Imperial Design v. Cosmo's Designer Direct

Docket No. 103331.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
IMPERIAL APPAREL, LTD., et al., Appellees, v. COSMO’S
DESIGNER DIRECT, INC., et al. Appellants.
Opinion filed February 7, 2008.
JUSTICE KARMEIER delivered the judgment of the court, with
opinion.
Justices Freeman, Fitzgerald, Kilbride, Garman, and Burke
concurred in the judgment and opinion.
Chief Justice Thomas took no part in the decision.
OPINION
Imperial Apparel, Ltd. (Imperial); its owner, Paul Rosengarten;
and an Imperial employee named Cyril Rosengarten brought an action
in the circuit court of Cook County against Cosmo’s Designer Direct,
Inc. (Cosmo’s), and the Chicago Sun-Times (the Sun-Times) alleging
that an advertisement for Cosmo’s published by the Sun-Times
constituted defamation per se, defamation per quod, false light
invasion of privacy and commercial disparagement. Imperial and the
Rosengartens further alleged that Cosmo’s conduct violated the
Consumer Fraud and Deceptive Business Practices Act (the Consumer
Fraud Act) (815 ILCS 505/1 et seq. (West 2004)). The Sun-Times
filed a motion pursuant to section 2–615 of the Code of Civil
Procedure (735 ILCS 5/2–615 (West 2004)) seeking dismissal of the
defamation per se, defamation per quod and commercial
disparagement counts. Cosmo’s, in turn, filed its own motion under
section 2–615 asking that the complaint be dismissed in its entirety.
The motions filed by the Chicago Sun-Times and Cosmo’s were
granted, and the complaint filed by Imperial and the Rosengartens was
dismissed with prejudice.
Imperial and the Rosengartens appealed. The appellate court
affirmed dismissal of the defamation per se count. It also affirmed
dismissal of the defamation per quod count as to the Rosengartens. In
all other respects, the judgment of the circuit court was reversed, and
the cause was remanded for further proceedings. 367 Ill. App. 3d 48.
We granted Cosmo’s petition for leave to appeal. 210 Ill. 2d R. 315.
For the reasons that follow, the judgment of the appellate court is
affirmed in part and reversed in part. The judgment of the circuit court
dismissing plaintiff’s complaint with prejudice is affirmed.
Our understanding of the relevant facts in this case is defined by
the posture in which the matter comes before us. Where, as here, the
legal sufficiency of a complaint has been attacked under section 2–615
of the Code of Civil Procedure (735 ILCS 5/2–615 (West 2004)), a
court must accept as true all well-pleaded facts contained in the
complaint and all reasonable inferences that can be drawn from those
facts. The court must also interpret the allegations in the complaint in
the light most favorable to the plaintiff. Tuite v. Corbitt, 224 Ill. 2d
490, 509-10 (2006).
The complaint in this case alleges that Cosmo’s and Imperial are
rivals in the highly competitive business of discounted men’s clothing.
Imperial is run by Paul Rosengarten and has a store in Lincolnwood,
east of the Edens Expressway, and north of the City of Chicago.
Cosmo’s, named for its president, Cosmo Laudadio, maintains its
business in Villa Park, which is just west of the City. The companies’
stores are less than 20 miles apart and were opened within two years
of one another in the late 1990s. The Rosengartens are Jewish.
Laduadio is of Italian descent.
Cosmo’s prides itself on being the “home of the original 3 for 1”
promotion. According to Imperial’s complaint, that promotion was
designed to “create the appearance that [the company] is selling three
items of clothing for the regular price of one item.” In the particular
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advertisement that gave rise to this litigation, Cosmo’s claimed, for
example, that customers could buy three “microtech suits” for $199,
three “fine hand tailored wool suits” for $299, or three “super 100’s
wool Italian suits” for $499. Cosmo’s “warehouse” was open to the
public four days a week, but offered “1000’s upon 1000’s of values ...
Cash & Credit Cards Only ... No Checks.” “Fine leather shoes” were
offered for $18 a pair, limit three, while “fully tailored” slacks were
only $15 a pair and silk ties were a mere $5 apiece.
Imperial reviewed Cosmo’s advertisements and determined that its
regular prices for individual suits and other items of menswear were
generally lower than the “3 for 1” promotions offered by Cosmo’s.
Imperial alleged that in order “to compete more effectively, and to
educate the public that its prices [were] generally lower” than
Cosmo’s “3 for 1” promotions, it ran advertisements of its own
offering some of its products on a “3 for 1” basis, but at prices lower
than those advertised by Cosmo’s. In response to Imperial’s “3 for 1”
ads, Cosmo’s took out a full-page ad in the October 15, 2004, edition
of the Chicago Sun-Times. Most of the ad was unremarkable. It
touted an “8 Day Blowout Sale” in which a “$3,000,000 Inventory
Backup Must Be Liquidated” due to a delay in the opening of its
Chicago showroom. The store’s location and hours were given, along
with listings of various clothing items offered for sale, some of which
we just described, and promises of “amazing door busters.” The text
was superimposed on a background photograph showing three tiers
of men’s tailored suits hanging inside a showroom.
This aspect of Cosmo’s ad was uncontroversial. What made
Imperial and the Rosengartens decide to sue was companion text set
out in columnar form along the right side of the ad under a headline
printed in large boldface type reading, “WARNING! Beware of Cheap
Imitators Up North ... .” The text read:
“We all know, there is only one ‘America’ in the world and
only one ‘3 for 1’ in the Midwest ... and in both cases it was
the original thinking of an Italian that made them famous. So
to the shameless owners of Empire rags center, east Eden and
south of quality, we say ... ‘Start being kosher ... Stop openly
copying and coveting your neighbor’s concepts or a hail storm
of frozen matzo balls shall deluge your ‘flea market style
warehouse.’
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Thankfully most readers, like thousands of our customers,
possess a taste level that can easily decipher the quality gap
between dried cream cheese and real Parmigiano ... or alas we
would be wasting ink.
It is laughable how with all the integrity of the ‘Iraq
Information Minister’, they brazenly attempt pulling polyester
over your eyes by conjuring up a low rent 3 for imitation that
has the transparency of a hooker[’]s come on ... but no matter
how they inflate prices and compromise quality, much to their
dismay, Cy and his son Paul the plagiarist still remain light
years away from delivering anything close to our ‘3 for 1’
values.
Remember, things that sound the same might not
necessarily be alike.
Finally, it’s an undisputed fact that when it comes to fine
clothing nothing substitutes for the heritage of the land of
Columbus, DaVinci and Armani ... Hence all that needs to be
said is that ... ‘They can at best poorly imitate what we create
... for we are Italian and they are not!’ ” (Emphasis in
original.)
This ad was written by Cosmo’s, which paid the Sun-Times to
print it. Imperial and the Rosengartens claimed, on information and
belief, that the paper has a daily circulation in excess of 450,000. The
ad appeared on page 13 of the newspaper’s October 15 edition. The
column of text was not specifically identified as an advertisement,
although it is doubtful that anyone would have mistaken it for
anything other than that. The day on which the ad appeared was a
Friday. According to Imperial’s complaint, “Fridays are important for
retail advertising. The bulk of retail sales of menswear occurs on the
weekend, and Friday ads are an important method used to boost
sales.”
Although the entity referred to in the ad was identified as “Empire
rags center,” Imperial and the Rosengartens contended that “[t]he
public in general, and menswear consumers in particular, would
reasonably understand that the Ad was about Imperial.” That is so,
according to the complaint, for a number of reasons. Among these are
the relationship between the word “empire” and the term “imperial,”
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the reference to “east Eden” when Imperial is located east of the
Edens Expressway, and the fact that Paul Rosengarten was mentioned
by his actual given name and Cyril was referred to by his nickname,
“Cy.” As evidence that the ad was understood to refer to Imperial and
the Rosengartens, the complaint alleged that on the day the ad was
published, Imperial and the Rosengartens “received numerous phone
calls from individuals who had read the Ad and understood that the
Ad was about *** them.”
Imperial and the Rosengartens asserted that Cosmo’s ad damaged
the reputations of the company and of the Rosengartens and falsely
disparaged the goods they sold. According to Imperial and the
Rosengartens, this was done deliberately. In their view, Cosmo’s
purchased the ad “in order to injure Imperial’s business,” “to lure
customers to Cosmo’s under false pretenses,” and to deter “past and
potential customers from buying menswear from Imperial.” Imperial
and the Rosengartens alleged that the ad had the intended effect.
Specifically, they contended that “during the weekend and weeks
immediately following the publication of the Ad, [its] sales decreased
from the preceding month as compared to the same period during
2003.” Imperial further charged that in a subsequent ad purchased by
Cosmo’s, Cosmo’s boasted that during the period immediately
following publication of the October 15 ad, it enjoyed some of the
biggest sales in its history.
According to Imperial and the Rosengartens, the ad caused more
than financial harm. It humiliated and embarrassed the Rosengartens,
who claim to have experienced “substantial pain” by being “publicly
vilified by anti-semitic slurs, by being compared to whores, and by the
accusations of a lack of business integrity.” Imperial and the
Rosengartens alleged that because of the ad, they were “lowered ***
in the estimation of the community.”
Imperial and the Rosengartens sought redress for the foregoing
injuries by bringing an action for damages against Cosmo’s and the
Sun-Times. Their complaint contained five counts. Counts I and II,
which were directed against both Cosmo’s and the Sun-Times, alleged
different forms of defamation. Count I charged defamation per se.
Count II was predicated on defamation per quod. Count III sought
recovery from Cosmo’s alone and was premised on the tort theory
commonly referred to as “false light.” Count IV asserted claims
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against Cosmo’s and the Sun-Times for commercial disparagement.
Count V, brought on behalf of Imperial, but not the Rosengartens, and
seeking recovery against Cosmo’s, but not the Sun-Times, alleged a
violation of section 2 of the Consumer Fraud Act (815 ILCS 505/2
(West 2004)).
All five counts were dismissed with prejudice by the circuit court
pursuant to section 2–615 of the Code of Civil Procedure (735 ILCS
5/2–615 (West 2004)). The basis for the circuit court’s judgment was
that the statements in the ad, while in poor taste, consisted of
nonactionable statements of opinion protected by the first amendment
to the United States Constitution (U.S. Const., amend. I).
The appellate court affirmed in part and reversed in part. It agreed
that certain of the statements in the ad were constitutionally protected,
nonactionable speech, but found otherwise with respect to the third
paragraph. That paragraph is the one which compared the plaintiffs’
integrity to that of the “Iraq Information Minister,” charging that they
“brazenly attempt pulling polyester over [customers’] eyes by
conjuring up a low rent three for imitation that has the transparency
of a hooker[’]s come on.” The paragraph further indicated that
Imperial and the Rosengartens “inflate[d] prices and compromise[d]
quality.” In the appellate court’s view, a reasonable reader could very
well interpret this portion of the ad as stating actual facts about the
plaintiffs and the originality and quality of Imperial’s goods. The
appellate court therefore concluded that the ad was not entitled to first
amendment protection. 367 Ill. App. 3d at 53-54.
After rejecting the circuit court’s rationale for dismissal of the
complaint, the appellate court proceeded to consider additional
arguments raised by Cosmo’s and the Sun-Times in support of the
circuit court’s judgment. The court first took up the question of
whether the plaintiffs constituted “limited purpose public figures” with
respect to their merchandising endeavors and, as such, should have
been required to plead and prove that the Sun-Times published the ad
with actual malice. The court held that they were not. This being the
only alternative basis advanced by the defendants in support of the
dismissal of count III of the complaint, which alleged “false light,” the
appellate court held that count III should not have been dismissed.
367 Ill. App. 3d at 55.
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The appellate court next reviewed the viability of count I, alleging
defamation per se. In undertaking its analysis, the court first rejected
defendants’ argument that the ad was not actionable because it was
reasonably capable of an innocent construction. 367 Ill. App. 3d at 56-
57. The court held, however, that because the statements in the ad did
not refer to Imperial by name or give the last names of the
Rosengartens and because the court believed the statements could
reasonably have been interpreted as referring to someone other than
the plaintiffs, the statements could not be found actionable per se. It
therefore affirmed the dismissal of count I. 367 Ill. App. 3d at 57-58.
The appellate court likewise affirmed dismissal of count II of the
complaint, alleging defamation per quod, with respect to the
Rosengartens. Its decision was based on the principle that an action
for defamation per quod requires that the plaintiff plead and prove
special damages, i.e., actual damages of a pecuniary nature. See
Bryson v. News America Publications, Inc., 174 Ill. 2d 77, 103
(1996). Such damages were alleged to have been sustained by
Imperial–its business declined–but no claim of special damages was
made as to Paul and Cyril Rosengarten. Although they contended that
their reputations were harmed and that they were vilified, humiliated,
and embarrassed, there is no indication in the complaint that such
affronts ever translated into actual damages of a pecuniary nature. The
appellate court therefore concluded that count II of plaintiffs’
complaint had failed to state a cause of action for defamation per quod
against the Rosengartens. 367 Ill. App. 3d at 58.
With the exception of these two claims (count I as to all parties
and count II with respect to the Rosengartens), the appellate court
reversed the circuit court’s judgment and remanded for further
proceedings. 367 Ill. App. 3d 48. In so doing, the appellate court
rejected defendants’ argument that count IV of plaintiffs’ complaint
was properly dismissed because the tort of commercial disparagement
is not a viable cause of action in Illinois. 367 Ill. App. 3d at 59-60.
Now that the matter is before our court, Cosmo’s and the Sun-
Times assert that the appellate court should not have reversed any
portion of the circuit court’s judgment and that the circuit court’s
judgment dismissing all counts of the complaint should be affirmed in
full. They contend that the statements made in the October 15 ad were
constitutionally protected and that the appellate court erred in
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concluding otherwise. Because the statements were constitutionally
protected, defendants assert, none of the five counts asserted by
Imperial and the Rosengartens are viable and they were all properly
dismissed by the circuit court.
Cosmo’s and the Sun-Times further argue, in the alternative, that
even if the Constitution does not shield them from plaintiffs’ claims,
we should nevertheless uphold the circuit court’s decision to dismiss,
in full, the claims asserted against them in counts II (defamation per
quod), III (false light), and IV (commercial disparagement).
According to Cosmo’s and the Sun-Times, count II is fatally infirm in
its entirety because it did not adequately plead special damages as to
any of the plaintiffs, not simply the Rosengartens. Cosmo’s and the
Sun-Times contend that count III must fail for the same reason. In
addition, they assert there is no set of facts that would permit plaintiffs
to recover under count IV because Illinois does not and should not
recognize a cause of action for commercial disparagement.
Imperial and the Rosengartens seek cross-relief. They argue we
should reverse that aspect of the appellate court’s judgment affirming
dismissal of the defamation per se claim set forth in count I. In their
view, the appellate court’s construction of the ad was strained and
unreasonable and conflicts with precedent from this court. They do
not challenge the appellate court’s determination that the claim for
defamation per quod was properly dismissed as to the Rosengartens
and, in all other respects, urge us to affirm the appellate court’s
judgment.
The standards governing our review are familiar. A motion to
dismiss under section 2–615 of the Code of Civil Procedure (735
ILCS 5/2–615 (West 2004)) attacks the legal sufficiency of a
complaint. Tuite v. Corbitt, 224 Ill. 2d 490, 509 (2006). A cause of
action should not be dismissed under section 2–615 unless it is clear
that no set of facts can be proved under the pleadings that would
entitle the plaintiff to recover. Tuite v. Corbitt, 224 Ill. 2d at 510.
Whether a complaint should be dismissed under section 2–615
presents a question of law, which we review de novo. Oliveira v.
Amoco Oil Co., 201 Ill. 2d 134, 147-48 (2002).
In assessing the legal sufficiency of the plaintiffs’ complaint in this
case, we begin with the uncontroverted fact that Imperial and
Cosmo’s are competitors in a highly competitive business. Under
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Illinois law, commercial competitors are privileged to interfere with
one another’s prospective business relationships provided their intent
is, at least in part, to further their businesses and is not solely
motivated by spite or ill will. General Motors Corp. v. State of Illinois
Motor Vehicle Review Board, 224 Ill. 2d 1, 15 (2007). The privilege
to compete does not, however, encompass the use of improper
competitive strategies that employ fraud, deceit, intimidation, or
deliberate disparagement. See Cohabaco Cigar Co. v. United States
Tobacco Co., No. 98–C–1580 (N.D. Ill. October 29, 1998).
Ultimately, what Imperial and the Rosengartens are arguing in this
case is that the ad taken out by Cosmo’s in the October 15, 2004,
edition of the Sun-Times crossed the line from legitimate competition
to actionable misconduct.
As we have described, Cosmo’s and the Sun-Times’ principal
response to plaintiffs’ claim is that the statements made in the ad were
constitutionally protected and therefore cannot be the basis for an
action for damages. Analysis of this argument is an appropriate
starting point for our review because it is potentially dispositive of the
case. If, as defendants contend, the content of the ad is protected by
the first amendment, the ad not only cannot serve as the predicate for
plaintiffs’ defamation claims, it cannot serve as the basis for their
“false light,” commercial disparagement, or Consumer Fraud Act
claims. See Scott v. Association for Childbirth at Home,
International, 88 Ill. 2d 279, 287 (1981); Brennan v. Kadner, 351 Ill.
App. 3d 963, 971 (2004); Soderland Brothers, Inc. v. Carrier Corp.,
278 Ill. App. 3d 606, 620 (1995); In re Estate of Albergo, 275 Ill.
App. 3d 439, 451 (1995).
The first amendment to the United States Constitution states, in
part, that “Congress shall make no law *** abridging the freedom of
speech, or of the press; or the right of the people peaceably to
assemble, and to petition the Government for a redress of grievances.”
U.S. Const., amend. I. Although the amendment, by its terms,
addresses only the power of Congress, the United States Supreme
Court has long held that its provisions are also binding on the states
through the due process clause of the fourteenth amendment (U.S.
Const., amend. XIV). See, e.g., Murdock v. Pennsylvania, 319 U.S.
105, 108, 87 L. Ed. 1292, 1295, 63 S. Ct. 870, 872 (1943).
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The protections afforded by the first amendment to freedom of
speech and the press were designed to assure “ ‘unfettered interchange
of ideas for the bringing about of political and social changes desired
by the people.’ ” (Emphasis omitted.) Miller v. California, 413 U.S.
15, 34-35, 37 L. Ed. 2d 419, 437, 93 S. Ct. 2607, 2620-21 (1973),
quoting Roth v. United States, 354 U.S. 476, 484, 1 L. Ed. 2d 1498,
1506, 77 S. Ct. 1304, 1308 (1957). Underlying this purpose is the
belief that “the best test of truth is the power of the thought to get
itself accepted in the competition of the market.” Abrams v. United
States, 250 U.S. 616, 630, 63 L. Ed. 1173, 1180, 40 S. Ct. 17, 22
(1919) (Holmes, J., dissenting). While political speech lies at the core
of first amendment protections, those protections also embrace
commercial speech, including advertising. 44 Liquormart, Inc. v.
Rhode Island, 517 U.S. 484, 495-500, 134 L. Ed. 2d 711, 723–26,
116 S. Ct. 1495, 1504-07 (1996). In addition, the provisions of the
first amendment have likewise been interpreted as limiting the reach
of state defamation laws. See Dun & Bradstreet, Inc. v. Greenmoss
Builders, Inc., 472 U.S. 749, 755, 86 L. Ed. 2d 593, 600, 105 S. Ct.
2939, 2943 (1985).
Whether and to what extent the Constitution constrains state
defamation law depends on the circumstances of the case at issue.
Two considerations must be taken into account. The first is whether
the plaintiff is a public figure or official or is, instead, merely a private
figure. The second is whether the speech at issue is of public concern.
Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767, 775, 89 L.
Ed. 2d 783, 791-92, 106 S. Ct. 1558, 1563 (1986).
The question of whether the plaintiffs are public or private figures
affects the standard of liability. If the plaintiffs are public figures or
officials, the first amendment precludes them from obtaining redress
in a defamation action unless they can prove that the allegedly
defamatory statements were made with actual malice. Costello v.
Capital Cities Communications, Inc., 125 Ill. 2d 402, 418-19 (1988),
citing New York Times Co. v. Sullivan, 376 U.S. 254, 11 L. Ed. 2d
686, 84 S. Ct. 710 (1964). If the plaintiffs are private figures, the first
amendment does not normally impose any restriction on the liability
standards states may adopt. The key exception is when a media
defendant is involved. The first amendment does not permit the
imposition of liability on a publisher or broadcaster of a defamatory
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falsehood injurious to a private person without a showing of fault,
although the degree of fault required is left to the states to determine.
See Rosner v. Field Enterprises, Inc., 205 Ill. App. 3d 769, 784
(1990), citing Gertz v. Robert Welch, Inc., 418 U.S. 323, 41 L. Ed. 2d
789, 94 S. Ct. 2997 (1974). In Illinois, ordinary negligence will
suffice. See Edwards v. Paddock Publications, Inc., 327 Ill. App. 3d
553, 562 (2001).
In contrast to a plaintiff’s status, the content of the challenged
speech, specifically, whether it addresses a matter of public concern,
does not determine the standard of liability. Troman v. Wood, 62 Ill.
2d 184, 195-96 (1975) (rejecting public interest criterion for
determining liability standard); see In re Factor VIII or IX
Concentrate Blood Products Litigation, 25 F. Supp. 2d 837, 847
(N.D. Ill. 1998) (libel suits are not automatically subject to heightened
standard articulated by New York Times Co. v. Sullivan simply
because they involve matters of public concern). Under current first
amendment doctrine, the question of whether the speech addresses a
matter of public concern bears on the standards that must be satisfied
in order to recover punitive damages. Where the cause of action is
based on defamatory statements concerning a matter of public
concern, punitive damages may not be imposed absent a showing of
actual malice. Where the defamatory statements involve a purely
private matter, by contrast, an award of punitive damages is not
dependent upon actual malice being established. See Mullen v. Solber,
271 Ill. App. 3d 442, 445 (1995).
Whether speech addresses a matter of public concern is relevant
for another reason as well. When the speech addresses a matter of
public concern and the claim is brought against a media defendant,
such as a newspaper, the first amendment requires the plaintiff to bear
the burden of showing falsity as well as fault before recovering
damages. There can be no presumption that the defamatory statement
is false. Milkovich v. Lorain Journal Co., 497 U.S. 1, 16, 111 L. Ed.
2d 1, 16, 110 S. Ct. 2695, 2704 (1990).
In the case before us, neither Imperial nor the Rosengartens are
alleged to be public officers of any kind. Cosmo’s and the Sun-Times
have offered nothing that would support characterization of Imperial
or anyone affiliated with it, including the Rosengartens, as a public
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figure for this or any purpose.1 In addition, no claim has been made
that the statements made in the disputed advertisement addressed a
matter of public concern. Under the principles we have just discussed,
the special standards for fault, falsity, and punitive damages imposed
by the first amendment in defamation actions therefore have no
application to the claims asserted by Imperial and the Rosengartens
against Cosmo’s. Those claims are subject to the normal common law
fault, falsity and punitive damage principles followed in Illinois in
defamation cases. Because it is a media defendant, the Sun-Times is
protected by the special first amendment standard requiring a showing
of fault, but because Illinois does not impose liability without fault in
defamation cases and thus comports with that standard, the standard
has no effect on resolution of this litigation.
When the circuit court granted the motions to dismiss filed by
Cosmo’s and the Sun-Times in this case, it did not address any of the
aspects of first amendment jurisprudence we have just discussed.
Instead, it focused on the character of the assertions contained in the
ad to discern whether they constituted statements of actual fact or
were merely expressions of opinion. The court took this approach on
the assumption that opinions are protected by the first amendment and
cannot serve as the predicate for defamation claims.
The circuit court’s analysis was not entirely correct. There is no
separate constitutional privilege for opinion. Milkovich v. Lorain
Journal Co., 497 U.S. at 21, 111 L. Ed. 2d at 19, 110 S. Ct. at 2707;
see Brennan v. Kadner, 351 Ill. App. 3d 963, 969 (2004).
Accordingly, as we recently explained in Solaia Technology, LLC v.
Specialty Publishing Co., 221 Ill. 2d 558, 581 (2006), and as the
appellate court in this case recognized, the fact that a statement is
phrased in the form of an opinion does not cloak it with first
amendment protection. Even when presented as apparent opinion or
1
As indicated earlier in this opinion, the Sun-Times did attempt to
persuade the appellate court that Imperial and the Rosengartens should be
regarded as “limited purpose public figures with respect to their
merchandising endeavors.” 367 Ill. App. 3d at 54. The appellate court
rejected that argument (367 Ill. App. 3d at 55), and the Sun-Times has not
pursued it in our court.
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rhetorical hyperbole, a statement may constitute actionable
defamation.
While the circuit court’s analysis was imperfect, the basis for its
approach was sound. In addition to governing standards regarding
fault, falsity, and punitive damages, the first amendment does impose
limits on the type of speech which may be the subject of state
defamation actions. Milkovich v. Lorain Journal Co., 497 U.S. at 16,
111 L. Ed. 2d at 16, 110 S. Ct. at 2704. Specifically, the first
amendment prohibits defamation actions based on loose, figurative
language that no reasonable person would believe presented facts.
See, e.g., Troy Group, Inc. v. Tilson, 364 F. Supp. 2d 1149, 1157
(C.D. Cal. 2005) (parties associated with corporation could not sue
shareholder for defamation based on his criticism of them “as the
biggest crooks on the planet” because, when viewed in context, it was
the type of exaggerated, figurative and hyperbolic speech that the first
amendment protects); Levinsky’s, Inc. v. Wal-Mart Stores, Inc., 127
F.3d 122, 128 (1st Cir. 1997) (because of the first amendment, Wal-
Mart’s reference to business competitor as “trashy,” while unflattering
and uncomplimentary, cannot serve as the basis for defamation claim);
Old Dominion Branch No. 496 v. Austin, 418 U.S. 264, 284-86, 41
L. Ed. 2d 745, 761-63, 94 S. Ct. 2770, 2781-82 (1974) (use of the
word “traitor” to define a worker who crossed a picket line not
actionable); Greenbelt Cooperative Publishing Ass’n v. Bresler, 398
U.S. 6, 13-14, 26 L. Ed. 2d 6, 14, 90 S. Ct. 1537, 1541-42 (1970)
(newspaper’s characterization of a developer’s negotiating position as
“blackmail” not defamatory as a matter of federal constitutional
law–the word was simply an epithet and, under the circumstances, did
not suggest commission of a crime); Phantom Touring, Inc. v.
Affiliated Publications, 953 F.2d 724, 728 (1st Cir. 1992) (calling
play “a rip-off, a fraud, a scandal, a snake-oil job” was mere hyperbole
and, thus, constitutionally protected).
The test for determining whether a statement is protected from
defamation claims under the first amendment is whether it can
reasonably be interpreted as stating actual fact. In applying this test we
are guided by several criteria: (1) whether the statement has a precise
and readily understood meaning, (2) whether the statement is
verifiable, and (3) whether the statement’s literary or social context
signals that it has factual content. Solaia Technology, LLC v.
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Specialty Publishing Co., 221 Ill. 2d at 581. The statement is
evaluated from the perspective of an ordinary reader, but whether or
not a statement is a factual assertion that could give rise to a
defamation claim is a question of law for the court. Brennan v.
Kadner, 351 Ill. App. 3d at 969; Lott v. Levitt, 469 F. Supp. 2d 575,
584-85 (N.D. Ill. 2007).
The principle that an allegedly defamatory statement is protected
by the first amendment unless the plaintiff shows that the statement is
factual has been found to apply to three types of actions: those
brought by public officials, those brought by public figures, and those
brought by private individuals against media defendants. See Anton v.
St. Louis Suburban Newspapers, Inc., 598 S.W.2d 493, 498 (Mo.
App. 1980). The claims asserted by Imperial and the Rosengartens
against the Sun-Times fall within the third of these categories. The
claims against Cosmo’s do not fall into any of them. As we have
indicated, those claims involve an attempt by private parties to obtain
redress against a private party based on statements involving a matter
of private rather than public concern.
Whether the privilege afforded by the first amendment to
statements that are not factual also extends to statements made by one
private party about another on a matter of purely private concern is
unsettled. Compare Anton v. St. Louis Suburban Newspapers, Inc.,
598 S.W.2d at 499, and Snead v. Redland Aggregates, Ltd., 998 F.2d
1325, 1334 (5th Cir. 1993), with Restatement (Second) of Torts
§566, Comment c (1977). Among the more detailed discussions of
this question was that made by the Supreme Court of Ohio in
Wampler v. Higgins, 93 Ohio St. 3d 111, 752 N.E.2d 962 (2001),
which involved a defamation action brought by a building owner
against the author of an unflattering letter to the editor published in a
local newspaper. The letter charged that the building owner had
forced a grocer out of business by charging exorbitant rent and
denounced him as a “ruthless speculator.” In holding that the letter
was not actionable as a matter of law, the court followed those
decisions that have rejected the notion private individuals should be
afforded less protection than media defendants with respect to the
expression of opinions rather than facts. Although the court rested its
decision on the state constitutional grounds, not the first amendment,
the authorities it surveyed in reaching its conclusion did invoke federal
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constitutional principles. Wampler, 93 Ohio St. 3d at 123-26, 752
N.E.2d at 974-76.
In the case before us, the judgments of the circuit and appellate
courts were consistent with this line of cases. They assumed, without
expressly deciding, that the constitutional privilege does extend to
private/private statements. There are benefits to this approach. Where,
as here, plaintiffs seek recovery from both private individuals and a
media defendant based on the same communication, subjecting them
to the same standards will insure a consistent outcome. The approach
also recognizes that the inherent worth of speech in terms of its
capacity for informing the public is not dependent on the status of the
defendant who publishes it. See First National Bank of Boston v.
Bellotti, 435 U.S. 765, 777, 55 L. Ed. 2d 707, 718, 98 S. Ct. 1407,
1416 (1978). In addition, the approach reduces ambiguity regarding
whether a particular communication is actionable. This is an important
value in first amendment jurisprudence, for ambiguity yields fear of
liability and fosters self-censorship, the effects of which chill the free
flow of protected expression. See Hillsboro News Co. v. City of
Tampa, 451 F. Supp. 952, 954 (M.D. Fla. 1978).
Having said that, the question of whether the privilege afforded by
the first amendment extends to private/private statements is a matter
we need not resolve today. The lower courts’ assumption that the
privilege is applicable has not been challenged in this appeal. For the
purposes of the present case, we shall therefore regard it as valid.
We turn then to the language of the ad itself to ascertain whether
it can reasonably be interpreted as stating actual fact. Contrary to the
appellate court, we believe that the answer to that question is no. The
text is artless, ungrammatical, sophomoric and sometimes nonsensical.
It is also a shameless appeal to ethnic prejudice, extolling, as it does,
the supposed superiority of Italians over those of Jewish ancestry, at
least “when it comes to fine clothing.” We do not believe, however,
that an ordinary reader would perceive it as making objectively
verifiable assertions about plaintiffs’ business.
The gist of the ad, taken as a whole, is simply this: plaintiffs
copied Cosmo’s “3 for 1” sale idea, plaintiffs were wrong to do so and
should stop, and while most customers realize the difference between
the companies offering the sales, those who might not should not be
deceived–you get more for your money in Cosmo’s 3 for 1 sale. To
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be sure, the language Cosmo’s used to convey these concepts was
unflattering. The ad employed terms such as “rags,” “flea market style
warehouse,” “dried cream cheese,” “low rent,” and “a hookers come
on.” It also likened plaintiffs to the Iraqi Information Minister and
claimed they “inflate prices and compromise quality.” In our view,
however, these are merely subjective characterizations lacking precise
and readily understood meaning. In the context of discount clothing
sales, no reasonable person would regard them as anything other than
colorful hyperbole aimed at capturing the reader’s interest and
attention.
The appellate court thought a reasonable reader might interpret
the ad as stating actual facts about the plaintiffs themselves, but did
not specify what those actual facts might be. The appellate court also
believed that a reasonable reader might interpret the ad as stating
actual facts about the originality of the goods Imperial sold. 367 Ill.
App. 3d at 54. In reality, the ad says nothing whatever about the
originality of the clothing Imperial sells. When the ad refers to
imitators, imitations, plagiarism and “coveting your neighbor’s
concepts,” it is talking about Imperial’s appropriation of Cosmo’s “3
for 1” sales concept. That Imperial got the idea for its “3 for 1” sale
from Cosmo’s is a verifiable fact. Because it is undisputably true,
however, it cannot be the basis for a defamation claim. Consistent
with the first amendment, a statement is not actionable unless it is
factual and false. Solaia Technology, LLC v. Specialty Publishing
Co., 221 Ill. 2d at 582.
In their brief, Imperial and the Rosengartens express profound
resentment for what they perceive as the anti-Semitic tone of Cosmo’s
ad. While we fully appreciate why Imperial and the Rosegartens would
find the language offensive, their arguments on this point do not affect
our resolution of the appeal. No matter how distasteful they may be,
epithets aimed at ethnic or religious groups fall within the protection
of the first amendment. See United States v. Eichman, 496 U.S. 310,
318-19, 110 L. Ed. 2d 287, 296, 110 S. Ct. 2404, 2410 (1990). No
circumstances are alleged in this case that would strip the language
used in the ad here of that protection.
As we noted earlier in this opinion, a determination that language
is not actionable under the first amendment not only is fatal to
plaintiffs’ defamation claims, it precludes them from obtaining
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recovery under any of the other common law and statutory claims they
asserted in their complaint. In light of this conclusion, we need not
reach the remaining issues raised by the partes on this appeal. The
circuit court acted correctly when it dismissed plaintiffs’ complaint on
the pleadings, with prejudice, pursuant to section 2–615 of the Code
of Civil Procedure (735 ILCS 5/2–615 (West 2004)).
Correspondingly, the appellate court should not have permitted any of
the claims asserted in that complaint to proceed. To the extent that it
did so, its judgment is reversed.
For the foregoing reasons the judgment of the appellate court is
affirmed in part and reversed in part. The judgment of the circuit court
is affirmed.
Appellate court judgment affirmed
in part and reversed in part;
circuit court judgment affirmed.
CHIEF JUSTICE THOMAS took no part in the consideration or
decision of this case.
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