Schatz v. Republican State Leadership Committee

United States Court of Appeals

For the First Circuit

No. 11-1437

JAMES M. SCHATZ,

Plaintiff, Appellant,

v.

REPUBLICAN STATE LEADERSHIP COMMITTEE; REPUBLICAN STATE

LEADERSHIP COMMITTEE-MAINE PAC; CROSSROADS MEDIA LLC; PATTI HECK;

MICHAEL DUBKE; SCOTT S. WARD; BEN CANNATTI; ARENA COMMUNICATIONS

LLC; OHMAN HOLDINGS LLC; VALCARCE HOLDINGS LLC; ARENA HOLDINGS

INC.; THE GRASSY KNOLL LLC; RICHARD J. OHMAN; PETER J. VALCARCE,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. D. Brock Hornby, U.S. District Judge]

Before

Lynch, Chief Judge,

Howard and Thompson, Circuit Judges.

Barry K. Mills, with whom Hale & Hamlin, LLC was on brief, for

appellant.

Timothy F. Brown, with whom Arent Fox LLP, Paul W. Chaiken,

and Rudman & Winchell were on brief, for appellees Republican State

Leadership Committee, Republican State Leadership Committee-Maine

PAC, Scott S. Ward, and Ben Cannatti.

Andrew M. Friedman, with whom Patton Boggs LLP, Anne Birgel

Cunningham, Alexia Pappas, and Verrill Dana, LLP were on brief, for

appellees Crossroads Media LLC, Patti Heck, Michael Dubke, Arena

Communications LLC, Valcarce Holdings LLC, Arena Holdings Inc., The

Grassy Knoll LLC, Richard J. Ohman, and Peter J. Valcarce.

February 10, 2012

THOMPSON, Circuit Judge.

PROLOGUE

Campaigning for public office sometimes has the feel of

a contact sport, with candidates, political organizations, and

others trading rhetorical jabs and sound-bite attacks in hopes of

landing a knockout blow at the polls. It is not for the thin-

skinned or the faint-hearted, to use two apropos clichés. See

Monitor Patriot Co. v. Roy, 401 U.S. 265, 275-76 (1971). And

because political speech is the life-breath of democracy, see Eu v.

S.F. Cnty. Democratic Cent. Comm., 489 U.S. 214, 223 (1989), the

First Amendment – applied to the states via the Fourteenth – bars

public figures from recovering damages under state defamation laws

unless they show that the defamer acted with "actual malice," see

New York Times Co. v. Sullivan, 376 U.S. 254, 279-80 (1964),

legalese that might suggest ill will or evil motive to the

uninitiated but really means knowledge of falsity or reckless

disregard for the truth, see Masson v. New Yorker Magazine, Inc.,

501 U.S. 496, 509-11 (1991).1 Cases define "reckless disregard"

variously as a defamer's having "'serious doubts'" about a

statement's falsity, or "actually" having "a 'high degree of

awareness of . . . probable falsity,'" or suspecting falsity and

purposefully – not just negligently – avoiding the truth. Harte-

1

For a succinct summary of the history behind what is

sometimes called the "New York Times rule," see Lluberes v.

Uncommon Prods., LLC, 663 F.3d 6, 11-14 (1st Cir. 2011).

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Hanks Commc'n, Inc. v. Connaughton, 491 U.S. 657, 688, 692 (1989)

(quoting St. Amant v. Thompson, 390 U.S. 727, 731 (1968), and

Garrison v. Louisiana, 379 U.S. 64, 74 (1964), respectively).

All this makes it quite obvious that defamation law does

not require that combatants for public office act like war-time

neutrals, treating everyone evenhandedly and always taking the high

road. Quite the contrary. Provided that they do not act with

actual malice, they can badmouth their opponents, hammering them

with unfair and one-sided attacks – remember, speaking out on

political issues, especially criticizing public officials and

hopefuls for public office, is a core freedom protected by the

First Amendment and probably presents "the strongest case" for

applying "the New York Times rule." See id. at 666 n.7, 686-87.

And absent actual malice, more speech, not damages, is the right

strike-back against superheated or false rhetoric. See id. at 686-

87.

Today's appeal – targeting speech critical of a

candidate's performance in public office and challenging the

dismissal of his defamation-based complaint for failure to state a

claim – brings these principles into bold relief. Finding no

reversible error in the judge's careful opinion, we affirm. The

story follows.

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HOW IT ALL BEGAN

Having lost his bid for a Maine Senate seat in 2010,

Democratic politician James Schatz brought this diversity suit

(governed, all agree, by Maine law) against a slew of defendants

for defamation libel, intentional infliction of emotional distress,

and publicly placing him in a false light. Our case caption lists

the complete cast of defendants. For simplicity's sake, we follow

the parties' lead and refer to the defendants, collectively, as the

"RSLC," which is short for the Republican State Leadership

Committee.

The gist of Schatz's operative complaint was that the

RSLC opposed his candidacy and supported his opponent's with

flyers, brochures, and radio and TV ads days before the election

that conjured up imaginary wrongs that he had supposedly done as a

selectman for the town of Blue Hill. He attached copies of the

offending circulars to his complaint, and we quote from one of

them, which is representative of the others.2 Emblazoned on the

front are these words:

No Rockets' Red Glare,

No Bursting in Air.

Thanks to JIM SCHATZ . . .

2

The judge reproduced the flyer as Exhibit A to his decision.

See Schatz v. Republican State Leadership Comm., 777 F. Supp. 2d

181, 192 (D. Me. 2011). To save trees, we refer the interested

reader there rather than reproducing a copy here. As for the radio

and TV ads, they basically parroted what the flyers said, Schatz

alleged.

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(Emphases removed.) And on the back:

Jim Schatz voted to cancel the $10,000

fireworks celebration for the Fourth of July –

blaming it on a bad economy.

However, before canceling the show, Schatz and

the Blue Hill Selectmen gave 10,000 taxpayer

dollars to a political organization.

It's wrong for Schatz to give your money to a

political organization, and it was wrong for

Schatz to cancel your 4th of July celebration.

On November 2, Vote against Jim Schatz,

because he's wrong for Maine.

(Emphases removed.)

A fine-print footnote in the flyers references two

newspaper articles as the source for these assertions, and Schatz

appended both items to his complaint too. The first, from the July

2, 2009 edition of the Bangor Daily News, chronicled the financial

difficulties confronting cash-strapped Maine towns in funding

fireworks for the 2009 Independence Day celebration:

There will be no fireworks display in Blue

Hill this Fourth of July due to the poor

economic climate, but business is booming

elsewhere as municipalities and private groups

have worked hard to raise funds to pay for the

fire that lights up the nation's birthday.

It continued:

For the past two years the Hancock County town

has fronted the money for the fireworks

display for the Fourth to Remember celebration

and paid the funds back through donations.

There's about $10,000 in the account, but the

selectmen and the fireworks committee opted

not to spend the funds this year.

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And it noted:

"Given the economy, we felt that in good

conscience we couldn't do it this year," said

Selectman Jim Schatz. "We thought that to

spend that much money on something that will

light things up for a few seconds and then is

gone was not the thing to do. Unless we were

sure we could pay the town back, we didn't

want to pull the trigger on it this year."

The second piece, from the August 9, 2009 edition of the

Kennebec Journal, highlighted how local communities "are being

asked to help roll back school consolidation." It started off:

Starved for cash, the advocates pressing for a

repeal of Maine's school district

consolidation law are taking their fundraising

appeal to the towns directly affected by the

sweeping state mandate.

The Maine Coalition to Save Schools,

which had $140 on hand at the beginning of

July, is seeking campaign contributions from

municipalities that turned down district

mergers or are unhappy with the consolidation

arrangements their voters approved.

It added:

Blue Hill approved a $3,000

contribution to the effort in January 2008 and

$2,000 more in July of last year. James

Schatz, a Blue Hill selectman and a state

representative, said the town recently paid

$5,000 to the coalition as the last

installment of a $10,000 commitment.

And Danforth and Deer Isle residents

each approved taking $3,000 out of town

coffers to boost the effort in January and

October of last year, respectively.

After noting "Monmouth selectmen don't have the power to contribute

town funds to a political cause," it informed:

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While it's legal for municipalities'

legislative bodies to dig into taxpayer funds

to support political causes, the Maine

Municipal Association, the lobbying arm for

Maine cities and towns, advises against it.

"Expressing one's view is one thing,"

association spokesman Michael Starn said.

"Expending town funds to support their view is

much more problematic."

A municipality should generally take a

position of "more fact gathering and factual

dissemination, not advocacy as individual

communities," Starn said.

But municipal officials, he noted, are

free to express their opinions on pending

political matters, and a town's legislative

body can approve resolutions supporting or

opposing particular causes.

"You do have a responsibility as a

government official to approach this whole

advocacy thing in a very responsible way,"

Starn said.

And, finally, it reported:

According to [Dick] Dyer, [a repeal

advocate,] there's no reason that can't

involve committing town funds to advancing a

political cause.

Town officials "make decisions all the

time that are political in nature that involve

spending taxpayers' dollars," he said.

Schatz, the Blue Hill selectman,

acknowledged that questions come up when

municipalities contribute to political causes.

But "a lot of the rural, small schools

have been hurt" by consolidation, he said.

"If (one) were to examine the issue, it would

seem appropriate" to contribute to the repeal

campaign.

Getting back to the complaint, Schatz alleged that the

RSLC had defamed him by falsely accusing him of a crime: having

lobbed words like "wrong" and "misuse" while denouncing him for

working both to give taxpayer money to a "political organization"

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and to squelch the 2009 fireworks display, the RSLC had smeared him

as a stealer of public funds. Eager to set things straight, Schatz

declared in his complaint that town voters had decided in January

2008 to make an up-to $10,000 contribution to the repeal-the-

school-consolidation-law effort, though they apparently gave the

selectmen the discretion to decide how much (if any) of the $10,000

to spend. Consistent with that vote, the selectmen paid the Maine

Coalition to Save Schools ("Coalition," for easy reading) $10,000

in three installments of varying amounts, Schatz said, with the

final payment coming the day before the 2009 Independence-Day

festivities. Speaking of Independence Day 2009, Schatz alleged

that he himself had voted in March 2009 to fund fireworks for that

day but was outvoted by the town's other two selectmen. He also

said that these funding decisions – the first, by the voters in

January 2008 to kick into the repeal kitty; the second, by the

selectmen in March 2009 not to spring for fireworks, after he lost

2-1 on that issue – were totally unrelated.

Schatz then used the words "actual malice" in his

complaint, claiming that the RSLC knew based on the two articles

that its defamatory statements were false or was recklessly

indifferent to whether they were false. And, on top of that, he

accused the RSLC of not bothering to confirm the truth of its

assertions, faulting it for not doing anything to double-check the

articles' accuracy.

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HOW THE CASE GOT HERE

The RSLC promptly moved to dismiss Schatz's complaint for

failure to state a viable claim. See Fed. R. Civ. P. 12(b)(6).

Faced with that filing, Schatz dropped his intentional-infliction-

of-emotional-distress claim and stated at a motion hearing that if

his defamation claim failed so too would his false-light claim.

Also importantly, Schatz agreed that the Coalition is a political

organization, conceded that he was a public official for defamation

purposes, and argued that the judge could identify actual malice by

comparing what the newspapers said against what the flyers said.

After argument, the judge wrote a thoughtful opinion

granting the RSLC's motion. Even assuming that the RSLC's

statements were false and smacked of "'gotcha' politics" of a

"juvenile" sort, the judge still had "serious doubts" about whether

they were defamatory under Maine law – doubts that he did not

resolve because he concluded that Schatz's complaint did not

plausibly allege that the RSLC had acted with actual malice. See

Schatz, 777 F. Supp. 2d at 187-91. Unpersuaded, Schatz appeals.

OUR ANALYSIS

We give de novo review to a Rule 12(b)(6) dismissal,

using the same criteria as the district judge. See, e.g., Ocasio-

Hernández v. Fortuño-Burset, 640 F.3d 1, 7, 11-13 (1st Cir. 2011).

Ocasio-Hernández points the way to the proper handling of a motion

to dismiss. Step one: isolate and ignore statements in the

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complaint that simply offer legal labels and conclusions or merely

rehash cause-of-action elements. Id. at 12 (discussing, among

other cases, Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009), and

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Step two:

take the complaint's well-pled (i.e., non-conclusory, non-

speculative) facts as true, drawing all reasonable inferences in

the pleader's favor, and see if they plausibly narrate a claim for

relief. Id. (again, discussing Iqbal and Twombly, among others);

see also S.E.C. v. Tambone, 597 F.3d 436, 441-42 (1st Cir. 2010)

(en banc). Plausible, of course, means something more than merely

possible, and gauging a pleaded situation's plausibility is a

"context-specific" job that compels us "to draw on" our "judicial

experience and common sense." Iqbal, 129 S. Ct. at 1949, 1950.

And in performing our review, we realize too that we can consider

(a) "implications from documents" attached to or fairly

"incorporated into the complaint,"3 (b) "facts" susceptible to

"judicial notice," and (c) "concessions" in plaintiff's "response

to the motion to dismiss." Arturet-Vélez v. R.J. Reynolds Tobacco

Co., 429 F.3d 10, 13 n.2 (1st Cir. 2005); see also Haley v. City of

Boston, 657 F.3d 39, 44, 46 (1st Cir. 2011).

3

Knowing that the documents may trump the complaint's

allegations if a conflict exists, e.g., where a defendant has

"excis[ed] an isolated statement from a document and import[ed] it

into the complaint," see Clorox Co. P.R. v. Proctor & Gamble

Commercial Co., 228 F.3d 24, 32 (1st Cir. 2000).

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Like the district judge, we skip over whether Schatz's

complaint plausibly alleges defamation and focus on whether it

plausibly alleges actual malice – given that this is the simplest

way to pinpoint Schatz's problem. Not so fast, Schatz says,

suggesting that courts cannot take that tack. Unfortunately for

Schatz, he cites no case for the point, and we are aware of none,

so we need say no more about that. See Rodríguez v. Municipality

of San Juan, 659 F.3d 168, 175-76 (1st Cir. 2011). But before we

tangle with the actual-malice issue, we need to clear away some

underbrush.

Schatz intimates that the RSLC should get less First

Amendment protection than traditional members of the institutional

press. Again, though, he makes the point in passing, with no case

analysis, which does not put the matter in play here. Id. He also

faults the judge for dismissing his complaint without giving him

the chance to fire up the pretrial-discovery process and at least

get to the summary-judgment stage. But to access discovery

mechanisms, a plaintiff must first produce a complaint that passes

the plausibility test – a test that helps keep defendants from

wasting time and money in discovery on "largely groundless" claims.

See Twombly, 550 U.S. at 558 (quoting Dura Pharms., Inc. v. Broudo,

544 U.S. 336, 347 (2005)) (internal quotation marks omitted). And

it does no good to suggest, as Schatz seemingly does, that a judge

can cast aside complaints "just shy of a plausible entitlement to

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relief" on summary judgment: because the high cost of litigation

can scare defendants into settling even a weak case pre-summary

judgment, a claim must have some degree of plausibility before the

parties are put through their discovery paces. See id. at 558-59.

We turn our attention, then, back to whether Schatz's

allegations plausibly support an actual-malice claim. His

complaint used actual-malice buzzwords, contending that the RSLC

had "knowledge" that its statements were "false" or had "serious

doubts" about their truth and a "reckless disregard" for whether

they were false. But these are merely legal conclusions, which

must be backed by well-pled facts. See, e.g., Ocasio-Hernández,

640 F.3d at 12. As for facts, the complaint alleged that the RSLC

had basically branded him a criminal, falsely charging him with

working with his co-selectmen to "wrong[ly]" divert $10,000 in

"taxpayer" funds to a "political organization" and then voting to

kill a $10,000 fireworks celebration. The reality, at least

according to his complaint, is that town residents had voted in

January 2008 to contribute to the Coalition and that he had voted

in March 2009 to fund the fireworks display. From these

allegations Schatz further insists that the RSLC had portrayed him

in a sinister light by connecting the two funding decisions (the

one had nothing to do with the other) and by referring to the

Coalition as a "political organization" rather than by its name

(leaving the impression that maybe his "political organization" had

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gotten the 10 grand). Given what the newspapers had reported,

which, according to the complaint, were the RSLC's sole sources of

information, the RSLC knew the offending statements were false or

made them recklessly without any regard for the truth – or so

Schatz argues. He also points out that his complaint alleged that

the RSLC did not launch "any additional investigation" to determine

whether what it said was true. And, reaching the ultimate

crescendo, he contends that the complaint's allegations plausibly

show that the RSLC acted with actual malice.

We think just the opposite. After comparing what the

RSLC proclaimed with what the newspapers disclosed (as everyone

agrees we should), we conclude that none of Schatz's points,

individually or collectively, can save the day for him.

Let us start with Schatz's beef with the RSLC's labeling

"wrong" a "vote" by him and his selectmen-partners to hand $10,000

to a "political organization":

1. The Kennebec Journal story spotlighted how some

consider funding like that to be inappropriate. Yet it is all

perfectly legal, the article pointed out. Schatz himself

essentially seconded these sentiments. Yes, some people raise

"questions" whenever a town contributes to a political cause, but

"it would seem to be appropriate" to chip in town money to the

repeal-the-school-consolidation-law campaign, he is quoted as

saying. And a commonsense reading of that article suggests that

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words like inappropriate (and "wrong" surely is one) are not

synonyms for criminal.

2. "Blue Hill approved" the contribution, the article

added. But neither that tidbit nor anything else there identified

Blue Hill voters as opposed to Blue Hill officials as the

approvers. Also, Schatz concedes that he and his colleagues had

voter-conferred discretion over whether to contribute any of the

$10,000 in the first place, meaning that they did play a leading

role in handing the Coalition $10,000. Undaunted, Schatz argues

here that because the Kennebec Journal story said that residents in

other towns had voted or needed to vote on the contribution

question, one can infer that Blue Hill residents and not Blue Hill

selectmen had to approve the appropriation too – given that (in the

words of his brief) Maine residents "generally know" and Maine law

generally provides "that selectmen can spend public funds only for

purposes authorized by voters at a town meeting." This is a

nonstarter, however: the article said nothing about whether these

supposed appropriation rules apply uniformly across the state and,

more importantly, to Blue Hill; also, at the risk of sounding like

a broken record, even Schatz admits that he and his selectmen

compatriots had the freedom to decide whether to contribute any

money at all.

3. While we are talking about concessions, Schatz once

again concedes that the Coalition is indeed a "political

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organization." And the inference that he asks us to draw – that

"political organization" was code for a Schatz political

organization that stood to reap the whole benefit from the $10,000

contribution – is simply too much of a stretch for us to credit,

even at the pleading stage. See Gooley v. Mobil Oil Corp., 851

F.2d 513, 514, 515 (1st Cir. 1988) (explaining that while we must

draw all reasonable inferences in the plaintiff's favor, we need

not accept every imaginable inference).

As for his railing against the RSLC for saying he had

voted not to fund the 2009 Fourth of July fireworks display and for

tying the two spending decisions (contributing to the repeal

campaign and cancelling the fireworks) together by their timing:

1. The Bangor Daily News story reported that "the

selectmen and the fireworks committee" had decided not to fund the

fireworks show. (Emphasis added.) And it provided not even the

slightest possible hint of a suggestion that Schatz had bucked his

colleagues and voted yes on the fireworks-funding issue. Actually,

his quoted comments – e.g., that "we" could not "in good

conscience" fund the fireworks "this year," given the poor economic

climate, and that "[w]e thought" that spending $10,000 "on

something that will light" up the sky "for a few seconds . . . was

not the thing to do" – gave the distinct impression that he had

voted no too.

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2. Neither article tied the fireworks funding to the

contribution payments. But the Kennebec Journal story of August 9,

2009 – published hard on the heels of the 2009 July Fourth

celebration that had no fireworks – paraphrased Schatz as saying

that Blue Hill had "recently paid" the Coalition "$5,000 . . . as

the last installment of a $10,000 commitment." (Emphasis added.)

Schatz harps on the judge's comment that the RSLC's juxtaposing the

contribution payments with the fireworks cancellation suggests

"careless[ness]" and smacks of childish "'gotcha' politics" too.

Schatz, 777 F. Supp. 2d at 189, 191. But that does not help

Schatz, because carelessness "is an indication of negligence, not

actual malice." Levesque v. Doocy, 560 F.3d 82, 91 (1st Cir.

2009).

This spells doom for Schatz. By now it is plain that

what the RSLC said synced up with or at least was not out of line

with what the stories said. Most importantly for present purposes,

none of Schatz's allegations – singly or together – plausibly

suggest that, given the articles' reporting, the RSLC either knew

that its statements were false or had serious doubts about their

truth and dove recklessly ahead anyway. That his complaint also

alleged that the RSLC passed on doing "additional" legwork to

verify the truth behind its statements does not change things.

True, "[r]ecklessness amounting to actual malice may be found"

where the defendant "relies on a source" when "there is an obvious

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reason to doubt its veracity . . . or deliberately ignores evidence

that calls into question his published statements." Id. at 90.

But Schatz has not alleged enough to meet that standard. The

bottom line, then, is that he has not "nudged" his actual-malice

claim "across the line from conceivable to plausible," so the judge

rightly dismissed the complaint. See Twombly, 550 U.S. at 570.

As a last-ditch effort to save his case, Schatz suggests

that if we do not reverse the judge we will be setting pleading

standards higher than what Twombly and Iqbal require. Not so.

Sure, malice is not a matter that requires particularity in

pleading — like other states of mind, it "may be alleged

generally." See Fed. R. Civ. P. 9(b). But, to make out a

plausible malice claim, a plaintiff must still lay out enough facts

from which malice might reasonably be inferred – even in a world

with Twombly and Iqbal. See, e.g., Iqbal, 129 S. Ct. at 1954

(noting that "Rule 9 merely excuses a party from pleading [states

of mind] under an elevated pleading standard" – it does not give

him carte blanche "to plead the bare elements of his cause of

action, affix the label 'general allegation,' and expect his

complaint to survive a motion to dismiss"). Having followed

Twombly and Iqbal to a T, we easily reject Schatz's last line of

attack.

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EPILOGUE

Concluding, as we do, that the judge reached a correct

result, we uphold his decision and judgment.

Affirmed with costs to appellees.

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