Extortion is a crime. Statements that falsely accuse another of committing a crime often constitute defamation per se in Virginia, particularly where the crime is one involving "moral turpitude." Does it follow, then, that false accusations of extortion will automatically qualify as defamation per se? The answer, which will undoubtedly surprise many of you, is no. The reason lies in the importance of context in defamation actions.
A good illustration comes from the Tenth Circuit, which issued its decision in Hogan v. Winder a few days ago. Chris Hogan worked as a consultant for the Utah Telecommunications Open Infrastructure Agency ("UTOPIA"), a state agency charged with upgrading high-speed Internet access. In the spring of 2011, Hogan began to suspect that UTOPIA's executive director unfairly favored a bid for a contract from the company where the director's brother worked, and he expressed his suspicions to UTOPIA's plant manager. He was terminated shortly thereafter. Believing that his termination was retaliatory, he hired a lawyer and sent UTOPIA a draft complaint along with certain settlement demands, pointing out that the public scrutiny that would result from filing the lawsuit would essentially destroy the company. In a response, UTOPIA's attorney characterized Hogan's demands as "extortion" and "blackmail."
Both sides filed lawsuits, and the dispute gained some local press coverage. One headline read, "Former UTOPIA contractor accused of extortion." The article that followed quoted UTOPIA's Chairman as citing "performance issues" as the reason for Hogan's termination. The article also reported on Hogan's accusations of conflicts of interest and mismanagement at UTOPIA. Hogan sued for defamation, claiming that the articles caused him emotional distress and prevented him from finding employment in the telecommunications industry.
The case was decided under Utah law, but the principles of defamation law on which the case was decided are substantially the same here in Virginia. As in Virginia, for example, defamatory meaning depends on the context in which the statement was made. Citing an opinion from the Utah Supreme Court, the Tenth Circuit explained that "words that appear at first blush to convey a defamatory meaning may be explained away as innocuous when their context is made clear. Conversely, words innocent on their face may, when explained in context, convey a defamatory meaning."
The job of the appellate court is to conduct a context-driven assessment of the alleged defamatory statement and reach an independent conclusion about the statement's susceptibility to a defamatory interpretation. If the context makes clear a reasonable reader would not accept the statements at face value, the statements do not harm reputation and therefore are not defamatory as a matter of law. In evaluating the context of a media report, the court held, courts should examine (1) the words themselves and their implications; (2) the entire article or message; (3) the events or disputes that gave rise to the article; and (4) the likely effect on the reasonable reader.
Hogan argued that the reports that he was "accused of extortion" suggested falsely that he had been accused of committing a crime and were therefore defamatory. Both the district court and the Tenth Circuit disagreed, noting that accusations of "extortion" are a familiar rhetorical device. As such, depending on context, such accusations are often not interpreted literally. The court noted that the article in question reported accurately that the statement was made by UTOPIA's lawyer in a letter to opposing counsel discussing the parties' employment dispute. In that context, the court found that no objective reader would believe that Hogan had committed a crime. Rather, most would recognize the statement as mere hyperbole and rhetorical flourish made in the context of a heated disagreement.
The court also rejected Hogan's argument that he was defamed by the headline. While recognizing that many people would stop reading at the headline and would not bother to read the explanation provided in the accompanying article, the court nevertheless found that it was obvious from the headline that there was more to the story, and that the full context of the statement would be provided in the body of the article. The result might be different (i.e., a headline might conceivably support a defamation when read in isolation) if the headline was disloyal to the article it advertised, but Hogan had made no such allegations. The court therefore affirmed the dismissal of the claim.