Zueger v. Goss, 2014 COA 61

 

I. CASE CITATION

Zueger v. Goss, 2014 COA 61.

II. FACTS

The Defendant, Lou Lou Goss, was a widow and personal representative of the estate of a renowned Native American artist Earl Biss.

The Plaintiffs were Paul J. Zueger, who was an art dealer, and other entities that purchased, sold, published, promoted, preserved, and exhibited artwork by Earl Biss through Zueger.

The Defendant had a dispute with Plaintiff Zueger stemming from the Defendant’s contention he was making and selling unauthorized reproductions of Biss’s artwork. The Defendant, following the dispute, made disparaging statements about Mr. Zueger on the Internet.

III. PROCEDURAL HISTORY

The Plaintiffs filed a lawsuit against the Defendant, asserting several claims for relief. Only two of their claims went to the jury: intentional interference with prospective business advantage and defamation.

The trial court determined that the fifteen “complained of” statements by the Plaintiffs were defamatory per se as a matter of law, including the following: “The company is comparable to the ‘Man in Black’ for Mozart.”

The jury found in the Plaintiffs’ favor on both claims. At the close of evidence, the trial court dismissed two other claims asserted by plaintiffs — outrageous conduct and civil extortion.

 IV. ISSUES

  1. Whether the trial court erred by entering as a discovery sanction an order precluding Biss’s former attorney from testifying?
  2. Whether the trial court erred when it concluded that one of the Defendant’s statements about the Plaintiffs was defamatory per se and so instructing the jury?
  3. Whether the trial court erred by concluding that the Plaintiffs were not public figures and that the Defendant’s online statements did not relate to a matter of public concern?
  4. Whether the trial court erred by awarding damages that were uncertain?
  5. Whether the trial court erred by dismissing the Plaintiffs’ claims for outrageous conduct and extortion?

 V. HOLDINGS

  1. The trial court did not err by precluding the former attorney from testifying.
  2. The trial court erred when it concluded that one of the Defendant’s statements about the Plaintiffs was defamatory per se and so instructing the jury.
  3. The trial court erred by concluding that the Plaintiffs were not public figures and that the Defendant’s online statements did not relate to a matter of public concern.
  4. The trial court did not err in its awarding of damages.
  5. The trial court did not err by dismissing the Plaintiffs’ claims for outrageous conduct and extortion.

 VI. RATIONALE 

A. Discovery Sanction

Under C.R.C.P. 37(c), a trial court has a duty to sanction a party for failure to comply with certain discovery deadlines by precluding evidence or witnesses, unless the party’s failure to comply is (1) substantially justified, or (2) harmless.

The Court reasoned that the sanction of witness preclusion was not unreasonable or unfair when the Defendants waited until a week after the C.R.C.P. 16(f)(2)(B) deadline (21 days before trial) to file their list of trial witnesses. In coming to its ruling, the Court noted that (1) the Defendant made no showing on appeal or at trial as to the importance of the former attorney’s testimony, and (2) the Defendant’s explanation that the witness list “fell through the cracks” was not found to be a substantial justification for missing the deadline. Likewise, as the trial was already in its fourth day when the Court heard the Defendant’s motion, a continuance or introduction of the witness list was not harmless—permitting the testimony would likely to disrupt the trial and raise attorney-client privilege waiver issues.

B. Defamation per se

Colorado courts employ a two-part test to determine whether a statement is defamatory: (1) whether the statement contains or implies a verifiable fact about the plaintiff and, (2) whether the statement reasonably is susceptible to being understood as an assertion of actual fact.  The Court also considers factors such as the phrasing of the statement, the context in which it appears, and the circumstances surrounding its publication.

The Court of Appeals ruled that the “Man in Black” statement did not contain or imply a verifiable assertion of fact, or could reasonably be understood as stating an actual fact about the Plaintiffs. Although the Plaintiffs argued that the target-audience of the Defendant’s statements was a sophisticated group of art connoisseurs who would recognize the literary reference to Mozart’s murderer from Aleksandr Pushkin’s play, Mozart and Salieri, the Court was not persuaded that the literary allusion would be under by a reasonable person as an actual assertion that the Plaintiffs were responsible for killing the artist Earl Biss. While a reasonable person would understand that the literary allusion expressed the Defendant’s unfavorable opinion of the Plaintiffs, an expression of belief or opinion that does not imply the existence of a false and defamatory fact is constitutionally privileged.

The Court then held that, although the jury verdict was based on more than one alleged defamatory statement, it could not be upheld if a single statement was defamatory even if others are not.  The Court reasoned that because it could cannot discern from the record which of the statements the jury relied upon in finding liability, and because it may have relied on the “Man in Black” statement, a new trial on the defamation claim was necessary.[1]

C. Public Figures

In determining whether an individual is a public figure, Colorado courts examine the nature and extent of his or her participation in the controversy giving rise to the alleged defamation.

A person may be a public figure for a limited purpose. In determining whether a person is a limited purpose public figure, the Court looks to “whether the defamatory statement involves a matter of public concern and […] whether the level of plaintiff’s participation in the controversy invites scrutiny.”

A matter of public concern is “one that affects a broad segment of the community or affects a community in a manner similar to that of a governmental entity.” However, those charged with defamation cannot, by their own conduct, create their own defense by making the claimant a public figure. Likewise, a person does not become a public figure merely by availing himself of the marketplace.

Absent evidence of other parties similarly affected by the plaintiffs’ ongoing business practices or involvement of government entities, the Court held that the Defendants statements about the Plaintiffs’ business activities did not involve a matter of public concern. Rather, their statements involved a private business dispute between private parties. While the statements may have gained publicity, any public interest was created by the Defendant’s online publication of disparaging statements about the Plaintiffs, not by any act of the Plaintiffs.

D. Damages

Under Colorado law, the amount of damages awarded is within the sole province of the jury and may not be disturbed unless it is clearly erroneous, completely unsupported by the record. Damages may not be based on mere speculation or conjecture.

The Court did not find the damages awarded by the jury clearly erroneous because the Plaintiffs’ used expert witnesses to testify that sales by the Plaintiffs of Biss’s work declined as a result of the Defendant disparaging them online.

E. Dismissed Claims

1. Outrageous Conduct

Proof of outrageous conduct under Colorado law requires that the defendant (1) engaged in extreme and outrageous conduct,  (2) recklessly or with the intent of causing the plaintiff severe emotional distress, and (3) caused the plaintiff severe emotional distress. Although whether conduct is extreme and outrageous is generally one of fact to be determined by a jury, it is the responsibility of a court to determine whether reasonable persons could find otherwise.

The Court held that the Defendant’s conduct was not sufficiently egregious to establish that it was extreme and outrageous because neither her unfavorable online publications about plaintiffs, nor her statements made directly to them went beyond all possible bounds of decency so as to be regarded as atrocious and utterly intolerable in a civilized community. Mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities can not establish outrageous conduct.

  1. Extortion

Colorado has no civil extortion statute and Plaintiffs cited no authority granting them a cause of action. However, the Court reasoned that even if Colorado had a civil extortion statute, the Plaintiffs could not make a prima facie showing of extortion through a standard settlement agreement. Arguments along the lines that “it was cheaper to pay the Defendant than to go to court” are insufficient.

F. Disposition

The Court of Appeals affirmed the trial court’s judgment as to Plaintiffs’ claim for intentional interference and the dismissal of their claims for outrageous conduct and extortion. The Court of Appeals reversed the judgment as to the defamation claim and remanded for further proceedings on that claim only.

[1] The Court noted that the trial court should have included a special verdict form requiring the jury to indicate which of the statements it relied upon in reaching its verdict.

By Cassandra Kirsch, HopkinsWay PLLC. | © HopkinsWay PLLC 2015. All rights reserved.

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