Summary
holding that libel per se constituted an unfair or deceptive act
Summary of this case from Market Choice, Inc. v. New England Coffee CompanyOpinion
No. 192PA89
Filed 7 February 1990
1. Libel and Slander 5.2 (NCI3d) — letter impeaching trade — libelous per se A letter sent by defendant potato processor's vice president to customers of plaintiff food brokerage company which referred to a price list for Northern Star potato products distributed by plaintiff and stated that "we at Northern Star did not authorize such a price list" impeached plaintiff in its trade as a food broker and was libelous per se.
Am Jur 2d, Libel and Slander 102, 104.
2. Libel and Slander 15 (NCI3d) — statement by plaintiffs customer — competency to show injury to business Testimony by plaintiff food broker's employee that, after having received a libelous letter from defendant potato processor stating that it did not authorize a price list distributed by plaintiff, a customer stated that "he was going to look for other sources to get his potatoes because he didn't know whether he could trust [plaintiff or defendant] either one" was properly admitted to show the customer's state of mind in relying on defendants' misrepresentations in the letter and was sufficient to support the jury's finding that defendants' letter proximately caused injury to plaintiffs' business.
Am Jur 2d, Libel and Slander 360, 472.
3. Unfair Competition 1 (NCI3d) — libel per se impeaching business activity — unfair trade practice A libel per se of a type impeaching a party in its business activities is an unfair or deceptive act in or affecting commerce in violation of N.C.G.S. 75-1.1, which will justify an award of damages under N.C.G.S. 75-16 for injuries proximately caused.
Am Jur 2d, Monopolies, Restraints of Trade, and Unfair Trade Practices 772, 774.
4. Unfair Competition 1 (NCI3d) — unfair trade practice — question of law Whether an act found by the jury to have occurred is an unfair or deceptive practice which violates N.C.G.S. 75-1.1 is a question of law for the courts.
Am Jur 2d, Libel and Slander 360, 484.
5. Unfair Competition 1 (NCI3d) — unfair trade practice — determination by appellate court It does not invade the province of the jury for the Supreme Court to determine as a matter of law on appeal that acts expressly found by the jury to have occurred and to have proximately caused damages are unfair or deceptive acts in or affecting commerce under N.C.G.S. 75-1.1.
Am Jur 2d, Libel and Slander 360, 484.
6. Unfair Competition 1 (NCI3d) — letter impeaching trade — jury finding of libel and damages — unfair trade practice as matter of law The jury's findings that defendants libeled plaintiff food brokerage company by a letter impeaching it in its trade, thereby causing it actual injury and damages, required entry of judgment for plaintiff as a matter of law on its unfair and deceptive trade practice claim.
Am Jur 2d, Libel and Slander 360, 484.
7. Libel and Slander 18 (NCI3d); Unfair Competition 1 (NCI3d) — libel and unfair trade practice — punitive or treble damages Where libel and unfair trade practice claims arose from a letter sent by defendants, plaintiffs were not entitled to both punitive damages for the libel and treble damages under N.C.G.S. 75-16 but could elect whether to recover punitive or treble damages.
Am Jur 2d, Monopolies, Restraints of Trade, and Unfair Trade Practices 711.
ON appeal from the judgment of Brewer, J., entered in Superior Court, WAKE County, on 4 November 1988. Pursuant to N.C.G.S. 7A-31 (a) and Rule 15 (e)(2) of the North Carolina Rules of Appellate Procedure, discretionary review prior to a determination by the Court of Appeals was allowed by the Supreme Court ex mero motu on 16 May 1989. Heard in the Supreme Court on 13 September 1989.
Graham James, by Mark Anderson Finkelstein, for the plaintiffs.
Morris, Bell Morris, by William C. Morris, Jr., for the defendants.
Justice MEYER dissenting.
Justice WHICHARD joins in this dissenting opinion.
The questions presented on appeal include (1) whether a letter sent by the defendants to some of the plaintiffs' business contacts is libelous per se, and (2) whether libel per se of a plaintiff relating to the conduct of its business constitutes an unfair or deceptive act affecting commerce in violation of N.C.G.S. 75-1.1. We conclude that the letter in question was properly found to be libelous per se. We further conclude that libel per se of a plaintiff as to the conduct of its business does violate N.C.G.S. 75-1.1 and, when the libel proximately causes injury to the business, gives rise to a cause of action under N.C.G.S. 75-16.
At trial, evidence tended to show that the plaintiff Ellis Brokerage Company, Inc. is a food broker. The company's function as a food broker is to convince large-quantity food buyers, such as hospitals and school systems, to place orders with the company's clients who are in the business of selling foods. The company's sole full-time employee is the individual plaintiff Earl Ellis. The defendant Northern Star Company is a Minnesota-based potato processor, and the defendant Thomas Kenney is Northern Star's senior vice-president for sales. Ellis Brokerage Company became a broker for Northern Star in 1981, and over the years built Northern Star's sales in eastern North Carolina from no sales at all to approximately $640,000 annually.
On 20 June 1986, Ellis received Northern Star potato pricing information from Kenney over the telephone. On 23 June 1986, Ellis sent price lists based on this information to several potential buyers.
On 29 August 1986, Northern Star terminated its brokerage contract with Ellis Brokerage Company. On 5 September 1986, Kenney wrote the following letter for Northern Star to several of the buyers who had received the 23 June price list from Ellis:
Dear Sir;
We have recently received copies of a price list sent to you from Ellis Brokerage Company regarding pricing on Northern Star potato products. These prices were noted for bids only, delivered by Northern Star.
We at Northern Star Company did not authorize such a price list and therefore cannot honor the prices as quoted on June 23, 1986.
Sincerely,
Thomas W. Kenney Senior Vice-President Sales
The plaintiffs then brought this action contending the letter is libelous per se and an unfair or deceptive act affecting commerce under N.C.G.S. 75-1.1. The plaintiffs' amended complaint also alleged breach of a covenant of good faith, breach of contract through unreasonable termination, tortious interference with business relations, and unjust enrichment or restitution. The defendants counterclaimed for breach of fiduciary duty and breach of contract. The breach of contract claim and counterclaim were settled prior to trial. At the close of the plaintiffs' evidence, the trial court granted the defendants' motions for directed verdicts on all but the libel claims. The jury found that the defendants had maliciously libeled the plaintiff Ellis Brokerage Company, and awarded compensatory and punitive damages. The jury also found, however, that the defendants had not libeled the individual plaintiff Earl Ellis.
We note at the outset that, since the jury expressly found that the defendants acted with actual malice, this case does not present the issue of whether damages may be presumed in libel per se actions absent a finding of malice, as this Court has held in previous cases. See, e.g., Flake v. News Co., 212 N.C. 780, 785, 195 S.E. 55, 59 (1938), quoted in Renwick v. News and Observer Renwick v. Greensboro News, 310 N.C. 312, 316, 312 S.E.2d 405, 408, cert. denied, 469 U.S. 858, 83 L.Ed.2d 121 (1984). Certain cases decided by the Supreme Court of the United States give rise to a question as to whether North Carolina can continue the common law presumption of damages in libel per se actions absent express findings of malice. See, e.g., Dun Bradstreet v. Greenmoss Builders, 472 U.S. 749, 86 L.Ed.2d 593 (1985); Gertz v. Robert Welch, Inc., 418 U.S. 323, 41 L.Ed.2d 789 (1974); Walters v. The Sanford Herald, Inc., 31 N.C. App. 233, 228 S.E.2d 766 (1976); Halpern, of Libel, Language, and Law: New York Times v. Sullivan at Twenty-Five, 68 N.C.L. Rev. 273 (1990); Christie, Underlying Contradictions in the Supreme Court's Classification of Defamation, 1981 Duke L. J. 811.
I.
We first address the defendants' contentions that the trial court erred in denying their motions for directed verdict and judgment notwithstanding the verdict as to the plaintiffs' libel and punitive damages claims. Since the jury found the defendants had not libeled Earl Ellis, we consider these contentions only as they relate to the libel claim by Ellis Brokerage Company.
North Carolina has long recognized three categories of libel:
(1) Publications which are obviously defamatory and which are termed libels per se; (2) publications which are susceptible of two reasonable interpretations, one of which is defamatory and the other is not; and (3) publications which are not obviously defamatory, but which become so when considered in connection with innuendo, colloquium and explanatory circumstances. This type of libel is termed libel per quod.
Flake v. News Co., 212 N.C. 780, 785, 195 S.E. 55, 59 (1938); see Renwick v. News and Observer Renwick v. Greensboro News, 310 N.C. at 316, 312 S.E.2d at 408 (quoting Arnold v. Sharpe, 296 N.C. 533, 537, 251 S.E.2d 452, 455 (1979)).
Further, a publication is libelous per se, or actionable per se, if, when considered alone without innuendo: (1) It charges that a person has committed an infamous crime; (2) it charges a person with having an infectious disease; (3) it tends to subject one to ridicule, contempt, or disgrace, or (4) it tends to impeach one in his trade or profession.
Flake v. News Co., 212 N.C. at 787, 195 S.E.2d at 60-61 (citing cases), cited in Renwick v. News and Observer Renwick v. Greensboro News, 310 N.C. at 317, 312 S.E.2d at 408-09.
The plaintiffs contend that the defendants' letter of 5 September 1986 is libelous per se. The defendants, on the other hand, argue that the letter is not defamatory at all or, alternatively, it is susceptible of both defamatory and nondefamatory interpretations. We conclude that the letter is libelous per se. The language "[w]e at Northern Star did not authorize such a price list," taken in the context of the entire letter, can only be read to mean that Ellis Brokerage Company, acting in its capacity as broker for Northern Star, did an unauthorized act. Whether that act was publishing certain unauthorized prices within a price list or publishing the entire price list itself without authorization is of no import; either reading is defamatory and impeaches Ellis Brokerage in its trade as a food broker.
Whether a publication is one of the type that properly may be deemed libelous per se is a question of law to be decided initially by the trial court. See Flake v. News Co., 212 N.C. at 786, 195 S.E.2d at 409, quoted in Renwick v. News and Observer Renwick v. Greensboro News, 310 N.C. at 317-18, 312 S.E.2d at 409; Sasser v. Rouse, 35 N.C. 142, 143 (1851). Here, the trial court properly treated the defendants' letter as a publication of that type and allowed the libel per se claim of Ellis Brokerage Company to be decided by the jury.
At trial, Earl Ellis testified to a discussion he had with Bill Flemming of Henderson Fruit Produce, one of Ellis Brokerage Company's customers. Ellis testified that Flemming stated he had received one of Northern Star's letters. Flemming told Ellis, after receiving the letter, that "he was going to look for other sources to get his potatoes because he didn't know whether he could trust me or Northern Star either one." Although the defendants objected to Ellis' testimony concerning Flemming's statement, the trial court properly admitted the testimony as showing Flemming's state of mind, since it was directly pertinent to the question of Flemming's reliance upon the defendants' misrepresentations. See Pearce v. American Defender Life Ins. Co., 316 N.C. 461, 472, 343 S.E.2d 174, 181 (1986); N.C.R. Evid. 801 (c), 803 (3); 1 Brandis on North Carolina Evidence 3d 141, 161 (1988 Supp. 1989). While Flemming's statement as described by Ellis could be taken as an indication that Flemming did not think he could trust Earl Ellis personally, Earl Ellis and Ellis Brokerage Company were, to the extent pertinent to this issue, one and the same; Earl Ellis was the sole employee of Ellis Brokerage Company. The testimony of Earl Ellis concerning Flemming's statement was sufficient to support the jury's finding that the defendants' letter proximately caused injury to Ellis Brokerage Company's business.
Based on the evidence and upon proper instructions, the jury found that the defendants had libeled Ellis Brokerage Company and that the company was entitled to compensatory and punitive damages. The defendants' assignments of error relating to the verdict and judgment against them for their having libeled Ellis Brokerage Company are without merit and are overruled.
II.
The second issue before the Court is whether libel per se in a business setting is an unfair or deceptive act in or affecting commerce in violation of N.C.G.S. 75-1.1. With certain qualifications discussed below, we answer this question in the affirmative. Again, since the jury found no libel of the plaintiff Earl Ellis by the defendants, we consider and answer this question only with regard to the plaintiff Ellis Brokerage Company.
This Court has previously examined the substance and purpose of N.C.G.S. 75-1.1 prohibiting unfair or deceptive acts in or affecting commerce. See, e.g., Marshall v. Miller, 302 N.C. 539, 276 S.E.2d 397 (1981). We have concluded, for example, that both false advertising and fraud violate that statute. Winston Realty Co. v. G.H.G., Inc., 314 N.C. 90, 331 S.E.2d 677 (1985) (false advertising); Hardy v. Toler, 288 N.C. 303, 218 S.E.2d 342 (1975) (fraud). In limitation, we have held that certain transactions already subject to pervasive and intricate statutory regulation, such as securities transactions, were not intended by the legislature to be included within the scope of the statute. Skinner v. E.F. Hutton Co., 314 N.C. 267, 333 S.E.2d 236 (1985). In the present case, however, we conclude that no such limitation applies. Instead, like fraud and false advertising, a libel per se of a type impeaching a party in its business activities is an unfair or deceptive act in or affecting commerce in violation of N.C.G.S. 75-1.1, which will justify an award of damages under N.C.G.S. 75-16 for injuries proximately caused. See Talbert v. Mauney, 80 N.C. App. 477, 343 S.E.2d 5 (1986). To recover, however, a plaintiff must have "suffered actual injury as a proximate result of defendant's deceptive statement or misrepresentation." Pearce v. American Defender Life Ins. Co., 316 N.C. at 471, 343 S.E.2d at 180. The trial court erred in granting the defendants' motion for directed verdicts in their favor on this claim.
III.
[4, 5] Given the peculiar posture in which this case comes before us on appeal, we next find it necessary to consider whether the jury's findings that the defendants libeled Ellis Brokerage Company by impeaching it in its trade, thereby proximately causing it actual injury and damages, require, as a matter of law, entry of judgment for Ellis Brokerage Company on its unfair or deceptive acts claim. Whether an act found by the jury to have occurred is an unfair or deceptive practice which violates N.C.G.S. 75-1.1 is a question of law for the court. Hardy v. Toler, 288 N.C. at 308-09, 218 S.E.2d at 345-46. "Ordinarily it would be for the jury to determine the facts, and based on the jury's finding, the court would then determine as a matter of law whether the defendant engaged in unfair or deceptive acts or practices in the conduct of trade or commerce." Id. at 310, 218 S.E.2d at 346-47. Therefore, it does not invade the province of the jury for this Court to determine as a matter of law on appeal that acts expressly found by the jury to have occurred and to have proximately caused damages are unfair or deceptive acts in or affecting commerce under N.C.G.S. 75-1.1.
Since the trial court erroneously directed a verdict against Ellis Brokerage Company on its unfair or deceptive practices claim, the jury was not instructed on the requirement of proximate causation necessary to support an award of damages for that claim. However, the jury was instructed that in order to award more than nominal damages for the defendants' libel of Ellis Brokerage Company, the jury must find "actual damages . . . to [the] business reputation of the Plaintiff caused by the libel." As Ellis Brokerage Company's libel and unfair trade claims both were based on exactly the same proximate results of exactly the same act of the defendants, we conclude that the jury was sufficiently instructed on, and by its special verdict did find, damages to Ellis Brokerage Company proximately caused by the defendants' letter. We conclude as a matter of law, upon the facts found by the jury after proper instructions in this case, that the defendants' act did violate N.C.G.S. 75-1.1. The order of the trial court directing a verdict against Ellis Brokerage Company on its unfair or deceptive practices claim must therefore be reversed and this case, given the peculiar posture in which it has come before us, is remanded for entry of judgment for the plaintiff Ellis Brokerage Company on that claim.
For reasons similar to those we have just discussed, however, the individual plaintiff Earl Ellis is entitled to no relief as a result of the trial court's error in directing a verdict against him on his unfair or deceptive practices claim. After proper instructions by the trial court, the jury found as a fact that the defendants' act of mailing the letter had not libeled Earl Ellis individually by impeaching him in his trade. As the plaintiff Earl Ellis alleged no other act of the defendants in support of his unfair or deceptive practices claim, the jury's findings against him in this regard on the libel claim necessarily were findings rejecting the facts alleged by him in his unfair or deceptive practices claim. Therefore, the plaintiff Earl Ellis is entitled to no relief on appeal.
IV.
There remains a question as to the proper damages to be awarded to Ellis Brokerage Company. The company contends that it should be entitled to both punitive damages for the libel and the treble damages automatically assessed under N.C.G.S. 75-16. We disagree. The libel and unfair trade claims both arose from the defendants' letter. Plaintiffs may in proper cases elect to recover either punitive damages under a common law claim or treble damages under N.C.G.S. 75-16, but they may not recover both. See Bicycle Transit Authority v. Bell, 314 N.C. 219, 230, 333 S.E.2d 299, 306 (1985); Mapp v. Toyota World, Inc., 81 N.C. App. 421, 426-27, 344 S.E.2d 297, 301, disc. rev. denied, 318 N.C. 283, 347 S.E.2d 464 (1986); Marshall v. Miller, 47 N.C. App. 530, 542, 268 S.E.2d 97, 103 (1980), modified and aff'd, 302 N.C. 539, 276 S.E.2d 397 (1981). The jury awarded Ellis Brokerage Company $32,500 in actual damages and $12,500 in punitive damages for the libel. Under N.C.G.S. 75-16, the $32,500 in actual damages would be trebled, for a sum of $97,500. On remand of this case, the trial court must allow Ellis Brokerage Company to elect its remedy: either a total of $45,000 for the combined libel award; or a total of $97,500 under N.C.G.S. 75-16.
Affirmed in part; reversed in part; and remanded for further proceedings not inconsistent with this decision.