A circuit court in Cook County, Illinois granted summary judgment in favor of Crain Communications (a publishing company) and others for publishing an article in June 2016 that allegedly was defamatory against Joseph J. Fox, then co-founder and CEO of Ditto Holdings, Inc.

(See Fox v. Crain Communications, Inc., et al., Case No. 17L5955.)

The article, titled “Frustrated investors led Fox hunt in LA” in digital form and “The Elusive Fox Who Fled to L.A.” in print, addressed Ditto’s financial position, investigations launched by the SEC and the Financial Industry Regulatory Authority, an employment lawsuit filed by a former Ditto executive, and testimonials from Ditto’s investors.

In his complaint, Fox alleged that the following statement and headlines in the article were false: a “federal judge in Chicago agreed with Simons, ordering Ditto in April to pay him $2.7 million” (the Judge Statement), “Frustrated investors led Fox hunt in LA,” and “The Elusive Fox Who Fled to L.A.” Fox claimed that Crain Communications, the company’s editor, and the reporter of the article (collectively, Crain Communications) knowingly published false and defamatory information about him.

Crain Communications moved for summary judgment on several bases, namely that:

  • The Judge Statement is protected by (1) the fair report privilege; (2) the fact that Fox is a limited purpose public figure; and (3) the fact that the statement is substantially true.
  • (1) The headlines are reasonably capable of, and must be given, a non-per se defamatory construction as a matter of law; (2) the headlines are rhetorical hyperbole that are non-verifiable and therefore non-actionable statements of opinion; (3) Fox is a limited purpose public figure who cannot prove that Crain Communications published any allegedly defamatory statement with actual malice; and (4) the statements are substantially true.

Considering the arguments, the Court decided the summary judgment motion by analyzing the following overarching bases for dismissal of both of Fox’s claims: whether Fox was a limited purpose public figure, actual malice existed, and the statements in question were substantially true and subject to innocent construction.

As to whether Fox was a “limited purpose public figure,” the Court found that there was no question that he was, given Fox’s national public presence. In Illinois, a plaintiff is a “limited purpose public figure” (1) if a public controversy exists, involving public debate about an issue, the “outcome of which impacts the general public or some portion of it in an appreciable way,” (2) if a plaintiff has “undertaken some voluntary act seeking to influence the resolution of the issues involved,” and (3) if the alleged defamation is “germane to the plaintiff’s participation in the controversy.”

(See Jacobson v. CBS Broad., Inc., 2014 IL App (1st) 132480, ¶¶ 29-31 (citing with approval Waldbaum v. Fairchild Publ’ns, Inc., 627 F.2d 1287 (D.C. Cir. 1980)).)

According to the evidence, Fox had made several public attempts to promote Ditto’s social media trading platform to investors nationally. Fox had also sought out, and was widely successful in getting, national media attention to promote Ditto.

After finding that Fox was a “limited purpose public figure,” the Court stated that he was required to demonstrate that Crain Communications had acted with actual malice – a burden Fox could not meet.

Of the remaining grounds for summarily adjudicating Fox’s claims, the Court analyzed whether the statements that Fox contested were substantially true. On this question, the court explained that “where no reasonable jury could find that substantial truth had not been established, the question is one of law.”

(See Harrison v. Chicago Sun-Times, Inc., 341 Ill. App. 3d 555 (1st Dist. 2003).)

The Court also disagreed with Fox’s argument that the phrase a “federal judge agreed with Simons” in the Judge Statement was false. The facts showed that in the federal employment case brought by a former Ditto executive, the judge did in fact enter a judgment in favor of plaintiff Simons and against Fox for $2.7 million. The record of the federal court proceedings also indicated that the judge disagreed with Fox on the characterization of the judgment, finding it instead to be “on the merits.” Thus, the Court held that the gist of the Judge Statement was substantially true.

Fox also argued that the headline statement that he “fled to L.A.” was false. But again, the Court disagreed on the grounds that, because “Fox literally packed up the Ditto assets, left for California, didn’t return to Chicago, and was unreachable by Ditto investors,” the “description of [Fox] having ‘fled to L.A.’ [was] substantially true.”

Finally, the Court addressed whether the headlines in question were reasonably subject to an innocent construction. In Illinois, the innocent construction rule states that “a written or oral statement is to be considered in context, with the words and the implications therefrom given their natural and obvious meaning; if, as so construed, the statement may reasonably be innocently interpreted…, it cannot be actionable per se.”

(See Chapski v. Copley Press, Inc., 92 Ill. 2d 344, 442 (1982).)

In applying the innocent construction rule, “a newspaper headline and the text of the article to which it refers are to be considered as one document and read together as a whole. Not only is the headline to be considered with the body of the article as a single entity, but the ‘import of the article’ must be considered in reaching a determination of reasonable innocent construction.”

(See Harrison, 341 Ill. App. 3d at 570.)

Here the Court found that the headlines “Frustrated investors led Fox hunt in LA” and “The Elusive Fox Who Fled to L.A.” were “reasonably subject to an innocent construction” when read together with the text of the article as a whole, “given [that] the content of the article” included statements that “‘some of the…people who invested…say [Fox] kept them in the dark as troubles mounted,’” and that a Ditto investor affidavit stated that “‘it would be nice to be apprised of all of the challenges they face along the way.’” As such, the headlines could not be actionable per se.

For the reasons above, the Court granted summary judgment in favor of Crain Communications and dismissed Fox’s claims with prejudice.