Statements That a Company Is "In Default" and "Fails or Refuses To Pay" Contractual Obligation Are Held Defamatory Per Se - And Not Susceptible Of An Innocent Construction
GIANT SCREEN SPORTS v. CANADIAN IMPERIAL BANK OF COMMERCE (January 20, 2009)
Giant Screen Sports (“GSS”) entered into an agreement with Sky High whereby GSS would distribute three Sky High films. GSS agreed to pay Sky High $3 million dollars over three years, after distribution. Sky High financed the production of one of the films through Canadian Imperial Bank of Commerce (“CIBC”). Although Sky High assigned its rights to the $3 million to CIBC, CIBC also required Sky High to obtain insurance from Export Development Canada (“EDC”) in the event of GSS’ default. EDC insisted on modifications to the distribution agreement between GSS and Sky High, including an accelerated payment schedule and a guarantee of Sky High’s obligation. In late 2002, Sky High provided contract documents to CIBC evidencing the changes and purportedly signed by GSS. GSS maintains that it did not sign and had no knowledge of the new agreements. In 2004, CIBC attempted to trigger the protections in the agreements. GSS notified CIBC that the signature was not that of the GSS officer. When presented by CIBC with the group of agreements, all purportedly bearing a GSS signature, GSS advised CIBC that it would cooperate with its investigation of forgery but only through legal process. CIBC did not tell CIBC that the signatures were forged but stated that CIBC “would not like” the answers to the questions of legitimacy. CIBC then filed an insurance claim with EDC, alleging a loss as a result of GSS’ failure to make the first payment under the agreements. In response to inquiries from EDC, CIBC stated that: a) GSS was in default, b) CIBC was unaware of any disputes that would impede payment, and c) CIBC knew of no reason why GSS did not pay. GSS brought an action against Sky High and CIBC. Against CIBC, GSS alleged that CIBC’s statements to EDC concerning GSS were defamatory per se. The district court granted summary judgment to CIBC on the ground that the statements were susceptible of an innocent construction. GSS appeals.
In their opinion, Judges Bauer, Cudahy (dissenting) and Wood reversed and remanded. The Court outlined Illinois law of defamation. To prevail on a defamation claim, a plaintiff must prove a false statement, an unprivileged publication to a third party, and damages. Illinois recognizes defamation per se, in which damages are presumed because of the obvious harm caused by the statements. Two kinds of statements constituting defamation per se are relevant to the case: those imputing an inability to discharge one’s duties and those that impute lack of ability in his or her business. Even statements meeting these criteria may be not actionable if they are reasonably capable of an innocent interpretation or are statements of opinion. The Court applied Illinois law to the three statements at issue: that GSS’ failure to pay resulted in a loss to CIBC, that GSS was still in default, and that CIBC was unaware of any dispute between GSS and Sky High that would affect GSS’ desire to pay. The Court believed that the district court’s conclusion put an undue strain on the statements’ meaning. The Court concluded that the statements, taken as a whole and in the context in which they were made, conveyed an untrue imputation that GSS was dishonest. The Court also concluded that the statements contained verifiable factual assertions and were not statements of opinion. Although GSS concedes that CIBC has a qualified privilege, the Court agreed with GSS that there existed genuine issues of fact as to whether CIBC abused the privilege – by failing to properly investigate the truth.
Judge Cudahy dissented. He believed that the majority gave only lip service to the innocent construction rule. He saw the statements of CIBC to be rather ordinary statements made during the course of a business dispute. Illinois precedent, in his view, holds that the mere statement of one’s failure to perform is not defamation per se. He would have affirmed the district court.
