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Seventh Circuit considers Wisconsin defamation law

A 2018 article on the alleged mishandling of a dead Wisconsin man’s $3 million trust prompted judges and attorneys to debate the nature and extent of defamation Wednesday.

CHICAGO (CN) — What is defamation, and to what extent can news outlets be held liable for it under Wisconsin law? These are the questions at the heart of a defamation case that came before the Seventh U.S. Circuit Court of Appeals on Wednesday.

The three-judge panel considered a 2018 article written for the Wausau Daily Herald by reporter Sam Wisneski. He chronicled the alleged bad-faith handling of deceased Wisconsin man Joe Geisler’s $3 million trust by financial advisor Thomas Batterman, who was also accused of defrauding charities before a local court cleared him of those charges.

Batterman sued the Wausau Daily Herald’s parent company Gannett Inc. in 2019, alleging the article was defamatory for bringing up his since-cleared fraud, theft and embezzlement charges, as well as his past arrest for drunk driving.“The article’s innuendo is impossible to miss: Tom Batterman is a bad financial advisor who takes advantage of elders and cannot be trusted with other people’s money,” the original complaint argues.

U.S. District Judge Stephen Crocker dismissed the majority of the case in 2020 on the grounds that the article’s reporting was substantively true and would not imply any new criminal misconduct on Batterman’s part to an ordinary reader. Crocker granted Gannett summary judgment on the remainder of the case in 2021, arguing that the article’s portrayal of Batterman as a bad faith financial actor is also true, and the truth can’t be defamatory.

“Gannett now seeks summary judgment on the one claim … that the article published by defendant defamed plaintiffs by implying that they financially exploit elders,” Crocker wrote in the introduction to his 2021 opinion. “As explained below, I am granting that motion on the ground that this implication is substantially true.”

In arguing Batterman’s appeal before the Seventh Circuit judicial panel on Wednesday, attorney Charles Philbrick said that the district court was wrong in opining that the article didn’t imply new criminal conduct on Batterman’s part. He cited an email conversation between two Wisconsin prosecutors he obtained through a public information request to support his claim.

“‘What do you think about him?,’ meaning Thomas Batterman,” Philbrick quoted one of the prosecutors as saying. “[The prosecutor] then sends the link to the article and then [the other prosecutor] shortly reads the article, four minutes later says, ‘Interesting, sounds criminal to me.’ … These people didn’t know Mr. Batterman at all. All they knew is what they read about him in the September version of the article.”

U.S. Circuit Court Judge Michael Brennan, a Donald Trump appointee and one of the three judges on Wednesday morning’s panel, pushed back on this argument. He said that prosecutors viewing the article through the lens of their profession would have a different perception that average layman readers.

Philbrick said this didn’t matter, claiming that the boundary between a professional and ordinary reader was completely arbitrary from a legal standpoint.

“There is no ordinary reader standard. The district court made that up,” he said.

Philbrick’s larger argument was that the district court overstepped its bounds in throwing the case out; by his estimation, the case should be remanded back to state court.

“Wisconsin law is clear that determining whether an article is capable of defamatory meaning is ultimately a question of fact, it’s not a question of law,” Philbrick said, meaning that the question of whether or not the article was defamatory was something a jury or bench trial should have decided.

Attorney Brian Spahn, representing Gannett, countered that all of Philbrick’s arguments were largely moot. A Wisconsin state court found that Batterman did handle Geisler’s trust in bad faith, as Wisneski’s article stated, just as it truthfully stated that Batterman was suspected of fraud and embezzlement by several of the charities to whom Geisler wanted to give his money.

“Mr. Batterman … was found to have acted intentionally and in bad faith in handling the trust assets of Joseph Geisler,” Spahn said. “The conduct caused over $80,000 in damages to the trust, and while the successor trustee did initially conclude that there was no fraud, that same successor trustee later submitted to the court that the charities’ allegations of fraud and embezzlement were reasonable. … Those are the facts that the Wasua Daily Herald truthfully and accurately reported in the article at issue in this case.”

The truth, Spahn said in agreement with the district court, cannot be defamatory as a matter of law. He cited the 1977 Wisconsin Supreme Court case Schaefer v. State Bar of Wisconsin to back up his argument.

“The Schafer case … explicitly states, ‘In Wisconsin if the communication cannot reasonably be considered defamatory or so understood, a motion to dismiss should be granted.’ Wisconsin has also held that a court as a matter of law decides whether an allegedly defamatory implication is fairly and reasonably conveyed by the words and pictures of the publication,” Spahn said.

He also expanded on the position by pointing out that, per the Seventh Circuit’s recent ruling in the case Law Offices of David Freydin v. Victoria Chamara, even defamatory writing isn’t legally actionable so long as an affirmative defense applies. In this case, again, that affirmative defense is the truth of the article’s reporting.

“In that case, the affirmative defense that was at issue was the fact that the statements at issue were opinions. Here the affirmative defense at issue is the fact that the statements at issue are substantially true. It’s the same conclusion,” Spahn said.

The panel of appellate judges listening to the debate, which also included Donald Trump appointee U.S. Circuit Judge Amy St. Eve and Ronald Reagan appointee U.S. Circuit Judge Joel Flaum, did not seem particularly sympathetic to either line of arguments. However, St. Eve admitted she was concerned that interpreting what makes a statement defamatory too broadly could have a chilling effect on free speech and scare the media away from reporting on new litigation.

She questioned Philbrick’s broad interpretation of the 1907 Wisconsin Supreme Court case Ilsley v. Sentinel Co., which decided that the judicial privilege protecting news outlets from libel claims does not apply to “mere pleadings and other preliminary papers which simply have been filed in the clerk’s office.”

“Do you agree that if we apply Ilsley as you’re asking us to, that the media … if they report on allegations in any new civil lawsuit where the district court or the trial isn’t making a ruling on anything in particular, that they always have the fear of being sued?”

“Bluntly, yes, that is the law in Wisconsin,” Philbrick responded.

The panel of judges took the attorneys’ arguments under advisement but did not say when they would issue a ruling. Wisneski, the article’s author, himself declined to comment for this story.

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Categories / Appeals, Civil Rights, Law, Media

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