GREGORY v. McDONNELL DOUGLAS CORPORATION (1976)

Plaintiffs appeal from a judgment of dismissal entered after defendants' general demurrer to the first amended complaint for libel was sustained without leave to amend.¹

The first amended complaint alleged: plaintiffs Clarence Gregory and Bob Berghoff are, and at all times relevant were, the president and the vice president, respectively of United Aerospace Workers, Local Union 148, the collective bargaining agent representing production and maintenance employees of defendant McDonnell Douglas Corporation at its facility in Long Beach; in 1972, acting under authority of the Economic Stabilization Act, a federal agency disallowed payment of 17 cents of the hourly wage previously negotiated by the said union in behalf of the employees; as a result of a lawsuit commenced by the union, that ruling was set aside; thereafter defendant refused to pay wages to its employees in accordance with the provisions of the collective bargaining agreement; defendant instead sought a written agreement from the union foreclosing certain rights of the employees; on several occasions between May 1973–May 1974 plaintiffs, in their respective capacities as president and vice president of the union, engaged in discussions with defendants;² during this period, defendants willfully published written defamation of plaintiffs directed to members of the union and their families; the first of these writings was an administrative bulletin dated March 29, 1974; copies of the bulletin were distributed by defendants to union members and were posted at numerous places in the McDonnell Douglas plant, subject to be read by thousands of employees; (the bulletin was addressed to ‘All DAC Employes in UAW Local No. 148 Bargaining Unit’ and its subject was ‘Payment of 17¢ To Employes In UAW Bargaining Unit’; after stating that defendant corporation had reached an understanding with all unions representing its employees except the UAW, regarding implementation of the 17-cent payment, the bulletin stated in pertinent part: ‘The Company has made every effort to reach a similar understanding with officials of UAW Local #148 and we are seriously concerned with their apparent eagerness to prevent eligible employes from receiving their approved payments in a timely fashion. [¶] We believe, and think most of you will agree, that after all of the lengthy legal processes which have preceded authorized payment, it is time to consider the wishes of each employe and not the political position of local union leaders and those who aspire to be leaders. It is difficult to understand why the President and Vice President of UAW Local #148 have consistently opposed the effort to settle this issue and now that a final decision is at hand their absolute refusal to cooperate in expediting payment. [¶] The payment to eligible employes is far more important than the political aspirations and personal ambitions of local union leaders who apparently are willing to sacrifice such payment so as to demonstrate ‘union leadership”); the second defamatory writing was a letter dated April 23, 1974, which defendants mailed to union members and their families in response to inquiries directed by the latter to defendants regarding the delay in payment; (the letter stated in pertinent part: ‘You may be assured that this company was the first company to agree with its major unions, including the UAW, as to how and what would be paid in a general agreement reached in May of 1973. It is, indeed, unfortunate that our employes have had to wait so long because of apparent self-interests of a few leaders within UAW Local 148. Apparently there were some internal politics within Local 148 and other areas of the UAW which certain individuals were using to seek personal gain and politial prestige rather than to serve the best interests of the members they were supposed to represent. Hence, the delay in arriving at the final Supplemental Agreement.’)³

It was also alleged: the accusations contained in the bulletin and the letter were ‘false, scandalous and unpriviledged’ (sic); they exposed plaintiffs to hatred, contempt, ridicule and obloquy, caused plainfiffs to be shunned and avoided, and tended to injure plaintiffs in their respective occupations as president and vice president of the union; each plaintiff thereby was damaged in the sum of $1,000,000; in publishing the bulletin and the letter, defendants acted with knowledge of the falsity of these writings or with reckless disregard as to their truth or falsity; defendants also acted with a deliberate ill will, intending to cause plaintiffs to be held in disrepute by the members of the union; each plaintiff therefore was entitled to punitive damages of $1,000,000.

Defendants demurred generally to the first amended complaint on the following grounds: (1) under both federal law and California law, statements made in labor disputes cannot be the basis of a libel action; and (2) the first amended complaint is defective for failure to plead innuendo, inducement and special damages. The demurrer was sustained upon each of these two grounds. (See Code Civ.Proc. § 472d.) We conclude that neither ground is valid.

I

In Old Dominion Branch No. 496 National Association of Letter Carriers, AFL–CIO v. Austin, 418 U.S. 264, 94 S.Ct. 2770, 41 L.Ed.2d 745 (1974), the United States Supreme Court was called upon to determine the extent to which statements made in the course of labor disputes may form the basis of a libel action under state laws without undermining the freedom of speech which is a basic tenet of federal labor policy. Adopting the standard formulated in New York Co. v. Sullivan,4 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), the court in Old Dominion indicated, particularly by its reliance upon Linn v. United Plant Guard Workers, 383 U.S. 53, 86 S.Ct. 657, 15 L.Ed.2d 582 (1966), that federal labor laws do not foreclose libel actions under state law based on defamatory statements made in labor disputes, if such statements were published with knowledge of their falsity or with reckless disregard of whether they were true or false. That standard is met in the present case, since the first amended complaint alleged that defendants published the defamatory materials ‘with knowledge of the falsity of the said materials or with a reckless disregard as to the truth or falsity thereof.’ Defendants contend plaintiffs nevertheless do not state a cause of action because, under federal law, expressions of opinion in labor disputes are absolutely privileged, and thus are not actionable in state courts. The contention is without merit. In the Old Dominion case the Supreme Court observed: ‘[S]tatements of fact or opinion relevant to a union organizing campaign are protected . . . even if they are defamatory and prove to be erroneous, unless made with knowledge of their falsity. . . . The sine qua non of recovery for defamation in a labor dispute . . . is the existence of falsehood.’ (418 U.S. at pp. 277–278, 283, 94 S.Ct. at p. 2778, 41 L.Ed.2d at pp. 758, 761.)

The California rule is similar. Thus, in Emde v. San Joaquin County etc. Council, 23 Cal.2d 146, 154, 143 P.2d 20, 25 (1943), our Supreme Court stated: ‘Although the publicizing of the facts of a labor dispute in a peaceful manner is within the liberty of free discussion guaranteed by the Fourteenth Amendment to the United States Constitution, a party to the controversy has no absolute privilege to discuss such matters so as to avoid civil responsibility for injury to another caused by a malicious and false statement made in the course of the differences between them.’ To the same effect is Washer v. Bank of America, 21 Cal.2d 822, 832–833, 136 P.2d 297, 303 (1943), disapproved on other grounds in MacLeod v. Tribune Publishing Co., 52 Cal.2d 536, 551, 343 P.2d 36 (1959), wherein it is stated: ‘For although either an employer or an employee may be immune from liability when he, without malice, publishes the facts of a dispute between them, a statement made maliciously and with knowledge of its falsity does not have that protection.’

II

Civil Code § 45 defines libel as ‘a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation.’ Libel per se is defined as ‘A libel which is defamatory of the plaintiff without the necessity of explanatory matter, such as an inducement [the extrinsic circumstances which show that the publication was understood in its defamatory sense], innuendo [allegation of defamatory meaning] or other extrinsic fact . . ..’ (Civ.Code § 45a. See also Cameron v. Wernick, 251 Cal.App.2d 890, 893, 60 Cal.Rptr. 102 [1967].) The initial determination as to whether a publication is, on its face, reasonably susceptible of a defamatory meaning is one of law. (MacLeod v. Tribune Publishing Co., 52 Cal.2d 536, 546, 343 P.2d 36 [1959]; Williams v. Daily Review, Inc., 236 Cal.App.2d 405, 410–411, 46 Cal.Rptr. 135 [1965].) In making such determination, the court must construe the publication in a sense that is natural and obvious, and in which the persons to whom it was communicated would be likely to understand it. (Washburn v. Wright, 261 Cal.App.2d 789, 797, 68 Cal.Rptr. 224 [1968]; Megarry v. Norton, 137 Cal.App.2d 581, 583, 290 P.2d 571 [1955]; Dethlefsen v. Stull, 86 Cal.App.2d 499, 502, 195 P.2d 56 [1948].) The statutory definition of libel per se is very broad and includes ‘almost any language which, upon its face, has a natural tendency to injure a person's reputation, either generally, or with respect to his occupation.’ (Bates v. Campbell, 213 Cal. 438, 441, 2 P.2d 383, 385 [1931]; Stevens v. Snow, 191 Cal. 58, 62, 214 P.2d 968 [1923].)

In light of these principles, the publications alleged in the instant case were libelous per se. The subject writings tend to injure plaintiffs' reputations with regard to their occupations. Such writings insinuate, without the necessity of resorting to extrinsic material, that plaintiffs acted to further their personal ambitions and political aspirations, and that plaintiffs were responsible for the employees' failure timely to receive a portion of their wages. ‘A defendant is liable for what is insinuated, as well as for what is stated explicitly.’ (MacLeod v. Tribune Publishing Co., supra, 52 Cal.2d 536 at p. 547, 343 P.2d at p. 42.) In essence, the subject writings impliedly charged plaintiffs with conduct inconsistent with the due fulfillment of what they, by virtue of their offices or employments, had undertaken. Such a charge or insinuation is libelous per se. (Maidman v. Jewish Publications, Inc., 54 Cal.2d 643, 650–651, 7 Cal.Rptr. 617, 355 P.2d 265 [1960].) It was not necessary, therefore, that plaintiffs allege special damages or explanatory matters such as inducement, innuendo or other extrinsic facts. (Civ.Code § 45a; Maidman v. Jewish Publications, Inc., supra, 54 Cal.2d at p. 654, 7 Cal.Rptr. 617, 355 P.2d 265; Layne v. Kirby, 208 Cal. 694, 696, 284 P. 441 [1930]; Boyich v. Howell, 221 Cal.App.2d 801, 802, 34 Cal.Rptr. 794 [1963]; Megarry v. Norton, supra, 137 Cal.App.2d 581, at p. 583, 290 P.2d 571.)

III

We now briefly consider a point not raised by either party. The first amended complaint alleged that defendants published the letter in response to inquiries from union members and their families regarding the delay in payment of a portion of their wages. Thus, under Civ.Code § 47, subd. 3,⁵ such communication was privileged if it was made without malice. ‘In such a case malice becomes the gist of the action and it must exist as a fact before the cause of action will lie. . . . Hence, where the complaint discloses a case of qualified privilege, no malice is presumed and in order to state a cause of action the pleading must contain affirmative allegations of malice in fact.'⁶ (Locke v. Mitchell, 7 Cal.2d 599, 602, 61 P.2d 922, 924 [1936]. See also Noonan v. Rousselot, 239 Cal.App.2d 447, 452–453, 48 Cal.Rptr. 817 [1966]; Everett v. California Teachers Assn., 208 Cal.App.2d 291, 294–295, 25 Cal.Rptr. 120 [1962]; Jackson v. Underwriters' Report, Inc., 21 Cal.App.2d 591, 593, 9 P.2d 878 [1937].) By pleading that defendants published the letter with knowledge of its falsity, plaintiffs adequately alleged malice in fact. (MacLeod v. Tribune Publishing Co., supra, 52 Cal.2d 536 at pp. 551–552, 343 P.2d 36; Washer v. Bank of America, supra, 21 Cal.2d 882 at p. 831, 136 P.2d 297; Boyich v. Howell, supra, 221 Cal.App.2d 801 at p. 803, 34 Cal.Rptr. 794.)

The judgment is reversed, with directions to the trial court to permit plaintiffs to amend their complaint, if necessary, as set forth herein in footnote 3.

FOOTNOTES

1.  The notice of appeal ‘from the judgment dismissing the complaint’ was filed prior to entry of the judgment but after the trial court sustained the demurrer without leave to amend. Under these circumstances, we treat the appeal as having been filed immediately after entry of the judgment. (Cal. Rules of Court, Rule 2, subd. (c).)

2.  In addition to McDonnell Douglas Corporation, the following were named as defendants in the caption of the first amended complaint: J. S. McDonnell, S. N. McDonnell, R. G. Adamson, Robert C. Krone and ‘Does' I through CC. None of these persons is mentioned by name in the body of the complaint.

3.  Contrary to the recitals in the first amended complaint, copies of the bulletin and the letter are not attached to the complaint as furnished to us. A copy of each of these writings was attached to the original complaint, but as the amended complaint did not refer to those copies, they did not become a part of the amended complaint. (Compare 3 Witkin, Cal. Procedure, 2d ed., pp. 1992–1993, ‘Pleading’ § 325.) No code section requires the attachment of publications to a complaint, but, absent such attachments, the amended complaint appears to state no cause of action. However, defendants raise on point concerning such oversight and it can easily be cured by amendment.

FN4. The Supreme Court there held: ‘The constitutional guarantees [of freedom of speech and press] require, we think, a federal rule that prohibits a public official from recovering damages for a defamatory falsehood relating to his official conduct unless he proves that the statement was made with ‘actual malice’—that is, with knowledge that it was false or with reckless disregard of whether it was false or not.' (376 U.S. pp. 279–280, 84 S.Ct. at p. 726, 11 L.Ed.2d at p. 706.).  FN4. The Supreme Court there held: ‘The constitutional guarantees [of freedom of speech and press] require, we think, a federal rule that prohibits a public official from recovering damages for a defamatory falsehood relating to his official conduct unless he proves that the statement was made with ‘actual malice’—that is, with knowledge that it was false or with reckless disregard of whether it was false or not.' (376 U.S. pp. 279–280, 84 S.Ct. at p. 726, 11 L.Ed.2d at p. 706.)

5.  Civil Code § 47: ‘A privileged publication or broadcast is one made . . . [¶] 3. In a communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such relation to the person interested as to afford a reasonable ground for supposing the motive for the communication innocent, or (3) who is requested by the person interested to give the information.’

6.  Civil Code § 48 provides that in the case of a privilege defined in § 47, subd. 3, ‘malice is not inferred from the communication.’

DUNN, Associate Justice.

KINGSLEY, Acting P. J., and JEFFERSON, J., concur.