, 460, 25 N.W.2d 62 (1946)). If the court decides that it is not, then the defendant is entitled to judgment in its favor. Id. If the court decides that the alleged defamatory implication is fairly and reasonably conveyed but that there is also a nondefamatory implication, then it is up to the jury to decide which the publication implies. Id. (citing Liberty Mut. Fire Ins. v. O'Keefe & O'Flaherty, Ltd., 205 Wis.2d 524, 527, 556 N.W.2d 133 (Ct. App.1996)). “[T]he ‘gist of the matter' is the ‘natural and reasonable import' of the words and images on the [reader.]” Id. (quoting Woods, 216 Wis. At 629). The court must consider the publication as a whole, “not in detached fragments.” Woods, 216 Wis. at 630.
Cases that fall squarely within the realm of “implied defamation” are those in which the plaintiff alleges that a specific statement, though not necessarily defamatory on its face, could be reasonably understood to convey a defamatory meaning and is therefore actionable. For example, in Filber v. Dautermann, 28 Wis. 134 (1871), the plaintiff alleged that the defendant had slandered him by saying to the plaintiff in the presence and hearing of others: “You have cheated and robbed orphan children out of fourteen hundred dollars.” Id. at 135. According to the complaint, a person named John Freling had assigned to the plaintiff a mortgage for $750, in 1863, in exchange for plaintiff's agreement to support and maintain Freling during his natural life. Freling died in 1866, leaving several orphan children. Id. at 135-36. The plaintiff alleged that the defendant's “You have cheated and robbed . . .” statement implied that, “by taking an assignment of such mortgage from John Freling as the consideration for his agreement to support said Freling during his natural life (Freling having since died leaving orphan children), the plaintiff committed the crime of larceny.” Id. at 136 (emphasis in original).
Finding that “whether the words spoken impute a charge that the plaintiff had been guilty of a criminal offense, and that such words are therefore actionable” was a question of law for the court, id., the Wisconsin Supreme Court found that the plaintiff had no cause of action for slander. Evaluated in context, held the court, “the word ‘robbed' was here used to indicate, not a taking by force and violence, but rather a taking by fraud and wrong, the charge being that the plaintiff cheated and robbed orphans “out of” a certain sum of money. Id. at 137 (emphasis in original).
In Luthey v. Kronschnabl, 239 Wis. 375, 1 N.W.2d 799, 801 (1942), the plaintiff brought a libel action based on a portion of an editorial that read: “Now if Mr. Luthey had attended a Christmas Eve service in any one of the Crandon churches we are sure he would have gotten a lot of good out of it and felt a whole lot better than he did.” Id. at 380. The plaintiff claimed that the statement implied that he was a man “of such general lack of integrity and Christian virtue as to require the influence of church service upon him.” Id. The court rejected plaintiff's claim as a matter of law, finding that “the usual, ordinary and natural meaning of the words” used in the editorial could not reasonably support the implication advanced by plaintiff. Id.
In Woods, 216 Wis. 627, the plaintiff alleged that the newspaper had falsely implied that he had been charged with a criminal offense when it published a story under the headline “Cops Free ‘Robber'”, which reported that the plaintiff's wife had called the police saying that her husband was a bank robber and was wanted in Indiana. Noting that the article had to be read as a whole and “not in detached fragments, ” 216 Wis.2d at 630, the court rejected plaintiff's claim, noting that the article had also reported that upon receipt of plaintiff's wife's message, the police had investigated the matter and found that the wife had made a false accusation because of trouble with her husband. Id. The article further reported that police did not detain the husband but instead arrested the wife on a charge of disorderly conduct. Id. In light of this, the court concluded, unsurprisingly, that “all suggestion that respondent was charged with the commission of any offense is positively excluded.” Id.
In addition to the classic case where a plaintiff claims that a defamatory meaning can be implied from the express words stated by the defendant, courts have recognized that a person can be defamed not by what is stated, but by what is implied when a defendant
(1) juxtaposes a series of facts so as to imply a defamatory connection between them, or (2) creates a defamatory implication by omitting facts, [such that] he may be held responsible for the defamatory implication, unless it qualifies as an opinion, even though the particular facts are correct.
Dan B. Dobbs, Prosser & Keeton on the Law of Torts § 116, at 117 (Supp. 1988). See also Turner v. KTRK Television, Inc., 38 S.W.3d 103, 115 (Tex. 2000) (“a plaintiff can bring a claim for defamation when discrete facts, literally or substantially true, are published in such a way that they create a substantially false and defamatory impression by omitting material facts or juxtaposing facts in a misleading way.”), cited in Plt.'s Br., dkt. 18, at 20.
The Wisconsin Court of Appeals' decision in Mach, 2003 WI.App. 11, is such a case. In Mach, a dog trainer named Frank Allison, sued a television station, its owner and a reporter, claiming that a story that the station ran about him and Chance - a dog placed with him for training that died a few days after returning home - conveyed the false impression that Allison employed beating or violence as a means of training Chance. Allison alleged that he did two types of dog training: (1) protection work, in which dogs are trained to bite only on command of the dog's master; and (2) obedience training, which is designed to be gentle and to help a dog gain trust in people. Id. at ¶ 13. The broadcast included two video sequences showing Allison with dogs other than Chance in which he was wearing protective gear and inciting the dogs to leap at him or bite him; in one, he had a stick in his hand. Accompanying these sequences were statements by the reporter, Chance's owner, and Allison that related specifically to Chance. Id. at ¶ 35. The court of appeals agreed with Mach that a reasonable viewer could conclude from these video sequences and the words spoken during them that Allison used with Chance the methods depicted in the video sequences with the other two dogs, particularly where there were no statements or images indicating that Allison had not used these methods on Chance. Id. at ¶ 36.
Finally, in Terry v. Journal Broadcast Corp., 2013 WI.App. 130, 351 Wis.2d 479, 840 N.W.2d 255, the plaintiff alleged that a TV news station's broadcast of an investigative report about her wedding video business falsely implied through statements, scary music, and video edits that she was a “freakish and dangerous” person. The broadcast focused on two couples' struggles to obtain their wedding videos from Terry for months after their wedding after paying her $1,000 up front. Id. at ¶¶ 2-3. As part of its investigation, a reporter, John Mercure, conducted an in-home interview of Terry, which ended when she made a throat-cutting gesture, told Mercure the interview was over and that he should leave. Terry's son, who was present during the interview, forcibly attempted to remove Mercure and Terry put her hand in front of the camera lens. All of this was captured on video and broadcast unedited. Id. at ¶¶ 3-5. In addition, the broadcast and promotional advertisement included the following statements: “It was their perfect day (pause) until she came along”; “The I-Team's Mercure tracked down the videographer, and that's when he got attacked literally. [T]hat's scary.”; and “A Videographer ripped off bride and groom and roughed us up.” Id. at ¶ 9.
In spite of what plainly was a sensational broadcast seemingly produced to cast Terry in a bad light, the court of appeals found that Terry could not maintain a cause of action for defamation:
With regard to the statements and images concerning the “brawl” Terry describes, we conclude that Terry fails to show how they are defamatory. In essence, Terry is challenging the way in which she was portrayed in so far as the music and video edits are concerned, but she does not have a cause of action for the words that were used to portray her. None of the videos or web stories Terry challenges use the term “freakish and dangerous person.” See Wis.Stat. § 802.03(6) (2011-12) (requiring parties alleging libel or slander to state “the particular words complained of” in the complaint). The video shows an incident-Terry's son attempting to forcibly remove Mercure from Terry's home-and Mercure's and Terry's reactions to the incident. Corresponding statements were used to describe the incident. As stated, “truth is an absolute defense” in defamation actions. Denny v. Mertz, 106 Wis.2d 636, 643, 318 N.W.2d 141 (1982). Terry cannot maintain a defamation action for how she feels she was portrayed. None of the specific spoken or written words present causes of action in defamation.Id. at ¶¶ 25-26 (emphasis in original).
Against this jurisprudential backdrop, I now turn to Batterman's specific allegations:
B. Implication that “Batterman Stole From or Defrauded the Charities”
1. Defamatory Meaning/Falsity
As noted above, Batterman alleges that, as a whole, the Article “paints a false and unfair picture of plaintiffs as thieves who, acting as trustee, defrauded the beneficiaries, causing four separate charities to lose money, all of which is false.” Br. in Opp., dkt. 18, at 17. Batterman cites the following statements as contributing to this overall impression:
• Headline: “Wisconsin financial advisor accused of violating a dead man's trust, mishandling $3 million” • But the financial advisor Joe Geisler entrusted to administer his trust put that money in jeopardy, according to a lawsuit filed in Marathon County.
• The advisor, Tom Batterman, is accused of defrauding the charities, committing numerous breaches of trust and conspiring with his fiancée to milk the fund for trustee fees.
• It was not the first time Batterman had been accused of mishandling clients' money.
• According to accusations and judgments made in the court documents, this is what happened: Two weeks after Geisler's death, Batterman and his fiancée, Deborah Richards, began talking about the trust via Richards' work email. They planned for Batterman to donate American Cancer Society's portion of the trust to different Relay for Life Events that Richards would be planning. The increase in money raised for each event would make Richards eligible for salary increases according to the American Cancer Society petition to the court.
• From Geisler's death to November 9, 2015, when Batterman and Vigil were removed as trustees, they collected about $30,000 in fees from the Trust, according to Batterman's affidavit.
• This is the second time that Batterman was found guilty of wrongdoing by the SEC.
In addition to the statements, Batterman notes that the web version of the Article contains a hyperlink-fronted by the word “RELATED:”-to an article titled “Accountant accused of embezzling over $155,000 near Stratford.” Although Batterman makes no claim that the linked article is about him or his companies, he argues that the hyperlink contributes to the Article's overall “embezzlement theme.” Having considered Batterman's arguments in light of the Article as a whole, I find that the Article does not fairly and reasonably convey the impression that Batterman engaged in theft, fraud, or embezzlement. First, insofar as the Article referred to fraud, it made clear that such conduct was only what Batterman had been “accused of” by ACS. Second, and more importantly, the Article specifically states that “a judge later found that Batterman had not committed fraud, theft or embezzlement[.]” As in Woods, supra, this statement expressly negates any implication that Batterman had embezzled or stolen trust funds, whether created by the reporting on ACS's allegations, the hyperlink, or otherwise.
In addition to this explicit statement, the Article also noted that neither Batterman nor his fiancée had been charged with any criminal wrongdoing in the Geisler case, and that Judge Moran had said the case solely concerned the beneficiaries of the trust, their request that Batterman be removed and the responsibility for legal fees. An ordinary reader would understand from these statements and from the Article as a whole that, to the extent Batterman may have been accused by ACS of fraud or theft, those accusations were dropped or refuted by the court. In other words, the Article correctly reported Batterman's vindication on these points.
Batterman argues that because the court found no fraud or theft, a fortiori, the Article's statements that Batterman was accused of “mishandling” funds, “wrongdoing, ” and putting $3 million “in jeopardy” were false. Again, however, Gannett explained when making these statements that the Article was reporting on ACS's allegations. ACS alleged that “[m]ultiple red flags relating to Vigil Trust's administration of the Geisler Trust . . . give ACS serious concern that Vigil Trust has inappropriately used trust assets for Batterman's and his corporate entities' own benefit and to the detriment of the remainder charitable beneficiaries, ” dkt. 6-2, ¶ 20. ACS further alleged that “[c]ontrary to the terms of the Trust, Vigil through Batterman has treated the Geisler Trust as though it were a discretionary trust to distribute funds as Batterman wishes and in a manner to benefit Batterman.” Id. at ¶ 21. ACS then outlined specific conduct by Batterman that had raised the “red flags, ” including arrangements that he and his fiancée had made for distribution of the funds to ACS. Id. at ¶¶ 21-44. In light of these allegations, the Article's statements that Batterman was accused of “mishandling” or putting “in jeopardy” Geisler's trust funds were substantially true. Prahl v. Brosamle, 98 Wis.2d 130, 141, 295 N.W.2d 768, 776 (Ct. App. 1980) (“Slight inaccuracies of expression are immaterial provided that the defamatory charge is true in substance.”), abrogated on other grounds by Wilson v. Layne, 526 U.S. 603 (1999)).
Moreover, and contrary to Batterman's contention, the court did not reject all of ACS's allegations concerning Vigil Trust/Batterman's administration of the Geisler Trust. As reported in the Article, the court found that Vigil, through Batterman, had breached its duties as a trustee when it failed to notify the beneficiaries within a reasonable time frame, failed to provide complete and timely information, and made unilateral decisions that arguably favored Vigil about how the gift was to be distributed to the beneficiaries. Further, the court found that those breaches “amounted to something of bad faith, fraud or deliberate dishonesty.” As Gannett accurately reported, although Judge Moran found that Batterman had not committed fraud, theft or embezzlement, “he ruled that the financial adviser had engaged in multiple acts of ‘bad faith' and ordered him to be removed from handling the Geisler trust and to pay part of the charities' legal fees.” In light of these rulings, Batterman cannot plausibly show that the Article was false insofar as it implied that Vigil/Batterman had “mishandled” or “committed wrongdoing” with respect to the trust funds. As in Filber, when these terms are considered in the context in which they were used, they plainly were not meant to indicate fraud, but rather that Batterman had failed to properly execute his duties with respect to the trust funds.
Batterman seems to be most upset about the fact that Gannett first reported on ACS's allegations after the court had ruled on them. Batterman asserts that “reporting that the allegations had been made after they had been discredited and abandoned is an utterly false report.” Br. in Opp., dkt. 18, at 17. Perhaps this assertion would have some traction if Gannett's article had reported the ACS's allegations as facts rather than allegations, or if Gannett had not made clear that the court had made no adverse findings against Batterman on the most damning accusations of the ACS petition. But the Article didn't do these things. Rather, the Article laid out what ACS had alleged, it explained that the court ultimately found no fraud, theft, or embezzlement, and then it reported on what the court did find, namely, that Batterman had breached his duties; Vigil Trust/Batterman was removed as trustee or trust protector; and Batterman was ordered to pay the charities' attorneys' fees.
Reading the Article as a whole, its “gist” or “sting” was not that Batterman was a thief, but rather that Batterman was untrustworthy. In light of the record of the Geisler Trust litigation, this sting was justified. Although the Article may have contained minor inaccuracies or minor embellishments by the reporter, Gannett's reporting on the Geisler Trust proceedings was not false, nor did it reasonably convey the impression that Batterman committed theft, embezzlement, fraud, or similar criminal misconduct.
2. The Judicial Proceedings Privilege
Having found that Gannett's statements with respect to the allegations and findings made in the Geisler Trust litigation cannot support a defamation action because they are substantially true, I also find that Gannett's statements are absolutely privileged as a true and fair report of a judicial or other government proceeding.
In Wisconsin, this privilege is codified under Wis.Stat. § 895.05(1), which states:
The proprietor, publisher, editor, writer or reporter upon any newspaper published in this state shall not be liable in any civil action for libel for the publication in such newspaper of a true and fair report of any judicial, legislative or other public official proceeding authorized by law or of any public statement, speech, argument or debate in the course of such proceeding.
This is the policy underlying the privilege:
The whole foundation for that privilege is the interest of the public to know that the conduct of judicial officers and legislators, to the end that misconduct or incapacity may be promptly discovered and remedied. This end has been deemed so vital to public welfare and to the maintenance of good government as to demand subordination of the interest of individuals adverse to the publicity of defamatory statements against them which must otherwise control.Ilsley v. Sentinel Company, 133 Wis. 20, 24-25, 113 N.W. 425 (1907).
Batterman agrees that the privilege applies to Gannett's reporting about what Judge Moran actually did or said in the Geisler Trust litigation. As Batterman correctly points out, however, the Wisconsin Supreme Court held in Ilsley that the privilege does not extend to “publication of defamatory contents of mere pleadings and other preliminary papers which have simply been filed in the clerk's office.” Id., 133 Wis. 20, 113 N.W. at 426-27. According to the Ilsley court, such pleadings have no public concern “until they are actually brought to the attention of some judicial officer, and some action on his part is demanded based thereon.” Id. See also Finnegan v. Eagle Printing Co., 173 Wis. 5, 179 N.W. 788, 790 (1920) (“The rule is well established in this state that the publication of pleadings or other preliminary papers to which the attention of no judicial officer has been called and no judicial attention invited is not privileged.”). Thus, says Batterman, Gannett's reporting on the allegations of the ACS petition does not enjoy the protection of the judicial proceedings privilege.
Gannett responds that Ilsley's exception for pleadings is no longer good law, noting that media outlets routinely report on newly filed lawsuits. Although this assertion seems correct on an intuitive level, Gannett does not cite to, and this court has not found, any case overturning Ilsley. Moreover, the statutory language of Wis.Stat. § 895.50(1) hasn't changed since Ilsley was decided more than 100 years ago. In any event, it is unnecessary to decide whether Ilsley's exception for pleadings still applies. Even under Ilsley, the privilege would apply to Gannett's reporting on the ACS's petition because it was “actually brought to the attention” of the court.
Few courts have considered what constitutes a “true and fair report” under Wis.Stat. § 895.05(1), but it is generally understood that an article or broadcast reporting on an official action or proceeding need not quote those proceedings verbatim or describe them completely, so long as the report is “accurate and complete or a ‘fair abridgement' of the proceeding.” Robert D. Sack, Sack on Defamation § 7:3.5[B][2] (5th ed. 2019). As the Wisconsin Court of Appeals has stated:
Under the § 895.05(1), Stats., privilege, it is not necessary for the media to report verbatim what occurred at the judicial proceeding. Instead, it is acceptable to condense or paraphrase the events as long as the summary accurately and fairly reflects what transpired. Writers and reporters, by necessity, sometimes alter what people say.Maguire v. Journal Sentinel, Inc., 198 Wis.2d 389, 542 N.W.2d 239 (Ct. App. 1995) (unpublished disposition) (citation omitted). See also Ilsley, 133 Wis. at 20 (“[A] report of a proceeding, to be privileged, need not be by way of quotations, but may be condensed and expressed in the words of the reporter[.]”). Moreover, so long as the publisher fairly and accurately reports on what was said by others during judicial or other governmental proceedings, it does not matter whether what the person said was true or not. Bell v. Associated Press, 584 F.Supp. 128, 130 (D.D.C. 1984)(“The point of the privilege is that it covers the reporting of both true and false factual matters.”). However, “[l]ibelous remarks or comments added or interpolated” in a newspaper report, as well as libelous headlines, are not privileged. Wis. Stat.§ 895.05(1).
I already have found that Gannett's statements with respect to the Geisler Trust proceedings were substantially true. That same finding leads to the conclusion that the statements are absolutely privileged under Wis.Stat. § 895.05(1). For reasons already explained, the Article accurately and fairly described the allegations of the ACS petition, the proceedings before the Marathon County circuit court, and the court's ultimate findings about Batterman's conduct. Accordingly, Batterman has no actionable defamation claim with respect to Gannett's reporting on the Geisler Trust litigation, including its statements with respect to the allegations in the ACS petition.
B. Implication that “Batterman Committed Elder Abuse”
Batterman alleges that the Article implies that “Tom Batterman is a bad financial advisor who takes advantage of elders and cannot be trusted with other people's money.” Complaint, dkt. 1, ¶ 52. According to the complaint, the statement that gives rise to this implication is the hyperlink in the web version of the Article that states:
RELATED: Five ways to fight elder abuse, financial exploitation (with hyperlink)Complaint, ¶ 56 l. Batterman alleges that “[t]his link in the middle of the on-line article unfairly and irresponsibly suggests that Mr. Batterman and Financial Fiduciaries were involved in “elder abuse.'” Id.
Gannett dismisses this claim out of hand, arguing that this it not actionable insofar as it contains nothing defamatory about Batterman or his companies. Batterman disagrees, arguing that the hyperlink must be considered in the context of the entire Article. More specifically, he argues that the Article contains an “elder abuse theme, ” which the average reader would understand from the following:
• the headline accusing Batterman of “violating a dead man's trust;”
• A picture of Joe Geisler taken during his later years that appeared below the headline;
• Statements indicating that Geisler was a hardworking man who entrusted Batterman to administer his trust;
• The reporting on Batterman's “mishandling” of the Geisler Trust; and finally,
• Quotations from Geisler's nephews stating that “Joe Geisler didn't have anyone to make sure he was making good financial decisions” and that Batterman was “taking advantage” of Geisler's good intentions.Dkt. 18, at 21-22.
In the midst of these statements and the reporting on the Geisler Trust litigation, Batterman argues, the hyperlink declaring a story about elder abuse to be “Related” to the Batterman Article creates the false impression that Batterman himself was engaged in “elder abuse” and “financial exploitation.”
At the dismissal stage, for the purposes of this particular claim, I am generously accepting Batterman's allegation that this implication is false, even though he has not specifically alleged in the complaint that he does not exploit elders for financial gain. Further, the public records do not conclusively refute this allegation. Judge Moran did not find that Batterman exploited Geisler, he found that Batterman breached his duties as trustee for Geisler's Trust. At this juncture, these types of misconduct are different enough to preclude me from finding from the exhibits to the complaint that the “elder abuse” implication is true.
To clarify, Batterman does not claim that the hyperlinked article about “Five ways to fight elder abuse” is false or in any way defamatory towards him. With the exception of his claim that the Article implied that he committed fraud, which I have already rejected, Batterman also does not claim that any of the underlying statements in the Article that allegedly contribute to the “elder abuse” implication are false. For example, he does not challenge any of the statements related to Joe Geisler or his frugality, nor does he contend that the Article misquoted Geisler's nephews or used their statements out of context to create a false impression. What is defamatory, says Batterman, is Gannett's declaration that the hyperlinked article about elder abuse was “related” to the Article about Batterman's handling of the Geisler Trust. By drawing a connection between the articles, he argues, Gannett deliberately implied that Batterman had engaged in elder abuse.
Neither party has cited and the court has not found a Wisconsin case considering whether a plaintiff can state a cause of action for defamation-by-implication based on a collection of expressed facts that are true. The closest case is Terry, but there the plaintiff pointed to video edits and music that allegedly implied the falsehood, taking her case outside the realm of “statements.” Here, the plaintiff points to an actual statement by the publisher - its endorsement of a different article as “Related” -- as giving rise to the defamatory implication.
The Seventh Circuit has expressed concern about the tensions between the First Amendment and defamation-by-implication claims based on true statements:
[R]equiring a publisher to guarantee the truth of all the inferences a reader might reasonably draw from a publication would undermine the uninhibited, open discussion of matters of public concern. A publisher reporting on matters of general or public interest cannot be charged with the intolerable burden of guessing what inferences a jury might draw from an article and ruling out all possible false and defamatory innuendoes that could be drawn from the article.Woods v. Evansville Press Co., 791 F.2d 480, 487-88 (7th Cir. 1986). See also Sack on Defamation, § 2:4.5 (“If unrestrained . . . the theory of libel by implication would allow a jury to draw whatever inferences it wished from statements of fact.”). The Woods court found, however, that these concerns were adequately addressed in that case by Indiana's fault requirement, which required that “the private individual who brings a libel action involving an event of general or public interest [must] prove that the defamatory falsehood was published with knowledge of its falsity or with reckless disregard of whether it was false.” Woods, 791 F.2d at 483 (quoting Aafco Heating & Air Conditioning Co. v. Northwest Publications, Inc., 162 Ind. App.671, 321 N.E.2d 580, 586 (1974)). Because that standard required a showing that defendant was motivated by ill-will or invidious intent, held the Seventh Circuit, it was not enough for the Plaintiff to show that the column at issue reasonably could be read to contain a defamatory inference:
Simply because a statement reasonably can be read to contain a defamatory inference does not mean, as is the case here, that this inference is the only reasonable one that can be drawn from the article. Nor does it mean that the publisher of the statement either intended the statement to contain such a defamatory implication or even knew that readers could reasonably interpret the statement to contain the defamatory implication.
In the present case, there is no evidence that the defendants, through Mr. McManus, shared the plaintiff's interpretation of the June 22 column or intended that the column be read to contain the defamatory innuendoes the plaintiff attributes to it.Woods, 791 F.2d at 487.
The Court of Appeals for the District of Columbia has likewise found that “something more” is required of a plaintiff who brings a defamation-by-implication claim based on materially true facts. In White v. Fraternal Order of Police, 909 F.2d 512 (D.C. Cir. 1990), the court held:
[I]f a communication, viewed in its entire context, merely conveys materially true facts from which a defamatory inference can reasonably be drawn, the libel is not established. But if the communication, by the particular manner or language in which the true facts are conveyed, supplies additional, affirmative evidence suggesting that the defendant intends or endorses the defamatory inference, the communication will be deemed capable of bearing that meaning.Id. At 520. See also Chapin v. Knight-Ridder, Inc., 993 F.2d 1087, 1092-93 (4th Cir. 1993) (in libel-by-implication case where expressed facts are true, “the language must not only be reasonably read to impart the false innuendo, but it must also affirmatively suggest that the author intends or endorses the inference.”) (citing White, 909 F.2d at 520).
Based on these authorities, and in the absence of any Wisconsin law or argument from Gannett to the contrary, I conclude that Batterman can proceed on his claim that Gannett defamed him by implying that he committed elder abuse. As an initial matter, I note that in the cases cited above, the plaintiffs had to show actual malice, either because they were public figures (White, Chapin), or because state law required it (Woods). Although the parties in this case have not addressed this issue, it appears that Batterman is a private individual. In Wisconsin, private figures who bring defamation actions against the news media need only show negligence, Denny v. Mertz, 106 Wis.2d 636, 657, 318 N.W.2d 141, 151 (1982), which suggests that Batterman need make a less rigorous showing than in the cases above.
In any case, I am satisfied that Batterman's complaint plausibly states a claim for defamation by implication even under the more demanding standard required in actual malice cases. Construing the facts in the light most favorable to Batterman, the Article as a whole is capable of conveying the defamatory inference that Batterman financially exploits elders. The Article's reporting on the Geisler Trust and SEC proceedings depicted Batterman as an unscrupulous financial adviser who mishandles his clients' money, and the quotations from Geisler's nephews alluded to elder abuse when they indicated that Batterman, their uncle's former financial adviser, “took advantage” of the elder Joe Geisler.
Perhaps if Gannett had stopped there and allowed its readers to draw their own conclusions from these statements, dismissal would be appropriate. But Gannett did something more: it told its readers in capitalized, bold letters that another article about “elder abuse” was “related” to the story about Batterman. By doing so, Gannett did not merely present a set of facts that permitted readers to infer that Batterman exploited elderly clients; instead, it drew the inference for them. Gannett's decision to deem an article about elder abuse “related” to the Batterman article “supplies additional, affirmative evidence suggesting that the defendant intends or endorses the defamatory inference, ” White, 909 F.2d at 520. This suffices to state a claim for defamation by implication. Moreover, to the extent Gannett implied that Batterman committed elder abuse, that statement is not privileged under Wis.Stat. § 895.05(1), insofar as it is not a “true and fair” report of a judicial or other governmental proceeding.
Accordingly, given the parties' respective burdens at the Rule 12(b)(6) stage, I am denying Gannett's motion to dismiss this claim.
II. Explicit Statements
A. “Batterman Was the Trustee” Batterman contends that in 10 different statements, the Article “falsely identifies Batterman or an entity controlled by Batterman as the trustee overseeing the administration of the Geisler Trust.” Br. in Opp., dkt. 18, at 17-18. According to Batterman, “Vigil Trust, ” the named trustee, was a registered trade name that he alleges was owned by Midwest Trust Company and in which Batterman had no ownership or financial interest. Throughout the complaint, Batterman repeatedly attempts to distance himself from Vigil Trust, arguing that he was not the successor trustee and that he was acting only at the direction or with the approval of Vigil Trust. See, e.g., Complaint, ¶¶ 56.b, 56.e, 56.I, 56k. Batterman alleges that “the two persons responsible for the administration of trusts for which Vigil Trust is trustee are Herbert McPherson and Janice Smith.” Complaint, ¶¶ 19, 56b. Therefore, he contends, the Article falsely represented that Vigil was a company owned and controlled by Batterman and falsely represented that “Batterman” was the trustee for the Geisler Trust.
Batterman's claim is defeated by the public records from the Geisler Trust litigation, which corroborate the Article's statements identifying Batterman as the trustee. First, as for Gannett's reporting on what was alleged in the ACS petition, it was accurate: the petition alleged that Batterman, on behalf of Vigil, operated as the trustee, administered the funds, and was responsible for carrying out its terms. Second, documents that Batterman himself provided to the court in the Geisler Trust proceeding demonstrate that he bore responsibility for deciding how to administer the trust funds. As his own submissions establish, he had multiple communications with ACS about the trust, he held himself out as the trustee, and in one email, he referred to Vigil Trust as his company. Dkt. 6-10, exh. 13.
Batterman points out that the court's November 11, 2015 order appointing successor trustee stated only that it was removing “Vigil Trust” and not “Batterman” as trustee, but that is irrelevant. It is plain from the court's orders that it found that Vigil Trust, nominally the trustee, had acted through Batterman. The court found that Batterman was responsible for failing to timely notify the beneficiaries, for setting up a scholarship fund without the prior consent of the Bruce School District, and for breaching his fiduciary duty to the trust. Finally, after refusing to dismiss Batterman from the case, the court found that “Mr. Batterman is the trust protector in this case, ” and it held him jointly and severally liable with Vigil and Midwest Trust Company for damages and attorney's fees. Tr., July 11, 2018, dkt. 6-9, at 26.
Clearly, the court agreed with the beneficiaries that, whatever the technical relationship between Batterman and Vigil, Batterman was acting on Vigil's behalf and carrying out the responsibilities of the trustee. That Batterman disputes the court's findings is factually and legally irrelevant. The court found what it found, and Gannett was entitled to report on it. Because the Article presented a substantially accurate account of the court's findings regarding Batterman's role with the trust, the statements were not false. Moreover, they were privileged under Wis.Stat. § 895.05(1).
B. “Batterman was ‘Found Guilty' by the SEC”
As noted in the facts, Batterman concedes that he and his related companies were the subject of SEC proceedings in 1997 and 2018. Because the SEC's administrative orders were an “other public official proceeding authorized by law, ” the newspaper's reporting on those proceedings was privileged under Wis.Stat. § 895.05(1) so long as the report was “true and fair.” Batterman claims that the Article's statements about the SEC proceedings were not true and fair because he and his related companies were not “found guilty of wrongdoing” by the SEC, as reported in the Article. According to Batterman, the term “found guilty” is false because it implies criminal proceedings, not civil administrative findings, and because Batterman consented to the SEC's findings without admitting or denying the alleged conduct.
While the use of the term “found guilty” may be technically inaccurate in the context of the SEC orders, this inaccuracy is not substantial enough to render the Article's reporting on the SEC proceedings untruthful or unfair. “[W]hen determining whether an article constitutes a fair and true report, the language used therein should not be dissected and analyzed with a lexicographer's precision. The article need only be a substantially accurate rendering of the allegations of the complaint.” Procter & Gamble Co. v. Quality King Distributors, Inc., 974 F.Supp. 190, 196 (E.D.N.Y. 1997) (internal quotation marks and citations omitted.) Within the legal system, being “found guilty” implies the commission of a crime; however, non-lawyers commonly use the term simply to denote responsibility or blameworthiness. See, e.g., https://www.merriam-webster.com/dictionary/guilty (defining “guilty” as “justly chargeable with or responsible for a usually grave breach of conduct or a crime, ” emphasis added).
Construed in this commonplace manner, the statement that Batterman was “found guilty of wrongdoing” by the SEC is substantially accurate: the SEC found that Batterman had mishandled client funds and had engaged in deceptive behavior in violation of rules that governed Financial Advisers, then the SEC ordered Batterman (and Vigil and Financial Fiduciaries, respectively) to cease the behavior and it imposed substantial fines on them. That Batterman may have stipulated to the findings does not change these facts or significantly diminish the import of the SEC's findings against him. In sum, because Batterman cannot make a plausible showing that any of the statements related to the SEC proceedings were not substantially true and fair, these statements are privileged and not actionable.
CONCLUSION
Even construed in the light most favorable to Batterman, Batterman doesn't have any plausible claim that the headline or any of the individual, allegedly defamatory statements in the Article are false. As the Article accurately reported, the Marathon County Circuit Court did find that he was responsible for carrying out and protecting the Geisler Trust, and the SEC did find that he had engaged in wrongdoing with respect to his handling of client assets. With respect to his defamation-by-implication claims, it is not plausible that an ordinary reader would understand from the Article that Batterman had committed fraud, theft or embezzlement with respect to the Geisler Trust, particularly given the Article's plain statement that no such finding had been made. When read as a whole, the Article's “sting” is a substantially true account of what occurred in the Geisler Trust litigation.
However, the average reader could conclude that Batterman had financially exploited elders, especially when Gannett suggested as much by directing the reader's attention to a “RELATED” article about elder abuse. Because Batterman has sufficiently alleged that the Article's implicit accusation that Batterman had engaged in elder abuse is both false and defamatory, Gannett is not entitled to dismissal of this claim. Whether the Article's explicit and implicit statements in this regard are reasonably capable of conveying a non-defamatory meaning is an open question that Gannett may address in response to Batterman's pending motion for partial summary judgment on liability, dkt. 17. Because this ruling may affect Gannett's approach to that motion, and because the deadline is rapidly approaching, I will extend it by three weeks, to June 26, 2020.
ORDER
IT IS ORDERED that:
1. The motion of defendant Gannett Co. Inc., to dismiss plaintiffs' complaint for failure to state a claim, dkt. 4, is GRANTED IN PART and DENIED IN PART, consistent with this order.
2. Gannett's deadline for responding to plaintiffs' early motion for summary judgment on liability, dkt. 17, shall be extended to June 26, 2020. Plaintiffs' reply is due on July 10, 2020.