Fox v. Crain Communications, Inc. ( 2021 )

2021 IL App (1st) 200153-UNo. 1-20-0153
Second Division
September 21, 2021
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
limited circumstances allowed under Rule 23(e)(1).
____________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
____________________________________________________________________________
) Appeal from the
JOSEPH J. FOX and AVI Y. FOX, ) Circuit Court of
) Cook County.
Plaintiffs-Appellants, )
)
v. ) No. 17 L 5955
)
CRAIN COMMUNICATIONS, INC., )
LYNNE MAREK and MICHAEL ARNDT, ) Honorable
) Patricia O’Brien Sheahan
Defendants-Appellees. ) Judge, presiding.
____________________________________________________________________________
JUSTICE COBBS delivered the judgment of the court.
Presiding Justice Fitzgerald Smith and Justice Lavin concurred in the judgment.
ORDER
¶1 Held: The circuit court properly granted summary judgment in favor of defendants and
against plaintiff Joseph Fox on his claim of defamation per se and false light
invasion of privacy where Joseph failed to show actual malice and the statements
were substantially true. The circuit court properly granted defendants’ motion to
dismiss as to plaintiff Avi Fox where the statements were not “of or concerning”
Avi.
No. 1-20-0153
¶2 Plaintiffs-appellants, Joseph J. Fox (Joseph) and Avi Y. Fox (Avi) filed suit against
defendants-appellees, Crain Communications, Inc. (Crain), Lynne Marek, and Michael Arndt
alleging defamation and false light invasion of privacy after an article was published in Crain’s
Chicago Business, a business reporting newspaper and website. Joseph appeals pro se from the
circuit court’s entry of summary judgment in favor of defendants on all his claims. Avi appeals
pro se from the circuit court’s grant of defendants’ motion to dismiss his claim with prejudice
pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2016)).
For the following reasons, we affirm.
¶3 I. BACKGROUND
¶4 A. Joseph’s Experience
¶5 Joseph and his brother Avi co-founded two companies, Ditto Holdings, Inc. (later known
as SoVesTech, Inc.) and its wholly-owned subsidiary and broker-dealer, Ditto Trade, Inc.
(collectively, Ditto). Joseph served as the chief executive officer (CEO) of Ditto, a social brokerage
firm which allowed users of its proprietary technology to trade in securities markets by emulating
more experienced traders.
¶6 In 1996, Joseph founded Web Street, a company which pioneered in creating technology
that allowed investors to stream stock quotes through their computer browser and access real-time
positions and balances. Joseph regularly made media appearances and utilized the business press
to promote his views regarding the role of technology in the securities industry and to publicize
his companies’ abilities to offer social media platforms that would enable customers to gain
expertise in regulated securities markets.
¶7 In 1998, Joseph testified as an expert before Congress regarding the rapid consumer
adoption of online stock trading and related concerns pertaining to security features and protection
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of investors in trading technology. Joseph became one of the first to conduct an online trade on the
floor of Congress. In 2012, Joseph appeared as a brokerage expert on CNBC to opine on whether
“Wall Street needed to get more humans back to trading.” He has been featured on numerous
shows and publications for expressing his opinions about the securities industry. For instance, in
2012, he obtained coverage for Ditto, which resulted in Ditto being featured in Forbes, Fortune,
USA Today, The Washington Post, Barron’s, Yahoo News, Reuters, and various nationally
televised shows.
¶8 B. The SEC Investigation
¶9 In September 2013, both the Securities & Exchange Commission (SEC) and the Financial
Industry Regulatory Authority (FINRA) launched investigations of Joseph and Ditto. In September
2015, the SEC issued a decision finding that Joseph “willfully violated” sections 5(a) and 5(c) of
the Securities Act of 1933. The SEC ordered Joseph to cease and desist any further violations,
disgorge $125,210 in profits gained because of the violation, and pay a civil penalty of $75,000 to
the SEC.
¶ 10 The SEC conducted further proceedings against Joseph “to determine, what, if any,
additional non-financial remedial sanctions under Section 15(b)(6) of the Securities Exchange Act
of 1934” would be “in the public interest.” On April 25, 2016, another public decision was issued.
In the April 2016 decision, the SEC Administrative Law Judge (ALJ) found that Joseph’s violation
of the Securities Act was “egregious” and that “both investors and the marketplace were harmed
by being deprived of information necessary to make fully informed investment decisions.” As
such, the ALJ barred Joseph from the financial industry for a period of five years, specifically
prohibiting him from “associating with a broker, dealer, investment adviser *** or nationally
recognized statistical rating organization, and from participating in an offering of penny stock.”
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¶ 11 C. Federal Retaliatory Discharge Suit
¶ 12 Prior to the ALJ’s 2016 decision, in January 2014, former Ditto executive Paul Simons
filed a suit against Joseph and Ditto in the United States District Court for the Northern District of
Illinois (Federal Suit). Simons claimed that he was fired in retaliation for informing regulators
about potential misappropriation of funds and securities violations. In February 2016, the district
court entered an order of default against Ditto and dismissed Ditto’s counterclaims against Simons.
On March 9, 2016, the final order of default was entered. After a prove-up hearing, a final
judgment against Ditto and in favor of Simons in the amount of $2.7 million was entered on April
7, 2016. On September 13, 2016, Joseph contested the judgment was on the merits, which the
district court rejected and confirmed that it was on the merits and was a final judgment.
¶ 13 D. The Article
¶ 14 On June 11, 2016, Crain published the article at issue in Crain’s Chicago Business
(Article). The online version of the article bore the headline “Frustrated investors led on Fox hunt
in L.A.” The article addressed the retaliatory discharge lawsuit filed by Simons, an SEC
investigation that led to Fox being banned from the financial industry, and frustration among Ditto
investors over being kept in the dark about Ditto’s troubles. The article stated that Joseph and Avi
were named “Crain’s 40 under 40 list in 2000.” According to the article, the brothers had co-
founded Web Street in 1996 which they later sold, had attempted to “take a [startup]” company
public but “a 2008 ‘restructuring’ ultimately led to a sale the following year,” and “in 2010, they
launched the company that would lead to the current barrage of beefs.” With regards to the federal
suit, the article reported that “former CEO Paul Simons, who was fired in 2013, sued the company
and Joseph in 2014, alleging he was ousted in retaliation for alerting the SEC to corporate
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misconduct by Fox.” The article stated that “ [a] federal judge in Chicago agreed with Simons,
ordering Ditto in April to pay him $2.7 million.”
¶ 15 E. Amended Complaint
¶ 16 On October 19, 2017, plaintiffs filed a three-count amended complaint asserting claims of
defamation (count I), false light invasion of privacy (count II) and intentional infliction of
emotional distress (IIED) (count III). Plaintiffs claimed that two statements in the article defamed
them and placed them in a false light: (1) the statement that a “federal judge in Chicago agreed
with Simons ordering Ditto in April to pay him $2.7 million” (Judge Statement); and (2) the
headline “Frustrated investors led on Fox hunt in L.A.” (Digital Headline). Plaintiffs asserted that
these “false statements made by [defendants] *** constitute[d] defamation per se (as well as
defamation per quod) as it pertains to Joseph Fox, and defamation per quod as it pertains to Avi
Fox.”
¶ 17 Plaintiffs alleged that the Judge Statement was defamatory because the district court never
agreed with Simons that Joseph had committed corporate misconduct as the judgment was merely
a procedural default against Ditto. Further, plaintiffs alleged that the Digital Headline defamed
Joseph because it implied that he was hiding from investors in Los Angeles even though he “had
been living in California for six years.” The complaint then stated that “[f]or a more detailed
analysis of the falsities of the June 13, 2016 Article, See Exhibit 7.”
¶ 18 Exhibit 7 is a document consisting of more than 100 paragraphs in which plaintiffs argue
that the entire article itself “including the headline, imagery, and colorful timeline was a calculated
effort *** to permanently destroy [their] reputation.” Plaintiffs argued that “[a]s a direct and
proximate result of the [defendants’] false statements, *** [they] suffered substantial and
irreparable damages, and will continue to suffer damages, including but not limited to loss of
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income, loss of good name, loss of reputation, loss of business, as well as embarrassment, shame,
humiliation and emotional distress.”
¶ 19 With regards to their false light claim, plaintiffs argued that defendants’ conduct placed
them in “false light before the public via Crain’s Chicago Business, in both print and via its online
website.” Further, the false light would be highly offensive to a reasonable person and defendants
“acted with actual malice and knowledge that the statements about [p]laintiffs *** were false
and/or with reckless disregard for whether the statements were true or false.”
¶ 20 Finally, with regards to their IIED claim, plaintiffs argued that defamatory statements
“constitute[d] a pattern of negligent, malicious and harmful conduct, purposely continuing from
time to time, causing each [p]laintiff severe emotional and psychological injury.”
¶ 21 F. Motion to Dismiss
¶ 22 On November 16, 2017, defendants Crain and Arndt moved to dismiss plaintiffs’ amended
complaint pursuant to section 2-615 of the Code (735 ILCS 5/2-615 (West 2016)). 1 Crain and
Arndt pointed out that (1) Avi only asserted a defamation per quod claim; and (2) Joseph’s
defamation per se claim and false light claim were essentially premised on the Judge Statement
and the Digital Headline. With respect to the Avi’s claim, Crain and Arndt argued that the article
only mentioned Avi “in passing” and the amended complaint failed to “allege any facts showing
that any third parties reasonably understood that any allegedly defamatory statement in the Article
was about Avi.” Aside from this “fatal defect,” Crain and Arndt argued that plaintiffs failed to
plead special damages necessary to state a claim of defamation per quod. Additionally, Joseph
1
On January 1, 2018, Marek joined Crain and Arndt’s motion to dismiss plaintiffs’ amended
complaint.
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failed to meet his burden of pleading defamation per se, plaintiffs failed to state a claim for false
light, and plaintiffs failed to plead an IIED claim.
¶ 23 In response, plaintiffs argued that the article constituted defamation per se because the
Digital Headline was not susceptible to an innocent construction and the article’s “other false and
defamatory statements cannot be innocently construed.” Plaintiffs also asserted that the fair report
privilege does not apply where the article failed to accurately describe the federal suit and other
proceedings. Plaintiffs further argued that the article “is of and concerning” Avi and the complaint
sufficiently alleged special damages, a false light claim, and an IIED claim. Defendants filed a
reply.
¶ 24 On February 1, 2018, a hearing was held on defendants’ motion to dismiss. During the
hearing, the court stated that it was “going to do away with the oral arguments” and instead,
proceed to ruling. The court granted defendants’ motion as to Avi’s allegation, finding that Avi’s
name is “mentioned only once in reference to him being 40 under 40 list with Joseph” with the
“next couple paragraphs [referring] to the brothers’ business ventures and companies ‘they
started.’ ” The court noted that the rest of the article and all the “complainant statements refer to
Fox, and the article makes it clear that Fox refers to Joseph” and not Avi. The court then granted
defendants’ motion as to the IIED claim with prejudice, finding that “no case law *** supports an
argument that rushing an article to print is sufficient to state a claim for intentional infliction of
emotional distress.” Even if plaintiffs were “susceptible to intentional infliction of emotional
distress,” the court found that “the conduct still needs to be extreme and outrageous, which it is
not here.” The circuit court then entered an order granting the defendants’ motion to dismiss the
amended complaint in part as to Avi’s claims and plaintiffs’ IIED claim and denied defendants’
motion to dismiss as to the remaining claims.
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¶ 25 G. Motions for Summary Judgment
¶ 26 On September 11, 2019, defendants filed their motion for summary judgment against
Joseph. Defendants’ motion asserted that Joseph based his defamation and false light invasion of
privacy claims on only the Digital Headline and the Judge Statement. Defendants argued that they
are entitled to summary judgment on the Headline claim because (1) the Headline was reasonably
capable of non-defamatory construction and must be given that construction as a matter of law;
(2) the Headline was rhetorical hyperbole and non-verifiable and therefore, non-actionable
statements of opinion as a matter of law; (3) Joseph is a limited purpose public figure who cannot
meet his burden to prove that defendants published any allegedly defamatory statement with actual
malice; and (4) the statements are substantially true. Defendants contended that they were entitled
to summary judgment on the Judge Statement because (1) it is protected by the fair report privilege;
(2) Joseph is a limited purpose public figure who cannot meet his burden (as stated above); and
(3) the statement is substantially true.
¶ 27 Defendants supported their request for summary judgment with the testimony of Joseph,
the affidavits of five Ditto investors, Lynne Marek, who was the author of the article, and Craig
Newman, the editor who wrote the Digital Headline “Frustrated investors led on Fox hunt in L.A.”
¶ 28 Lawrence Wert, Marc Mandel, Scot Olson, Charles Parisi, and Greg Colando each
provided affidavits stating that they were Ditto investors, that they lost their investments, that they
were frustrated by their inability to get information from Joseph regarding Ditto’s financial
position, and the SEC investigation.
¶ 29 In her affidavit, Marek averred that in the course of conducting research for the article, she
reviewed publicly available court records for the federal suit and the records of the SEC, as well
as a report about Ditto prepared by the law firm Goldberg Kohn. She also contacted at least 15
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different individuals who had knowledge about Joseph and his business. Marek understood at the
time of publication that Simons alleged he was not fired “for cause” and that the district court’s
entry of a final judgment meant that the court agreed with Simons’ claims. Marek also understood
and believed that the investors she spoke to “were aggravated, frustrated, and disappointed” with
Joseph’s responses to their questions and his lack of availability. At no time prior to the publication
of the article did she have any information that any statement in the article was false.
¶ 30 In his affidavit, Newman averred that he authored the Digital Headline. At the time he
wrote the headline, Newman stated that it was his understanding and belief that Ditto investors
were “aggravated, frustrated, and disappointed” because Joseph did not keep them appraised of
Ditto’s financial condition and failed to adequately address their concerns. This was based on his
review of Marek’s reporting, conversation with her, and the contents of the article. He wrote the
headline “intending it to convey the idea that these investors had to ‘hunt’ for answers to their
questions from [Joseph] who at the time was in Los Angeles.” He intended the phrase “Fox hunt
in L.A.” to be “stylistic or rhetorical play on words with [Joseph’s] surname to suggest that
investors were pursing [him] for answers rather than any factual assertion.” At all times prior to
publication, Newman believed that the statements contained in the article were true and accurate
and a “rhetorical flourish designed to convey the statements contained in the Article through a play
on words.”
¶ 31 On September 18, 2019, Joseph moved for partial summary judgment. In his motion,
Joseph stated that “[w]hile the entire Article is replete with defamatory statements and misleading
statements that lead to the permanent damage of the Plaintiffs’ reputation and place [them] in a
False Light, this Motion for Partial Summary Judgment is only addressing two of these
statements,” specifically, the Judge Statement and the Digital Headline. The motion further stated
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that “[n]othing in his [m]otion *** should lead [the court] to believe that the Plaintiff does not
want his day in court regarding all of the contents of the Article and the malicious purpose behind
publishing it.”
¶ 32 On October 28, 2019, Joseph filed a response to defendants’ motion for summary
judgment. In his response, Joseph argued that the headline from the print version of the article,
“The Elusive Fox Who Fled to L.A.” (Print Headline) was also false and defamatory. Joseph
further asserted that he was not a “limited purpose public figure” and therefore, actual malice was
not required. Nonetheless, defendants had actual malice in publishing the article. Finally, Joseph
argued that the Judge Statement and Digital Headline constituted defamation per se and
defendants’ motion did not address his false light claim.
¶ 33 H. December 18, 2019 Hearing
¶ 34 At the December 18, 2019 hearing on the parties’ motions for summary judgment, defense
counsel stated, “we’re only dealing with two claims, defamation per se and false light; and those
claims are both based upon the same two allegedly defamatory statements. We’ve defined them in
our brief as ‘the headline’ and the ‘judge statement.’ ” Defense counsel noted that defendants
raised “a number of defenses for those two statements,” including “innocent construction rule,
opinion, fair report privilege, and substantial truth.” However, “there’s one defense that cuts across
all claims and *** makes for an easy resolution of this case, and that is that the plaintiff has failed
to show [actual malice].” Defense counsel further pointed out that the claim pertaining to the Print
Headline was “never made [in] any complaint” or interrogatory.
¶ 35 After defense counsel concluded his argument, counsel for Joseph stated, “I’m going to
save us all some time because for the most part, your Honor, I’m confident that your Honor read
the papers, and I think the plaintiff made clear and concise arguments in the papers.” With respect
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to the Print Headline, plaintiff’s counsel noted that “the plaintiff made a request for leave to amend
the pleading on its face to conform with the proofs, and that is within the Court’s discretion to
grant or deny that request.” The court inquired as to why the request was not “brought as a motion”
to which plaintiff’s counsel responded that it was a “question for prior counsel who is not on the
case.” The court denied leave to amend pleadings as to the Print Headline on the basis that the
“way [the request] was brought was improper.” Defense counsel rested.
¶ 36 I. December 24, 2019 Order
¶ 37 On December 24, 2019, the circuit court issued its 13-page order granting defendant’s
motion for summary judgment on all claims as to Joseph and dismissing the case with prejudice.
The order noted that Joseph’s claims were based on the Judge Statement and the Digital Headline.
The court found that Joseph was a “limited-purpose figure” and was therefore, “required to
demonstrate a question of material fact [existed as to] whether defendants acted with actual malice
in order to survive summary judgment.” The court noted that Joseph was unable to point to any
evidence to demonstrate actual malice, and therefore, summary judgment was appropriate. The
court further found that the Judge Statement and the Digital Headline were substantially true and
the Digital Headline was subject to an innocent construction. With respect to the false light claims,
the court found that it required a showing of actual malice and plaintiff again failed to make any
kind of showing as to malice. Plaintiffs appealed.
¶ 38 II. ANALYSIS
¶ 39 On appeal, plaintiffs, proceeding pro se, contend that their claims were based not only on
the Digital Headline and the Judge Statement but also on eight additional highly defamatory
statements that the court did not consider. Specifically, plaintiffs assert that their amended
complaint incorporated Exhibit 7 by reference which included other “falsities” pertaining to the
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article which the court did not discuss. Plaintiffs also assert that Avi was in fact defamed in the
article, the court erred “when it reversed course on the defamatory nature of the claim that a federal
judge agreed with Simons,” and the Headline cannot be innocently construed.
¶ 40 Defendants point out that plaintiffs are appealing from two orders of the circuit court. One
of the orders is the motion to dismiss Avi’s claims and the other is the grant of summary judgment
against Joseph. Defendants contend that this court should (1) strike plaintiffs’ brief and dismiss
the appeal for numerous violations of Illinois Supreme Court Rule 341 (eff. Oct. 1, 2020); (2) find
that plaintiffs have waived all claims based on Exhibit 7; and (3) affirm on the same grounds as
the circuit court; or (4) alternatively, find that the Digital Headline constitutes non-actionable
opinion and that the Judge Statement is protected by the fair report privilege. Lastly, defendants
argue that the circuit court correctly held that the amended complaint failed to include any
defamatory statement that was “of or concerning” Avi Fox.
¶ 41 A. Motion to Strike & Dismiss Appeal
¶ 42 At the outset, we must address defendants’ motion to strike plaintiffs’ brief and dismiss the
appeal for failure to comply with Supreme Court Rule 341. Illinois Supreme Court Rule 341(h)
(eff. Oct. 1, 2020) governs the contents of an appellant’s brief. “The rules of procedure concerning
appellate briefs are rules and not mere suggestions.” Niewold v. Fry, 306 Ill. App. 3d 735, 737
(1999). We agree with defendants that plaintiffs’ brief suffers from several deficiencies. Although
defendant’s brief follows an appropriate format in that it contains headings like “Nature of the
Case,” “Issues Presented,” “Statement of Facts,” and “Argument,” the substantive content is
nowhere near as proper. First, we note that plaintiffs improperly engage in argument in their
statement of the facts and as defendants point out, fail to regularly cite to the record. See Ill. S. Ct.
R. 341(h)(6) (eff. Oct. 1, 2020) (Statement of Facts “shall contain the facts necessary to an
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understanding of the case, stated accurately and fairly without argument or comments, and with
appropriate reference to the pages of the record on appeal.”).
¶ 43 Next, Rule 341(h)(7) requires that the argument section “shall contain the contentions of
the appellant and the reasons therefor, with citation of the authorities and the pages of the record
relied on.” Ill. S. Ct. R. 341(h)(7) (eff. Oct. 1, 2020). Like their statement of facts, plaintiffs fail to
include citations to the relevant pages of the record. Further, plaintiffs’ arguments as to the
defamatory nature of the statements, which forms the basis of their suit and issues on appeal, are
also not supported by citations to legal authority as required by Rule 341(h)(7). Instead, the
argument section of plaintiffs’ brief contains only citations to the standard of review for granting
a motion for summary judgment and citations for the proposition that exhibits incorporated by
reference constitute part of the pleading. Although we recognize that plaintiffs have elected to
proceed pro se, this does not excuse noncompliance with our court rules. Fryzel v. Miller, 2014 IL
App (1st) 120597, ¶ 26. (Pro se litigant is not relieved of obligation to comply with the appellate
practice rules and failure to comply is not excused.).
¶ 44 Additionally, the reviewing court “is not a depository into which the burden of research
may be dumped.” Campbell v. Wagner, 303 Ill. App. 3d 609, 613 (1999). The failure to provide
cohesive, organized arguments supported by legal citation may result in waiver of a party’s claims.
Calomino v. Board of Fire and Police Commissioners of Village of Schaumburg, 273 Ill. App. 3d
494, 501 (1995); see also Twardowski v. Holiday Hospital Franchising, Inc., 321 Ill. App. 3d 509,
511, (2001) (This court is “entitled to have briefs submitted that present an organized and cohesive
legal argument in accordance with the Supreme Court Rules.”). Where an appellant fails to comply
with the applicable rules of appellate procedure, this court may, in its discretion, strike a brief and
dismiss the appeal. McCann v. Dart, 2015 IL App (1st) 141291, ¶ 12. In view of these principles,
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we are entitled to strike plaintiffs’ brief or dismiss the appeal based on violations of Rule 341.
However, we choose to exercise our discretion to review this appeal.
¶ 45 B. Standard of Review
¶ 46 Although plaintiffs’ nature of the case section states that the “appeal is taken” from the
circuit court’s grant of defendants’ motion for summary judgment, the record, notice of appeal,
and arguments presented on appeal make it clear that this appeal is being taken from both the
circuit court’s grant of defendant’s motion to dismiss as to Avi’s claims and motion for summary
judgment as to Joseph’s claims. As such, we set out the standards of review governing motions to
dismiss and summary judgment.
¶ 47 A section 2-615 motion to dismiss challenges the legal sufficiency of a complaint based on
defects apparent on its face. Bueker v. Madision County, 2016 IL 120024, ¶ 7. In reviewing
a section 2-615 motion to dismiss, the court takes all well-pleaded facts as true and draws all
reasonable inferences in favor of the plaintiff. Edelman, Combs & Latturner v. Hinshaw and
Culbertson, 338 Ill. App. 3d 156, 156-57 (2003). We review the circuit court’s decision to grant
a section 2-615 motion to dismiss de novo. Marshall v. Burger King Corp., 222 Ill. 2d 422, 429
(2006).
¶ 48 In contrast, summary judgment is appropriate where “the pleadings, depositions, and
admissions on file, together with the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as a matter of law.” 735 ILCS
5/2-1005(c) (West 2016). In determining whether there is a genuine issue of fact, a court must
construe the pleadings and record strictly against the movant and liberally in favor of the
nonmoving party. Shannon Court Condominium Association v. Armada Express Inc., 2020 IL App
(1st) 192341, ¶ 11. Summary judgment is a drastic means of disposing litigation that should be
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granted only where the moving party’s right to judgment is clear and free from doubt. Adames v.
Sheahan, 233 Ill. 2d 276, 295-96 (2009). We may affirm the circuit court’s ruling on a motion
for summary judgment on any basis in the record, regardless of the reasoning employed by the
court. Kainrath v. Grider, 2018 IL App (1st) 172270, ¶ 19. Our review of an order granting
summary judgment is also de novo. Sears, Roebuck and Company v. Acceptance Insurance Co.,
342 Ill. App. 3d 167, 171 (2003).
¶ 49 C. Avi’s Claims
¶ 50 Avi contends that he was in fact defamed in the article. An essential element of any
defamation action is that an alleged defamatory statement be “of and concerning the plaintiff,”
(i.e., that the statements in question refer to the specific plaintiff). Schiarelli v. CBS, Inc., 333 Ill.
App. 3d 755, 765 (2002). The “requirement in a defamation case that the statement be ‘of and
concerning the plaintiff’ is equally applicable to a false light claim.” Id.¶ 51 Here, the alleged defamatory statements are not “of and concerning ”Avi. He cannot state
any defamation or false light claims based on the article because the two statements at issue in the
amended complaint both specifically and exclusively refer to Joseph. Moreover, the article only
mentions Avi to the extent that it states that he was named to Crain’s 40 under 40 list of prominent
Chicago businessmen in 2000 and that he co-founded Ditto and other business ventures with
Joseph. We cannot see how these statements would lead a reasonable person to believe that the
alleged defamatory statements against Joseph were also made against Avi. See Velle
Transcendental Research Ass'n, Inc. v. Esquire, Inc., 41 Ill. App. 3d 799, 803 (1976) (plaintiff not
named in the allegedly defamatory statement must allege that third parties must have reasonably
understood that the statement was of and concerning that plaintiff); Myers v. The Telegraph, 332
Ill. App. 3d 917, 928 (2002) (article was not “of and concerning” wife where it referred to the last
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name both spouses shared). A reasonable person would not find that Avi was also being defamed.
Therefore, we find that the circuit court did not err in granting defendants’ motion to dismiss as to
Avi’s claims.
¶ 52 Having found that Avi cannot state a claim based on the article, we now turn to address the
remaining claims as they pertain to Joseph.
¶ 53 D. Joseph’s Claims
¶ 54 1. Defamation
¶ 55 Joseph argues that the circuit court erred in granting summary judgment in favor of
defendants because it “ignored the fact that the [p]laintiffs actual claims in the [c]omplaint included
a minimum of eight highly defamatory statements, both [per se and per quod].” To establish a
defamation claim, a plaintiff must present sufficient facts establishing that: (1) the defendant made
a false statement about the plaintiff; (2) the defendant made an unprivileged publication of that
statement to a third party; and (3) the publication caused damages. Green v. Rogers, 234 Ill. 2d
478, 491 (2009). Defamatory statements are actionable either per se or per quod. Statements are
defamatory per se if “the statements that form the basis of the action *** falsely charge the plaintiff
with misconduct or incapacity in words so obviously and naturally harmful that they are actionable
without proof of special damages.” Costello v. Capital Cities Communications, Inc., 125 Ill. 2d
402, 414 (1988). In fact, no showing of special damages (i.e., damages of a pecuniary nature) is
required for statements that are defamatory per se. Id.¶ 56 Illinois recognizes five categories of statements that are considered defamatory per se: “(1)
words that impute a person has committed a crime; (2) words that impute a person is infected with
a loathsome communicable disease; (3) words that impute a person is unable to perform or lacks
integrity in performing her or his employment duties; (4) words that impute a person lacks ability
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or otherwise prejudices that person in her or his profession; and (5) words that impute a person has
engaged in adultery or fornication.” Green, 234 Ill. 2d at 491-92. “Although a complaint
for defamation per se need not set forth the allegedly defamatory words in haec verba, the
substance of the statement must be pled with sufficient precision and particularity so as to permit
initial judicial review of its defamatory content” and allow the defendant to properly formulate an
answer and identify affirmative defenses. Id. at 492.
¶ 57 In contrast, a cause of action for defamation per quod may be brought under two sets of
circumstances. Bryson v. News America Publications, Inc., 174 Ill. 2d 77, 103 (1996). First, a
cause of action for defamation per quod may exist where the defamatory character of the statement
is not apparent on its face, but extrinsic facts demonstrate an injurious meaning. Id. Second, a
claim of defamation per quod is appropriate when the statement is defamatory on its face, but does
not fall within one of the five recognized categories of defamation per se. Id. A plaintiff may only
prevail on a claim for defamation per quod if the plaintiff pleads and proves special damages,
which are actual damages of a pecuniary nature. Hill v. Schmidt, 2012 IL App (5th) 110324, ¶ 25.
¶ 58 We note that plaintiffs’ brief fails to identify which statements constituted defamation per
se and defamation per quod. Nevertheless, we reject Joseph’s contention that he can prevail on a
claim for defamation per quod. In their amended complaint, plaintiffs did not allege that they
suffered actual monetary damages because of defendants’ defamatory statements. Plaintiffs only
alleged that they have “suffered substantial and irreparable damages, and will continue to suffer
damages, including but not limited to loss of income, loss of good name, loss of reputation, loss
of business, as well as embarrassment, shame, humiliation and emotional distress.” However,
“[g]eneral allegations such as damage to one’s health or reputation, economic loss [i.e., loss of
salary], and emotional distress are insufficient to state a cause of action for defamation per quod.”
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Maag v. Illinois Coalition for Jobs, Growth and Prosperity, 368 Ill. App. 3d 844, 853 (2006)
(quoting Kurczaba v. Pollock, 318 Ill. App. 3d 686, 694 (2000)). Rather, special damages must be
alleged. Because Joseph failed to allege special damages, we reject his defamation per quod
claims.
¶ 59 a. Actual Malice
¶ 60 Regardless of whether a defamation claim involves statements that are alleged to be
defamatory per se or per quod, where the offending statement is made by a member of the press
or a media organization about a plaintiff who is a public figure, the plaintiff “may not obtain redress
in a libel action unless he proves that the allegedly defamatory statements were made with actual
malice.” Costello, 125 Ill. 2d at 418-19 (citing New York Times Co. v. Sullivan, 376 U.S. 254(1964)). Individuals who are limited purpose public figures (i.e., those who thrust themselves in
the forefront of particular public controversies to influence the resolution of the issues involved),
need to “establish actual malice only in those instances where the purported libelous statements
were sufficiently connected to controversies in which they have chosen to accept a leadership
role.” Kessler v. Zekman, 250 Ill. App. 3d 172, 181 (1993). The inquiry as to whether a statement
was made with actual malice is subjective. Wanless v. Rothballer, 115 Ill. 2d 158, 170 (1986)
(citing Bose Corp. v. Consumers Union of United States, Inc., 466 U.S. 485, 51 (1984)). The
plaintiff must prove by clear and convincing evidence that defendants “published the defamatory
statements with knowledge that the statements were false or with reckless disregard for their truth
or falsity.” Costello, 125 Ill. 2d at 419. Reckless disregard for the truth may be found “where the
evidence shows that the defendant in fact entertained serious doubts as to the truth of the
publication.” Id. Further, a “[f]ailure to investigate does not itself establish actual malice if the
defendants did not seriously doubt the truth of their assertions.” Id. at 421. We will “infer that a
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media defendant published defamatory statements in reckless disregard for their truth only when
the defendant’s investigation has revealed either insufficient information to support the defamatory
accusations in good faith or creates a substantial doubt as to the truth of those accusations.” Id.¶ 61 We find that the circuit court correctly held that Joseph was a limited purpose public figure
and thus, a showing of actual malice is required. In determining whether an individual may qualify
as a limited public figure, Illinois has adopted the three-part test articulated in Waldbaum v.
Fairchild Publications, Inc., 627 F.2d 1287 (D.C. Cir. 1980). See Kessler, 250 Ill. App. 3d at 181.
First, there must be a public controversy, which means an issue that is publicly debated, and the
outcome of which impacts the general public or some portion of it in an appreciable way.
Waldbaum, 627 F.2d at 1296. A matter of general public interest or concern is not sufficient. Id.Second, the plaintiff must have undertaken some voluntary act seeking to influence the resolution
of the issues involved. Waldbaum, 627 F.2d at 1297. Finally, “the alleged defamation must have
been germane to plaintiff’s participation in the controversy.” Kessler, 250 Ill. App. 3d at 182(quoting Waldbaum, 627 F.2d at 1298).
¶ 62 Here, there was a public controversy surrounding the use of online technology to bring
amateur traders into the regulated securities market. Joseph thrusted himself into the controversy
through Ditto, a company he co-founded which allowed users of its proprietary technology to trade
in securities markets by emulating more experienced traders. As the circuit court noted, this model
represented “a substantial departure from the trading norms and requirements established by the
SEC.” The court correctly noted that “[w]hile the SEC has *** proposed expanding the Accredited
Investor definition, the proposed requirements nevertheless require a demonstration of
sophistication; by contrast, Ditto’s platform was marketed as an opportunity for unsophisticated
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investors.” As such, it implicates “foreseeable and substantial ramifications for nonparticipants”
and therefore, impacts the general public or some portion of the population.
¶ 63 Next, the record demonstrates Joseph’s active role in the public controversy. He made
regular media appearances and utilized the business press to promote his views regarding the role
of technology in the securities industry and to publicize his companies’ abilities to offer social
media platforms that would enable customers to gain expertise in regulated securities markets.
Joseph testified as an expert before Congress regarding the rapid consumer adoption of online
stock trading and related concerns pertaining to security features and protection of investors in
trading technology. He also appeared as an expert on CNBC to opine on whether “Wall Street
needed to get more humans back to trading” and has been featured in numerous publications for
expressing his opinions about the securities industry. Finally, the statements in the article were
germane to plaintiff’s participation in the controversy. The article stated that Joseph had launched
Ditto which provided a platform for amateur traders. The article then stated that Ditto became a
subject of a “barrage of beefs,” including SEC investigations and sanctions. These statements were
germane to plaintiff’s participation in the controversy. Therefore, we find that Joseph was a limited
purpose public figure.
¶ 64 Our inquiry next turns to whether Joseph sufficiently alleged actual malice. The affidavits
of Marek and Newman (who authored the article and headline) provide that they never entertained
serious doubts as to the truth of the publication. At no time prior to the publication of the article
did Marek have any information that any statement in the article was false. Similarly, at all times
prior to publication, Newman believed that the statements contained in the article were true and
accurate. Joseph has failed to prove, by clear and convincing evidence, that defendants “published
the defamatory statements with knowledge that the statements were false or with reckless disregard
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for their truth or falsity.” Costello, 125 Ill. 2d at 419. Absent clear and convincing evidence, we
cannot find that the element of actual malice has been met.
¶ 65 b. Substantial Truth
¶ 66 Although we need not address Joseph’s argument that the Judge Statement and the Digital
Headline were defamatory in nature because they were also false, we note that substantial truth
doctrine is a defense to a defamation claims. Lemons v. Chronicle Publishing Co., 253 Ill. App.
3d 888, 890 (1993). Generally, a defendant is not liable for a defamatory statement if the statement
is true. J. Maki Construction Co. v. Chicago Regional Council of Carpenters, 379 Ill. App. 3d 189,
203 (2008). While “substantial truth” can be an affirmative defense to a defamation suit, falsity is
also an element of the defamation cause of action. Kapotas v. Better Government Ass’n, 2015 IL
App (1st) 140534, ¶ 34. To be substantially true does not mean that every detail of the statement
needs to be accurate. Coghlan v. Beck, 2013 IL App (1st) 128891, ¶ 42. The defendant bears the
burden of establishing the substantial truth of the assertions, which can be accomplished by
showing that the “gist” or “sting” of the defamatory material is true. Id. The question of substantial
truth is normally a question for the jury, but “where no reasonable jury could find that substantial
truth had not been established, the question is one of law.” Harrison v. Chicago Sun-Times, Inc.,
341 Ill. App. 3d 555 (2003).
¶ 67 The crux of Joseph’s argument is that the Judge Statement, which stated that the district
court “agreed with Simons,” was defamatory because the district court’s ruling was procedural
(i.e., not on the merits). Essentially, Joseph contends that the district court did not rule on the merits
of Simons’ retaliatory discharge claims but instead entered a judgment based on default. Although
the article could have highlighted the default nature of the judgment, the statement that the court
“agreed with Simons” was “substantially true.” See Coghlan, 2013 IL App (1st) 128891, ¶ 42 (not
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every detail of the statement needs to be accurate to be “substantially true.”). The record shows
that on September 13, 2016, Joseph contested that the judgment was on the merits. The district
court disagreed with Joseph and noted that it was a “default judgment” and “well, default judgment
is on the merits.” As such, it was substantially true that the district court agreed with Simons,
where it disagreed with Joseph. Therefore, no reasonable jury could determine that substantial
truth had not been established.
¶ 68 With respect to the Digital Headline claiming that “Frustrated investors led on Fox hunt in
L.A.,” Marek’s affidavit stated that she understood and believed that the investors she spoke to
“were aggravated, frustrated, and disappointed” because of Joseph’s responses to their questions
and his lack of availability. This was corroborated by the affidavits of five Ditto investors who
stated that they were frustrated by their inability to get information from Joseph regarding Ditto’s
financial position. Although defendants had information that Joseph lived in Los Angeles at least
part time when the article was published, their description is nevertheless substantially true
because Joseph had ceased his Chicago operations, was in Los Angeles, and was unavailable to
address the investors’ concerns. Thus, a reasonable jury could find that substantial truth had been
established. Further, we note that the words “Fox Hunt” in the Digital Headline appears to be a
play on words, combining Joseph’s surname with a figure of speech. It is a rhetorical hyperbole
because it is understood in context “as an exaggeration rather than a statement of literal fact.” See
Kolegas v. Heftel Broadcasting Corp., 154 Ill. 2d at 15 (citing Greenbelt Cooperative Publishing
Association, Inc. v. Bresler, 398 U.S. 6 (1970)). As such, the Digital Headline does not constitute
a defamatory statement.
¶ 69 We also reject plaintiff’s contention that the court failed to analyze the other eight
defamatory statements in the amended complaint that were incorporated by reference to Exhibit 7.
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Plaintiffs’ amended complaint merely stated, without more, that “[f]or a more detailed analysis of
the falsities of the June 13, 2016 Article, See Exhibit 7.” The amended complaint did not allege
that those statements were also defamatory and served as the basis of plaintiffs’ claim. More
importantly, plaintiffs have waived this argument where they did not raise it before the circuit
court. Cambridge Engineering, Inc. v. Mercury Partners, 378 Ill. App. 3d 437, 453 (2007). The
record shows that plaintiff did not raise this issue in their response to defendants’ motion for
summary judgment. Further, during the hearing on the parties’ motions for summary judgment,
defense counsel stated that the issues in the case pertained to only two statements. Plaintiffs’
counsel failed to object to this characterization of the dispute during the hearing. See Village of
Arlington Heights v. Anderson, 2011 IL App (1st) 110748, ¶ 15 (“Theories not raised during
summary judgment proceedings are waived on review.”). As such, plaintiffs have waived this
argument.
¶ 70 2. False Light
¶ 71 Joseph’s false light claims reincorporate and re-allege the facts pertaining to his defamation
claim. A claim of false light invasion of privacy serves to protect “one’s interest in being let alone
from offensive publicity.” Schaffer v. Zekman, 196 Ill. App. 3d 727, 734 (1990). The three
elements required to establish a cause of action for false light invasion of privacy are: (1) the
plaintiff was placed in a false light before the public because of defendant’s actions; (2) the false
light would be highly offensive to a reasonable person; and (3) defendant acted with actual malice.
Chang Hyun Moon v. Kang Jun Liu, 2015 IL App (1st) 143606, ¶ 17.
¶ 72 “Although the causes of action of false light and defamation overlap ***, they are
different.” Kirchner v. Greene, 294 Ill. App. 3d 672, 682 (1998). Our supreme court noted that the
existence of defamation is not a requirement for false light claims. See Lovgren v. Citizens First
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National Bank, 126 Ill. 2d 411, 421 (1989) (“all defamation cases can be analyzed as false-light
cases, but not all false-light cases are defamation cases.”). However, where the plaintiff has failed
to state a cause of action for defamation per se, this court has held the claim of “invasion of privacy
(false light), must fail as well.” Harte v. Chicago Council of Lawyers, 220 Ill. App. 3d 255, 263
(1991); see also Kapotas v. Better Government Association, 2015 IL App (1st) 140534, ¶ 75
(“where the plaintiff fails to state a cause of action for defamation per se, a count alleging false-
light invasion of privacy based on the allegedly inherently defamatory statements must fail as
well”); Seith v. Chicago Sun-Times, Inc., 371 Ill. App. 3d 124, 139 (2007) (“because the plaintiff’s
unsuccessful defamation per se claim is the basis of his false-light claim, plaintiff’s false-light
invasion of privacy claim fails as well”). Because Joseph has failed to establish the elements
necessary to sustain his claim for defamation per se, we find that plaintiffs’ claims of false light
fail for the same reasons. Additionally, as previously discussed, Joseph has failed to show actual
malice. Where no evidence of actual malice exists, there is no cause of action for false light
invasion of privacy.
¶ 73 III. CONCLUSION
¶ 74 For the reasons stated, we affirm the judgment of the circuit court.
¶ 75 Affirmed.
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