Suarez Corp. Industries v. McGraw

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

SUAREZ CORPORATION INDUSTRIES;
EMERSON SONNY CLOPPER; PATRICIA
CLOPPER; ELIZABETH PISHNER,
Plaintiffs-Appellees,

v.

DARRELL V. MCGRAW, JR., Attorney
General of the State of West
Virginia, in his official capacity;
No. 98-2696
THOMAS RODD, individually,
Defendants-Appellants,

and

JOHN DOE, I-III, individually,
Defendants,

THOMAS TINDER,
Party in Interest.

Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Charles H. Haden II, Chief District Judge.
(CA-95-248-2)

Argued: October 26, 1999

Decided: February 2, 2000

Before LUTTIG and MOTZ, Circuit Judges,
and HAMILTON, Senior Circuit Judge.

_________________________________________________________________

Vacated and remanded by published opinion. Senior Judge Hamilton
wrote the opinion, in which Judge Luttig and Judge Motz joined.
COUNSEL

ARGUED: Rebecca Ann Baitty, REBECCA A. BAITTY, P.A., Sara-
sota, Florida, for Appellants. C. Allen Foster, PATTON BOGGS,
L.L.P., Washington, D.C., for Appellees. ON BRIEF: Rudolph L.
DiTrapano, DITRAPANO, BARRETT & DIPIERO, Charleston,
West Virginia, for Appellant McGraw; Robert F. Cohen, Jr., COHEN,
ABATE & COHEN, L.C., Fairmont, West Virginia, for Appellant
Rodd. Eric C. Rowe, PATTON BOGGS, L.L.P., Washington, D.C.;
Herbert L. Hively, II, Hurricane, West Virginia, for Appellees.

_________________________________________________________________

OPINION

HAMILTON, Senior Circuit Judge:

Darrell V. McGraw (McGraw), the Attorney General of West Vir-
ginia, and Thomas Rodd (Rodd), a former West Virginia Deputy
Attorney General, appeal from that portion of a district court order
that denied their motion for summary judgment on the 42 U.S.C.
§ 1983 claim asserted by Suarez Corporation Industries (SCI) alleging
that McGraw and Rodd retaliated against SCI for exercising its First
Amendment right to free speech. McGraw and Rodd contend that the
district court erred in denying them summary judgment on this claim
because they are entitled to qualified immunity. We agree. Accord-
ingly, we vacate that portion of the district court's order appealed
from and remand for further proceedings consistent with this opinion.

I.

SCI, an Ohio corporation, markets a variety of consumer goods,
under various trade names, through direct mail marketing that invites
potential customers to participate in sweepstakes or other promotions.
Prior to September 1994, SCI, under the trade name Lindenwold Fine
Jewelers (Lindenwold), conducted business in West Virginia by solic-
iting mail orders for its products. Three of these solicitations are rele-
vant to this case: (1) a "free" 1-carat Lindenwold cubic zirconium
diamond simulant, already set in a mounting, for which the consumer
must pay $19 for the mounting and an enhanced opportunity to win

2
$10,000 (the CZ solicitation); (2) a cash prize of"as much as" $1000
contained in a clutch purse ensemble, for which the consumer must
pay $12, plus $2 shipping and handling (the clutch purse solicitation);
and (3) leaded crystal candlesticks, for which the consumer must pay
$19 in order to receive the candlesticks, a free glass heart-shaped
dish, and an enhanced opportunity to win a $1000 cash prize (the can-
dlesticks solicitation).

The CZ solicitation notified consumers that they had won a 1-carat
Lindenwold cubic zirconium diamond simulant, and further that they
were eligible to win an additional $10,000 prize. The "free" cubic zir-
conium diamond simulant, however, was already mounted in a ring
or necklace that consumers could purchase for $19. The solicitation
informed consumers that their opportunity for winning the $10,000
was enhanced if the mounting was purchased. If consumers only
wanted the "free" simulant, they had to affix a label from one form
to another form, handwrite a "code number" on the new form, then
fill out a release form, and return it to SCI in a #10 white envelope.
Failure to properly follow these procedures resulted in the forfeiture
of the simulant and eligibility to win the $10,000. If consumers were
willing to pay the $19 for the mounting, to claim their simulant and
be eligible for the enhanced prize, they only needed to complete a
simple form and return it to SCI in a self-addressed envelope. Any-
time consumers attempted to claim just the simulant, SCI would send
a follow-up solicitation informing them that unless they purchased the
mounting, their file would be closed. The language of the follow-up
solicitation intimated that if a consumer's file was closed, the con-
sumer would no longer be eligible for the $10,000 prize.

The clutch purse solicitation notified consumers that they had won
a cash prize of "as much as $1000." The cash prize was contained in
a five piece clutch purse ensemble that consumers could purchase for
$12, plus $2 for special packaging, shipping, and insurance. For
99.5% of the time, the cash prize was $1. Although consumers were
informed that they need not purchase the ensemble to claim their
prize, SCI claimed that because it would have to remove the prize
from the purses, those who ordered the ensemble would receive prior-
ity handling. Moreover, to claim the cash prize without ordering the
ensemble, consumers were required to: (1) cut out the prize confirma-
tion bar code from the order form; (2) paste it onto a 3-1/2" x 5-1/2"

3
index card furnished by the consumers; (3) write their name, address,
and phone number on the index card; and (4) return it in a #10 white
envelope. If the consumers failed to follow these procedures, they for-
feited the cash prize. In contrast, consumers willing to purchase the
ensemble simply had to complete an order form and return it in a self-
addressed envelope.

Finally, the candlesticks solicitation offered consumers a pair of
leaded crystal candlesticks for $19, plus a bonus glass heart-shaped
dish at no additional cost. All consumers receiving the solicitation
were eligible to win a $1000 cash prize, but purchasers of the candle-
sticks received priority handling and "immediate security processing."
The text of the solicitation led consumers to believe that their chances
of winning the $1000 were enhanced if they purchased the candle-
sticks. Consumers who did not want to purchase the candlesticks, but
who wanted to remain eligible for the $1000, were required to print
their name, address, and customer number onto a 3-1/2" x 5-1/2"
index card and return it, along with the envelope provided by SCI for
those who did choose to purchase the candlesticks, in a second enve-
lope.

Based on solicitations analogous to SCI's, in January 1994, the
West Virginia Attorney General's office (the AG's office) initiated an
action in the Circuit Court of Kanawha County, West Virginia,
against four direct marketing companies alleging violations of the
state's Consumer Credit and Protection Act, W. Va. Code §§ 46A-1-
101 to -8-102 (1998), and the Prizes and Gifts Act, id. §§ 46A-6D-1
to -10.1 In August 1994, the AG's office moved to join 102 additional
defendants, including SCI. At the same time, the AG's office applied
for a preliminary injunction against all of the defendants. The state
circuit judge granted the motion to join the additional defendants but
instructed the AG's office to select a representative number of defen-
_________________________________________________________________

1 The state's amended complaint charged that the defendants were ille-
gally soliciting and obtaining money from West Virginians by using mis-
leading and deceptive solicitations. The state's lawsuit requested
consumer restitution, civil penalties, and preliminary and permanent
injunctive relief.

4
dants against whom it wished to proceed. Thereafter, the AG's office
notified the state circuit court that it would proceed only against SCI.2

Following the initiation of the state court litigation, SCI and the
AG's office had a number of less than congenial confrontations. SCI
claims that, in August 1994 it met with Rodd, who was then the West
Virginia Deputy Attorney General assigned to the Consumer Protec-
tion Division, about a possible settlement, but that Rodd responded by
"launch[ing] into a tirade that was not factually substantive," and
"calling Lindenwold a bunch of crooks." (J.A. 113). Rodd allegedly
stated that it would "become his mission to `cause as much pain, dam-
age and injury as possible to SCI,'" unless SCI voluntarily withdrew
its direct marketing business from the State of West Virginia. Id.
Rodd testified in a deposition that he gave SCI the choice of
"[a]gree[ing] to a temporary injunction or [the AG's office would] go
forward and seek to inflict the maximum degree of penalty."3 (J.A. 84
n.7). SCI's response to this meeting was to file a complaint with the
Better Government Bureau (BGB), which in turn filed a Freedom of
Information Act request with the AG's office.4

In late August 1994, a number of newspaper articles were pub-
lished in which members of the AG's office accused SCI/Lindenwold
of cheating West Virginia residents out of their money. There is also
_________________________________________________________________

2 "[T]he mailings of [SCI] were selected by the Attorney General as
representative of the solicitations in question of all of the defendants."
West Virginia v. Imperial Mktg., 506 S.E.2d 799, 802 (W. Va. 1998)
(Imperial Mktg. II).
3 In Rodd's deposition, the sentence preceding the one quoted above,
which was not included in the joint appendix, clarifies that he was refer-
ring to "the maximum amount of penalty possible that will cause consid-
erable pain and damage to your client . . . because these civil penalties
can be very high." (SCI's Response to Plaintiff's Motion for Summary
Judgment Exhibit G at 37 (emphasis added)).

4 The BGB is an Ohio based corporation that purports to fight govern-
ment abuse of power and corruption. The BGB turned out to be an entity
over which SCI had substantial influence, despite BGB's alleged unbi-
ased third-party status. The involvement of BGB spawned a lawsuit
against McGraw similar to this one. That suit was resolved by a jury in
McGraw's favor on September 1, 1998.

5
an indication that, at approximately the same time these articles were
published, the AG's office had received information from the Wash-
ington State Attorney General's Office that SCI's modus operandi for
fighting state investigations was to engage in an extensive media cam-
paign criticizing public officials. Based on this information, the West
Virginia Managing Deputy Attorney General, Fran Hughes, informed
both McGraw and Rodd about her concerns with respect to the begin-
nings of an SCI media campaign.

On September 2, 1994, SCI published a two-page ad in The
Charleston Gazette newspaper. The ad was in the form of a letter
from Lindenwold employees to McGraw and Rodd, which read, in
part, "DO NOT PLAY POLITICS WITH OUR LIVELIHOOD OR
THE RIGHTS OF OUR 20,000 SATISFIED CUSTOMERS IN THE
STATE OF WEST VIRGINIA." (SCI's Response to Motion for Sum-
mary Judgment Exhibit A-1). The employees proceeded to criticize
McGraw for his prosecution of the lawsuit against SCI and demanded
"to know why [McGraw and Rodd] are wasting taxpayer's dollars
when we have managed our business so responsibly, yet real crimes
such as drug trafficking, rape and assaults are left unprosecuted by
you as West Virginia's top law enforcement officers."5 Id. (emphasis
in original).

On September 9, 1994, the state circuit court ruled that there were
reasonable grounds to believe that SCI's solicitation activities were
illegal, misleading, deceptive, fraudulent, and unconscionable. The
state circuit court then issued a preliminary injunction enjoining a
number of SCI's marketing schemes.6
_________________________________________________________________
5 Interestingly, in West Virginia, the AG's office has no authority to
initiate a criminal prosecution. See Manchin v. Browning, 296 S.E.2d
909, 915 (W. Va. 1982) (noting that the authority to initiate criminal
prosecutions "is exercised in West Virginia by the respective county
prosecuting attorneys").
6 SCI appealed to the West Virginia Supreme Court of Appeals, which,
on March 20, 1996, affirmed the preliminary injunction against SCI find-
ing that "the Attorney General has offered sufficient evidence to estab-
lish reasonable cause to believe that SCI is engaging in or is likely to
engage in conduct proscribed by the Prizes and Gifts Act." West Virginia
v. Imperial Mktg., 472 S.E.2d 792, 810 (W. Va. 1996) (Imperial Mktg.

6
Following the September 9, 1994 hearing, a number of press
accounts appeared in the media quoting Rodd as saying "I think peo-
ple are tired of the elderly being victimized like this" and "Attorney
General McGraw is not going to be intimidated or bullied." (J.A. 118
(quoting Court Bans Ohio Firm, Cites "Scam", Parkersburg Centinel,
September 8, 1994)). Also during September 1994, McGraw sent a
communication to other state attorneys general claiming that SCI had
"been sued by the United States Postal Service for mail fraud." Id.
According to SCI, the United States Postal Service proceedings did
not allege the crime of mail fraud.7

In a letter sent by McGraw to the state attorneys general on Octo-
ber 6, 1994, McGraw stated that "it has been reported to me that in
the course of [a state circuit court's] hearing (newspaper report
attached hereto) that [SCI's lawyer] threatened violence upon Deputy
Attorney General Rodd." (J.A. 119). McGraw went on to warn that
"there is a possibility that [SCI's] modus operandi might include a
proclivity to violence." Id.

Also, in the fall of 1994, Michael Paris, the new president of the
Better Business Bureau/Canton Regional, Inc. (the BBB), was seek-
_________________________________________________________________
I). The court concluded that "SCI's sweepstakes are nothing more than
ingeniously crafted deceptive methods to sell its merchandise by delud-
ing consumers with expectations of greater rewards if they purchase the
product that is the subject of the solicitation." Id. at 802. The court
observed that "SCI, has made fear and confusion the catalysts to assure
a completed sale of whatever product is being peddled." Id. at 805.
Accordingly, the court affirmed the award of the preliminary injunction.
See id. at 810.

On April 25, 1997, a West Virginia state circuit court granted sum-
mary judgment to the AG's office and permanently enjoined SCI from
conducting illegal activities within the State of West Virginia. The grant
of summary judgment and the issuance of a permanent injunction were
affirmed by the West Virginia Supreme Court of Appeals on June 25,
1998. See Imperial Mktg. II, 506 S.E.2d at 809-10.
7 The United States Postal Service action was dismissed pursuant to a
settlement agreement in March 1995 after SCI sued the service claiming
retaliation for SCI's political speech critical of federal regulators.

7
ing to expand the role of the BBB in West Virginia. 8 He contacted
Rodd to facilitate the expansion but Rodd responded, in essence, that
the West Virginia AG's office would "have a hard time sort of
respecting the integrity of your Better Business Bureau" if the BBB
was going to tolerate the conduct of SCI, one of its members. (J.A.
89). SCI alleges that Rodd went further, "advising [BBB's] represen-
tatives that the AG would offer no assistance to BBB in its expansion
plans in West Virginia for so long as SCI remained a member of
BBB." (J.A. 49).

On October 11, 1994, Paris convened a special executive commit-
tee meeting of the BBB. In the meeting, the executive committee
members discussed SCI's history with the BBB, current litigation
against SCI, as well as Rodd's alleged comment that"`if [SCI] is a
member of the Bureau, they have lost all credibility in the Better
Business Bureau.'" (J.A. 76). Paris conceded that this was typical of
other comments received from across the country. Four months later,
on February 16, 1995, the BBB expelled SCI but later reinstated it as
a result of a lawsuit filed by SCI against the BBB.

In 1995, Dun & Bradstreet issued a report on SCI. The report, in
part, was based on information provided by the AG's office on Janu-
ary 10, 1995. According to Dun & Bradstreet, the information stated
that the United States Postal Service had issued a temporary restrain-
ing order against SCI and that mail returns "will be seized pending the
outcome of 6 counts of mail fraud filed against the company by cer-
tain states in conjunction with the US Postal Service." (SCI's Resp.
Mot. Summ. J. Ex. B-2, at 6). The report went on to state that SCI
"subsequently declared mailings void" in several states.9 Id. Finally,
the report also mentioned that: (1) the BBB had reported that numer-
_________________________________________________________________
8 Canton Regional, Inc. is based in Canton, Ohio and operates the Bet-
ter Business Bureau for twelve counties in Ohio and nine counties in
West Virginia.
9 Although SCI attributes that portion of the report to McGraw and
Rodd, the report indicates that the information was derived directly from
SCI. A sentence on page one of the report states:"Management [SCI]
reported that mailings to these states have been suppressed due to unique
features in the laws of these states." (SCI's Resp. Mot. Summ. J. Ex. B-
2, at 1).

8
ous complaints had been filed against SCI, but that most had been
resolved; and (2) the "U.S. Postal Service indicated it has filed two
civil false representation suits against [SCI]." Id.

In addition to the above incidents, McGraw and Rodd are alleged
to have repeatedly defamed SCI in the press and to other state attor-
neys general. These alleged defamatory statements included asser-
tions that SCI: (1) "preys on the elderly, infirmed and incapacitated,"
Josef Federman, Suarez Corp. Files Lawsuit vs. West Virginia Attor-
ney General, Canton Repository, April 6, 1995 (attached as Ex. C-38
to SCI's Resp. Mot. Summ. J.); (2) "is a gambling syndicate from
Ohio that also sells jewelry," (SCI's Resp. Mot. Summ. J. Ex. B-3
(fax from the Charleston Daily Mail quoting McGraw));
(3) "representatives . . . have `a documented proclivity to violence,'"
id.; and (4) has "link[s] to organized crime," (SCI's Resp. Mot.
Summ. J. Ex. A-9 (published in 1996 and 1998 by the AG's office
in "Consumer News")).10

On April 4, 1995, SCI, Emerson Clopper, Patricia Clopper, and
Elizabeth Pishner brought this action against McGraw and Rodd in
the United States District Court for the Southern District of West
Virginia.11 On August 28, 1995, the plaintiffs filed an amended com-
plaint containing nine counts. Counts one, two, three, and six were
brought pursuant to 42 U.S.C. § 1983. In count one, SCI sought
_________________________________________________________________
10 Throughout the time period in which SCI claims McGraw and Rodd
engaged in the alleged misconduct, SCI was not a silent bystander. SCI
continued to publish numerous ads, conducted a radio ad campaign, and
sent out a mass mailing critical of McGraw and Rodd. Not only did the
ads attack McGraw and Rodd for their conduct with regard to the suit
against SCI, but the ads also focused on McGraw and Rodd's personal
lives. (SCI's Resp. Mot. Summ. J. Ex. O-2.) When McGraw ran for
reelection, Benjamin Suarez (Suarez), the president of SCI, spent more
than $300,000 to defeat McGraw. When McGraw's brother ran for a seat
on the West Virginia Supreme Court of Appeals, Suarez created a politi-
cal action committee with a budget of $100,000 to assist McGraw's
brother's opponent.
11 Emerson Clopper, Patricia Clopper, and Elizabeth Pishner are West
Virginia residents who purchased goods from SCI or participated in its
promotions.

9
declaratory and injunctive relief on the basis that McGraw and Rodd
allegedly retaliated against SCI for exercising its First Amendment
rights. In count two, SCI sought declaratory and injunctive relief on
the basis that McGraw and Rodd's actions violated its rights secured
by the Equal Protection Clause of the Fourteenth Amendment. In
count three, SCI sought money damages from McGraw and Rodd, in
their individual capacities, on the basis that they allegedly retaliated
against SCI for exercising its First Amendment right to free speech.
In count six, the Cloppers and Pishner sought injunctive relief from
the state circuit court's preliminary injunction (which was still in
effect) at least to the extent it impeded their First Amendment right
to receive communications from SCI.

The remaining claims of the amended complaint were brought pur-
suant to West Virginia state law. In count four, SCI sought money
damages based on McGraw and Rodd's alleged defamatory state-
ments. In count five, SCI sought money damages based on McGraw
and Rodd's alleged intentional interference with SCI's contractual
relations. In count seven, the Cloppers and Pishner sought injunctive
relief based on an alleged deprivation of their state constitutional right
to receive communications. In count eight, SCI sought money dam-
ages based on McGraw and Rodd's alleged interference with SCI's
prospective contractual relations. In count nine, SCI sought money
damages on the basis that McGraw and Rodd's actions constituted a
prima facie tort.

On September 21, 1995, McGraw and Rodd moved to dismiss the
amended complaint based, in part, on the ground of absolute immu-
nity. On November 16, 1995, the district court denied McGraw and
Rodd's motion to dismiss. From this decision, McGraw and Rodd
filed an interlocutory appeal in this court.

On appeal, in addition to raising a claim of absolute immunity, for
the first time, McGraw and Rodd argued that the plaintiffs' claims
were barred by the Eleventh Amendment and/or principles of quali-
fied immunity. On September 11, 1997, this court affirmed in part,
reversed in part, vacated in part, and remanded in part. See Suarez
Corp. Indus. v. McGraw, 125 F.3d 222, 230-31 (4th Cir. 1997). With
respect to count seven, we reversed the district court's decision, con-
cluding that count seven was barred on its face by the Eleventh

10
Amendment.12 See id. at 230. With respect to the remaining counts,
we affirmed the district court's holding that these counts were not
barred by absolute immunity. See id. at 230. To the extent counts one,
two, six, and seven sought relief from the state circuit court's prelimi-
nary injunction, we vacated the district court's decision on these
counts because, while this appeal was pending, the state circuit court
entered a permanent injunction. See id. at 227-28. To the extent
counts one, two, six, and seven sought relief from the permanent
injunction, this court vacated the district court's decision on these
counts and remanded with instructions to dismiss these counts to the
extent these counts were barred by the Rooker-Feldman doctrine. See
Suarez Corp. Indus., 125 F.3d at 228. Finally, because McGraw and
Rodd asserted qualified immunity as a defense for the first time on
appeal, this court refused to consider that defense. See id. at 226.

On remand, McGraw and Rodd moved for summary judgment and
briefed the Rooker-Feldman issue, while also presenting the defense
of qualified immunity to the district court. The district court ruled on
the motion for summary judgment and issued an order on November
11, 1998. With respect to counts one, two, and six, the district court
held that these counts were barred by the Rooker-Feldman doctrine.
With respect to counts five and eight, the district court held that these
counts failed to state a claim and were also barred by the Rooker-
Feldman doctrine. With respect to count nine, the district court dis-
missed this count for failure to state a claim. With respect to counts
three and four, the district court held that genuine issues of material
fact precluded the grant of summary judgment.

In addressing McGraw and Rodd's defense of qualified immunity
as to count three, the district court held that the facts as alleged by
SCI were sufficient to demonstrate that McGraw and Rodd retaliated
against SCI for exercising its First Amendment right to free speech.
The district court also concluded that the right to be free from retalia-
tion for exercising one's First Amendment right to free speech was
_________________________________________________________________
12 This court addressed McGraw and Rodd's Eleventh Amendment
immunity argument even though it was raised for the first time on appeal
because, unlike a claim of qualified immunity, Eleventh Amendment
immunity is jurisdictional in nature. See Suarez Corp. Indus., 125 F.3d
at 227.

11
clearly established at the time of McGraw and Rodd's alleged mis-
conduct.

After the district court denied their defense of qualified immunity,
McGraw and Rodd filed a notice of appeal on that issue. The district
court then granted McGraw and Rodd's motion to stay its proceedings
pending the appeal on the issue of qualified immunity.

II.

"The district court's denial of a claim of qualified immunity, to the
extent it turns on an issue of law, is an appealable`final decision'
within the meaning of 28 U.S.C. § 1291 under the collateral order
doctrine." Gould v. Davis, 165 F.3d 265, 268 (4th Cir. 1998); see also
Behrens v. Pelletier, 516 U.S. 299, 307-09 (1996) (allowing a second
interlocutory appeal on the issue of qualified immunity, the first after
a motion to dismiss was denied and the second after a motion for
summary judgment was denied). The grant or denial of summary
judgment based on qualified immunity is reviewed de novo. See
Norwood v. Bain, 166 F.3d 243, 252 (4th Cir. 1999) (en banc). Sum-
mary judgment is appropriate only "if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any mate-
rial fact." Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986). In determining whether a party is entitled to sum-
mary judgment, the record is viewed in the light most favorable to the
nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986).

A.

"To avoid `excessive disruption of government,' a qualified immu-
nity is recognized to protect government officials performing discre-
tionary functions from civil damage suits `insofar as [the officials']
conduct does not violate clearly established rights of which a reason-
able person would have known.'" Porterfield v. Lott, 156 F.3d 563,
567 (4th Cir. 1998) (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818
(1982)). The United States Supreme Court recently set forth a two-
prong test for evaluating a claim of qualified immunity. See Wilson
v. Layne, 119 S. Ct. 1692, 1696-97 (1999). A court "`must first deter-

12
mine whether the plaintiff has alleged the deprivation of an actual
constitutional right at all.'" Id. at 1697 (quoting Conn v. Gabbert, 119
S. Ct. 1292, 1295 (1999)). If so, the court then proceeds to "`deter-
mine whether that right was clearly established at the time of the
alleged violation.'" Id. (quoting Conn, 119 S. Ct. at 1295). The
Wilson Court reasoned that this test would "`spare a defendant not
only unwarranted liability, but unwarranted demands customarily
imposed upon those defending a long drawn-out lawsuit.'" Id. (quot-
ing Siegert v. Gilley, 500 U.S. 226, 232 (1991)). "Deciding the consti-
tutional question before addressing the qualified immunity question
also promotes clarity in the legal standards for official conduct, to the
benefit of both the officers and the general public." Id.

The first prong under Wilson requires that we determine whether
SCI "alleged the deprivation of an actual constitutional right." Id.
(internal quotation marks omitted). SCI alleges McGraw and Rodd
deprived it of its First Amendment right to free speech when they
engaged in various acts of retaliation in response to SCI's initial exer-
cise of its right to free speech. To analyze whether SCI alleged the
actual deprivation of a constitutional right, the obvious place to begin
is with the constitutional right at issue--the First Amendment right to
freedom of speech.

The First Amendment provides that "Congress shall make no law
. . . abridging the freedom of speech." U.S. CONST. amend. I. The
First Amendment right to free speech includes not only the affirma-
tive right to speak, but also the right to be free from retaliation by a
public official for the exercise of that right. See ACLU v. Wicomico
County, Md., 999 F.2d 780, 785 (4th Cir. 1993) ("Retaliation, though
it is not expressly referred to in the Constitution, is nonetheless
actionable because retaliatory actions may tend to chill individuals'
exercise of constitutional rights."); see also Pickering v. Board of
Educ., 391 U.S. 563, 574 (1968) (noting that retaliatory acts are "a
potent means of inhibiting speech"). Thus, by engaging in retaliatory
acts, public officials place informal restraints on speech "allow[ing]
the government to `produce a result which [it] could not command
directly.' Such interference with constitutional rights is impermissi-
ble." Perry v. Sindermann, 408 U.S. 593, 597 (1972) (alterations in
original) (citation omitted).

13
However, not every reaction made in response to an individual's
exercise of his First Amendment right to free speech is actionable
retaliation. See DiMeglio v. Haines, 45 F.3d 790, 806 (4th Cir. 1995)
("Not every restriction is sufficient to chill the exercise of First
Amendment rights, nor is every restriction actionable, even if retalia-
tory."). Rather, a § 1983 retaliation plaintiff must demonstrate that the
defendant's actions had some adverse impact on the exercise of the
plaintiff's constitutional rights. See Wicomico County, 999 F.2d at
785 ("In order to state a retaliation claim, Appellees are required to
show that WCDC's actions adversely impacted these First Amend-
ment rights.").

In light of these principles, a § 1983 retaliation plaintiff must estab-
lish three elements in order to prove a First Amendment § 1983 retali-
ation claim. First, the plaintiff must demonstrate that his or her speech
was protected. See Huang v. Board of Governors , 902 F.2d 1134,
1140 (4th Cir. 1990). Second, the plaintiff must demonstrate that the
defendant's alleged retaliatory action adversely affected the plaintiff's
constitutionally protected speech. See Wicomico County, 999 F.2d at
785 (stating that "a showing of adversity is essential to any retaliation
claim"). Third, the plaintiff must demonstrate that a causal relation-
ship exists between its speech and the defendant's retaliatory action.
See Huang, 902 F.2d at 1140.

In this case, the parties do not dispute the fact that SCI's advertise-
ments criticizing McGraw and Rodd were speech protected by the
First Amendment. The parties' dispute centers on whether McGraw
and Rodd's conduct adversely affected SCI's constitutionally pro-
tected speech and, if so, whether that conduct was causally connected
to SCI's speech.

B.

Determining whether a plaintiff's First Amendment rights were
adversely affected by retaliatory conduct is a fact intensive inquiry
that focuses on the status of the speaker, the status of the retaliator,
the relationship between the speaker and the retaliator, and the nature
of the retaliatory acts. See Thaddeus-X v. Blatter, 175 F.3d 378, 398
(6th Cir. 1999) ("[T]he definition of adverse action is not static across
contexts."). For example, in the public employment context, the

14
speaker is the employee and the retaliator is the public employer. The
employment relationship between the speaker and retaliator creates
competing interests between "the interests of the[public employee],
as a citizen, in commenting upon matters of public concern and the
interest of the [government], as an employer, in promoting the effi-
ciency of the public services it performs through its employees."
Pickering, 391 U.S. at 568. To properly balance these interests, courts
have required that the nature of the retaliatory acts committed by a
public employer be more than de minimis or trivial. See Sharp v. City
of Houston, 164 F.3d 923, 933 (5th Cir. 1999); Nunez v. City of Los
Angeles, 147 F.3d 867, 875 (9th Cir. 1998); DiMeglio, 45 F.3d at 806.
Thus, a public employer adversely affects an employee's First
Amendment rights when it refuses to rehire an employee because of
the exercise of those rights, see Mt. Healthy City Sch. Dist. Bd. of
Educ. v. Doyle, 429 U.S. 274, 285-87 (1977); or when it makes deci-
sions, which relate to "promotion, transfer, recall, and hiring," based
on the exercise of an employee's First Amendment rights, Rutan v.
Republican Party, 497 U.S. 62, 79 (1990). On the other hand, courts
have declined to find that an employer's actions have adversely
affected an employee's exercise of his First Amendment rights where
the employer's alleged retaliatory acts were criticism, false accusa-
tions, or verbal reprimands. See Benningfield v. City of Houston, 157
F.3d 369, 376-77 (5th Cir. 1998) (holding that employees "falsely
accused" of criminal wrongdoing and "verbally reprimanded" by their
employer failed to allege adverse employment actions sufficient to
constitute retaliation), cert. denied, 119 S. Ct. 1457 (1999);
Harrington v. Harris, 118 F.3d 359, 366 (5th Cir. 1997) (holding that
an employer's criticism of employees and failure to award them merit
pay increases did not constitute actionable adverse employment
actions).

Just as the nature of the retaliatory acts impacts whether a public
employee's First Amendment rights were adversely affected, so too
the nature of the retaliatory acts impacts whether those acts are
actionable when a private citizen is the speaker and a public official
is the retaliator. For example, a public official who restricts the award
of or terminates public benefits based on the citizen's exercise of his
First Amendment rights adversely affects that citizen's First Amend-
ment rights. See, e.g., Board of County Comm'rs v. Umbehr, 518 U.S.
668, 686 (1996) (holding that the termination of a garbage contract

15
constituted retaliation for an independent contractor's exercise of
freedom of speech); Sherbert v. Verner, 374 U.S. 398, 409-10 (1963)
(holding that retaliation existed where the government denied unem-
ployment benefits to a person whose religion precluded her from
accepting a job that required her to work on Saturdays). The same
officials, however, are obviously permitted to require the government
contractor to submit documentation that no public funds were spent
on espousing political views, or to require a person seeking unem-
ployment benefits to fill out an additional form explaining why she
cannot work on Saturdays.

The nature of the alleged retaliatory acts has particular significance
where the public official's acts are in the form of speech. Not only
is there an interest in having public officials fulfill their duties, a pub-
lic official's own First Amendment speech rights are implicated.
Thus, where a public official's alleged retaliation is in the nature of
speech, in the absence of a threat, coercion, or intimidation intimating
that punishment, sanction, or adverse regulatory action will immi-
nently follow, such speech does not adversely affect a citizen's First
Amendment rights, even if defamatory.13 See X-Men Sec., Inc. v.
Pataki, Docket Nos. 97-9023(L), 97-9595(CON), 1999 WL 993442,
at *14 (2d Cir. Nov. 2, 1999) (to be reported at 196 F.3d 56) (holding
that, in the absence of threats, intimidation, or coercion, legislators'
"disparaging, accusatory, or untrue statements about X-Men fail to
state a claim for violation of X-Men's constitutional rights"); Colson
v. Grohman, 174 F.3d 498, 512 (5th Cir. 1999) (holding that a citi-
zen's First Amendment rights were not adversely affected because
she had "alleged only that she was the victim of criticism, an investi-
gation (or an attempt to start one), and false accusations: all harms
_________________________________________________________________
13 The requirement that public official's speech include a threat, coer-
cion, or intimidation, to adversely affect a citizen's First Amendment
rights recognizes that a balance must be struck between the citizen's
right to exercise his First Amendment rights and the public official's per-
sonal First Amendment rights, as well as his duty to the public to speak
out about matters of public concern. See Penthouse Int'l Ltd. v. Meese,
939 F.2d 1011, 1015 (D.C. Cir. 1991) ("As part of the duties of their
office, these officials surely must be expected to be free to speak out to
criticize practices, even in a condemnatory fashion, that they might not
have the statutory or even constitutional authority to regulate.").

16
that, while they may chill speech, are not actionable under our First
Amendment retaliation jurisprudence"); Penthouse Int'l Ltd. v.
Meese, 939 F.2d 1011, 1015-16 (D.C. Cir. 1991) (holding that public
officials were entitled to qualified immunity for criticism they leveled
at publishers of pornography and noting that "the Supreme Court has
never found a government abridgment of First Amendment rights in
the absence of some actual or threatened imposition of governmental
power or sanction"); R.C. Maxwell Co. v. Borough of New Hope, 735
F.2d 85, 89 (3d Cir. 1984) (holding that a borough that sent letters to
a landowner encouraging, but not threatening, intimidating, or coerc-
ing, the landlord to terminate its leases with a billboard owner did not
violate the billboard owner's First Amendment rights where the land-
owner terminated the leases in order to curry favor with the borough);
Hammerhead Enters., Inc. v. Brezenoff, 707 F.2d 33, 38-39 (2d Cir.
1983) (holding that a public official who sent letters to retail stores
requesting that they refrain from selling a controversial board game
did not violate the board game manufacturer's First Amendment
rights, and declaring that to rise to the level of conduct that violates
free speech rights, a public official's comments must "reasonably be
interpreted as intimating that some form of punishment or adverse
regulatory action will follow the failure to accede to the official's
request"); Toma v. Hinkel, 947 P.2d 816, 821 (Alaska 1997) (conclud-
ing that the First Amendment protects an official's right to speak
truthfully in response to criticism even if the official's speech is retal-
iatory and stating, "We do not believe that imposing section 1983 lia-
bility on a public official who responds in kind to protected speech
critical of the official would be consistent with the First Amend-
ment."); cf. Bantam Books, Inc. v. Sullivan , 372 U.S. 58, 68 (1963)
(finding a constitutional violation where a Rhode Island Commis-
sion's conduct amounted to "thinly veiled threats to institute criminal
proceedings" against publishers who did not make efforts to stop cir-
culating publications on a list created by the Commission); Gini v.
Las Vegas Metro. Police Dept., 40 F.3d 1041, 1045 (9th Cir. 1994)
(holding that defamation must be accompanied by a harm to "some
more tangible interests" to be actionable retaliation (internal quota-
tions omitted)). One possible exception to this rule is where the retal-
iatory disclosure of information "relates to`those personal rights that
can be deemed `fundamental' or `implicit in the concept of ordered
liberty.'"; that is, the resulting injury caused by the disclosure of the
information in retaliation for engaging in protected conduct is suffi-

17
ciently embarrassing, humiliating, or emotionally distressful. See
Bloch v. Ribar, 156 F.3d 673, 681 (6th Cir. 1998) (holding that a sher-
iff's publication of the explicit details of a rape in retaliation for the
rape victim's criticism of the sheriff was sufficiently adverse to "chill
people of ordinary firmness"). This aspect of the contextual analysis,
however, has been limited to cases in which the public official has
disclosed damaging information about an individual. See Mattox v.
City of Forest Park, 183 F.3d 515, 521 n.3 (6th Cir. 1999) ("Analysis
of retaliation cases under the First Amendment is distinct, and the
effect of public disclosure of damaging information about an individ-
ual may be enough to trigger constitutional protection, as in Bloch and
Barrett.").14

In this case, SCI, the private citizen, alleges that McGraw and
Rodd, public officials who were in the process of suing SCI for viola-
tions of West Virginia law, retaliated against SCI by: (1) making
alleged defamatory statements to the media and to other attorneys
general; (2) making truthful statements to the BBB; and (3) making
defamatory statements to Dun & Bradstreet.15 McGraw and Rodd's
alleged retaliatory acts are in the nature of speech. Therefore, the
interests in conflict are SCI's First Amendment right to speech versus
McGraw and Rodd's First Amendment speech rights, as well as their
duty to keep the public and other law enforcement officials informed
about consumer fraud and their ongoing investigation and prosecution
_________________________________________________________________
14 Of course, in limited circumstances, non-retaliatory speech may be
actionable. For example, in Paul v. Davis, 424 U.S. 693 (1976), the
United States Supreme Court acknowledged that defamatory statements,
when accompanied by a harm to a more tangible interest, were actionable
under the Fifth and Fourteenth Amendment Due Process Clauses. See id.
at 701-02. In a different context, we have recognized that an individual's
constitutional right to privacy may be implicated when a public official
discloses "information that touch[es] on rights that are fundamental or
implicit in the concept of ordered liberty." Ferguson v. City of
Charleston, 186 F.3d 469, 482 (4th Cir. 1999) (internal quotation marks
omitted).
15 Although SCI alludes to other defamatory comments McGraw and
Rodd made to television stations and legislators as a "public relations
campaign to link SCI with organized crime activities," (Appellee's Br.
at 6), we group this conduct with SCI's allegations that McGraw and
Rodd defamed SCI to the media and other attorneys general.

18
of SCI. Because none of McGraw and Rodd's statements concerned
private information about an individual, we find that the appropriate
inquiry to determine whether McGraw and Rodd adversely affected
SCI's First Amendment speech rights to be whether their speech was
threatening, coercive, or intimidating so as to intimate that punish-
ment, sanction, or adverse regulatory action will imminently follow.
See X-Men Sec., 1999 WL 993442, at *14; Penthouse Int'l, 939 F.2d
at 1016; Hammerhead Enters., 707 F.2d at 39.

III.

A.

SCI claims that the following alleged defamatory statements to the
media constituted actionable retaliation: (1) Rodd's statement saying,
"I think people are tired of the elderly being victimized like this" and
"Attorney General McGraw is not going to be intimidated or bullied"
(J.A. 118); (2) McGraw and Rodd's assertions that SCI "preys on the
elderly, infirmed and incapacitated," Federman, Suarez Corp. Files
Lawsuit vs. West Virginia Attorney General, supra; (3) McGraw's
assertion that SCI "is a gambling syndicate from Ohio that also sells
jewelry," (SCI's Resp. Mot. Summ. J. Ex. B-3); (4) McGraw's state-
ment that "representatives [of SCI] have`a documented proclivity to
violence,'" id.; and (5) the AG's office's assertion that SCI has
"link[s] to organized crime" (SCI's Resp. Mot. Summ. J. Ex. A-9). In
addition, SCI claims that McGraw retaliated against it when he made
statements to other attorneys general claiming that SCI had "been
sued by the United States Postal Service for mail fraud," and stating
that "it has been reported to me that in the course of the hearing . . .
that [SCI's lawyer] threatened violence upon Deputy Attorney Gen-
eral Rodd," and that "there is a possibility that [SCI's] modus
operandi might include a proclivity to violence." (J.A. 119).

With respect to these alleged defamatory statements, SCI has failed
to show that McGraw and Rodd's statements can reasonably be inter-
preted as intimating that McGraw and Rodd would punish, sanction,
or take an adverse action against SCI. None of the statements even
imply that McGraw and Rodd would utilize their governmental power
to silence SCI. Thus, SCI has failed to show that McGraw and Rodd's
alleged defamatory statements to the media and other attorneys gen-

19
eral adversely affected its First Amendment rights. McGraw and
Rodd's communications to the other attorneys general did provide
warnings about the type of conduct SCI allegedly engaged in when
sued, but did not encourage any action that caused adversity to SCI.

B.

SCI contends that Rodd's statements to the BBB's president, Mr.
Paris, constituted actionable retaliation because the BBB later
expelled SCI. The only evidence in the record that describes Rodd's
conversation with Paris is Rodd's deposition. In his deposition, Rodd
states:

I inquired if he knew anything about a Canton, Ohio com-
pany called Lindenwold Fine Jewelers. And I think he said
yes, he did. And I said, are they a member of the Better
Business Bureau or is there a relationship there. And he said
yes, they are. And I said, you know, we welcome the oppor-
tunity to work with Better Business Bureaus all the time, but
we are going to have a hard time sort of respecting the integ-
rity of your Better Business Bureau . . . . If this is what the
Better Business Bureau, the kind of conduct it allows by its
members, then we just don't have a lot of respect for that.
So that . . . is going to reflect upon what we think about you
and if we have any future contacts or relationships.

(J.A. 119). After this discussion with Rodd, Paris convened a special
executive committee meeting of the BBB.

The minutes of the meeting indicate that Paris began the meeting
by giving some historical background of SCI, including that: (1)
"[t]here were problems during the first years they were with the
Bureau"; (2) in June 1980, SCI was dropped from the membership
roster for not following the membership standards but was reinstated
in 1982; (3) legal actions were brought "against the company in 1991,
1992, 1993, and 1994"; (4) there was a civil suit pending in West Vir-
ginia at the time of the meeting; and (5) United States postal authori-
ties had recently found mail fraud in one of SCI's promotions.16 (J.A.
_________________________________________________________________
16 The BBB minutes indicate that the Ohio Attorney General's office
was investigating SCI but that Ohio's consumer laws were different from

20
76). The meeting's notes indicate that Paris stated that Rodd com-
mented that "`if [SCI] is a member of the Bureau, they have lost all
credibility in the Better Business Bureau.' They will not do anything
at all to help us in membership if this is the kind of members we
accept. This was typical of other comments received from across the
country." Id.

Rodd's statements to the BBB, which SCI apparently concedes are
true and which arguably led to the BBB's subsequent expulsion of
SCI from its membership, do not evidence that McGraw and Rodd
adversely affected SCI's First Amendment rights. Nothing in Rodd's
testimony can reasonably be interpreted as intimating that McGraw
and Rodd would punish or take an adverse action against SCI or the
BBB.17

Indeed, the BBB itself did not feel threatened by Rodd's com-
ments; rather, it interpreted his comments as a refusal to "do anything
at all to help us in membership if this is the kind of members we
accept." (J.A. 76). Absent a direct or implied threat or coercive lan-
guage, Rodd's statements are speech that did not adversely affect
SCI's First Amendment rights, but which allowed the BBB to deter-
mine its own course of action.

C.

The final act of actionable retaliation SCI claims is that McGraw
and Rodd retaliated against it by making defamatory statements to
Dun & Bradstreet. Specifically, SCI claims that Rodd stated to Dun
_________________________________________________________________
other states and that if the BBB expected Ohio "to do something about
[SCI] in the near future . . . [it] may have a long wait. The last definitive
thing heard from an Attorney General representative is they want to go
in with other states and file a class action suit against [SCI]." (J.A. 76).
In addition, the minutes reflect that the BBB concluded that it spent more
money on handling complaints against SCI than SCI paid in dues.
17 Because none of Rodd's language was threatening, coercive, or
intimidating, we need not address whether a threat, coercion, or intimida-
tion need be directed at the speaker or whether it can be directed at a
third party.

21
& Bradstreet that: (1) the United States Postal Service had issued a

temporary restraining order against SCI and that mail returns "will be

seized pending the outcome of 6 counts of mail fraud"; and (2) that

SCI "subsequently declared mailings void" in several states. (SCI's

Resp. Mot. Summ. J. Ex. B-2, at 6). SCI argues that these statements

were defamatory and constituted retaliation. Moreover, because Dun

& Bradstreet included these alleged defamatory remarks in its "Busi-

ness Information Report," SCI asserts that its credit history was

adversely affected. Even if we assume those statements were defama-

tory, SCI's arguments are without merit.

The major flaw in SCI's claim is that SCI has not submitted any

evidence that the statements to Dun & Bradstreet can reasonably be

interpreted as intimating that McGraw and Rodd would punish, sanc-

tion, or take adverse action against SCI. The only evidence in the

record reflects that Dun & Bradstreet solicited information from the

AG's office and Rodd responded. Dun & Bradstreet then reported in

its Business Information Report the information Rodd provided. None

of the alleged defamatory language, however, implies a threat to SCI.18

_________________________________________________________________

18 We note that McGraw and Rodd engaged in some of the alleged con-

duct prior to SCI ever exercising its First Amendment rights. Thus, SCI's
claim that "but for" the exercise of its First Amendment rights McGraw

and Rodd would not have retaliated is undermined by the evidence in the

record. Moreover, based on the findings of the West Virginia Supreme
Court of Appeals, see Imperial Mktg. I, 472 S.E.2d at 805, we are hard

pressed to find that McGraw and Rodd's conduct was motivated by any-

thing other than a desire to rid West Virginia of SCI's illegal (as found
by the West Virginia Supreme Court of Appeals) direct marketing ploys.

However, because McGraw and Rodd's conduct did not adversely affect

SCI's First Amendment rights, we need not address the causal connec-

tion element of SCI's First Amendment retaliation claims.

22
IV.

For the reasons stated herein, we vacate that portion of the district
court's order appealed from and remand for further proceedings con-
sistent with this opinion.19

VACATED AND REMANDED
_________________________________________________________________
19 To the extent that SCI asserts to incorporate a due process claim into
its First Amendment retaliation claim by alleging that it was defamed
and deprived of a "more tangible interest" as required by Paul v. Davis,
424 U.S. at 701, we have reviewed this claim and find it to be without
merit.

23