Opinion
CV-23-00259-TUC-JAS
09-13-2024
Pamela Ruggeroli, Plaintiff, v. Residential Real Estate Council and Alex Milshteyn. Defendants.
ORDER
HONORABLE JAMES A. SOTO, UNITED STATES DISTRICT JUDGE
Pending before the Court is a Motion to Dismiss by Defendant Residential Real Estate Council (“RRC”) for Lack of Personal Jurisdiction and a Failure to State a Claim (Doc. 11), Plaintiffs' Response (Doc. 12), and RRC's Reply (Doc. 13). Also before the Court is Defendant Alex Milshteyn's Motion to Dismiss on the same grounds (Doc. 17).Plaintiff brings common law claims for defamation per se, defamation per quod, and false light invasion of privacy. Defendants move this Court to dismiss all Plaintiff's claims for a lack of personal jurisdiction under the Federal Rules of Civil Procedure 12(b)(2) and for a failure to state a claim upon which relief can be granted under Rule 12(b)(6). For the reasons set forth in this Order, RRC's 12(b)(2) motion is denied, and its 12(b)(6) motion is granted in part and denied in part. Milshteyn's 12(b)(2) motion is granted and Milshteyn shall be removed from this action as a defendant.
Plaintiff filed no response to Milshteyn's motion and the Parties submitted no stipulation indicating briefing on the second motion was unnecessary. The Court notes, that some of the issue raised in both motions are identical; to that extent, any ruling on RRC's motion (Doc. 11) is binding law of the case for Milshteyn's motion (Doc. 17). Where the motions do not overlap, the Court treats new arguments in Milshteyn's motion as unopposed. See Part II B of this Order.
I. Factual Background
Plaintiff Pamela Ruggeroli is a Realtor and Certified Residential Specialist in Tucson, Arizona. Compl., Doc. 1-5 at ¶¶1, 6. She is a former president of the board for Defendant RRC, a nonprofit corporation with approximately 28,000 Realtor members. Id. at ¶¶7, 35. RRC is an out-of-state corporation with its principal place of business in Illinois but is registered to do business in Arizona and conducts business there. Id. at ¶2.
During Plaintiff's tenure as vice president of RRC in 2021, its then CEO informed then Board President, Defendant Alex Milshteyn, that one of RRC's staff members filed a sexual-harassment complaint against Plaintiff's partner, Mr. Savard. Id. at ¶¶11-14. Mr. Milshteyn relayed the claim against Mr. Savard to Plaintiff. Id. at ¶15. The staff member later contacted Plaintiff to notify her that she did not make a sexual-harassment claim related to Mr. Savard. Id. at ¶19. Nonetheless, in 2022 when Plaintiff was president-elect, RRC counsel Ms. Paula Goedert instructed Plaintiff that Mr. Savard was barred from attending Plaintiff's induction ceremony as president of the board. Id. at ¶34. Plaintiff assumed her position as president of the board of the board in January 2023. Id. at ¶35.
During her term as president of RRC in March 2023, Plaintiff and Mr. Savard attended a National Association of Realtors (“NAR”) conference in Cancun, Mexico. Id. at ¶36. At the Cancun conference, Plaintiff attended a RRC reception for its members and guests. Id. at ¶¶37-38. Plaintiff did not invite Mr. Savard to attend the reception. Id. at ¶40. Despite this, Mr. Savard attended the reception along with five other RRC members and their spouses who had encouraged him to attend. Id. at ¶39. While Mr. Savard was at the reception, Plaintiff did not interact with him. Id. at ¶40.
Upon returning from the conference in Cancun, RRC board members accused Plaintiff of bringing Mr. Savard to the reception. Id. at ¶42. Board members then held a meeting about which they did not notify Plaintiff until after it began. Id. at ¶44. The next day, the board voted to restrict all of Plaintiff's responsibilities and duties as president. Id. at ¶46. Inferring that the board members did so because they believed Plaintiff had brought Mr. Savard to the reception, Plaintiff provided the board members with four written statements from RRC members stating they, not Plaintiff, invited Mr. Savard. Id. at ¶¶49-50. The Board then voted to remove Plaintiff from her position as president. Id. at ¶56. RRC published a statement to its approximately 28,000 members that Plaintiff was “removed because of her actions.” Id. at ¶59.
Following the announcement of Plaintiff's removal, RRC refused to retract its statement. Id. at ¶62. At some time after RRC removed Plaintiff from her position, an RRC board member told another RRC member that Plaintiff had been removed because of “sexual harassment.” Id. at ¶65.
Plaintiff is now suing RRC and Milshteyn for defamation per se, defamation per quod, and false light invasion of privacy. Id. at ¶¶68-83. Defendants have moved to dismiss the claims under Fed.R.Civ.P. Rules 12(b)(2) and 12(b)(6). RRC Motion to Dismiss, Doc. 11 at ¶1; Milshteyn Motion to Dismiss, Doc. 17 at ¶1.
II. Discussion
A. Personal Jurisdiction as to RRC
The District of Arizona may exercise personal jurisdiction over Defendant RRC.
Rule 12(b)(2) of the Federal Rules of Civil Procedure allows dismissal when the court lacks personal jurisdiction over any or all named defendants. When considering a motion to dismiss for lack of personal jurisdiction, the court takes as true “uncontroverted material” in the Complaint and resolves in the plaintiff's favor “conflicts between the facts contained in the parties' affidavits.” Doe v. WebGroup Czech, a.s., 93 F.4th 442, 448 (9th Cir. 2024) (quoting Rio Props., Inc. v. Rio Intern. Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002)).
A district court has personal jurisdiction over a defendant “who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court resides.” Fed.R.Civ.P. 4(k)(1)(A). The plaintiff has the burden to demonstrate the court may lawfully exercise personal jurisdiction over the defendant. Rio Props, 284 F.3d at 1019. To establish that the court can exercise personal jurisdiction over the defendant, the plaintiff must demonstrate that the forum state's long-arm statute “confers personal jurisdiction over” the defendant and that exercising personal jurisdiction over the defendant adheres to due process. Id. The forum state may exercise specific personal jurisdiction over the defendant if the defendant has sufficient minimum contacts with the forum “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice'” under due process. International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).
Under Arizona's long-arm statute, an Arizona state court can exercise personal jurisdiction over defendants so long as doing so adheres to due process under the Arizona Constitution and the United States Constitution. Ariz. R. Civ. P. 4.2(a). “The analyses of personal jurisdiction under Arizona law and federal due process are, therefore, the same.” Discovery Land Co. LLC v. Discovery Global LLC, No. CV-20-01940-PHX-MTL, 2021 WL 148641, at *5 (D. Ariz. Jan. 15, 2021).
RRC has sufficient minimum contacts with Arizona under traditional notions of fair play and substantial justice. To establish if the defendant has sufficient minimum contact with the forum state, the Ninth Circuit uses the three-pronged test from Schwarzenegger. The prongs are:
“(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum state or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.”Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) (quoting Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)). The plaintiff has the burden to satisfy prongs one and two, after which the defendant has the burden to satisfy prong three. Id.
1. Schwarzenegger Test Prong One
Plaintiff sufficiently demonstrated that RRC either purposefully availed itself to the privileges of operating within Arizona or that RRC purposefully directed its allegedly defamatory statements into Arizona.
When addressing the first prong of the Schwarzenegger three-part test, the Ninth Circuit uses one of two different approaches: purposeful-direction analysis or purposeful-availment analysis. Id. Which approach is applicable depends on the nature and context of the claim. Id. Purposeful-direction analysis typically is appropriate in cases involving torts while purposeful-availment analysis ordinarily is appropriate in contracts cases. Id.; see also Discovery, 2021 WL 148641, at *7. However, the Ninth Circuit has “specifically recognized that ‘[its] cases do not impose a rigid dividing line' between purposeful-availment and purposeful-direction.” Impossible Foods Inc. v. Impossible X LLC, 80 F.4th 1079, 1088-89 (9th Cir. 2023) (quoting Global Commodities Trading Grp., Inc. v. Beneficio de Arroz Choloma, S.A., 972 F.3d 1101, 1107 (9th Cir. 2020)). Rather than strictly adhering to a tort-contract dichotomy when selecting between purposeful-direction or purposeful-availment analysis, the Ninth Circuit generally conducts purposeful-direction analysis when the defendant's conduct occurred outside the forum state while it opts for purposeful-availment analysis when the defendant's conduct was within the forum. Id. at 1088; Freestream Aircraft (Bermuda) Ltd. v. Aero Law Grp., 905 F.3d 597, 604 (9th Cir. 2018) (reaffirming that purposeful-availment analysis applies if “the defendant has taken deliberate action within the forum state” while purposeful-direction analysis extends to a “defendant who never physically entered the forum state”).
For purposeful direction, the Ninth Circuit uses the three-part test from Calder v. Jones to determine if the defendant purposefully directed his or her activities toward the forum state. 465 U.S. 783 (1984). To satisfy the Calder test, the defendant must have allegedly “(1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.” Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002). Regarding the second element of the Calder test, if the defendant's conduct is aimed at the plaintiff who is a resident of the forum state while the plaintiff is in the forum, the defendant's conduct is “expressly aimed at the forum state.” For example, in Panavision Intern., L.P. v. Toeppen, the court held the defendant's extortion attempts were expressly aimed at California, the forum state, because they targeted Panavision, a resident of California, and injured Panavision in the forum state. 141 F.3d 1316, 1321-1322 (9th Cir. 1998); Schwarzenegger, 374 F.3d at 807 (discussing Panavision, 141 F.3d at 1321-1322).
Here, RRC satisfied the first Schwarzenegger prong under both the purposeful-availment approach and the purposeful-direction approach. While RRC is correct that courts often use the purposeful-direction framework in tort cases, it is not an absolute requirement. In the Complaint, Plaintiff noted that the events that gave rise to this action took place in Pima County, Arizona while also stating that RRC published the allegedly defamatory statement relating to Plaintiff's “actions” to its 28,000 employees across the globe. Thus, RRC published the allegedly defamatory statements both in the forum state and outside of it such that either purposeful-direction or purposeful-availment analysis may apply. RRC argued that the court ought to use purposeful-direction analysis while in her Response, Plaintiff used purposeful-availment analysis. The difference is inconsequential because RRC satisfies the first Schwarzenegger prong under both approaches.
If RRC made the allegedly defamatory statements in Arizona, then the purposeful-availment analysis applies because the conduct at issue would have occurred within the forum state. As noted in the Complaint, RRC is registered to do business in Arizona. Thus, RRC systematically and continuously receives the “benefits and protections of the laws” within Arizona while conducting its business. International Shoe, 326 U.S. at 319. As such, RRC purposefully availed itself to the privileges of doing business in the forum state. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985) (holding that the defendant purposefully availed himself to the forum state because he “availed himself of the privilege of conducting business there, and because his activities are shielded by ‘the benefits and protections' of the forum's laws”).
If RRC published the allegedly defamatory statement outside of Arizona, then the purposeful-direction analysis would apply because the conduct at issue would have occurred outside of the forum state. Accordingly, the Calder three-part test applies. First, defamation is an intentional tort, satisfying the first Calder element. See Schwarzenegger, 374 F.3d at 806 (holding allegedly defamatory writing qualified as an intentional act). Second, RRC's allegedly defamatory statements targeted Ruggeroli, an Arizona resident, and if defamatory, did damage to her and her reputation in Arizona. This is comparable to the extortion attempts in Panavision which were expressly aimed at the forum state because they targeted the plaintiff, a resident of the forum, and injured the plaintiff in the forum. Third, a defamatory statement is likely to harm Ruggeroli's reputation within Arizona, particularly among RRC's Arizona members. Thus, RRC purposefully directed its activities toward Arizona.
The first Schwarzenegger prong is satisfied.
2. Schwarzenegger Test Prong Two
Plaintiff's defamation claim arose from RRC's contact with Arizona.
The second prong “consider[s] the extent of the defendant's contacts with the forum and the degree to which the plaintiffs suit is related to those contacts.” Impossible Foods, 80 F.4th at 1091 (quoting Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1210 (9th Cir. 2006)). If the defendant has little contact with the forum, that limited contact may still be sufficient if it is closely related to the conduct at issue. Id. Likewise, if the defendant has “‘continuously and deliberately exploited' the forum state's market,” the defendant's contacts with the forum state do not need to be as closely related to the litigation. Id.
Furthermore, if the defendant's alleged conduct is an intentional tort that took place within the forum state, it typically satisfies the second prong of the Schwarzenegger three-part test. Paccar Intern., Inc. v. Com. Bank of Kuwait, S.A.K, 757 F.2d 1058, 1064 (9th Cir. 1985). Thus, if the plaintiff alleges the defendant defamed him or her in the forum state, the second prong is satisfied. See Freestream Aircraft, 905 F.3d at 603 (“Because Plaintiffs allege that Defendants engaged in defamation while present in the forum state, the first two prongs of the minimum contacts test are satisfied.”).
Here, Plaintiff's claim arose from RRC's contact with Arizona. RRC has sufficient minimum contact with Arizona because it is registered to do business, conducts business, and publishes materials to its members there. RCC's allegedly defamatory statement was made through its business operations that included its Arizona members, meaning there is a sufficient relationship. Like in Freestream Aircraft, Plaintiff alleges RRC defamed her in Arizona, the forum state, thereby satisfying the second prong under Schwarzenegger.
3. Schwarzenegger Test Prong Three
RRC has not sufficiently demonstrated that the exercise of jurisdiction over it undermines fair play and substantial justice and/or is unreasonable.
The Schwarzenegger test's third prong breaks into a seven-factor balancing test. Freestream Aircraft, 905 F.3d at 607. Those factors are:
(1) the extent of the defendant's purposeful interjection into the forum state's affairs;
(2) the burden on the defendant of defending in the forum;
(3) the extent of conflict with the sovereignty of the defendant's state;
(4) the forum state's interest in adjudicating the dispute;
(5) the most efficient judicial resolution of the controversy;
(6) the importance of the forum to the plaintiff's interest in convenient and effective relief; and
(7) the existence of an alternative forum.Id.
Here, despite RRC bearing the burden to establish that personal jurisdiction over it would not “comport with fair play and substantial justice,” it made no such argument in its motion. For the sake of thoroughness, the Court will conduct the seven-factor balancing test. Regarding Factor One, RRC has “purposefully interjected” itself into Arizona's affairs having registered to do business there. Regarding Factor Two, even though RRC is a resident of a foreign state, “modern advances in communications and transportation have significantly reduced the burden of litigating in another [forum].” Freestream Aircraft, 905 F.3d 597 at 608 (quoting Sinatra v. Nat'l Enquirer, Inc., 854 F.2d 1191, 1199 (9th Cir. 1988)). Regarding Factor Three, RRC provided no evidence of a conflict between Arizona law and Illinois law. Regarding Factor Four, Arizona, like other forum states, has an interest in allegedly tortious conduct occurring within its borders, including defamation. See Id. Regarding Factor Five, while potential witnesses and evidence related to the case may be spread out across where RRC's 28,000 members reside, “this factor is ‘no longer weighed heavily given the modern advances in communication and transportation.'” Id. at 609 (quoting Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1133 (9th Cir. 2003)). Regarding Factor Six, neither party provided evidence regarding Arizona's importance to Plaintiff receiving relief. Regarding Factor Seven, RRC did not provide an alternative forum to resolve this case. In sum, Factors One and Four favor Plaintiff while the other factors provide little to no support for either party. Thus, RRC did not provide sufficient evidence that it would be unreasonable for Arizona to have personal jurisdiction over it.
Because Plaintiff met her burden of satisfying the first two prongs of the Schwarzenegger test and RRC did not meet its burden of satisfying the third prong, RRC has sufficient minimum contacts with the District of Arizona, and this Court has personal jurisdiction over it. RRC's motion to dismiss for lack of personal jurisdiction is denied.
B. Personal Jurisdiction as to Milshteyn
Milshteyn argues, and the Court agrees, that the Complaint makes no factual allegations indicating that Milshteyn has sufficient contact with Arizona for this Court to exercise personal jurisdiction over him. Moreover, the Court is not obligated to consider the merits of an unopposed motion to dismiss. See LRCiv. 7.2(i), Wystrach v. Ciachurski, 26 Fed.Appx. 606 (9th Cir. 2008), Hicks v. Blitz USA Inc., No. CV-18-00543-PHX-DJH, 2018 WL 9878565, at *1 (D. Ariz. May 25, 2018) (treating a motion to dismiss as unopposed when Plaintiff failed to file response within 14 days). Milshteyn's motion is therefore granted on the ground that this Court lacks personal jurisdiction.
C. Failure to State a Claim
Rule 12(b)(6) of the Federal Rules of Civil Procedure allows dismissal when the plaintiff has not stated a claim upon which relief can be granted. To survive a 12(b)(6) motion to dismiss, a complaint must provide a sufficient factual account such that when it is assumed to be true, the court can “draw the reasonable inference that the defendant is liable.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007)). The factual assertions in the complaint must give rise to merely a plausible inference of liability; they need not establish probable liability. Id. Whether a complaint confers a plausibility of liability “is a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. In doing so, the court must “draw all reasonable inferences in favor” of the plaintiff. Boquist v. Courtney, 32 F.4th 764, 773 (9th Cir. 2022) (quoting Retail Prop. Tr. v. United Bhd. of Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014)).
1. Defamation Per Se and Defamation Per Quod Claims
Plaintiff failed to state a claim for defamation per se (Count One) or for defamation per quod (Count Two).
To constitute defamation in Arizona, “a publication must be false and must bring the defamed person into disrepute, contempt, or ridicule, or must impeach plaintiff's honesty, integrity, virtue, or reputation.” Rogers v. Mroz, 252 Ariz. 335, 337 (2022) (quoting Godbehere v. Phx. Newspapers, Inc., 162 Ariz. 335, 341 (1989)). Substantial truth is an absolute defense against defamation claims. Read v. Phx. Newspapers, Inc., 169 Ariz. 353, 355 (1991). Defamation can be per se or per quod. Defamation per se includes statements that are facially defamatory without the need for “extrinsic matter” or facts to understand the statements are defamatory while defamation per quod includes statements that require knowledge of “certain surrounding circumstances” to fall within the definition of defamation. Ilitzky v. Goodman, 57 Ariz. 216, 220-21 (1941) (explaining that “X murdered Y” would be defamation per se while “X was the only person present at the home of Y on May 1 between the hours of six and nine” would be defamation per quod because it requires knowledge that the murder occurred at that time and place to imply X murdered Y); Fedoseev v. Alexandrovich, No. CV-05-536-TUC-DCB, 2006 WL 964281, at *4 (D. Ariz. April 11, 2006).
A statement can be substantially true if it has merely “slight inaccuracies” such that the “gist” of the statement is true. Read, 162 Ariz. at 337.
A statement can be defamatory based on its explicit wording or through its clear implication, insinuation, or innuendo. Rogers, 252 Ariz. at 339 (“[A] statement is actionable if it implies a clearly defamatory meaning”); see Phx. Newspapers, Inc. v. Church, 103 Ariz. 582, 588 (1968) (holding that an “insinuation” of “intimidation, blackmail, and terror” is defamatory per se); Ilitzky, 57 Ariz. at 221 (explaining that “otherwise innocent” statements may entail an innuendo such that they become defamatory); see also Price v. Stossel, 620 F.3d 992 (9th Cir. 2010). Whether the statement itself or its implication are defamatory is based on their “probable effect[s] upon the mind of the average reader.” Phx. Newspapers, 103 Ariz. at 587 (quoting MacLeod v. Tribune Publ'g, Co., 52 Cal.2d 536, 547 (1959)). If a statement is not explicitly defamatory and instead requires the average reader or listener to make an inference for it to be so, the statement is defamatory per quod. Ilitzky, 57 Ariz. at 221. Consequently, a statement that requires an inference to be defamatory cannot be defamation per se. Central Ariz. Light & Power Co. v. Akers, 45 Ariz. 526, 536 (1935) (“In determining whether the advertisement is libelous per se, we look to the [statement] alone. We cannot consider the innuendoes pleaded by plaintiff. Words that are libelous per se do not need an innuendo because they are libelous in and of themselves.”); Phx. Newspapers, 103 Ariz. at 587.
In defamation per se claims, the plaintiff does not need to plead to special damages because the damages are assumed. Ilitzky, 57 Ariz. at 221. Conversely, in defamation per quod claims, the plaintiff must plead special damages, including lost profits. Id.; Dealer Comput. Serv.s, Inc. v. Fullers' White Mountain Motors, Inc., No. CV07-00748-PCT-JAT, 2008 WL 4628448, at *4 (D. Ariz. Oct. 17, 2008); Modla v. Parker, 17 Ariz.App. 54, 56 (1972) (“As a general rule, slander Per quod is not actionable unless special damages are pleaded and proved.”).
Here, Plaintiff failed to state either a defamation per se claim because all the statements at issue require inference to be defamatory or a defamation per quod claim because the Plaintiff pled no special damages. The Court finds it plausible that RRC's statement that it “removed” Plaintiff because of “her actions” without any other detail could imply, insinuate, or provide an innuendo that Plaintiff committed some wrongdoing. The implication in RRC's statement plausibly damaged Plaintiff's professional reputation among the RRC members who read or heard it. Because there is no facially negative quality to the phrase “her actions” and instead requires an inference to be harmful, the statement cannot be part of a defamation per se claim. It can, however, provide grounds for a defamation per quod claim. Although RRC was correct in asserting that Plaintiff's removal itself cannot be defamatory because it truly happened, the plausible implication of wrongdoing in the explanation for the removal may be untrue and therefore defamatory.
Plaintiff also alleged that RRC continued to make statements regarding Plaintiff's removal, including a statement from an RRC board member that RRC removed her because of “sexual harassment.” Unlike the example of a per se defamatory statement in Ilitzky that “X murdered Y,” the board member did not directly state that Plaintiff sexually harassed someone. Rather, as Plaintiff stated in the Complaint, the Court finds it plausible that the board member's statement could be interpreted to “imply” that Plaintiff sexually harassed another. Because the statement is plausibly defamatory because of its implication, it cannot be facially defamatory and can constitute only defamation per quod.
In the Complaint, Plaintiff stated that RRC made false statements about Plaintiff related to Mr. Savard's attendance at the NAR conference reception in Cancun, Mexico. Goedert had previously barred Mr. Savard from attending another RRC event. The Court finds the statements about Plaintiff and Mr. Savard's presence at the reception are not facially defamatory. Nonetheless, the Court finds it plausible that knowledge of the bar on Mr. Savard's attendance at prior RRC events could plausibly imply misconduct from the Plaintiff through her alleged involvement in Mr. Savard's presence at the reception. Because such a defamatory implication required knowledge of extrinsic evidence, the statements could plausibly be defamation per quod.
Under the count for defamation per quod, Plaintiff failed to plead special damages (“actual pecuniary loss”) as required. F.A.A. v. Cooper, 566 U.S. 284, 295 (2012). In her Complaint, Plaintiff claimed that RRC's conduct damaged her “reputation for honesty, integrity, and virtue, and otherwise brought Plaintiff into disrepute.” However, “loss of reputation, shame, mortification, injury to the feelings and the like” constitute general damages, not special damages. Id. at 295-96. Plaintiff's other statement that RRC's conduct “caused her to be damaged in an amount to be proven at trial” did not provide a factual basis for special damages. Because Plaintiff provided facts sufficient only to find a claim for defamation per quod and did not plead special damages, Count One (defamation per se) and Count Two (defamation per quod) are dismissed.
2. False Light Invasion of Privacy Claim
Plaintiff sufficiently stated a claim for false light invasion of privacy (Count Three).
To claim false light invasion of privacy, a plaintiff must show that the defendant gave “publicity” to a matter about the plaintiff that places the plaintiff in a false light “highly offensive to a reasonable person.” Godbehere, 162 Ariz. at 338. The defendant must have “had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the [plaintiff] would be placed.” Id.; Fedoseev 2006 WL 964281, at *5 (“[A] plaintiff must show (1) the defendant knowingly or recklessly; (2) gave publicity to: (3) false information or innuendo about the plaintiff; (4) that a reasonable person would find highly offensive.”). Whereas the publication at issue must be false in a defamation claim, a false light invasion of privacy claim can be the product of a “false innuendo created by a highly offensive presentation of a true fact.” Godbehere, 162 Ariz. at 341. A false light invasion of privacy claim is meant to address “mental and emotional interests,” but the plaintiff still may recover for reputational damages. Id.; Avid Telecom LLC v. Frankel, No. CV-22-00558-TUC-JCH, 2023 WL 5045903, at *2 (D. Ariz. Aug. 8, 2023). So long as the publicity of the statement in question is “unreasonably offensive and attributes false characteristics,” the plaintiff can make a claim for false light invasion of privacy. Godbehere, 162 Ariz. at 341.
A statement is given sufficient publicity if it is made to a large audience. Hart v. Seven Resorts, Inc., 190 Ariz. 272, 280 (Ariz.Ct.App. 1997) (quoting Restatement (Second) of Torts § 652D). However, the plaintiff cannot claim false light invasion of privacy “if he or she is a public official and the publication relates to performance of his or her public life or duties.” Godbehere, 162 Ariz. at 343. The public official title applies to government employees or those with substantial control over governmental affairs. Id. The public official designation does not apply to non-governmental employees even if they are acting in the public eye. See Longoria v. Kodiak Concepts, LLC, 527 F.Supp.3d 1085, 1105 (D. Ariz. 2021) (holding that even though they have a large following on social media, the plaintiffs do not qualify as public officials because they are not government employees). Thus, even if the plaintiff's actions have publicity, so long he or she is not acting as public officials, the conduct is part of the plaintiff's private affairs and actionable for false light invasion of privacy. Godbehere, 162 Ariz. at 343.
Here, Plaintiff sufficiently stated a claim for false light invasion of privacy. First, RRC knew it published a false statement about Plaintiff. In its Reply, RRC argued that Plaintiff's “removal” cannot be grounds for false light invasion of privacy because the removal truly happened. However, the cause of action is not based on the removal itself, but RRC's explanation for the removal and the implication of the words “her actions” used in the explanation. The Court finds it plausible RRC knew the implication of misconduct in the words “her actions” was false; it is plausible RRC was aware Plaintiff had not invited Mr. Savard to the reception in Cancun-the grounds for the removal- after Plaintiff provided RRC with letters from other RRC members that they had invited Mr. Savard.
Second, the statement in question was given sufficient publicity. RRC published the statement that Plaintiff was “removed” to its approximately 28,000 members. The Court finds that an announcement to 28,000 individuals qualifies as a “large audience” such that the statement was given sufficient publicity. Although the statement had publicity, Plaintiff is not a public official, so RRC's statement about her and her removal relates to private affairs and is accordingly actionable for false light invasion of privacy.
Third, the innuendo in RRC's statement about Plaintiff was false. The Court finds that RRC's statement that it “removed” Plaintiff because of “her actions” without any other detail could imply, insinuate, or provide an innuendo that Plaintiff committed some wrongdoing. Although it is true that Plaintiff was “removed” from the board and the board meeting concerning her future with the company, it is the implication of misconduct in this true statement's “presentation” that is false and therefore provides grounds for a claim.
Fourth, the innuendo in RRC's statement about Plaintiff was highly offensive. The Court finds an implication made to all members of her employer that Plaintiff was recused because of her misconduct could be “highly offensive.” Because the Court cannot say it is not highly offensive as a matter of law that RRC implied in the phrase “her actions” that Plaintiff is guilty of some wrongdoing, it finds that Plaintiff provides a claim upon which relief can be granted. See Canas v. Bay Entertainment, 252 Ariz. 117, 122 (Ariz.Ct.App. 2021).
Because the Court finds that Plaintiff provided a sufficient factual basis for all elements of false light invasion of privacy, the Fed.R.Civ.P. Rule 12(b)(6) motion to dismiss Count Three (false light invasion of privacy) is denied.
D. Qualified Privilege
The Court cannot dismiss Count Three (false light invasion of privacy) on qualified privilege grounds because Plaintiff presented evidence of malice.
Because the Court dismissed Count One (defamation per se) and Count Two (defamation per quod) for a failure to state a claim upon which relief can be granted, the Court will not consider the issue of qualified privilege regarding those counts. It will consider the applicability of qualified privilege to Count Three.
Communication is conditionally privileged if it was made in a privileged occasion and the defendant did not abuse the privileged occasion. Roscoe v. Scoolitz, 105 Ariz. 310, 312 (1970). The court determines if an occasion is privileged; if the court finds the occasion privileged, the jury determines if the defendant abused the privileged occasion. Id. at 313. The defendant abused the privilege if he or she acted with malice. Aspell v. Am. Cont. Bridge League of Memphis, Tenn., 122 Ariz. 399, 401 (Ariz.Ct.App. 1979). “Malice is established by showing that [the defendant] acted in reckless disregard of the truth, or with actual knowledge that [his or her] statements were false.” Id. If the plaintiff does not allege that the defendant abused his or her qualified privilege, then the court may dismiss the claim on qualified privilege grounds. See Thompson v. Fin. Regs., Inc., No. CV-11-382-PHX-GMS, 2011 WL 5037028, at *4 (D. Ariz. Oct. 24, 2011).
Communication among members of a group or association concerning disciplinary actions against one of its members constitutes a privileged occasion. See Aspell, 122 Ariz. at 400. In Aspell, the court held that there was a privileged occasion because the American Contract Bridge League (ACBL) provided its members the minute entry explaining why it suspended Aspell, another member. Id. The court explained that the ACBL acted in accordance with its duty to its members to regulate and announce its affairs, including disciplinary ones. Id.
Here, the Court cannot dismiss Count Three on qualified privilege grounds because Plaintiff presented evidence of malice. Like the ACBL in Aspell, RRC acted in accordance with its duty to announce its disciplinary action against Plaintiff, a board member, to its other members. Therefore, the Court finds that RRC's statement that Plaintiff was “removed” from the Board because of “her actions” was made in a privileged occasion. However, RRC knew the implication of misconduct in the phrase “her actions” was false because RRC knew Plaintiff had not invited Mr. Savard to the Cancun reception, the grounds for the removal, after Plaintiff presented letters from other RRC members that they had invited Mr. Savard. Drawing all reasonable inferences in favor of Plaintiff, the Court finds Plaintiff alleged evidence of malice such that RRC abused its qualified privilege. Thus, the Court denies the motion to dismiss Count Three on qualified privilege grounds.
III. CONCLUSION
RRC and Milshteyn challenge Plaintiff's defamation per se claim, defamation per quod, and false light invasion of privacy claim on three grounds: (1) a lack of personal jurisdiction, (2) a failure to state a claim upon which relief can be granted, and (3) qualified privilege.
This Court may exercise personal jurisdiction over RRC but not over Milshteyn. Plaintiff did not provide a plausible factual basis for a defamation per se claim because the allegedly defamatory statements are not facially defamatory. Plaintiff also did not provide a plausible factual basis for a defamation per quod claim because she did not allege special damages. Plaintiff provided a sufficient factual basis for a false light invasion of privacy claim. Further, Plaintiff provided a sufficient factual basis that RRC acted with malice such that the Court cannot dismiss the false light invasion of privacy claim on qualified privilege grounds. Accordingly,
IT IS ORDERED as follows:
1. RRC's Motion to Dismiss (Doc. 11) is granted in part and denied in part.
a. This Court has personal jurisdiction over Defendant RRC.
b. Counts One and Two are dismissed, Count Three remains.
2. Milshteyn's Motion to dismiss (Doc. 17) is granted on the basis that this Court lacks personal jurisdiction over Milshteyn.
a. Milshteyn shall be removed from this action as a defendant.