Beverly Entr Inc v. Trump

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit

6-28-1999

Beverly Entr Inc v. Trump
Precedential or Non-Precedential:

Docket 98-3222

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Recommended Citation
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http://digitalcommons.law.villanova.edu/thirdcircuit_1999/173

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Filed June 28, 1999

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

NO. 98-3222

BEVERLY ENTERPRISES, INC.;
DONALD L. DOTSON

Appellants

v.

ROSEMARY TRUMP;
SERVICE EMPLOYEES INTERNATIONAL UNION
LOCAL 585

On Appeal From the United States District Court
For the Western District of Pennsylvania
(D.C. Civil Action No. 97-cv-01490)
District Judge: Honorable Gary L. Lancaster

Argued December 11, 1998

BEFORE: BECKER, Chief Judge, and STAPLETON,
Circuit Judges, and HARRIS,* District Judge

(Opinion Filed June 28, 1999)

Michael T. McMenamin (Argued)
Walter & Haverfield
50 Public Square
1300 Terminal Tower
Cleveland, OH 44113
Attorney for Appellants
_________________________________________________________________

*Honorable Stanley S. Harris, United States District Judge for the
District of Columbia, sitting by designation.
 Claudia Davidson
Healey, Davidson & Hornack
Law & Finance Building, 5th Floor
Pittsburgh, PA 15219
and
Harold C. Becker (Argued)
Associate General Counsel
Service Employees International
Union
14 West Erie Street
Chicago, IL 60610
Attorneys for Appellees

Geraldine R. Gennet
General Counsel
Kerry W. Kircher
Deputy General Counsel
Office of General Counsel
U.S. House of Representatives
219 Cannon House Office Building
Washington, D.C. 20515-6601
Attorneys for Amicus Curiae
Bipartisan Legal Advisory Group of
the United States House of
Representatives

OPINION OF THE COURT

STAPLETON, Circuit Judge:

This diversity-based defamation action arises from
statements allegedly made by a union representative about
a company official during two separate incidents, one at a
political rally and another at a "Town Hall meeting." The
District Court dismissed the plaintiffs' complaint after
finding the comments at the rally incapable of defamatory
meaning and the Town Hall meeting comment protected
under the doctrine of absolute testimonial immunity.
Although for somewhat different reasons, we will affirm.

I.

There is a long-standing and acrimonious relationship
between Beverly Enterprises, a national provider of nursing

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home care, and the Service Employees International Union
("SEIU"), whose local affiliates represent a substantial
number of Beverly's employees. Plaintiffs are Beverly
Enterprises and Donald L. Dotson, Beverly's Senior Vice
President for Labor and Employment. Before joining Beverly
Enterprises, Dotson had a prestigious career in labor
relations, serving as Chairman of the National Labor
Relations Board and as Assistant Secretary for Labor-
Management Relations at the U.S. Department of Labor.
This suit arises from two incidents in which Rosemary
Trump, President of Local 585 of the SEIU, allegedly made
false and defamatory statements about Dotson and Beverly.
Plaintiffs allege that, as a result of the statements uttered
by Trump, Dotson and Beverly have suffered damage to
their reputations. A district court's order dismissing a
complaint is subject to plenary review. Pension Benefit
Guar. Corp. v. White Consol. Indus. Inc., 998 F.2d 1192,
1997 (3d Cir. 1993). We accept as true all well-pleaded
factual allegations in the plaintiffs' complaint and all
reasonable inferences therefrom. Independent Enterprises v.
Pittsburgh Water, 103 F.3d 1165, 1168 (3d Cir. 1997). The
parties agree that Pennsylvania law governs this dispute.

II.

The first set of allegedly defamatory statements were
made in August, 1996, at a political rally in Pittsburgh,
Pennsylvania, sponsored by the Dole/Kemp presidential
campaign. Plaintiffs allege that Trump approached Dotson
in the midst of a large crowd, ascertained his identity as a
Beverly official, and asked him whether he knew who she
was. When Dotson said he did not, Trump became visibly
upset, told Dotson he should know her, identified herself,
and then began to berate Dotson in a loud and angry voice.
Specifically, Trump accused Dotson of being a "criminal"
and said that "you people at Beverly are all criminals."
When Dotson tried to respond, Trump cut him off and
angrily accused him of "devoting [his] entire career to
busting unions." Despite Dotson's efforts at reasoned
discourse, Trump continued berating Dotson, finally
shouting at him: "I know your kind. You're just part of that
World War II generation that danced on the graves of Jews."

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Plaintiffs allege that these statements were false and
defamatory as to both Dotson and Beverly Enterprises.
Moreover, they allege that Trump uttered the statements
with actual malice, and that, as a result of these
statements, Dotson suffered damage to his reputation. The
District Court concluded that each of the three statements
at the rally were incapable of defamatory meaning because
they constituted mere hyperbole and insulting rhetoric, all
too common in labor disputes.

We begin by addressing Trump's alleged statements
accusing Dotson of "union-busting" and referring to Dotson
and others at Beverly as "criminals." By statute in
Pennsylvania, a plaintiff in a defamation action has the
burden of proving:

(1) the defamatory character of the communication, (2)
its publication by the defendant, (3) its application to
the plaintiff; (4) the understanding by the recipient of
its defamatory meaning; (5) the understanding by the
recipient of it as intended to be applied to the plaintiff;
(6) special harm resulting to the plaintiff from its
publication, and (7) abuse of any conditional privilege.

42 Pa. C. S. S 8343(a) (West 1999).

The Pennsylvania Supreme Court has held that "[i]n an
action for defamation, it is the court's duty to determine if
the publication is capable of the defamatory meaning
ascribed to it by the party bringing suit." MacElree v.
Philadelphia Newspapers, Inc., 674 A.2d 1050, 1053 (Pa.
1996). "A communication is defamatory if it tends so to
harm the reputation of another as to lower him in the
estimation of the community or deter third persons from
associating or dealing with him." Id. at 1055 (quoting
Thomas Merton Center v. Rockwell Int'l Corp., 442 A.2d 213,
215 (Pa. 1981)).

Appellants contend that Trump's references to "criminals"
and "union busting" were defamatory per se because they
imputed criminal conduct to both Dotson and Beverly. 1
_________________________________________________________________

1. Insofar as plaintiffs' allegations can be construed as alleging slander
per se, plaintiffs are excepted from the requirement that they must also
allege special damages. Baird v. Dun & Bradstreet, 285 A.2d 166, 171
(Pa. 1971); Clemente v. Espinosa, 749 F. Supp. 672, 677 (E.D. Pa. 1990)
(construing Pennsylvania law).

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Moreover, they argue that other attendees at the
Dole/Kemp rally within earshot could reasonably have
interpreted Trump's statements as alleging actual facts
about Dotson and Beverly.

We disagree. Although Trump's statements were
undoubtedly offensive and distasteful, the law of
defamation does not extend to mere insult. Courts in
Pennsylvania and elsewhere have long recognized a
distinction between actionable defamation and mere
obscenities, insults, and other verbal abuse. "[S]tatements
which are merely annoying or embarrassing or no more
than rhetorical hyperbole or a vigorous epithet are not
defamatory." Kryeski v. Schott Glass Techn., Inc., 626 A.2d
595, 601 (Pa. Super. 1993) (quoting Redding v. Carlton, 296
A.2d 880, 881 (Pa. Super. 1972)); see also Greenbelt
Cooperative Publishing Assoc. v. Bresler, 398 U.S. 6, 14
(1970) (finding that a statement that was "no more than
rhetorical hyperbole, a vigorous epithet" was not slander).
As the Restatement (Second) of Torts explains:

A certain amount of vulgar name-calling is frequently
resorted to by angry people without any real intent to
make a defamatory assertion, and it is properly
understood by reasonable listeners to amount to
nothing more. This is true particularly when it is
obvious that the speaker has lost his temper and is
merely giving vent to insult. Thus when, in the course
of an altercation, the defendant loudly and angrily calls
the plaintiff a bastard in the presence of others, he is
ordinarily not reasonably to be understood as asserting
the fact that the plaintiff is of illegitimate birth but only
to be abusing him to his face. No action for defamation
will lie in this case.

Restatement (Second) of Torts S 566, comment e (1977).

Similarly here, Trump's exclamation that "you people at
Beverly are all criminals" is reasonably understood as a
vigorous and hyperbolic rebuke, but not a specific
allegation of criminal wrongdoing. Trump's accusation that
Dotson "devot[ed] [his] entire career to busting unions" is
equally incapable of a defamatory construction. Appellants
describe these statements as "mean-spirited . . .

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accusations of illegal and immoral conduct." First, it is
doubtful at best that an accusation of "union-busting"
amounts to an insinuation of criminal activity. Even if it
were so understood, however, the reasonable listener would
recognize this statement as merely a vituperative outburst
which, although undoubtedly offensive, it is not actionable
in defamation. On this basis, we conclude that these two
statements are incapable of defamatory meaning and thus
cannot support an action in tort.

Plaintiffs' claim based on the third comment Trump
allegedly made at the rally -- that Dotson was "part of that
World War II generation that danced on the graves of Jews"
-- fails for a different reason. As a rule, except as to
allegations of slander per se, plaintiffs in slander actions
must allege special damages beyond an injury to
reputation. 42 Pa. C. S. S 8343(a)(6); Baird, 285 A.2d at 171
("[i]t is a general rule that defamatory words are not
actionable, absent proof of special damage"); Solosko v.
Paxton, 119 A.2d 230, 232 (Pa. 1956) ("[g]enerally speaking,
damages for defamatory words when spoken are not
recoverable in the absence of proof of special damages");
Altoona Clay Prod. Inc., v. Dun & Bradstreet, Inc., 246 F.
Supp. 419, 422 (W.D. Pa. 1965), rev'd on other grounds,
367 F.2d 625 (3d Cir. 1966) ("The Pennsylvania cases
require both the allegation and proof of [a] specific item of
damage to support the recovery."); Restatement (Second) of
Torts, S 558(d). Whereas the aforementioned comments
arguably impute criminal conduct to the plaintiff, and thus
constitute allegations of slander per se, this accusation of
bigotry does not fall within the narrowly defined categories
of per se defamation. Clemente, 749 F. Supp. at 677 (citing
the four categories of slander per se as words imputing the
commission of a criminal offense, a loathsome disease,
business misconduct, or serious sexual misconduct).

Consequently, as to the alleged statement imputing anti-
Semitism, to survive a motion to dismiss, the plaintiff must
go beyond a claim of injury to reputation and allege special
damages. Typically considered as a pecuniary loss, special
damages are "actual and concrete damages capable of being
estimated in money, established by specific instances such
as actual loss due to withdrawal of trade of particular

6
customers, or actual loss due to refusal of credit by specific
persons, all expressed in figures." Altoona, 246 F. Supp. at
422; Restatement (Second) of Torts, S 575, comment b
(special harm is "the loss of something having economic or
pecuniary value"). Because plaintiffs have only alleged
damage to their reputation, they have failed to meet this
requirement.2

III.

The second incident in which plaintiffs allege that Trump
made a defamatory statement was in May, 1997, at a "Town
Hall meeting." According to the plaintiffs' complaint, the
SEIU persuaded several members of Congress to convene
the meeting in the Allegheny County Courthouse to discuss
an item of federal legislation then pending in Congress. The
bill, entitled the "Federal Procurement and Assistance
Integrity Act," was designed to preclude businesses that are
in violation of certain federal labor standards from
obtaining federal contracts. Plaintiffs allege that the "true
purpose" of the meeting was to provide a forum for
disparaging Beverly Enterprises and, to that end, members
of Congress were importuned to ask speakers about the
adverse effects that the pending legislation would have on
Beverly. Trump, an invited speaker, allegedly made the
following statement in response to a question from
Congressman Klink:
_________________________________________________________________

2. Beverly also argues that it need not allege or prove special damages
because Trump acted with actual malice. But Beverly confuses the
requirements of special damages and actual damages. Under
Pennsylvania law, where a defendant acts with actual malice, there is no
need to prove actual damages. See Frisk v. News Co., 523 A.2d 347, 354
(Pa. Super. Ct. 1986) (citing Gertz v. Robert Welch, Inc., 418 U.S. 323
(1974)); Agriss v. Roadway Express, Inc., 483 A.2d 456, 467-68 (Pa.
Super. Ct. 1985). This rule requires that, in the absence of actual
malice, even if the plaintiff need only prove general damage to
reputation, as in a defamation per se case, he or she cannot rely on a
presumption of damages; he or she must offer actual specific evidence of
such general damages. This is different from the principle of special
damages (proof of which is excused in defamation per se cases, see
Agriss, 483 A.2d at 468-75.)

7
 CONGRESSMAN KLINK: Thank you. To Ms. Trump and
Ms. Ford, just to clear up in my mind, why have we
seen this problem exacerbated so much in
Pennsylvania and we haven't seen it at the other
Beverly locations across the country? What transpired
in Pennsylvania to make the situation here much
worse?

MS. TRUMP: Well, this is one of the most unionized,
heavily unionized Beverly states, if not the most
unionized Beverly state. They operate approximately 42
facilities in Pennsylvania, 20 of which are organized
and we have had a history of bargaining that went very
well. But quite frankly when President Clinton was
elected and a new Chairman of the National Labor
Relations [Board] was appointed, the former Chairman,
Don Dotson, walked out of his federal government job
and knocked on evidently the Beverly door and said,
who knows more about all of your unfair labor practice
cases in Beverly 1 and 2 than me since I have been
supervising them on behalf of the government and
besides which, I could really -- really this is conjecture
on my part, but I can only assume that because they
went out and recruited the former general counsel for
the National Right to Work Committee. They decided
that you're the largest chain of Beverly facilities, if
we're able to break unionism in the Beverly chain,
then, of course, it will have a ripple effect in the entire
industry and the whole industry will operate nonunion.

Plaintiffs allege that the italicized statement by Trump is
defamatory because it accuses Dotson of criminal violation
of the Ethics in Government Act, 18 U.S.C. #8E8E # 201 et seq.
("EGA"). Specifically, plaintiffs allege that the "gist or sting"
of Trump's statement is that Dotson (1) may have
negotiated for employment with Beverly while Chairman of
the NLRB, and (2) eventually represented Beverly in matters
that were pending before the NLRB during his
Chairmanship, both in criminal violation of federal
government ethics laws. Further, plaintiffs allege that
Trump's statement also implicates Beverly as a participant
in a criminal conspiracy with Dotson toward these same
ends. According to plaintiffs, these statements are false,

8
defamatory, and slanderous per se, as accusations of
criminal conduct. On the basis of this statement, Dotson
and Beverly claim to have sustained damage to their
reputations.

The District Court dismissed this claim after concluding
that Trump enjoyed absolute testimonial immunity for her
statement. Like absolute judicial immunity, the common
law testimonial immunity provides that:

A witness is absolutely privileged to publish defamatory
matter as part of a legislative proceeding in which he is
testifying or in communications preliminary to the
proceeding, if the matter has some relation to the
proceeding.

See Jennings v. Cronin, 389 A.2d 1183, 1185 (Pa. Super.
Ct. 1978) (quoting and adopting S 590A of the Restatement
(Second) of Torts). After considering the scope, purpose,
and format of the meeting, the District Court concluded
that the meeting constituted a "legislative proceeding" for
purposes of testimonial immunity. Moreover, because
Trump was an invited speaker and made the allegedly
defamatory statement in response to a question posed by a
panel member, the District Court concluded that the
statement was "part of " the legislative proceeding. Finding
Trump's statement absolutely privileged, therefore, the
Court dismissed plaintiffs' claim.

We see no need to consider the contours of absolute
testimonial immunity in this case, however, because we
find Trump's statement at the Town Hall meeting incapable
of either of the defamatory constructions plaintiffs allege.3
_________________________________________________________________

3. Plaintiffs contend that the District Court erred by considering matters
outside the pleadings without converting defendants' motion into one for
summary judgment. See Fed.R.Civ.P. 12(b). Specifically, plaintiffs
contend the District Court erroneously considered a videotape of the
meeting and a copy of the pending legislation at issue. Plaintiffs thus
assert that "Dotson and Beverly must be provided the opportunity to
rebut the extrinsic materials relied on by the District Court, and
discover
Rule 56 evidence in support of their claims." Appellant's Brief at 23.

It is well-settled that in deciding a motion to dismiss, courts generally
may consider only the allegations contained in the complaint, exhibits

9
Whether a reasonable listener could have construed
Trump's statements as defamatory is a question of law to
be determined by the court. Pierce v. Capital Cities
Communications, Inc., 576 F.2d 495, 502 (3d Cir. 1978);
Thomas Merton Ctr., 442 A.2d at 215-16; Restatement
(Second) of Torts, S 614.

Plaintiffs allege that Trump's statement implicates Dotson
and Beverly in violation of two separate provisions of the
Ethics in Government Act. Construing the allegations in the
complaint in the plaintiff 's favor, as we must, we
nonetheless find neither of these interpretations
reasonable. First, the act prohibits an executive branch
officer from "personally and substantially" participating in a
quasi-judicial proceeding if the officer is also negotiating
prospective employment with an organization that has a
financial interest in that proceeding. See 18 U.S.C. S 208.
Plaintiffs' complaint alleges that Trump's statement asserts
_________________________________________________________________

attached thereto, and matters of public record. Pension Benefit Guar.
Corp. v. White Consol. Indus. Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).
As the federal bill is a matter of public record, the District Court did
not
err in considering it before deciding defendants' motion to dismiss.

However, the District Court's opinion also reflects the Court's reliance
on the videotape of the meeting, which was relevant to determining
whether the meeting constituted a "legislative proceeding." For example,
the District Court noted the relevance of several details only obtained
from the videotape, such as one Congressman's opening words at the
meeting, his reference to the meeting as a "field hearing," and the
number of other members of Congress present as well as their
relationship to the bill. Although "a court may consider an undisputedly
authentic document that the defendant attaches as an exhibit to a
motion to dismiss if the plaintiff's claims are based on the document,"
such exception does not apply here. See id. This exception prevents "a
plaintiff with a legally deficient claim [from surviving] a motion to
dismiss
simply by failing to attach a dispositive document on which it relied."
Id.
In this case, however, defendants offered the videotape (and the District
Court considered it) in support of their affirmative defense of
testimonial
immunity. Because the plaintiff was not given an adequate opportunity
for discovery or to submit rebuttal evidence, we will treat the District
Court's decision as a 12(b)(6) dismissal and will disregard the videotape
of the meeting in conducting our plenary review of that decision. See
Indep. Enterprises, 103 F.3d at 1168 n.2.

10
a violation of this provision insofar as she said that "when
President Clinton was elected and a new Chairman of the
National Labor Relations [Board] was appointed, the former
chairman, Don Dotson, walked out of his federal
government job and knocked on evidently the Beverly door
. . . ." We find this interpretation of Trump's statement
unreasonable. Not only is there nothing in Trump's
statement to suggest that Dotson simultaneously sought
employment from Beverly and supervised cases involving
Beverly, but Trump's statement suggests to us just the
opposite: that Dotson did not approach Beverly until after
he left his government job.

Second, the Ethics in Government Act restricts former
federal officers from representing another individual or
entity in a matter formerly under the officer's supervision.
See 18 U.S.C. S 207. Plaintiffs contend that Trump accused
Dotson of violating this provision when she said,"Don
Dotson, walked out of his federal government job and
knocked on evidently the Beverly door and said, who knows
more about all of your unfair labor practice cases in Beverly
. . . than me since I have been supervising them on behalf
of the government . . . ." Trump's statement, according to
plaintiffs, amounts to an accusation that Dotson violated
S 207 of the EGA "by representing Beverly in matters that
had been pending before the NLRB during his
Chairmanship." Again, we fail to see how a reasonable
hearer of the statement Trump allegedly made could
interpret it as plaintiffs suggest.

Trump's statement undeniably implies that Dotson
sought to capitalize on his knowledge of the NLRB's
prosecutions of Beverly in an effort to obtain employment
with Beverly. Moreover, given that Dotson was a Beverly
Vice President at the time of the alleged statement, Trump's
statement implies that Dotson successfully secured his job
at Beverly on the basis of his knowledge of their ongoing
litigation with the NLRB. However, none of these
implications amounts to a violation of federal law-- civil or
criminal. Trump's comment simply does not state or imply
that Dotson has done that which the EGA prohibits:
making, with an intent to influence, a communication to or
appearance before any department, agency, or court in

11
connection with matters he previously supervised. See 18
U.S.C. S 207(a)(2).

Unless Trump's statement is reasonably susceptible of a
defamatory meaning, plaintiffs have failed to state a claim
with respect to the Town Hall meeting. See Sarkees v.
Warner-West Corp., 37 A.2d 544, 546 (Pa. 1944) ("If the
words are not susceptible of the meaning ascribed to them
by the plaintiff, and do not sustain the innuendo, the case
should not be sent to a jury."); McAndrew v. Scranton
Republican Pub. Co., 72 A.2d 780, 783 (1950). We conclude
that Trump's statement is incapable of conveying either of
the defamatory meanings plaintiffs advance. Moreover, to
the extent the statement is susceptible of another
defamatory interpretation that does not constitute an
accusation of criminal wrongdoing, such interpretation
would not constitute slander per se and, as a result
plaintiff 's complaint would be insufficient for failure to
allege special damages.

IV.

Accordingly, we will affirm the order of the District Court
dismissing the plaintiffs' complaint for failure to state a
claim.

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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