Think You Know Libel Law? Think Again

A bedrock principle of libel law is that truth is an absolute defense. If what you say about someone is true, the person cannot win a libel case against you, even if you defame them. The federal appeals court in Boston put a jackhammer to the bedrock this week. In Noonan v. Staples, it ruled that even a true statement can be subject to a libel lawsuit if it was said with actual malice. In so deciding, the three-judge panel did an about face, reversing its own earlier decision in the same case. You need not be superstitious to appreciate the import of this Friday the 13th ruling. It is the most dangerous libel decision in decades. The decision puts a crack in the bedrock that threatens to undermine free speech.

To reach this outcome, the 1st U.S. Circuit Court of Appeals panel dusted off a 1902 statute that the highest state court in Massachusetts long ago ruled unconstitutional in a related context. The statute, G. L. c. 231, Section 92, says that truth is a defense to libel "unless actual malice is proved." In a 1998 case, Shaari v. Harvard Student Agencies, the Supreme Judicial Court ruled that statute unconstitutional as applied to matters of public concern. Citing a line of U.S. Supreme Court opinions leading back to the seminal 1964 case, New York Times v. Sullivan, the SJC said, "To apply this statute to the defendants' truthful defamatory statement concerning a matter of public concern, even if the statement is malicious, violates the First Amendment."

Remarkably, the 1st Circuit sidestepped Shaari with barely a nod to its significance. In a 34-page opinion written by Circuit Judge Juan R. Torruella, the court gave Shaari only a footnote. It dismissed Staples' argument that Shaari applied here on a procedural formality. "This argument is not developed now and was not raised in the initial briefing. Accordingly, we do not consider it at this time." It ignored Shaari even though the SJC suggested in dictum that the ruling should apply equally to private cases. "Although the Supreme Court has instructed that private figure plaintiffs may recover 'on a less demanding showing than that required' in cases of public figure plaintiffs, ... the falsity of the defendant's defamatory statement regarding matters of public concern remains a prerequisite to recovery," the SJC said.

At issue in this case was an e-mail a Staples executive sent to some 1,500 employees about the termination of Alan Noonan, a Staples sales director. The company terminated Noonan for cause after investigators concluded that he had deliberately falsified expense reports. The next day, Executive Vice President Jay Baitler sent the e-mail. "It is with sincere regret that I must inform you of the termination of Alan Noonan's employment with Staples," he wrote. "A thorough investigation determined that Alan was not in compliance with our [travel and expense] policies."

As the 1st Circuit itself acknowledged, "everything said in the e-mail was true." But it said Noonan could still have a claim under the 1902 statute if he could show that the e-mail was sent "with actual malice." The Supreme Court's decision in New York Times v. Sullivan defined actual malice as requiring knowledge that a statement was false or reckless disregard for its truth or falsity. The first time the 1st Circuit decided this case, it applied that standard to dismiss Noonan's appeal. This time, it leapfrogged back in time over 40 years of Supreme Court precedent to apply a 1903 SJC ruling that defined actual malice as "malicious intention," which Torruella recasts as "ill will."

"From this evidence, a jury could permissibly infer that Baitler singled out Noonan in order to humiliate him," Torruella wrote. He cites three pieces of evidence he considers key. First, Baitler had never before referred to a fired employee by name in a communication to employees. Second, he sent no memo about another employee who was fired for embezzling money through fraudulent expense reports. Third, he sent the e-mail to some 1,500 employees, many of whom did not travel and had no reason to be reminded of the policy. "The presence of these three pieces of evidence support inferences upon which a jury could base a verdict for Noonan," Torruella said.

This is far from the end of this case. The 1st Circuit's decision sends it back to the lower court for a trial to determine how the case should be decided. Most likely, Staples will ask the full panel of 1st Circuit judges to review this case en banc. It could even make its way to the Supreme Court. For the time being, however, be afraid -- be very, very afraid -- of this precedent. If ill will is all that is needed to turn a truthful statement into libel, then everyone is a potential defendant.