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A federal judge has predicted that Pennsylvania would recognize a claim for “defamation-by-implication” in a case where “true facts are juxtaposed or facts are omitted in a way that gives rise to a defamatory implication.” In his 26-page opinion in Fanelle v. LoJack Corp., Senior U.S. District Judge Lowell A. Reed Jr. also predicted that the Pennsylvania Supreme Court would not require expert testimony to prove emotional damages in a defamation case despite a 1999 Superior Court opinion that currently does require it. In the suit, Peter Fanelle claims he was defamed by LoJack when it promoted its anti-autotheft tracking device by using a newspaper clipping from an account of Fanelle’s arrest — and kept it in the promotion package for months after Fanelle was acquitted of the charges. Fanelle, a self-employed buyer and seller of engine parts and transmission cores, was waiting at a garage in the East Frankford area of Philadelphia on the evening of July 21, 1997, when police descended on the site and arrested him and others during a raid targeted at a suspected car theft and “chop shop” operation. The police were led to the scene by an antitheft device manufactured by defendant LoJack. Two days later, The Philadelphia Inquirer ran an article about the investigation and arrests that mentioned LoJack and the names and photos of the four people arrested, including Fanelle. Fanelle was found not guilty of all charges in October 1998. LoJack began including the Inquirer article in a package of promotional materials that it provided to car dealerships throughout Philadelphia, Northern Pennsylvania, Southern New Jersey and Wilmington, Del. The package consisted of 12 stapled and photocopied pages. The title page bore the words “LoJack Stolen Vehicle Police Recovery Network,” and was followed by a page of statistics about car theft and representations about the LoJack system. The package also contained a copy of the Inquirer article containing Fanelle’s name and full-face, close-up photos of Fanelle and the other three suspects; a copy of a Consumers Digest “Best Buy” award certificate; a one-page vignette recounting the theft and recovery of a Lexus automobile in New Jersey; a page listing typical expenses to a car owner resulting from a car theft; a 1997 article from Business Week magazine discussing LoJack’s success rate; and four one-page “recovery story” vignettes about the theft and recovery of cars in the Philadelphia/New Jersey area and consequent arrests. Distribution of the promotional package continued until July 1999, nine months after Fanelle’s acquittal. LoJack’s lawyers, Julie A. Taima and Michael J. Burns of Christie Pabarue Mortensen & Young, argued that Fanelle couldn’t prove defamation because each of the individual items in the package was true. But Fanelle’s lawyer, Thomas Moribondo, argued that Fanelle was making a claim of “defamatory implication” in which the truth of the individual items was irrelevant. Looking to Pennsylvania law, Reed found himself in “essentially uncharted territory” because the Pennsylvania Supreme Court has never spoken on the issue of “defamation-by-implication.” The Superior Court has upheld the theory, Reed found, saying in its 1982 decision in Dunlap v. Philadelphia Newspapers Inc. that “the literal accuracy of separate statements will not render a communication ‘true’ where, as here, the implication of the communication as a whole was false.” Looking beyond Pennsylvania law, Reed said, found that defamation-by-implication “is not a novel theory.” At least four federal appellate courts — the 4th, 8th, 9th and District of Columbia Circuits — have recognized a cause of action where the facts of a statement are literally true, but the implication arising out of those facts is false and defamatory, Reed noted. As a result, Reed said, “I predict that the Supreme Court of Pennsylvania would recognize a cause of action for defamation in a case where true facts are juxtaposed or facts are omitted in a way that gives rise to a defamatory implication.” Reed also concluded that the elements of a defamation-by-implication claim are the same as in a typical defamation claim. “Some courts have suggested that in defamation-by-implication cases, the court should demand ‘an especially rigorous showing where the expressed facts at true,’ such as evidence that the recipient ‘reasonably understood’ the communication ‘to have been intended in the defamatory sense,’ or that the defamatory statement ‘affirmatively suggest that the author intends or endorses the inference,’ ” Reed wrote. But under Pennsylvania’s defamation statute, he said, a plaintiff “already must establish that the recipient of the communication understands the communication to be defamatory and intended to apply to the plaintiff, and thus the requirement is already incorporated into Pennsylvania defamation statute.” Arguments that even more should be required of a plaintiff in a defamation-by-implication case “demand too much,” Reed said, “because such additional requirements teeter dangerously close to requiring a showing of the actual intent of the speaker such as ‘actual malice,’ the high threshold of proof that the Supreme Court of the United States established to protect the sacred rights of publishers under the First Amendment.” Reed said he does not believe such a high threshold is required or warranted in defamation-by-implication cases because “an implication is no less defamatory when it is cloaked in literal truth; on the contrary, the patina of accuracy may exacerbate the harmfulness of a statement by making it more palatable and believable to the recipient.” Reed said it was important to view LoJack’s promotional materials in their entirety to assess the claim. The Inquirer article carried the headline: “Stolen car leads police to others,” and was immediately preceded in the package by a page of statistics that said: “There is no way to fully protect your car from thieves. But there is a way to get yours back quick enough so only minimal damage may be done to your vehicle.” Reed found that a reader of the materials “would first read about ‘thieves’ and LoJack’s ability to protect one’s car from damage, and then turn to the Inquirer article, which included a picture of Peter Fanelle and discussed the damage that was about to be done to 10 cars he was suspected of stealing.” A reasonable person, Reed said, “could believe, upon reading these documents in proximity to one another, that Fanelle and the other people pictured in the Inquirer article … were in fact ‘thieves.’ “ A jury, he said, could decide that the implication of the package was that Fanelle was “arrested inside a garage near confirmed, cut-up, stolen automobiles during a police raid on a hot spot of suspected stolen vehicles.” In context, he said, a reader could infer that “the LoJack system helped recover cars and at least incidentally furthered the arrest of car thieves like Peter Fanelle.” TRUTH REJECTED Reed rejected Lojack’s truth defense, saying, “The defense of truth in the defamation-by-implication setting does not prevail where a defendant merely asserts the literal truth of the facts in the statement, as defendant does here.” Instead, he said, the defendant “must establish the truthfulness of the implication arising out of the literally true facts.” LoJack also attempted to assert the “fair report” privilege, saying the company enjoys the same protection that the newspaper enjoyed when it first published the story. But Reed said LoJack had “absolutely no support for the quantum logical leap required to maintain its assertion of the fair report privilege.” The fair report privilege was designed for “the press,” he said, and has never been extended to a non-media defendant. While the article involved matters of “public concern,” Reed also found that LoJack was engaging in nothing more than commercial speech. “LoJack was merely hawking its wares, and any attempt to clothe its commercial speech in the mantle of news reporting is rejected by this court,” Reed wrote. “I conclude that the commercial speech at issue in this case receives only moderate, not enhanced, protection under the First Amendment, that the public concern defense is not available to LoJack, and that Fanelle need not prove falsity to prevail on his defamation claim.” PRIVACY CLAIMS Fanelle also won the right to go forward with two privacy claims — “false light” and publicity. On the false light claim, Reed found that a jury could find that LoJack’s package “gave readers the impression that [Fanelle] was a car thief,” and that “there is no question that such a false impression would be highly offensive to a reasonable person.” LoJack argued that Fanelle cannot pursue a publicity claim because he has not proved that his name and image had commercial value or that LoJack’s use of his name and image diminished that value. Once again, Reed was forced to predict how the Pennsylvania Supreme Court would decide the issue. The prediction wasn’t easy, Reed said, because the issue has resulted in “a skirmish that has long simmered” over whether a non-celebrity may assert a claim for appropriation of publicity. Reed sided with the majority of courts that have concluded that “even the identities of non-celebrities have commercial value and that all individuals have a publicity right in their identities, and that non-celebrities may therefore assert an appropriation of publicity claim.” That position made more sense, Reed said, because “distinguishing between celebrities and non-celebrities presents a daunting challenge, the least of which is how to deal with the fact that on some occasions, the communication at issue case itself may give rise to celebrity status that had not existed before.” In the end, Reed said he was convinced that “the right of publicity resides in every person, not just famous and infamous individuals.” EMOTIONAL EXPERT Finally, Reed rejected LoJack’s argument that Fanelle cannot recover damages for emotional distress expert medical testimony, citing the Superior Court’s 1999 decision in Wecht v. PG Publishing Co. In Wecht, the Superior Court held that while lay testimony concerning the mental and emotional distress that a plaintiff suffered could be sufficient in most circumstances, invasion of privacy claims demand the additional showing that the emotional damages are “of a kind that normally results from such an invasion.” The court went on to hold that expert testimony is required to establish the kind of emotional damages that “normally result” from an invasion of privacy because a lay witness could not make that determination on her own. But Reed found that the Pennsylvania Supreme Court has never followed Wecht and predicted that it never will. “I do not find its [ Wecht's] reasoning to be persuasive. While a lay witness might not be able to compare a person’s mental or emotional distress to that which ‘normally results from’ an invasion of privacy, I believe a reasonable jury could infer from lay testimony, without expert testimony, whether the emotional distress suffered by a person as a result of an invasion of privacy is commensurate with the level of emotional distress one would normally expect to result from such conduct,” Reed wrote. “I predict that the Supreme Court of Pennsylvania would, if confronted with this question, conclude that expert medical testimony is not required to prove emotional distress damages in invasion of privacy and defamation cases. However, while expert medical testimony is not required in such cases, I believe the jury still may be called upon to make a discrete finding that plaintiff has proved that the claimed emotional damages are of the type that normally results from defamation or invasion of privacy.”

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