Tort/Negligence – Defamation – Libel – Blog Posts – Texas Law – Civil Practice – Choice of Law — Intellectual Property – Copyright Infringement Claim

Ascent Health Corp. v. Wells (Lawyers Weekly No. 13-02-0250, 27 pp.) (W. Earl Britt, Sr.J.) 4:12-cv-00083; E.D.N.C.

Holding: In a choice of law analysis, the general rule for defamation claims is that the place of harm is the place of publication; however, when a publication occurs over the internet, publication takes place in more than one state. The court predicts that the N.C. Supreme Court would apply Texas law in this case because the alleged injury to plaintiffs – in the form of reputational and financial harm – is centered in Texas, the state where the plaintiff-hospital and its plaintiff-medical director are located.

Defendant Wells’ motion to dismiss is granted as to plaintiffs’ claims which arise exclusively under N.C. law (libel under N.C. law and violation of the N.C. Unfair and Deceptive Trade Practices Act), civil conspiracy, and copyright infringement. Plaintiffs’ claims for libel and business disparagement under Texas law remain.

The plaintiff-hospital is a Texas psychiatric hospital. Defendant Wells is an N.C. resident who was a patient at the hospital. Plaintiffs allege that Wells has registered and/or created two internet blogs on which she has posted defamatory statements about plaintiffs.

Choice of Law

The general rule for defamation claims is the place of harm is the place of publication. This rule presumes that the defamatory statement is published (i.e., communicated to third parties) in one geographic location. In this case, however, the publication of the allegedly defamatory statements occurred over the internet, meaning multistate (if not worldwide) publication took place. As far as the court is aware, the N.C. appellate courts have not had the opportunity to apply the lex loci delicti rule to a defamation claim, let alone one involving multistate publication.

The court predicts that in a case of multistate defamation, while still adhering to the lex loci delicti rule, the N.C. Supreme Court would apply Texas law because the alleged injury to plaintiffs, in the form of reputational and financial harm, is centered in Texas, as that state is where the hospital and its medical director are located, and the allegedly defamatory remarks concern the hospital, its medical director, and defendant Ascend Health Corp.’s and defendant Kresch’s operation of the hospital. Texas is the location where plaintiffs sustained their harm, and its law will apply to plaintiffs’ tort claims.

Because Texas law applies, plaintiffs’ claim for defamation/libel under N.C. law obviously is not viable. Plaintiffs’ claim for violation of the N.C. Unfair and

Deceptive Trade Practices Act fails for the same reason.

Libel

Whether the court applies the general notice requirement of Fed. R. Civ. P. 8(a) or Texas’s particularity requirement, plaintiffs have sufficiently pled their libel claim. As for at least some of the allegedly defamatory statements, plaintiffs have quoted verbatim the relevant portion of the statement Wells made about one or more of them and set forth the date and website on which she posted it. That plaintiffs may not have alleged the same with respect to each of the more than 50 purportedly libelous statements does not mean their libel claim in its entirety fails, and the court will not dismiss it on this ground.

While some of Wells’ alleged statements are clearly ones of opinion, others are not. Because some of the alleged statements are actionable, the court will not dismiss the entire libel claim.

Wells claims immunity as a “service provider” under § 509 of the federal Communications Decency Act because, as to some of the statements at issue, she “simply … re-post[ed] content provided by a third party.” The court assumes, without deciding, that Wells, as an operator of a blog on the internet which accepts commentary for posting, is a provider of an interactive computer service for purposes of § 230. As such, if she in fact only allowed others’ content to be posted or re-posted on the blog, even with minor editorial changes on her part, she would be entitled to immunity. However, what plaintiffs allege Wells did goes beyond that conduct. Plaintiffs allege that Wells herself created some of the defamatory statements on her blog. Furthermore, as to the defamatory statements based on information provided by others, it is not evident the extent to which Wells may have made more than mere editorial changes to that information; discovery should bear this out.

Section 230 immunity does not cover content which Wells created herself or other content, although originating with a third party, which Wells significantly altered. Plaintiffs’ allegations encompass such content; therefore, the libel claim will not be dismissed on this ground.

Wells also contends the alleged statements are protected by Texas’s fair reporting privilege, Tex. Civ. Prac. & Rem. Code § 73.002(b)(2). The court finds that the privilege does not cover the statements on Wells’ blogs because neither blog is a “newspaper or other periodical” under § 73.002(a).

A reasonable statutory interpretation in light of current society’s reliance upon the internet for dissemination of information would likely include newspapers and other periodicals which publish on the internet. However, Wells’s internet blogs are not akin to a newspaper or other periodical, even one published electronically. Postings on the blog are not published at regular intervals. They are not composed of articles, news items, or the like. Accordingly, Wells’s blogs are not covered by the privilege under § 73.002.

Business Disparagement

For the reasons stated with regard to plaintiffs’ libel claim, plaintiffs have met their burden as to the publication of false statements that are not privileged. As to whether Wells acted with actual malice, the court agrees with plaintiffs that when one considers her false statements and their context, particularly on her blogs, one might reasonably infer that she acted with actual malice.

Additionally, the court concludes that plaintiffs have come forward with sufficient proof, that being, the sworn testimony of the hospital’s chief executive officer, of special damages. She states that the allegedly defamatory statements “have caused harm in the form of a reduction of patient days, particularly among youth inpatient and women’s services.” She cites to one instance where “an adult patient completed an assessment to be admitted to UBH and then declined treatment with UBH, asserting concerns due to Wells’ website.” She further swears that “Plaintiffs have lost customers, business, and income as a result of the actions of the Defendants.” Such evidence is sufficient to overcome a motion to dismiss.

Civil Conspiracy

That Wells may have permitted others to independently post defamatory statements on her blogs or re-posted others’ defamatory statements, even with their consent, does not support an inference that defendants specifically intended to agree amongst themselves to defame plaintiffs. Without an allegation indicating a meeting of minds, plaintiffs have not sufficiently alleged a civil conspiracy.

Copyright Infringement

Wells has posted images copyrighted by plaintiffs. She uses the images to criticize plaintiffs’ purported business practices.

Plaintiffs use the images on their websites to convey that they provide quality healthcare services to attract customers. Wells uses the images for a different reason: to criticize plaintiffs. Thus, although Wells has not altered the images, her use of them is transformative.

Wells’ use of the images is non-commercial. Moreover, there is no market or intrinsic value to the copyrighted images themselves.

Wells’ use of plaintiffs’ images is fair; therefore, the copyright infringement claim must be dismissed.

Wells’ motion to dismiss is granted in part and denied in part.