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Kuwait & Gulf Link Transport Co. v. Doe

Superior Court of Pennsylvania

August 1, 2019


          Appeal from the Order Entered July 6, 2018 In the Court of Common Pleas of Cumberland County Civil Division at No(s): 2012-1820 Civil Term.

          BEFORE: LAZARUS, J., MURRAY, J., and STEVENS [*] , P.J.E.


          STEVENS, P.J.E.

         Kuwait & Gulf Link Transport Co., KGL Logistics, and KGL Transportation Co. K.S.C.C. (collectively "KGL") appeal from the July 6, 2018, order entered in the Court of Common Pleas of Cumberland County granting the motion for summary judgment in favor of Agility Public Warehousing Co. K.S.C. ("PWC"), Agility DGS Logistics Services Co. K.S.C.C., PWC Transport Co. WLL., Agility DGS Holdings, Inc., Agility Defense Government Services, Inc., and Agility International, Inc. (collectively "Agility"), and "John Doe" (a/k/a "Scott Wilson"). After a careful review, we affirm.

         The relevant facts and procedural history have been set forth previously by this Court, in part, as follows:

KGL is a family of Kuwaiti-based companies that provides shipping, transportation, warehousing, and logistics services to the United States Government in Kuwait and Southeast Asia. Agility is a family of logistics companies, including three of their separate, but wholly owned, subsidiaries that competes with KGL for government contracts.
In February 2011, the United States Government's Defense Logistics Agency ("DLA") awarded a contract to KGL to operate a military storage and distribution depot in Kuwait. On March 10, 2011, Intermarkets Global ("Intermarkets"), a company not related to any party in this matter, protested the award of that contract to KGL. KGL alleges that on March 22, 2011[, ] and March 24, 2011, a person under the pseudonym "Scott Wilson" sent two letters ("the Wilson Letters") to contracting officers at the DLA and the United States Army Sustainment Command ("USASC"). The Wilson Letters informed the DLA and the USASC that KGL had violated the Comprehensive Iran Sanctions, Accountability, and Divestment Act ("CISADA") by maintaining business relationships with Iranian entities[, namely Valfajr Shipping, an Iranian shipping company, ] and urged them to investigate this issue. The Wilson Letters also contained email chains in support of these allegations. [Specifically, the emails purportedly reported KGL leased a cargo ship to Valfajr Shipping.]
KGL alleges that Intermarkets supplemented its protest of the above-referenced contract with copies of the Wilson Letters, characterizing KGL as an irresponsible contractor. KGL asserts that it sustained losses and costs associated with defending this protest, but that it was able to get the protest dismissed, and that the DLA eventually awarded the contract to KGL. KGL also alleges that it competed for a "Heavy Lift 7" contract from the USASC and that the Wilson Letters affected the award of this contract because the USASC would not give the contract to KGL unless KGL addressed the Wilson Letters and proved that it was a responsible contractor. KGL again contends that it sustained losses and costs associated with addressing the USASC's concerns, but that it was able to provide the USASC with a satisfactory explanation and that it received the "Heavy Lift 7" contract. [Thus, while KGL admits that the Wilson Letters did not cause them to lose any contracts and they received all contracts on which they bid, KGL alleges that it suffered costs associated with defending itself against bid protests and addressing concerns of the DLA and the USASC.]
On March 21, 2012, KGL filed suit against Agility and "John Doe" alleging liability for defamation, tortious interference with contractual and other business relationships, respondeat superior, conspiracy, aiding and abetting, and negligent supervision[, arising out of the two Wilson Letters sent to the U.S. Government.] KGL further alleged, and PWC admitted, that employees of PWC authored the Wilson Letters [using the pseudonym "Scott Wilson"] and were acting within the scope of their employment [for purposes of respondeat superior liability. KGL alleged that the allegations in the Wilson Letters were false.]
KGL filed an amended complaint on June 14, 2012. On August 14, 2012[, ] and September 4, 2012, Agility filed preliminary objections that the trial court overruled on November 15, 2012[, ] and October 19, 2012, respectively. On September 14, 2012, KGL served discovery requests on each known defendant, including interrogatories, requests for production of documents, and requests for admissions, each with the primary purpose of identifying "Scott Wilson." Agility objected to these discovery requests based on its First Amendment right to speak anonymously and on Pilchesky v. Gatelli, 12 A.3d 430 (Pa.Super. 2011), which Agility argued requires KGL to satisfy four requirements before it could obtain discovery identifying an anonymous pseudonymous speaker. On December 4, 2012, KGL moved to strike Agility's objections to discovery requests and to compel discovery responses. [On December 5, 2012, Agility filed separate answers to the amended complaint. They denied liability on several grounds, including that the factual statements in the Wilson Letters were substantially true and, in any event, did not cause any damage to KGL.]
On February 20, 2012, the trial court heard argument on [the December 4, 2012, ] motion. Finally, on May 21, 2013, the trial court granted KGL's motion to strike Agility's objections to discovery requests and to compel discovery responses insofar as the objections relate to Pilchesky.
[T]he trial court granted KGL's motion because it found that Pilchesky did not apply to the Wilson Letters. The trial court ruled that the Wilson Letters were commercial speech, as opposed to "literary, religious, or political" speech, and that the First Amendment affords less protection to commercial speech.
Agility…filed [an] appeal.

Kuwait & Gulf Link Transport Co. v. Doe, 92 A.3d 41, 43-44 (Pa.Super. 2014) (citations to record omitted).

         On appeal, Agility argued the trial court erred in ordering discovery compelling the disclosure of "Scott Wilson's" identity because the First Amendment preserves the right to speak anonymously and pseudonymously. In addressing Agility's issues, we relevantly held the following:

[W]e find that the Wilson Letters constitute anonymous or pseudonymous political speech, thus receiving extensive constitutional protection under the First Amendment. We conclude that the Wilson Letters represent political speech because the award of substantial government contracts to contractors who are claimed to illegally engage in business with a prohibited foreign government directly implicates "the manner in which government is operated or should be operated." We also have no problem concluding that the Wilson Letters discuss affairs of government which are at the heart of the First Amendment protections. "Scott Wilson" wrote the Wilson Letters to the DLA and the USASC to inform them that he believed that KGL maintained business relationships with Iranian entities in violation of CISADA. KGL is a government contractor performing multi-million dollar contracts for the United States military. The DLA and the USASC are two government agencies responsible for the operation of the United States military. Additionally, KGL's alleged misconduct involved its possible connection to Iran businesses, misconduct that is a national and newsworthy issue. Thus, at their core, the Wilson Letters represent political speech involving the operation of the government and the questionable expenditure of public funds. The Wilson Letters directly implicate the appropriateness of the relationship between the United States Government and some of its contactors and those contractors' relationships with a foreign government in conflict with the United States.
Furthermore, we note that the Wilson Letters cannot be categorized as commercial speech. The Wilson Letters do not "propose a commercial transaction," or propose the sale of a specific product at a specific price. Moreover, the Wilson Letters: (1) are not an advertisement; (2) they do not reference any specific product; and (3) we are unable to determine whether or not the author had an economic motivation for making the communication. Although PWC admitted that its employee authored the Wilson Letters, there is no evidence indicating whether he did so as a concerned citizen or whether he did so to advance the interests of Agility. Likewise, even if we knew that the author wrote the Wilson Letters with an economic motivation, that knowledge alone is insufficient to compel the classification of the Wilson Letters as commercial speech. Therefore, given the political nature of the Wilson Letters, they are entitled to the highest level of protection and not the intermediate level of protection that commercial speech receives under the First Amendment.
Accordingly, we find that the Wilson Letters are anonymous political speech under the First Amendment subject to Pilchesky's four-part test for disclosure of anonymous or pseudonymous speakers.

Id. at 49-50 (quotation, citations, and footnote omitted). Consequently, we vacated the trial court's order compelling discovery of the identity of "Scott Wilson" and remanded the case to the trial court for the proper application of the Pilchesky test. Upon remand, the trial court applied the Pilchesky test and, ultimately, denied the motion to compel the disclosure of the identity of "Scott Wilson."[1]

         Meanwhile, the parties engaged in considerable discovery, at the completion of which, on June 4, 2018, Agility filed a motion for summary judgment, as well as a supporting brief. Therein, Agility averred they were entitled to summary judgment since KGL failed to set forth a prima facie case for their defamation and tortious interference claims, which in turn foreclosed KGL from proving its derivative claims of respondeat superior, conspiracy, aiding and abetting, and negligent supervision.

         On June 8, 2018, KGL filed an answer in opposition to Agility's motion for summary judgment. On June 25, 2018, Agility filed a reply to KGL's answer in opposition, and following a hearing on the motion for summary judgment, by opinion and order entered on July 6, 2018, the trial court granted Agility's motion for summary judgment and dismissed KGL's complaint.

         Specifically, the trial court concluded that, as a matter of law, the Wilson Letters involved "a matter of 'public concern'" and, for purposes of the instant litigation, KGL is a limited-purpose public figure. Trial Court Opinion, filed 7/6/18, at 4. Consequently, the trial court determined that KGL was required to set forth a prima facie case that the Wilson Letters contained false allegations that were made with "actual malice." See id. However, the trial court concluded that, as a matter of law, the Wilson Letters contained opinions, which are not actionable. See id. The trial court further concluded KGL did not set forth a prima facie case of "actual malice."

         Additionally, the trial court held that, assuming the Wilson Letters contained defamatory statements, "there is no evidence that the letters caused harm to [KGL]." See id. at 6. In this regard, the trial court concluded KGL did not set forth any evidence of malice, so there was no evidence upon which a jury could award presumed damages. See id. Further, as to general damages, the trial court concluded the "record does not contain the testimony of a single witness to the effect that the Wilson Letters negatively affected his or her view of KGL." See id. at 7. Therefore, the trial court concluded there was no evidence of reputational harm. See id. Moreover, the trial court concluded there was no evidence of any out-of-pocket loss, which would establish special damages. See id.

         This timely appeal followed. The trial court did not direct KGL to file a Pa.R.A.P. 1925(b) statement, and consequently, no such statement was filed. The trial court filed a brief Pa.R.A.P. 1925(a) statement relying on its previously filed opinion.

         On appeal, KGL presents the following issues in its "Statement of the Questions Involved" (verbatim):

1. The U.S. Supreme Court held in Milkovich v. Lorain Journal Co., 497 U.S. 1, 21 (1990), that "imaginative expression" or "loose, figurative, or hyperbolic language" are non-actionable opinion. Defendant "Scott Wilson" sent two letters (the "Wilson Letters") to the U.S. government, charging KGL with violating U.S. law and stating that KGL engaged in "a serious misrepresentation and violation of U.S. law," "violation of the Comprehensive Iran, Sanctions, Accountability, and Divestment Act of 2010," "violation of the Iran Sanctions Act," and "a clear violation of U.S. law." Were Wilson's statements that KGL engaged in illegal conduct actionable statements of fact or actionable, "mixed" opinion (as opposed to non-actionable opinion)?
2. In defamation cases, damages may take the form of reputational harm ("general damages") or special damages (monetary loss). Reputational harm means "impairment of reputation and standing in the community" or a "showing that anyone thought the less of" the person. The Wilson Letters caused the U.S. government to investigate KGL for violations of U.S. law. KGL lost credibility and spent money to mitigate the damage. Was KGL's evidence of damages sufficient to raise a genuine issue of material fact?
3. In defamation cases requiring a showing of "actual malice," the plaintiff must show that the defendant made a defamatory statement "with knowledge that it was false or with reckless disregard of whether it was false or not." When Wilson sent his Wilson Letters, he knew from contemporaneous documents that his charges of KGL violations of U.S. law were in serious doubt. He sent them anyway-all in the interest of, and within the scope of his employment for, KGL's government contracting competitor, Agility. Was KGL's evidence of malice sufficient to raise a genuine issue of material fact?
4. Under U.S. and Pennsylvania Supreme Court precedents, a defamation plaintiff is entitled to wide latitude in discovering evidence of "actual malice," including discovery into the "state of mind" of the defamation defendant. In a series of orders, the trial court ruled that KGL could not unmask Wilson, take discovery of his state of mind, source material and due diligence, or inquire into defendants' collaboration with Wilson to defame KGL. Were the trial court's discovery orders erroneous, and did they interfere with KGL's ability to obtain additional evidence of malice?
5. A defamation plaintiff must demonstrate "actual malice" if he is a limited-purpose public figure-someone who has voluntarily "thrust" himself into a public controversy. KGL is a government contractor that defendants dragged into a controversy when they sent the Wilson Letters to the U.S. government charging KGL with violating U.S. law. Was KGL a private figure (as opposed to limited-purpose public figure) such that it need only demonstrate negligence (as opposed to "actual malice").
6. Under U.S. Supreme Court precedent, a defamation defendant's burden to prove truth shifts to the plaintiff to prove falsity where (1) the plaintiff is a public figure, or (2) the defamatory statement involves a matter of public concern and the defendant is a member of the news media. Were elements (1) or (2) satisfied such that KGL must prove falsity, and must KGL do so by clear and convincing evidence (as opposed to preponderance of the evidence)?
7. A party may seek leave of court to amend a pleading at any time; provided that, the amendments do not violate the law, or surprise or prejudice the other party. Six months before trial, while discovery remained open, KGL sought leave to amend its complaint to assert new defamation claims against the Agility Defendants that were timely under Pennsylvania's discovery rule. Should KGL have been granted leave to amend?

KGL's Brief at 6-9 (trial court answers omitted).[2]

         Initially, we note the principles we apply in reviewing a summary judgment order are well-settled.

Our scope of review of an order granting summary judgment is plenary. [W]e apply the same standard as the trial court, reviewing all the evidence of record to determine whether there exists a genuine issue of material fact. We view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Only where there is no genuine issue as to any material fact and it is clear that the moving party is entitled to a judgment as a matter of law will summary judgment be entered.
Motions for summary judgment necessarily and directly implicate the plaintiff's proof of the elements of his cause of action. Thus, a record that supports summary judgment will either (1) show the material facts are undisputed or (2) contain insufficient evidence of facts to make out a prima facie cause of action or defense and, therefore, there is no issue to be submitted to the [fact-finder]. Upon appellate review, we are not bound by the trial court's conclusions of law, but may reach our own ...

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