Slovinski v. Elliot

Docket No. 107146.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
JERRY SLOVINSKI, Appellant, v. JAMES ELLIOT et al.,
Appellees.
Opinion filed April 15, 2010.
JUSTICE BURKE delivered the judgment of the court, with
opinion.
Chief Justice Fitzgerald and Justices Freeman, Thomas, Garman,
and Karmeier concurred in the judgment and opinion.
Justice Kilbride dissented, with opinion.
OPINION
Following the entry of a default judgment in a defamation lawsuit,
a jury awarded the plaintiff, Jerry Slovinski, $81,600 in damages for
emotional distress and $2 million in punitive damages. The circuit
court of Cook County remitted the punitive damage award to
$1 million. On appeal, the appellate court affirmed the default
judgment and the award for emotional damage but remitted the
punitive damage award further, to $81,600. No. 1–05–0423
(unpublished order under Supreme Court Rule 23). Plaintiff appeals,
challenging only the appellate court’s judgment remitting the punitive
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damage award. We affirm the judgment of the appellate court.
Background
In July 1997, plaintiff filed a one-count complaint alleging
defamation per se against Cherry Communications, Inc. (Cherry), and
its chief executive officer, defendant James Elliot. Cherry was a
telecommunications company which bought long-distance phone
minutes in bulk at a discounted rate and then resold them for a profit.
Plaintiff’s cause of action was stayed in November of 1997 after
Cherry filed for bankruptcy. Cherry has since dissolved and is no
longer a party to this action.
The bankruptcy stay was eventually lifted and, in April of 2003,
plaintiff filed a second amended complaint. In his complaint, plaintiff
alleged that he was the chief financial officer of Cherry from July 1995
to May 1996. Plaintiff further alleged that one of his responsibilities
as chief financial officer was to prepare monthly and annual financial
statements, which would allow Cherry’s suppliers to assess the
financial strength and creditworthiness of the company.
In May 1996, plaintiff’s employment was terminated. According
to plaintiff’s complaint, prior to his departure from Cherry he had
completed Cherry’s 1995 annual financial statement and the monthly
statements for January, February, and March 1996. Plaintiff
maintained that the financial statements demonstrated that the overall
financial situation of Cherry was worsening.
Several months after his employment was terminated, plaintiff
learned of a meeting that occurred in July 1996 between defendant
and representatives from WorldCom, one of Cherry’s suppliers.
During this meeting, defendant and the WorldCom representatives
discussed Cherry’s debt to WorldCom, and WorldCom requested
Cherry’s 1995 annual financial statement and updated monthly
statements. Plaintiff alleged that, during the meeting, defendant made
false statements about plaintiff to the WorldCom representatives.
Specifically, according to plaintiff, defendant stated that Cherry’s
financial statements were not available because plaintiff had not
completed them, plaintiff “was not doing his job,” plaintiff “came in
late and left early,” plaintiff was “sneaking off to do workouts,” and
plaintiff “spent his time chasing pussy all day.”
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After defendant failed repeatedly to answer discovery requests, the
circuit court entered a default judgment against defendant pursuant to
Supreme Court Rule 219(c)(v) (210 Ill. 2d R. 219(c)(v)). A hearing
was subsequently held before a jury on the question of damages. See
735 ILCS 5/2–1206(a) (West 2000).
At the hearing, plaintiff and his wife, Bonita Slovinski, were the
only witnesses to testify. The bulk of plaintiff’s testimony consisted of
extensive descriptions of his work and salary history after leaving
Cherry. Through this testimony, plaintiff attempted to show that
defendant’s defamatory statements had damaged his reputation in the
telecommunications industry and resulted in a reduction in his income.
Plaintiff also testified that defendant’s defamatory statements caused
him emotional distress. Plaintiff stated that he had a “very difficult
conversation” with his wife about the defamatory statements and had
to explain to her that they were not true. Plaintiff also testified that,
because his professional reputation had suffered, he had been forced
to take jobs out of town and had lost time with his family. Finally,
plaintiff stated that he had not yet told his children about the
statements, that this was something else he had to do, and that this
was something that caused him emotional stress. On cross-
examination, plaintiff acknowledged that his firing, which occurred
some two months prior to defendant’s meeting with the WorldCom
representatives, was unrelated to defendant’s defamatory statements.
Bonita testified that she was “shocked” to learn of defendant’s
accusation that plaintiff had chased “women all day long.” She initially
considered whether the accusation was true but “after thinking about
it” realized it “was definitely a false accusation.” According to Bonita,
plaintiff appeared less “energetic about going to work” after he
learned about the defamatory statements. He also spent less time
socializing with friends.
The evidence presented at the hearing regarding defendant’s
conduct was minimal. 1 Plaintiff testified that he received a phone call
1
Although plaintiff’s complaint contained further allegations regarding
defendant’s defamatory statements, and these were deemed admitted by
virtue of defendant’s default, the allegations were not presented to the jury
during the damages hearing. See generally Mooney v. Underwriters at
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from the treasurer of WorldCom in November of 1996. According to
plaintiff, the treasurer told him that during a meeting with WorldCom
representatives in July 1996, defendant made a number of disparaging
comments about plaintiff. Specifically, defendant told the WorldCom
representatives that plaintiff had not completed Cherry’s financial
statements, that plaintiff “was not doing his job,” that plaintiff “came
in late and left early,” that plaintiff was “sneaking off to do workouts,”
and that plaintiff “spent his time chasing pussy all day.” Plaintiff
testified that none of these statements were true. No further evidence
was introduced regarding defendant’s conduct and no evidence was
introduced regarding defendant’s finances.
During closing argument, plaintiff’s attorney contended that an
award of $2 million in punitive damages was necessary to punish
defendant, largely because defendant had engaged in a premeditated
scheme to harm plaintiff. Defendant’s counsel, in turn, declined to
address the issue of punitive damages. Instead, defense counsel argued
to the jury that since punitive damages could only be awarded if
compensatory damages were found, and since, in defense counsel’s
view, there was no basis for a compensatory award, there was no need
to even discuss the issue of punitive damages.
The jury subsequently returned an itemized verdict form awarding
plaintiff $0 for lost wages, $0 for damage to reputation, $81,600 in
damages for emotional distress and $2 million in punitive damages.
The circuit court denied defendant’s posttrial motion seeking
judgment notwithstanding the verdict, a directed verdict or a new trial.
The court also denied defendant’s motion seeking remittitur of the
compensatory damage award. However, the circuit court granted
defendant’s motion seeking remittitur of the punitive damage award
and reduced the award to $1 million. Defendant appealed. Plaintiff
cross-appealed, challenging the circuit court’s reduction of the
punitive damage award.
The appellate court affirmed the trial court’s entry of the default
judgment and upheld the award of $81,600 for emotional distress.
Lloyd’s, London, 33 Ill. 2d 566, 570 (1965) (admissions in pleadings may
be argued to the jury); 4 J. Wigmore, Evidence §1064 (Chadbourn rev. ed.
1972).
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However, the appellate court entered a remittitur of $1,918,400 on
the punitive damage award, reducing it to $81,600, conditioned on
plaintiff’s consent. No. 1–05–0423 (unpublished order under Supreme
Court Rule 23). We granted plaintiff’s petition for leave to appeal.
210 Ill. 2d R. 315. We also allowed the Illinois Trial Lawyers
Association to file an amicus curiae brief in support of plaintiff.
Analysis
Punitive damages “are not awarded as compensation, but serve
instead to punish the offender and to deter that party and others from
committing similar acts of wrongdoing in the future.” Loitz v.
Remington Arms Co., 138 Ill. 2d 404, 414 (1990). Punitive damages
may be awarded when the defendant’s tortious conduct evinces a high
degree of moral culpability, that is, when the tort is “committed with
fraud, actual malice, deliberate violence or oppression, or when the
defendant acts willfully, or with such gross negligence as to indicate
a wanton disregard of the rights of others.” Kelsay v. Motorola, Inc.,
74 Ill. 2d 172, 186 (1978). To determine whether punitive damages
are appropriate, “the trier of fact can properly consider the character
of the defendant’s act, the nature and extent of the harm to the
plaintiff that the defendant caused or intended to cause and the wealth
of the defendant.” Restatement (Second) of Torts §908(2) (1979).
Because punitive damages are penal in nature, they “are not favored
in the law, and the courts must take caution to see that punitive
damages are not improperly or unwisely awarded.” Kelsay, 74 Ill. 2d
at 188.
Section 2–1207 of the Code of Civil Procedure (735 ILCS
5/2–1207 (West 2000)) provides that the “trial court may, in its
discretion, with respect to punitive damages, determine whether a jury
award for punitive damages is excessive, and if so, enter a remittitur
and a conditional new trial.” Accordingly, when, as in this case, a
circuit court reduces a jury’s punitive damage award by remittitur, we
review the court’s decision for an abuse of discretion.
Initially, plaintiff contends that the appellate court erred in not
reinstating the jury’s original award because the jury’s award of
$2 million should have been left undisturbed by the circuit court. In
plaintiff’s view, the circuit court abused its discretion in remitting the
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jury’s punitive damage award by any amount.
In granting defendant’s motion for remittitur, the circuit court first
recited the general principles underlying punitive damages, stating that
such damages are meant to punish the wrongdoer and deter others,
and that punitive damages must “fit the crime” and not be imposed
unwisely. The circuit court then went on to note that while it did not
condone defendant’s conduct,
“an award which is disproportionate to the wrong serves none
of the purposes of punitive damages and is excessive. The
Court believes that in light of the fact that the jury awarded
Plaintiff $81,600.00 compensatory, an award of punitive
damages in the amount of one million dollars is sufficient to
punish the Defendants and deter others from committing a
similar offense. Accordingly, a remittitur will be entered in the
amount of one million dollars.”
Plaintiff maintains that this reasoning is inadequate. According to
plaintiff, the circuit court erred in entering a remittitur without first
making specific findings that the evidence failed to support the jury’s
award, or that the jury’s award was improperly based on passion,
prejudice or corruption. Citing to NC Illinois Trust Co. v. First Illini
Bancorp, Inc., 323 Ill. App. 3d 254 (2001), plaintiff maintains that the
circuit court’s failure to make these specific findings is, by itself,
reason to hold that the court abused its discretion and is reason to
reinstate the jury’s award. We disagree.
In NC Illinois Trust Co., the appellate court reversed a circuit
court’s remittitur of a jury’s punitive damage award. In so holding, the
appellate court stated the following:
“In remitting the jury’s punitive damages award to
$450,000, the trial court here made no specific findings nor
did it determine that the jury verdict was the product of
passion or prejudice. Instead, the court stated only that it
found the damages award to be excessive.
This court has already set forth with particularity the
evidence in the record supporting the jury’s finding that Bank
repeatedly breached its fiduciary duty to the estate. Because
the trial court indicated only that it did not believe the
evidence supported the verdict, this court has no way to
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review the propriety of that decision. Case law dictates that
when the record supports the jury verdict, the trial court must
set forth its reasons for remitting that award. See Batterton,
105 Ill. App. 3d at 805, 434 N.E.2d at 1178. As the court here
failed to do so, we reverse.” (Emphasis added.) NC Illinois
Trust Co., 323 Ill. App. 3d at 267.
Though it was perhaps inartfully phrased, we do not read NC Illinois
Trust Co. as holding that a circuit court’s failure to provide specific
reasons for entering a remittitur is, standing alone, and without giving
any consideration to the record, a basis for a reviewing court to hold
that the circuit court abused its discretion. Rather, we read NC Illinois
Trust Co. as standing for the simple principle that when a reviewing
court determines that the record supports the jury’s verdict, and the
circuit court offers no explanation as to why a remittitur is necessary,
the jury verdict must be reinstated.
This reading of NC Illinois Trust Co. is consistent with the
standard of review that we have recognized for a circuit court’s ruling
on a motion for new trial, a motion closely related to remittitur. See,
e.g., Tri-G, Inc. v. Burke, Bosselman & Weaver, 222 Ill. 2d 218, 254
(2006). As we have held, when reviewing a circuit court’s ruling on
a motion for new trial, “an abuse of discretion will be found where
there is no recognizable basis in the record to support” the order
entered by the circuit court. Snelson v. Kamm, 204 Ill. 2d 1, 41
(2003). Applying that standard here, the relevant question for the
appellate court was not whether the circuit court set forth any
particular findings. Instead, the question faced by the appellate court
was whether or not there was a basis in the record to support the
circuit court’s order.
Plaintiff further contends, however, that the appellate court also
erred when it failed to offer more specific reasons for its holding that
the circuit court should have reduced the punitive damage award
further. The appellate court below, after acknowledging that the
circuit court’s entry of a remittitur was reviewed for an abuse of
discretion, stated the following:
“Here, after carefully reviewing the evidence, we conclude
that defendant’s conduct was reprehensible and certainly
warrants an award of punitive damages. Nevertheless, we find
that both the jury’s $2 million punitive damages award and the
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circuit court’s order of remittance to $1 million represent
excessive awards. *** Ultimately, we conclude that a punitive
damages award of $81,600, which is equal to plaintiff’s
compensatory damages award, would sufficiently punish
defendant and deter others from committing a similar offense
under the particular circumstances of this case.” No.
1–05–0423 (unpublished order under Supreme Court Rule
23).
Plaintiff contends that the appellate court’s statement that it
reviewed the evidence is insufficient and that the appellate court was
required to state with more specificity how the circuit court erred. The
appellate court’s failure to do so, according to plaintiff, means that we
must reverse the judgment of the appellate court. Again, we disagree.
“It is a fundamental principle of appellate law that when an appeal
is taken from a judgment of a lower court, ‘[t]he question before [the]
reviewing court is the correctness of the result reached by the lower
court and not the correctness of the reasoning upon which that result
was reached.’ ” People v. Johnson, 208 Ill. 2d 118, 128 (2003),
quoting People v. Novak, 163 Ill. 2d 93, 101 (1994). For purposes of
our review, it is irrelevant whether the appellate court articulated with
sufficient clarity the reasons it had for reaching its decision. The issue
for this court is simply whether the appellate court erred in holding
that the circuit court should have reduced the jury’s award further.
In order to determine whether the appellate court erred, we must
of course resolve the underlying issue of whether the circuit court was
correct to enter a remittitur in the first place. Accordingly, we
conclude that the scope of our review in this case may be expressed
in a single question: Is there a basis in the record to support the
remittitur entered by the circuit court? We turn now to that question.
The primary argument advanced by plaintiff in the circuit court in
favor of a large punitive damage award was that defendant engaged
in a premeditated scheme to harm plaintiff. During closing argument,
for example, plaintiff’s counsel stated to the jury:
“And I said before how [the defamatory statements] were
designed. I keep thinking before [defendant] went into that
meeting when he was driving his limo over to WorldCom, he
had to have sat in the back seat and thought what can I tell
them? What can I tell them that may be believable, that will
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appeal to them about why these financials aren’t available?
What can I tell them about [plaintiff] that will appeal to the
men in the room?
[Defendant’s counsel]: Objection, Judge.
THE COURT: Overruled.
[Plaintiff’s counsel]: I wonder whether he was frankly
really pleased with himself when he came up with the chasing
pussy story, because I’m sure that he knew that would appeal
to the men in the room, and that that would play well with
them. We know he had to think about it. We know he had to
plan it out, unless maybe all this comes natural to him.”
Later, plaintiff’s counsel continued with the theme of premeditation:
“And the defendant is not entitled to the benefit of any
doubt because he didn’t give [plaintiff] any benefit of the
doubt on that day in July of 1996 when he maliciously with
malice aforethought went into that meeting and did what he
did to [plaintiff] and his family.”
Plaintiff also repeats this argument before this court. Plaintiff contends
that the jury’s original $2 million punitive damage award is justified
because defendant’s “conduct was premeditated, calculated, and
considered in a ‘risk-reward’ type of framework.”
The problem with this argument is that the jury heard absolutely
no evidence to support it. There was no evidence that defendant rode
in a limousine while plotting to defame plaintiff prior to meeting with
the WorldCom representatives. In fact, there was no evidence
presented of anything taking place prior to July 1996 that would
indicate defendant had a premeditated scheme to defame plaintiff. The
only evidence offered of events prior to July 1996 that would appear,
at least initially, to bear on the question of defendant’s motivation was
plaintiff’s firing in May of 1996. But plaintiff testified that his firing
had nothing to do with defendant’s defamatory statements:
“[Defendant’s counsel]: But it is your testimony, is it not,
Mr. Slovinski, that any comments made that are prayed for in
your complaint had nothing to do with your firing in May of
1996?
[Plaintiff]: That is correct.”
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As part of his argument that defendant had a premeditated scheme
to defame plaintiff, plaintiff’s counsel also maintained that defendant’s
defamatory statements successfully “bought time” for Cherry and
helped stave off bankruptcy until November of 1997. But plaintiff
testified that after May 1996, he “was gone so I really wasn’t
involved” with Cherry and thus had no knowledge of Cherry’s
business transactions. On this record, it is possible that the bankruptcy
would have occurred at the same time it did, even if defendant had not
made the statements about plaintiff. Accordingly, there was no
evidence that defendant’s statements delayed Cherry’s creditors or
was part of a successful, premeditated scheme to “buy time.”
Plaintiff’s counsel also argued to the jury that the defamatory
statements were part of premeditated scheme enacted by defendant
because otherwise defendant would have had to invest more of his
own money into Cherry. Again, however, no evidence was offered
about Cherry’s financial status or whether defendant would have been
required to put his own money into the firm.
In short, there was no evidence presented to the jury that
defendant had an intentional, premeditated scheme to harm plaintiff.
The most that may be said on this record–and defendant does not
contest this point–is that defendant’s defamatory statements were
made with a reckless disregard for plaintiff’s rights. This places
defendant’s conduct on the low end of the scale for punitive damages,
far below those cases involving a defendant’s deliberate attempt to
harm another person.
Other facts of record also indicate that a small punitive damage
award is appropriate in this case. For example, the evidence before the
jury was that defendant did not repeat the defamatory statements, but
made them only once, in the July 1996 meeting. The scope of
publication was also limited, to those individuals present in the
meeting.
Further, the jury’s verdict with respect to compensatory damages
shows limited harm to plaintiff. The jury found no damages for loss of
reputation, or lost wages. Although there was a damage award
returned for emotional distress, there was no evidence of any physical
harm to plaintiff. There was, for example, no evidence of visits to a
doctor or therapist, no evidence that plaintiff missed work, and no
evidence of any alteration in plaintiff’s normal daily activities.
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An award of punitive damages must be remitted to the extent that
there is no material evidence to support it. Loitz v. Remington Arms
Co., 138 Ill. 2d 404, 426 (1990); see generally C. McCormick,
Damages §79, at 281-82 (1935) (observing that even in cases of
defamation per se, the malicious conduct necessary to support an
award of punitive damages may not be presumed, but must be proved
by competent evidence). For the reasons stated above, we conclude
that the circuit court abused its discretion in remitting the jury’s
punitive damage award to $1 million. There is no basis in the record
to support such an award. We conclude, as did the appellate court
below, that the highest award the evidence of record may support is
$81,600. Accordingly, we affirm the judgment of the appellate court.
In light of our disposition that the judgment of the appellate court
must be affirmed under principles of state common law, we need not
address defendant’s alternative contention that the circuit court’s
judgment violated the due process principles set forth in State Farm
Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 155 L.
Ed. 2d 585, 123 S. Ct. 1513 (2003), and that the judgment of the
appellate court should therefore be affirmed as a matter of federal
constitutional law.
Conclusion
For the foregoing reasons, the judgment of the appellate court is
affirmed.
Appellate court judgment affirmed.
JUSTICE KILBRIDE, dissenting:
I disagree with the majority’s conclusion that the trial court abused
its discretion in remitting the jury’s punitive damage award to
$1 million and that the highest award the evidence of record may
support is $81,600. In my view, the majority gives lip service to the
correct standard of review–whether the trial court abused its
discretion in remitting the damages award–and then ignores this
standard by substituting its judgment for the trial court’s.
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This court has recognized that “[a] reviewing court will not
disturb an award of punitive damages on grounds that the amount is
excessive unless it is apparent that the award is the result of passion,
partiality, or corruption.” Deal v. Byford, 127 Ill. 2d 192, 204 (1989).
Here, by reducing the punitive damages award, the trial court
implicitly found that the punitive damage award of $2 million was the
result of jury passion, partiality, or corruption. The trial court found
the award disproportionate to the wrong and concluded an award of
punitive damages in the amount of $1 million was sufficient to punish
defendant and deter others from committing a similar offense.
We may only find the trial court’s remittitur to be an abuse of
discretion when “no reasonable person would agree with the position
adopted by the trial court.” Schwartz v. Cortelloni, 177 Ill. 2d 166,
176 (1997). In reviewing an award of punitive damages, the court is
to consider the relevant circumstances, including “the nature and
enormity of the wrong, the financial status of the defendant, and the
potential liability of the defendant.” Deal, 127 Ill. 2d at 204. In this
case, the nature and enormity of the wrong and the liability of
defendant are beyond question. In addition, the absence of evidence
regarding defendant’s financial status is the direct result of defendant’s
default and may not properly be used against the plaintiff.
The only real issue is the amount of the punitive damages award.
Importantly, proportionality between punitive and compensatory
damages is not required under this court’s precedents. Deal, 127 Ill.
2d at 204. “Because punitive damages serve a penal purpose and are
awarded not as compensation, but for reasons of retribution and
deterrence, the amount of such an award is determined by more than
just a consideration of the nature and extent of the claimant’s loss.”
Loitz v. Remington Arms Co., 138 Ill. 2d 404, 416 (1990). The facts
of each case must be examined carefully, and the court must consider
the underlying purposes of a punitive damage award. Deal, 127 Ill. 2d
at 204.
Here, the record indicates that plaintiff filed a complaint alleging
defamation per se. In his complaint, plaintiff alleged that defendant
knowingly made false statements that plaintiff had not completed
company financial statements, that plaintiff “was not doing his job,”
that plaintiff “came in late and left early,” that plaintiff “was sneaking
off to do workouts,” and that plaintiff “spent his time chasing
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[women2] all day.”
Defendant failed to answer plaintiff’s complaint, failed six times to
present himself for deposition, and failed to comply with plaintiff’s
discovery requests, despite being ordered to comply by the trial court.
Ultimately, the trial court entered a default judgment against
defendant, and the case was set for jury trial on the damages issue
alone. Due to defendant’s default, we must accept the truth of the
allegations in the plaintiff’s complaint and conclude that defendant per
se defamed plaintiff. See Buck v. Citizens’ Coal Mining Co., 254 Ill.
198, 200 (1912).
According to the allegations in the complaint, defendant
maliciously, intentionally, and knowingly made false statements to
third parties that were designed to injure plaintiff. The complaint
alleged that “defendant knew this statement to be false and the
statement was made with the intent to injure plaintiff.” The majority’s
analysis, however, fails to acknowledge the truth of these allegations
and, instead, concludes that defendant’s conduct merely showed “a
reckless disregard for plaintiff’s rights,” placing “defendant’s conduct
on the low end of the scale for punitive damages, far below those
cases involving a defendant’s deliberate attempt to harm another
person.” Slip op. at 11. The majority does not dispute, however, that
the jury was presented with sufficient evidence to warrant punitive
damages.
Rather, the majority simply chooses to overlook the truth of the
allegations in the complaint and, accordingly, disagrees with the trial
court’s assessment of the excessiveness of the punitive damage award.
The majority apparently would award a significantly lower sum if it
were initially deciding the remittitur issue. That, however, is not the
role of a reviewing court under the limited “abuse of discretion”
standard of review applicable in this case. Because I do not believe the
majority properly applied this highly deferential standard of review to
the facts we must accept as true under the undisputed allegations in
the plaintiff’s complaint, I must respectfully dissent.
2
The record establishes that defendant’s actual statement was far more
derogatory.
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