Media Defamation Case Revived by 1st Circuit

BOSTON (CN) - A trade publication for the rail industry must face a claim that its reporting about lost train cars defamed a railway, the First Circuit ruled.

The 33-page partial reversal handed down Friday gives an artful telling of the "battle-scarred defamation case" Pan Am Systems filed last year against Atlantic Northeast Rails & Ports and reporter Chalmers Hardenberg.

Pan Am and its CEO, David Fink, filed the suit as the parent company of Springfield Terminal Railway, "fed up" after it was the subject of four ANR&P articles published between December 2009 and March 2011, according to the First Circuit ruling.

The articles covered a train derailment, a supposed broken promise about staffing, Fink's removal from management and Springfield's alleged habit of losing trains.

A federal judge in Maine dismissed the first version of the lawsuit for failure to state a claim, and threw out the second at summary judgment.

Describing the ensuing appeal for a three-judge panel of the First Circuit, Judge O. Rogeriee Thompson noted that the railway has made "the big-picture argument that the troublesome passages in the offending articles ... are capable of defamatory readings and are provably false."

"Wrong, and wrong again, defendants fire back," the 33-page decision states. "But, for reasons to appear shortly, we think plaintiffs are right about the lost-car comments. And so we reverse only on that issue."

Thompson rejected the newsletter's contention that its reporting about lost cars containing toxic cargo was "too cryptic" to have conveyed a defamatory thought.

"Defendants do not deny that their readers readily know what a big deal it is for a rail carrier to act like a scofflaw when it comes to hazardous materials," Thompson wrote. "So we do not doubt that having defendants accuse them of losing track of TIH cars (even temporally) - a readily verifiable charge, supposedly based on specific events - certainly lowers plaintiffs' standing in the community." (Parentheses in original.)

TIH is short for "toxic inhalation hazard."

Finding that the statement dealing with public safety could also be seen as materially false, the ruling quotes a Springfield official's affidavit, which said that "no agency ... has ever accused Springfield of losing TIH or other railcars, or of violating any federal laws in shipping cars to" a chemical company.

Thompson noted that the reversal is not a full victory for the railway. Indeed the lost-car comments are not yet even ready for trial.

"After all, our analysis here concerns only part of the defamation inquiry - whether the battled-over statements are capable of a defamatory meaning and whether they are provably false. There remains the question whether defendants were at fault," Thompson wrote. "To show fault, plaintiffs will need to show at the very least that defendants were negligent - and they may need to show that defendants acted with actual malice."

Fault has not yet been established because the trial court divided discovery, ceding to the newsletter's worry "that a fight over the fault element might require them to divulge confidential sources and threaten their First-Amendment interests," the ruling notes.

"Because the judge bifurcated discovery, she left the fault issue for another day," Thompson wrote. "And so we must do the same."

In trying to portray the derailment article as defamatory, the railway insisted that the article overemphasized the role its aging tracks played in the derailment, while it saw another company's aging train car as "a major contributing factor."

Thompson refused to make the call on who is right. "Defendants cannot be on the hook because (as they argue) the speech deals with an issue of public concern and plaintiffs have not shown the speech (even if false) is materially false," the ruling states (parentheses and emphasis in original).

The court cited this logic as well in rejecting claims over the reporting about Fink's role at Pan Am. "Defendants cannot be liable because (so far as the summary-judgment record shows) the disputed statements relate to public concerns and are not false in any material sense," Thompson wrote.

As to the article about the railway's "assurances," Thompson said "there is no falsity - let alone a material one - when it comes to this statement."

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