Kuwait & Gulf Link Transport Co. v. Wilson, S.

J-A16037-19
2019 PA Super 234KUWAIT & GULF LINK TRANSPORT : IN THE SUPERIOR COURT OF
COMPANY, KGL LOGISTICS, & KGL : PENNSYLVANIA
TRANSPORTATION CO. KSCC :
:
Appellants :
:
:
v. :
: No. 1268 MDA 2018
:
JOHN DOE (A.K.A. SCOTT WILSON), :
AGILITY DGS HOLDINGS, INC., :
AGILITY DEFENSE AND :
GOVERNMENT SERVICES, INC., AND :
AGILITY INTERNATIONAL, AND :
AGILITY PUBLIC WAREHOUSING CO. :
KSC, AGILITY DGS LOGISTICS :
SERVICES CO. KSCC, PWC :
TRANSPORT CO. WLL
Appeal from the Order Entered July 6, 2018
In the Court of Common Pleas of Cumberland County Civil Division at
No(s): 2012-1820 Civil Term
BEFORE: LAZARUS, J., MURRAY, J., and STEVENS*, P.J.E.
OPINION BY STEVENS, P.J.E.: FILED AUGUST 01, 2019
Kuwait & Gulf Link Transport Co., KGL Logistics, and KGL Transportation
Co. K.S.C.C. (collectively “KGL”) appeal from the July 6, 2018, order entered
in the Court of Common Pleas of Cumberland County granting the motion for
summary judgment in favor of Agility Public Warehousing Co. K.S.C. (“PWC”),
Agility DGS Logistics Services Co. K.S.C.C., PWC Transport Co. WLL., Agility
DGS Holdings, Inc., Agility Defense Government Services, Inc., and Agility
____________________________________
* Former Justice specially assigned to the Superior Court.
J-A16037-19
International, Inc. (collectively “Agility”), and “John Doe” (a/k/a “Scott
Wilson”). After a careful review, we affirm.
The relevant facts and procedural history have been set forth previously
by this Court, in part, as follows:
KGL is a family of Kuwaiti-based companies that provides
shipping, transportation, warehousing, and logistics services to
the United States Government in Kuwait and Southeast Asia.
Agility is a family of logistics companies, including three of their
separate, but wholly owned, subsidiaries that competes with KGL
for government contracts.
In February 2011, the United States Government’s Defense
Logistics Agency (“DLA”) awarded a contract to KGL to operate a
military storage and distribution depot in Kuwait. On March 10,
2011, Intermarkets Global (“Intermarkets”), a company not
related to any party in this matter, protested the award of that
contract to KGL. KGL alleges that on March 22, 2011[,] and March
24, 2011, a person under the pseudonym “Scott Wilson” sent two
letters (“the Wilson Letters”) to contracting officers at the DLA and
the United States Army Sustainment Command (“USASC”). The
Wilson Letters informed the DLA and the USASC that KGL had
violated the Comprehensive Iran Sanctions, Accountability, and
Divestment Act (“CISADA”) by maintaining business relationships
with Iranian entities[, namely Valfajr Shipping, an Iranian
shipping company,] and urged them to investigate this issue. The
Wilson Letters also contained email chains in support of these
allegations. [Specifically, the emails purportedly reported KGL
leased a cargo ship to Valfajr Shipping.]
KGL alleges that Intermarkets supplemented its protest of
the above-referenced contract with copies of the Wilson Letters,
characterizing KGL as an irresponsible contractor. KGL asserts
that it sustained losses and costs associated with defending this
protest, but that it was able to get the protest dismissed, and that
the DLA eventually awarded the contract to KGL. KGL also alleges
that it competed for a “Heavy Lift 7” contract from the USASC and
that the Wilson Letters affected the award of this contract because
the USASC would not give the contract to KGL unless KGL
addressed the Wilson Letters and proved that it was a responsible
contractor. KGL again contends that it sustained losses and costs
associated with addressing the USASC’s concerns, but that it was
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able to provide the USASC with a satisfactory explanation and that
it received the “Heavy Lift 7” contract. [Thus, while KGL admits
that the Wilson Letters did not cause them to lose any contracts
and they received all contracts on which they bid, KGL alleges that
it suffered costs associated with defending itself against bid
protests and addressing concerns of the DLA and the USASC.]
On March 21, 2012, KGL filed suit against Agility and “John
Doe” alleging liability for defamation, tortious interference with
contractual and other business relationships, respondeat superior,
conspiracy, aiding and abetting, and negligent supervision[,
arising out of the two Wilson Letters sent to the U.S.
Government.] KGL further alleged, and PWC admitted, that
employees of PWC authored the Wilson Letters [using the
pseudonym “Scott Wilson”] and were acting within the scope of
their employment [for purposes of respondeat superior liability.
KGL alleged that the allegations in the Wilson Letters were false.]
KGL filed an amended complaint on June 14, 2012. On
August 14, 2012[,] and September 4, 2012, Agility filed
preliminary objections that the trial court overruled on November
15, 2012[,] and October 19, 2012, respectively. On September
14, 2012, KGL served discovery requests on each known
defendant, including interrogatories, requests for production of
documents, and requests for admissions, each with the primary
purpose of identifying “Scott Wilson.” Agility objected to these
discovery requests based on its First Amendment right to speak
anonymously and on Pilchesky v. Gatelli, 12 A.3d 430(Pa.Super. 2011), which Agility argued requires KGL to satisfy four
requirements before it could obtain discovery identifying an
anonymous pseudonymous speaker. On December 4, 2012, KGL
moved to strike Agility’s objections to discovery requests and to
compel discovery responses. [On December 5, 2012, Agility filed
separate answers to the amended complaint. They denied liability
on several grounds, including that the factual statements in the
Wilson Letters were substantially true and, in any event, did not
cause any damage to KGL.]
On February 20, 2012, the trial court heard argument on
[the December 4, 2012,] motion. Finally, on May 21, 2013, the
trial court granted KGL’s motion to strike Agility’s objections to
discovery requests and to compel discovery responses insofar as
the objections relate to Pilchesky.
***
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[T]he trial court granted KGL’s motion because it found that
Pilchesky did not apply to the Wilson Letters. The trial court
ruled that the Wilson Letters were commercial speech, as opposed
to “literary, religious, or political” speech, and that the First
Amendment affords less protection to commercial speech.
Agility…filed [an] appeal.
Kuwait & Gulf Link Transport Co. v. Doe, 92 A.3d 41, 43-44 (Pa.Super.
2014) (citations to record omitted).
On appeal, Agility argued the trial court erred in ordering discovery
compelling the disclosure of “Scott Wilson’s” identity because the First
Amendment preserves the right to speak anonymously and pseudonymously.
In addressing Agility’s issues, we relevantly held the following:
[W]e find that the Wilson Letters constitute anonymous or
pseudonymous political speech, thus receiving extensive
constitutional protection under the First Amendment. We
conclude that the Wilson Letters represent political speech
because the award of substantial government contracts to
contractors who are claimed to illegally engage in business with a
prohibited foreign government directly implicates “the manner in
which government is operated or should be operated.” We also
have no problem concluding that the Wilson Letters discuss affairs
of government which are at the heart of the First Amendment
protections. “Scott Wilson” wrote the Wilson Letters to the DLA
and the USASC to inform them that he believed that KGL
maintained business relationships with Iranian entities in violation
of CISADA. KGL is a government contractor performing multi-
million dollar contracts for the United States military. The DLA
and the USASC are two government agencies responsible for the
operation of the United States military. Additionally, KGL’s alleged
misconduct involved its possible connection to Iran businesses,
misconduct that is a national and newsworthy issue. Thus, at their
core, the Wilson Letters represent political speech involving the
operation of the government and the questionable expenditure of
public funds. The Wilson Letters directly implicate the
appropriateness of the relationship between the United States
Government and some of its contactors and those contractors’
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relationships with a foreign government in conflict with the United
States.
Furthermore, we note that the Wilson Letters cannot be
categorized as commercial speech. The Wilson Letters do not
“propose a commercial transaction,” or propose the sale of a
specific product at a specific price. Moreover, the Wilson Letters:
(1) are not an advertisement; (2) they do not reference any
specific product; and (3) we are unable to determine whether or
not the author had an economic motivation for making the
communication. Although PWC admitted that its employee
authored the Wilson Letters, there is no evidence indicating
whether he did so as a concerned citizen or whether he did so to
advance the interests of Agility. Likewise, even if we knew that
the author wrote the Wilson Letters with an economic motivation,
that knowledge alone is insufficient to compel the classification of
the Wilson Letters as commercial speech. Therefore, given the
political nature of the Wilson Letters, they are entitled to the
highest level of protection and not the intermediate level of
protection that commercial speech receives under the First
Amendment.
Accordingly, we find that the Wilson Letters are anonymous
political speech under the First Amendment subject to
Pilchesky’s four-part test for disclosure of anonymous or
pseudonymous speakers.
Id. at 49-50 (quotation, citations, and footnote omitted). Consequently, we
vacated the trial court’s order compelling discovery of the identity of “Scott
Wilson” and remanded the case to the trial court for the proper application of
the Pilchesky test. Upon remand, the trial court applied the Pilchesky test
and, ultimately, denied the motion to compel the disclosure of the identity of
“Scott Wilson.”1
____________________________________________
1 The trial court noted in its opinion that Agility filed a motion for summary
judgment on August 21, 2015, prior to the trial court’s December 9, 2015,
opinion; however, since discovery was not complete, the trial court denied the
motion for summary judgment.
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Meanwhile, the parties engaged in considerable discovery, at the
completion of which, on June 4, 2018, Agility filed a motion for summary
judgment, as well as a supporting brief. Therein, Agility averred they were
entitled to summary judgment since KGL failed to set forth a prima facie case
for their defamation and tortious interference claims, which in turn foreclosed
KGL from proving its derivative claims of respondeat superior, conspiracy,
aiding and abetting, and negligent supervision.
On June 8, 2018, KGL filed an answer in opposition to Agility’s motion
for summary judgment. On June 25, 2018, Agility filed a reply to KGL’s
answer in opposition, and following a hearing on the motion for summary
judgment, by opinion and order entered on July 6, 2018, the trial court
granted Agility’s motion for summary judgment and dismissed KGL’s
complaint.
Specifically, the trial court concluded that, as a matter of law, the Wilson
Letters involved “a matter of ‘public concern’” and, for purposes of the instant
litigation, KGL is a limited-purpose public figure. Trial Court Opinion, filed
7/6/18, at 4. Consequently, the trial court determined that KGL was required
to set forth a prima facie case that the Wilson Letters contained false
allegations that were made with “actual malice.” See id. However, the trial
court concluded that, as a matter of law, the Wilson Letters contained
opinions, which are not actionable. See id. The trial court further concluded
KGL did not set forth a prima facie case of “actual malice.”
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Additionally, the trial court held that, assuming the Wilson Letters
contained defamatory statements, “there is no evidence that the letters
caused harm to [KGL].” See id. at 6. In this regard, the trial court concluded
KGL did not set forth any evidence of malice, so there was no evidence upon
which a jury could award presumed damages. See id. Further, as to general
damages, the trial court concluded the “record does not contain the testimony
of a single witness to the effect that the Wilson Letters negatively affected his
or her view of KGL.” See id. at 7. Therefore, the trial court concluded there
was no evidence of reputational harm. See id. Moreover, the trial court
concluded there was no evidence of any out-of-pocket loss, which would
establish special damages. See id.
This timely appeal followed. The trial court did not direct KGL to file a
Pa.R.A.P. 1925(b) statement, and consequently, no such statement was filed.
The trial court filed a brief Pa.R.A.P. 1925(a) statement relying on its
previously filed opinion.
On appeal, KGL presents the following issues in its “Statement of the
Questions Involved” (verbatim):
1. The U.S. Supreme Court held in Milkovich v. Lorain Journal
Co., 497 U.S. 1, 21 (1990), that “imaginative expression” or
“loose, figurative, or hyperbolic language” are non-actionable
opinion. Defendant “Scott Wilson” sent two letters (the “Wilson
Letters”) to the U.S. government, charging KGL with violating
U.S. law and stating that KGL engaged in “a serious
misrepresentation and violation of U.S. law,” “violation of the
Comprehensive Iran, Sanctions, Accountability, and
Divestment Act of 2010,” “violation of the Iran Sanctions Act,”
and “a clear violation of U.S. law.” Were Wilson’s statements
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that KGL engaged in illegal conduct actionable statements of
fact or actionable, “mixed” opinion (as opposed to non-
actionable opinion)?
2. In defamation cases, damages may take the form of
reputational harm (“general damages”) or special damages
(monetary loss). Reputational harm means “impairment of
reputation and standing in the community” or a “showing that
anyone thought the less of” the person. The Wilson Letters
caused the U.S. government to investigate KGL for violations
of U.S. law. KGL lost credibility and spent money to mitigate
the damage. Was KGL’s evidence of damages sufficient to raise
a genuine issue of material fact?
3. In defamation cases requiring a showing of “actual malice,” the
plaintiff must show that the defendant made a defamatory
statement “with knowledge that it was false or with reckless
disregard of whether it was false or not.” When Wilson sent
his Wilson Letters, he knew from contemporaneous documents
that his charges of KGL violations of U.S. law were in serious
doubt. He sent them anyway-all in the interest of, and within
the scope of his employment for, KGL’s government
contracting competitor, Agility. Was KGL’s evidence of malice
sufficient to raise a genuine issue of material fact?
4. Under U.S. and Pennsylvania Supreme Court precedents, a
defamation plaintiff is entitled to wide latitude in discovering
evidence of “actual malice,” including discovery into the “state
of mind” of the defamation defendant. In a series of orders,
the trial court ruled that KGL could not unmask Wilson, take
discovery of his state of mind, source material and due
diligence, or inquire into defendants’ collaboration with Wilson
to defame KGL. Were the trial court’s discovery orders
erroneous, and did they interfere with KGL’s ability to obtain
additional evidence of malice?
5. A defamation plaintiff must demonstrate “actual malice” if he
is a limited-purpose public figure-someone who has voluntarily
“thrust” himself into a public controversy. KGL is a government
contractor that defendants dragged into a controversy when
they sent the Wilson Letters to the U.S. government charging
KGL with violating U.S. law. Was KGL a private figure (as
opposed to limited-purpose public figure) such that it need only
demonstrate negligence (as opposed to “actual malice”).
6. Under U.S. Supreme Court precedent, a defamation
defendant’s burden to prove truth shifts to the plaintiff to prove
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falsity where (1) the plaintiff is a public figure, or (2) the
defamatory statement involves a matter of public concern and
the defendant is a member of the news media. Were elements
(1) or (2) satisfied such that KGL must prove falsity, and must
KGL do so by clear and convincing evidence (as opposed to
preponderance of the evidence)?
7. A party may seek leave of court to amend a pleading at any
time; provided that, the amendments do not violate the law,
or surprise or prejudice the other party. Six months before
trial, while discovery remained open, KGL sought leave to
amend its complaint to assert new defamation claims against
the Agility Defendants that were timely under Pennsylvania’s
discovery rule. Should KGL have been granted leave to
amend?
KGL’s Brief at 6-9 (trial court answers omitted).2
Initially, we note the principles we apply in reviewing a summary
judgment order are well-settled.
Our scope of review of an order granting summary judgment
is plenary. [W]e apply the same standard as the trial court,
reviewing all the evidence of record to determine whether there
exists a genuine issue of material fact. We view the record in the
light most favorable to the non-moving party, and all doubts as to
the existence of a genuine issue of material fact must be resolved
against the moving party. Only where there is no genuine issue
as to any material fact and it is clear that the moving party is
entitled to a judgment as a matter of law will summary judgment
be entered.
Motions for summary judgment necessarily and directly
implicate the plaintiff’s proof of the elements of his cause of
action. Thus, a record that supports summary judgment will
either (1) show the material facts are undisputed or (2) contain
insufficient evidence of facts to make out a prima facie cause of
action or defense and, therefore, there is no issue to be submitted
to the [fact-finder]. Upon appellate review, we are not bound by
the trial court’s conclusions of law, but may reach our own
____________________________________________
2 We note KGL’s issues are interrelated, and where appropriate, we have
addressed the issues in such a manner.
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conclusions. The appellate Court may disturb the trial court’s
order only upon an error of law or an abuse of discretion.
Coleman v. Ogden Newspapers, Inc., 142 A.3d 898, 904 (Pa.Super. 2016)
(quotation omitted).
The requirements of a defamation claim are codified as follows:
(a) Burden of plaintiff.—In an action for defamation, the
plaintiff has the burden of proving, when the issue is properly
raised:
(1) The defamatory character of the communication.
(2) Its publication by the defendant.
(3) Its application to the plaintiff.
(4) The understanding by the recipient of its defamatory meaning.
(5) The understanding by the recipient of it as intended to be
applied to the plaintiff.
(6) Special harm resulting to the plaintiff from its publication.
(7) Abuse of a conditionally privileged occasion.
(b) Burden of defendant.—In an action for defamation, the
defendant has the burden of proving, when the issue is properly
raised:
(1) The truth of the defamatory communication.
(2) The privileged character of the occasion on which it was
published.
(3) The character of the subject matter of defamatory comment
as of public concern.
42 Pa.C.S. § 8343 (bold in original).
In its first issue, KGL argues the trial court erred in concluding the
statements made in the Wilson Letters indicating KGL violated CISADA are
statements of opinion, which are non-actionable, as opposed to statements of
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fact or statements of “mixed opinion,” which are actionable. See KGL’s Brief
at 21.
“A communication may be considered defamatory if it tends to harm the
reputation of another so as to lower him or her in the estimation of the
community or to deter third persons from associating or dealing with him or
her.” Bell v. Mayview State Hosp., 853 A.2d 1058, 1062 (Pa.Super. 2004)
(citation omitted). Further, in determining whether a statement is capable of
defamatory meaning, a court must view the statement in context. See id.“The nature of the audience is a critical factor in determining whether a
statement is capable of defamatory meaning.” Dougherty v. Boyertown
Times, 547 A.2d 778, 783 (Pa.Super. 1988) (some quotation omitted).
When raised by a public figure concerning statements
bearing on a matter of public concern,[3] claims for defamation are
____________________________________________
3 As indicated supra, this Court previously held the statements at issue bear
on a matter of public concern. See Kuwait & Gulf Link Transport Co.,
supra. Additionally, we now conclude that KGL is a “limited-purpose public
figure,” and thus, we find meritless KGL’s Issue Five supra. As our Supreme
Court has held:
[A] “limited-purpose public figure,”…is an individual who
“voluntarily injects himself or is drawn into a particular public
controversy and thereby becomes a public figure for a limited
range of issues.” To determine such status,…it is necessary to
consider the “nature and extent of an individual’s participation in
the particular controversy giving rise to the defamation.”
American Future Systems, Inc. v. Better Business Bureau of Eastern
Pennsylvania, 592 Pa. 66, 923 A.2d 389, 401 (2007). A “controversy” may
be created by the individual’s own actions. See id.As this Court stated previously, “KGL is a government contractor
performing multimillion-dollar contracts for the United States military.”
Kuwait & Gulf Link Transport Co., 92 A.3d at 49. As such, KGL has
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subject to an onerous standard of proof, owing to considerations
of free speech that inhere to any claim that implicates the First
Amendment. See Milkovich v. Lorain Journal Co., 497 U.S. 1,
17, 110 S.Ct. 2695, 111 L.Ed.2d 1 (1990) (emphasizing the
obligation of appellate courts to ensure that judgments entered
pursuant to state tort law do not intrude on the “field of free
expression”). Consequently, our Courts’ First Amendment
jurisprudence makes clear that statements on matters of public
concern must be provable as false before there can be liability
under state defamation law….Moreover,…a statement of opinion
relating to matters of public concern that does not contain a
provably false connotation will receive full constitutional
protection.
Krajewski v. Gusoff, 53 A.3d 793, 803 (Pa.Super. 2012) (quotation marks
and quotations omitted) (footnote added).
In determining whether a statement is capable of defamatory meaning,
the trial court must also ascertain whether the statement constitutes an
opinion. The question of “[w]hether a particular statement constitutes a fact
or an opinion is a question of law for the trial court to determine.” Mathias v.
Carpenter, 587 A.2d 1, 3 (Pa.Super. 1991). Hence,
In determining whether [a publication is] capable of defamatory
meaning, a distinct standard is applied [when] the publication is
of an opinion. Veno v. Meredith, 357 Pa.Super. 85, 515 A.2d
571, 575 (1986), appeal denied, 532 Pa. 665, 616 A.2d 986____________________________________________
voluntarily exposed itself to increased risk of injury from defamatory falsehood
and has effectively “assumed the risk of potentially unfair criticism by entering
into the public arena and engaging the public’s attention.” American Future
Systems Inc., supra, 923 A.2d at 402 (quotation and citations omitted).
Accordingly, we agree with the trial court that KGL is a public figure for
purposes of the instant matter, and we reject KGL’s argument to the contrary.
See KGL’s Fifth Issue supra; KGL’s Brief at 49-51.
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(1992). “A statement in the form of an opinion is actionable only
if it may reasonably be understood to imply the existence of
undisclosed defamatory facts justifying the opinion. A simple
expression of opinion based on disclosed facts is not itself
sufficient for an action of defamation.” Id. (internal citations
omitted); see also Neish v. Beaver Newspapers, Inc., 398
Pa.Super. 588, 581 A.2d 619, 622–24 (1990), appeal denied, 527
Pa. 648, 593 A.2d 421 (1991) (editorial criticizing the way
appellant handled his job and suggesting replacing him was an
opinion not based on undisclosed defamatory facts and, therefore,
was not actionable. The Court found that while the statements in
the editorial “might be viewed as annoying and embarrassing,
they were not tantamount to defamation.”).
Kurowski v. Burroughs, 994 A.2d 611, 618 (Pa.Super. 2010) (emphasis in
original).
This principle is in conformity with Restatement (Second) of Torts § 566,
Expression of Opinion. See Mathias, supra (applying § 566). That section
provides: “A defamatory communication may consist of a statement in the
form of an opinion, but a statement of this nature is actionable only if it implies
the allegation of undisclosed defamatory facts as the basis for the opinion.”
Restatement (Second) of Torts § 566.
Thus, generally, only statements of fact, rather than mere expressions
of opinion, are actionable under Pennsylvania’s defamation law. Bell, supra.In order for an opinion to be deemed capable of defamatory meaning, it must
reasonably be understood to imply the existence of undisclosed defamatory
facts justifying the opinion. Dougherty, supra.Here, the trial court concluded there was no genuine issue of material
fact that the factual assertions in the Wilson Letters relating to KGL’s ties with
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Iranian entities were substantially true. Further, the trial court concluded, as
a matter of law, the statements made in the Wilson Letters indicating that
these ties constituted a violation of CISADA constituted non-actionable
opinions.
Specifically, in addressing this claim, the trial court relevantly indicated
the following:
With respect to the first issue, we agree with [Agility] that
the Wilson Letters touch on a matter of “public concern.” (The
Superior Court has [stated as much in its previous decision].)
Moreover, we agree with [Agility] that, for purposes of this
litigation, KGL is a limited-purpose public figure. Accordingly,
[KGL] must prove the falsity of the Wilson Letters by clear and
convincing evidence. See Tucker v. Philadelphia Daily News,
848 A.2d 113, 127-28 (Pa. 2004). The identity and relationship
of the businesses mentioned in the Wilson Letters are generally
not in dispute. Notwithstanding, the thrust of [KGL’s] case is that
any relationship of [KGL] with Iranian entities was not such as
would allow for the accusation that KGL was in violation of
CISADA. We agree with [Agility], however, that this accusation
can best be construed as an opinion.
***
It may well be that “Scott Wilson,” as [KGL] contends, got
it wrong when he requested an investigation based on an
allegation of a violation of the sanction laws. His
misapprehension, however, with respect to the legal import of the
business relationships described in the letters is, we conclude, an
opinion, and therefore, not actionable. [KGL] contends that the
Wilson Letters do not contain matters of opinion. Instead, [KGL]
argues that the accusations in the letters suggest the commission
of a crime, which is actionable “per se.” At the same time,
however, they argue that the question of whether KGL was in
violation of CISADA is a legal question and not a factual one. To
this extent, they belie their own contention.
Trial Court Opinion, filed 7/6/18, at 4 (footnote omitted) (footnote added).
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We agree with the trial court in this regard. Specifically, we conclude
the statements contained in the Wilson Letters regarding KGL’s violation of
CISADA constituted subjective opinions. See Parano v. O’Connor, 641 A.2d
607 (Pa.Super. 1994). Moreover, the facts upon which the author of the
Wilson Letters based his or her opinions (i.e., KGL’s ties to Iranian entities)
were disclosed, and therefore, the opinions did not imply undisclosed false
facts. See Dougherty, supra. As the trial court noted, while the author of
the Wilson Letters may have misunderstood the implication of KGL’s ties, the
simple expression of opinion (that KGL violated CISADA because of these ties)
is not itself sufficient for an action of defamation, “no matter how unjustified
and unreasonable the opinion may be or how derogatory it is.” Mathias, 587
A.2d at 363 (quotation omitted).
In any event, assuming, arguendo, KGL is correct that the challenged
statements regarding KGL’s violation of CISADA constitute statements of fact
or opinions based on undisclosed, defamatory facts, we note:
Caselaw prescribes additional elements that arise in relation
to the character of the statement, the role of the defendant as a
media outlet, or the role of the plaintiff as a public official or public
figure. If the statement in question bears on a matter of public
concern, or the defendant is a member of the media, First
Amendment concerns compel the plaintiff to prove, as an
additional element, that the alleged defamatory statement is in
fact false.[4] See Philadelphia Newspapers, Inc. v. Hepps,
____________________________________________
4To the extent KGL argues that, since Agility was not a member of the media,
KGL was not required to prove the statements were false, see KGL’s Issue Six
supra and Brief at 53-56, we disagree. Under the First Amendment to the
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475 U.S. 767, 777, 106 S.Ct. 1558, 89 L.Ed.2d 783 (1986); see
also Milkovich v. Lorain Journal Co., 497 U.S. 1, 2, 110 S.Ct.
2695, 111 L.Ed.2d 1 (1990); Ertel v. Patriot–News Co., 544 Pa.
93, 674 A.2d 1038, 1041 (1996). If the plaintiff is a public official
or public figure, she must prove also that the defendant, in
publishing the offending statement, acted with “actual malice,” i.e.
“with knowledge that [the statement] was false or with reckless
disregard of whether it was false or not.” Curran v. Philadelphia
Newspapers, Inc., 376 Pa.Super. 508, 546 A.2d 639, 642
(1988).
“Actual malice” is a fault standard, predicated on the need
to protect the public discourse under the First Amendment from
the chill that might be fostered by less vigilant limitations on
defamation actions brought by public officials.
[T]he stake of the people in public business and the
conduct of public officials is so great that neither the
defense of truth nor the standard of ordinary care
would protect against self-censorship and thus
adequately implement First Amendment policies.
Neither lies nor false communications serve the ends
of the First Amendment, and no one suggests their
desirability or further proliferation. But to insure the
ascertainment and publication of the truth about
public affairs, it is essential that the First Amendment
protect some erroneous publications as well as true
ones.
Curran, 546 A.2d at 643. Thus, the actual malice standard, by
design, assures “that public debate will not suffer for lack of
‘imaginative expression’ or ‘rhetorical hyperbole’ which has
traditionally added much to the discourse of this Nation.”
Milkovich, 497 U.S. at 2, 110 S.Ct. 2695. “[T]he First
Amendment requires that we protect some falsehood in order to
protect speech that matters.”
Thus, the “actual malice” standard is a constitutionally
mandated safeguard and, as such, must be proven by clear and
____________________________________________
United States Constitution, a plaintiff asserting defamation concerning a
publication of a matter of “public concern” bears the burden of proving that
the publication was false. Philadelphia Newspapers, Inc. v. Hepps, 475
U.S. 767, 776, 106 S.Ct. 1558, 89 L.Ed.2d 783 (1986). This Court has
previously held the statements at issue bear on a matter of public concern.
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convincing evidence, the highest standard of proof for civil claims.
Moreover, evidence adduced is not adjudged by an objective
standard; rather, “actual malice” must be proven applying a
subjective standard by evidence “that the defendant in fact
entertained serious doubts as to the truth of his publication.” See
Curran, 546 A.2d at 642. This determination may not be left in
the realm of the factfinder:
The question whether the evidence in the record in a
defamation case is of the convincing clarity required
to strip the utterance of First Amendment protection
is not merely a question for the trier of fact. Judges,
as expositors of the Constitution, must independently
decide whether the evidence in the record is sufficient
to cross the constitutional threshold that bars the
entry of any judgment that is not supported by clear
and convincing proof of “actual malice”.
Curran, 546 A.2d at 644. We have recognized accordingly that
the question of “actual malice” is not purely one of fact, but rather
may be described as one of “ultimate fact,” a “hybrid of evidential
fact on the one hand and conclusion of law on the other.” Id.Application of these concepts is more difficult than its
recitation. See Curran, 546 A.2d at 644. “[E]rroneous statement
is inevitable in free debate, and…must be protected if the
freedoms of expression are to have the ‘breathing space’ that they
need to survive.” Id. at 645. To minimize judicial intrusion into
this “breathing space,” our courts have tended to measure
actionable conduct by what the defendant did, as opposed to what
it refrained from doing or might have done but omitted to do.
Curran, 546 A.2d at 648. Thus, while “actual malice” may be
shown by circumstantial evidence of events surrounding the
publication of the offending statement, that evidence must tend
to establish fabrication, or at least that the publisher had “obvious
reasons to doubt the veracity of the informant or the veracity of
his reports.” Because “actual malice” is a fault standard, it is not
shown by the falsity of the statement in and of itself. See Curran,
546 A.2d at 642. Similarly, evidence of ill will or a defendant’s
desire to harm the plaintiff’s reputation, although probative of the
defendant’s state of mind, without more, does not establish
“actual malice.” Harte–Hanks Communications, Inc. v.
Connaughton, 491 U.S. 657, 109 S.Ct. 2678, 105 L.Ed.2d 562(1989) (“The phrase ‘actual malice’ is confusing in that it has
nothing to do with bad motive or ill will.”).
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Lewis v. Philadelphia Newspapers, Inc., 833 A.2d 185, 191-93 (Pa.Super.
2003) (quotations and citations omitted) (emphasis in original) (footnote
added).
In the case sub judice, as indicated supra, this Court previously held the
statements contained in the Wilson Letters bear on a matter of public concern,
thus contrary to KGL’s assertion,5 it had the burden to adduce clear and
convincing evidence to allow a jury to find the Wilson Letters were, in fact,
false. See ToDay’s Housing v. Times Shamrock Communications, Inc.,
21 A.3d 1209 (Pa.Super. 2011); Lewis, supra. Moreover, as indicated supra,
since KGL is a limited-purpose public figure, contrary to KGL’s argument, it
had the burden to set forth a prima facie case that Agility published the Wilson
Letters with “actual malice,” i.e., with knowledge that the Wilson Letters were
false or with reckless disregard of whether the Wilson Letters were false.
ToDay’s Housing, supra; Lewis, supra.In addressing this issue, the trial court suggested that, to the extent the
Wilson Letters contained false statements, KGL failed to set forth a prima facie
case to establish the presence of “actual malice.” Relevantly, the trial court
noted:
The various business entities referred to in the Wilson
Letters do in fact exist and have had or continue to have business
relationships. A contention that their relationship violated the law
is based, in no small part, on altered emails. [KGL] admits,
____________________________________________
5 See KGL’s Issue 6 supra and Brief at 56.
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however, that the emails emanated from former disgruntled
employees of KGL. In other words, there is no allegation that
[Agility] forged or altered the emails[, upon which the author of
the Wilson Letters relied.]
***
“[T]he requirement that the plaintiff be able to show actual
malice by clear and convincing evidence is initially a matter of
law.” Joseph v. Scranton Times L.P., 129 A.3d 404, 436 (Pa.
2015) (citations omitted). In this case, there is simply no
evidence of malice[.]
Trial Court Opinion, filed 7/6/18, at 6 n.2.
Upon review of the record, contrary to KGL’s argument,6 we agree with
the trial court that evidence of “actual malice” is substantially lacking. In so
holding, we acknowledge that KGL argues the falsity of the Wilson Letters;
however, the demonstrable falsity of a statement does not establish Agility’s
fault, i.e., “actual malice,” in writing and disseminating the Wilson Letters.
See Lewis, supra.Furthermore, KGL argues that the author of the Wilson Letters relied on
a privileged memo, which suggested the veracity of the underlying emails
should be authenticated. KGL argues the author’s failure to investigate the
underlying emails more fully, as well as his or her failure to recite larger
portions of the privileged memo in the Wilson Letters, demonstrates “actual
malice.”
____________________________________________
6 See KGL’s Issue Three supra and Brief at 34-38.
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Initially, we note the undisputed evidence shows that representatives of
Agility met with the source of the emails to “satisfy themselves” as to the
“veracity of the emails.” Videotaped Deposition of Adlai Shalabi, dated
3/16/18, at 517-20. In any event, the fact that the author of the Wilson
Letters failed to investigate the emails more fully and/or failed to recite larger
portions of the privileged memo does not, in our view, establish that he or she
acted with any level of fault in writing his or her concerns about KGL’s
activities. Rather, this evidence is consistent with simple negligence regarding
a matter of public concern, which remains subject to First Amendment
protection. See Lewis, supra. Even if a higher degree of responsibility
would have counseled greater care in investigating the emails, “actual malice”
is not established. See Harte–Hanks Communications, Inc., supra.
Consequently, KGL’s evidence is insufficient as a matter of law to demonstrate
“actual malice” and therefore raises no impediment to summary judgment.
Lewis, supra.Apparently recognizing the lack of evidence regarding “actual malice,”
KGL also suggests the trial court erred in prohibiting discovery of evidence
that may have established “actual malice.”7 Specifically, KGL argues the trial
court erred in its analysis of the third and fourth prongs of the Pilchesky test
____________________________________________
7 See KGL’s Issue Four supra and Brief at 38-48.
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and, thus, in denying the motion to compel the discovery of the identity of
“Scott Wilson.”
As this Court previously recognized in this case:8
Pilchesky specifically addressed the issue of under what
circumstances a trial court can compel the disclosure of the
identity of individuals speaking anonymously or pseudonymously
in a defamation case. Pilchesky, 12 A.3d at 442.
In Pilchesky, John Does made allegedly defamatory
statements about the President of Scranton City Council by
posting messages on a website under a unique user name or
pseudonym. Id. at 432–33. The plaintiff petitioned the trial court
to compel the disclosure of the identity of the John Doe defendants
and that court granted the petition. Id. at 433–34.
On appeal, this Court held that the trial court must address
the following four factors before ordering the disclosure of the
identity of an anonymous or pseudonymous speaker: first, “[t]he
reviewing court must ensure that the John Doe defendant receives
proper notification of a petition to disclose his identity and a
reasonable opportunity to contest the petition”; second, the party
seeking disclosure “must present sufficient evidence to establish
a prima facie case for all elements of a defamation claim, within
the plaintiff's control, such as would survive a motion for summary
judgment”; third, “[a] petitioner must submit an affidavit
asserting that the requested information is sought in good faith,
is unavailable by other means, is directly related to the claim and
is fundamentally necessary to secure relief”; and fourth, “[t]he
court must expressly balance the defendant’s First Amendment
rights against the strength of the plaintiff’s prima facie case.” Id.at 442–45. This Court stated that the four requirements “are
necessary to ensure the proper balance between a speaker’s right
to remain anonymous and a defamation plaintiff’s right to seek
redress.” Id. at 442.
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8 We specifically previously held “the Wilson Letters are anonymous political
speech under the First Amendment subject to Pilchesky’s four-part test for
disclosure of anonymous or pseudonymous speakers.” Kuwait & Gulf Link
Transport Co., 92 A.3d at 50.
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Kuwait & Gulf Link Transport Co., 92 A.3d at 49 (emphasis omitted).
In concluding KGL failed to meet the third and fourth prongs of the
Pilchesky test, the trial court relevantly stated the following:
We next consider the requirement that plaintiff submit an
affidavit of good faith and necessity. As discussed above, the
Pilchesky court elaborated that the plaintiff must state that the
information is “sought in good faith, is unavailable by other
means, is directly related to the claim and is fundamentally
necessary to secure relief.” Pilchesky, 12 A.3d at 444-45(emphasis added).
KGL asserts that is submitted an affidavit of good cause as
required by Pilchesky. KGL argues that it has exhausted all other
means to obtain the identity of Scott Wilson, and that his identity
is necessary in order to prove fault[.] Agility counters that while
KGL has satisfied the technical requirements of submitting an
affidavit, the information is, in fact, not sought in good faith, is
available through other means, does not relate to the claim, and
is not fundamentally necessary to secure relief.
We agree with KGL that it has satisfied the technical
requirements of Pilchesky by submitting an affidavit alleging
good faith, has made substantial efforts to uncover the identity of
Scott Wilson without success, and that the information sought
relates to the claim. However, the affidavit notwithstanding, we
do not agree that the information sought is fundamentally
necessary to secure relief. In the present case, Agility admits that
it is responsible for Scott Wilson’s statements under the theory of
respondeat superior. Moreover, Agility has offered to produce a
corporate designee pursuant to…Pa.R.C.P. 4007.1(e) (stating that
a corporation may respond to a subpoena by appointing a
representative, who “shall testify as to matters known or
reasonably available to the organization”). KGL’s concerns that a
corporate designee will “likely involve Pilchesky in an overly-
broad fashion” to protect Wilson’s identity are purely speculative
and can be addressed by this court if such an issue arises.
Consequently, KGL may seek recovery against Agility without
knowing the identity of Wilson, and as a result, KGL has not
satisfied the third prong of Pilchesky.
Finally, we must balance Scott Wilson’s right under the First
Amendment against the strength of KGL’s prima facie case. The
Pilchesky court instructed that “the reviewing court should
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examine the defamatory nature of the comments, the quantity
and quality of evidence presented, and whether the comments
were privileged.” Pilchesky, 12 A.3d at 445. The court also
should consider the forum where the comments arose. Id.Comments on “matters of public importance of those which
criticize public officials” are entitled to higher protection.
KGL argues that the equities weigh strongly in favor of
disclosing Wilson’s identity. Specifically, KGL contends that it has
established a strong prima facie case, defendants have already
partially revealed Wilson’s identity by admitting that he was acting
within the scope of his employment, Wilson’s malicious intent
undermines his right to anonymity, Wilson’s speech was
commercially motivated, he was not a legitimate whistleblower,
and Wilson as a foreign speaker is not entitled to First Amendment
protection. Despite these various arguments, we agree with
[Agility] that the case put forward by [KGL] does not outweigh
Wilson’s First Amendment rights.
The question of Wilson’s First Amendment rights has been
laid to rest by the Superior Court. We have been instructed, in no
uncertain terms, that “given the political nature of the Wilson
Letters, they are entitled to the highest level of protection…under
the First Amendment.” We agree with [Agility] that the attempts
of [KGL] to downplay Wilson’s strong First Amendment rights
amount to nothing more than an attempt to re-litigate issues
which were foreclosed by the Superior Court’s [previous] decision.
These include [KGL’s] assertions that Wilson was speaking in a
commercial forum, that he has no standing to raise free speech
rights, and that the United States Constitution may not apply
because Wilson may not be a United States citizen.
Of controlling importance is that the strength of [KGL’s]
evidence simply does not outweigh the necessity for First
Amendment protections in this case….Without prejudging the
issue, we readily understand [Agility’s] arguments that a
defamatory effect can be derived from the Wilson Letters only by
misconstruing them. We also agree with [Agility] that there is
little evidence of harm in this case. Notwithstanding allegations
of adverse media coverage and inquiries from government
officials, there is no direct evidence that [KGL’s] reputation has
been damaged in the eye of a specific third party or that KGL
suffered a loss of its business. Allegations with respect to
expenditures for attorneys and lobbyists are, at best, imprecise.
We note, also, Pennsylvania law which provides a defamation
plaintiff must prove actual impairment of reputation in the
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community and that it is not enough that the plaintiff be merely
embarrassed or annoyed.
In sum, we believe the quantity and quality of the evidence
of defamation presented in this case does not outweigh the right
of pseudonymous speech in this case. Consequently, the motion
to apply Pilchesky and compel disclosure of John Does’
[(Wilson’s)] identity will be denied.
Trial Court Opinion, filed 12/9/15, at 3-5 (footnotes, citations, and emphasis
omitted).
Contrary to KGL’s assertion, we conclude the trial court did not err in its
application of Pilchesky to the instant matter. We specifically reject KGL’s
claim that Pilchesky did not apply in any manner to the instant matter
because the First Amendment anonymity rights were not implicated in this
case. See KGL’s Brief at 40. As indicated supra, this Court previously held
the Pilchesky test was relevant to the within matter and, in fact, we
specifically directed the trial court to undertake an analysis thereunder in
order to determine whether Agility should be compelled to disclose Scott
Wilson’s identity.9
____________________________________________
9 KGL also lists a litany of discovery orders and suggest that, if the trial court
had granted the discovery orders, KGL “may have” been able to discover the
motivation of the person(s) who sent the emails upon which “Scott Wilson”
relied, as well as what additional steps Agility could have taken to authenticate
the veracity of the emails. KGL’s speculative argument aside, we note that
evidence of ill will or the email sender’s desire to harm KGL, without more,
would not establish “actual malice” with regard to “Scott Wilson’s” reliance
upon the emails. See Harte–Hanks Communications, Inc., supra (holding
“actual malice” has nothing to do with bad motive or ill will). Moreover, as
indicated supra, “actual malice” is generally an inquiry into “what the
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Finally, we note KGL argues the trial court erred in denying KGL’s
February 9, 2018, motion to file an amended complaint asserting two new
defamation claims related to the following: Agility (as opposed to “Scott
Wilson”) sent the privileged memo underpinning the Wilson Letters to
congressional leaders, and Agility (as opposed to “Scott Wilson”) sent a 2011
email to various people indicating KGL violated CISADA. See KGL’s Issue
Seven supra; KGL’s Brief at 56-58.
The right to amend should be liberally granted, absent an error of law
or resulting prejudice to an adverse party. Connor v. Allegheny General
Hospital, 501 Pa. 306, 461 A.2d 600, 602 (1983); Pa.R.C.P. 1033.
However, the right to amend is not absolute. Where the initial
pleading reveals that the complaint’s defects are so substantial
that amendment is not likely to cure them, and that the prima
facie elements of the claim or claims asserted will not be
established, the right to amend is properly withheld. See Spain
v. Vicente, 315 Pa.Super. 135, 461 A.2d 833, 837 (1983); also
see Behrend v. Yellow Cab Co., 441 Pa. 105, 271 A.2d 241,
243 (1970). Furthermore, the decision to grant or deny leave to
amend is within the sound discretion of the trial court, and will not
be reversed absent a clear abuse of discretion. Junk v. East End
Fire Dept., 262 Pa.Super. 473, 396 A.2d 1269, 1277 (1978) [(en
banc)].
Feingold v. Hill, 521 A.2d 33, 39 (Pa.Super. 1987).
KGL’s new claims were predicated on statements substantially similar to
those found in the Wilson Letters. Thus, permitting KGL to amend its
____________________________________________
defendant did, as opposed to what it refrained from doing or might have done
but omitted to do.” Curran, 546 A.2d at 648.
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complaint to add these new defamation claims would have been futile.
Accordingly, we conclude the trial court did not abuse its discretion in denying
KGL permission to amend its complaint.10
For all of the foregoing reasons, we affirm.
Affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/1/2019
____________________________________________
10 In light of our discussion supra, we need not additionally address KGL’s
Issue Two supra related to damages. However, suffice it to say that we find
no error in the trial court’s analysis thereof. See Trial Court Opinion, filed
7/6/18, at 6-8.
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