Wheeler v. Twenty-First Century Fox

Citation: 322 F. Supp. 3d 445Docket: 17 Civ. 5807 (GBD)

Court: District Court, S.D. Illinois; August 2, 2018; Federal District Court

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Rod Wheeler, the plaintiff, has initiated a lawsuit against Fox News Network LLC, its parent company Twenty-First Century Fox, and individuals associated with Fox News, including investigative journalist Malia Zimmerman and contributor Ed Butowsky. The claims include defamation per se and, alternatively, defamation and libel per quod, stemming from Fox News's reporting on Wheeler's investigation into the murder of Seth Rich, a former Democratic National Committee (DNC) employee linked to leaked emails to WikiLeaks.

Defendants have filed a motion to dismiss the lawsuit under Rule 12(b)(6) of the Federal Rules of Civil Procedure, which the court has granted. Butowsky has also sought sanctions against Wheeler and his former counsel under Rule 11, and both parties requested attorney fees related to this motion, which were ultimately denied.

The factual background reveals that Seth Rich was murdered on July 10, 2016, with authorities initially believing it to be a botched robbery. Speculation arose about his potential connection to DNC email leaks, with conflicting theories about whether Russian hackers or Rich himself were responsible for the leaks. Butowsky claimed to have received information about an FBI report regarding the murder from investigative journalist Seymour Hersh, suggesting that the FBI had accessed Rich's computer and found evidence linking him to the leaks. In February 2017, Butowsky contacted Wheeler, indicating that the Rich family wanted an independent investigation into Rich's murder, leading to meetings with Butowsky and Zimmerman to discuss the investigation's objectives, particularly to counter narratives implicating Russian interference in the election.

On March 14, 2017, the Rich family and the Plaintiff signed an agreement for the Plaintiff to conduct an independent investigation into the death of Seth Rich, with Butowsky covering the investigation costs. The Plaintiff interviewed Rich's relatives, co-workers, and friends, and reviewed evidence from the MPDC, while keeping Butowsky and Zimmerman updated on his progress. On April 25, 2017, Detective Joseph Della-Camera of the MPDC indicated that he believed Rich's murder was a botched robbery and had no evidence linking it to DNC emails or FBI involvement. However, on May 10, 2017, Butowsky and Zimmerman claimed to have an FBI source confirming emails between Rich and WikiLeaks. Zimmerman sent the Plaintiff a draft article on May 11, which did not include any references to Rich emailing WikiLeaks or any cover-up involving the DNC or prominent Democrats. On May 15, 2017, Zimmerman informed the Plaintiff that the article would be published soon. Although the Plaintiff was traveling and unable to review drafts, he provided quotes for the article, including allegations about political figures being involved in the investigation. That evening, the Plaintiff participated in a Fox 5 interview, where he affirmed that he had sources within the FBI linking Rich to WikiLeaks and criticized the MPDC and FBI for their lack of cooperation. He also suggested a connection between the Mayor's office and the DNC regarding the investigation. The following day, the article was published as the lead story on FoxNews.com.

The Article titled "Seth Rich, Slain DC Staffer, Had Contact with WikiLeaks," authored by Zimmerman, reported that a federal investigator indicated Seth Rich had communicated with WikiLeaks, claiming to have seen emails between Rich and WikiLeaks. This information was presented as consistent with findings from Rod Wheeler, who was quoted in the Article regarding his investigation into Rich’s murder, suggesting potential interference from D.C. government or Democratic entities. After the Article's publication, the Rich family condemned it and Wheeler's statements. Zimmerman communicated with Joel Rich, asserting much of the Article's information was sourced from Wheeler, which Plaintiff later disputed as inaccurate. In subsequent discussions, both Zimmerman and Butowsky acknowledged discrepancies in quotes attributed to Plaintiff. On May 23, 2017, Fox News retracted the Article, citing inadequate editorial scrutiny. Plaintiff informed the Defendants of his intent to pursue legal action on June 23, 2017. On June 26, Butowsky tweeted criticisms regarding Wheeler’s credibility, which Plaintiff claims resulted in emotional distress and professional ostracism, alleging that 21st Century Fox and Fox News hindered his future appearances as a contributor.

Plaintiff claims that his private investigator business has suffered due to negative publicity, which has led to a decline in clients. The document outlines the legal standards for a Rule 12(b)(6) motion, which assesses the sufficiency of claims in a complaint. To survive such a motion, a plaintiff must present sufficient factual allegations that make the claim plausible, allowing the court to infer liability. Factual allegations are accepted as true, but conclusory statements are not. 

All of Plaintiff's claims are based on defamation under Maryland law, which requires four elements: a defamatory statement made to a third party, the statement's falseness, the defendant's fault in making the statement, and resulting harm to the plaintiff. The essence of a defamation claim is the publication of falsehoods; without proving a statement's falsity, a claim for defamation fails. A statement must be objectively true or false, and those that cannot be interpreted as factual cannot support a defamation claim. Opinion statements are actionable only if they imply undisclosed facts. If readers understand opinions as subjective interpretations of disclosed facts, they are not actionable as defamation.

Rhetorical statements, characterized by loose, figurative, or hyperbolic language, are protected under defamation law as they do not assert actual facts. A statement is not deemed false if it is substantially correct, and minor inaccuracies do not constitute falsity as long as the gist of the statement remains justified. A statement is only considered false if it would impact the reader's perception differently than the truth would. In this case, the plaintiff's defamation claims are based on five statements, none of which can be proven false. 

The two specific statements, referred to as the Email Quote and the Murder Investigation Quote, are not false as they do not differ materially from statements made by the plaintiff in a prior interview. The plaintiff argues that the Email Quote implies personal knowledge or evidence, but fails to demonstrate that it would lead readers to a different conclusion than what his actual statements conveyed. Similarly, the Murder Investigation Quote is not materially different from the plaintiff's previous statements, reinforcing that he cannot establish falsity in these claims.

Plaintiff claims to have provided a quote to Zimmerman regarding inquiries made by Debbie Wasserman Schultz and Donna Brazile, former DNC chairs, about his investigation into Seth Rich's murder. He asserts that the text message he sent indicates their concern about his inquiries, particularly Schultz's question about how much he was learning. Plaintiff argues this message does not suggest an attempt to obstruct the investigation, but he acknowledges that the nature of the inquiries implies a concern about the information he might uncover.

In a Fox 5 interview, Plaintiff referred to a source within the MPDC who claimed they were told to "stand down" on the case, suggesting a possible connection between the D.C. Mayor's office and the DNC, although he does not assert direct involvement in the investigation's halt. He also noted that while his messages and interview comments did not mention the "Clinton team," he recognized Hillary Clinton's affiliation with the DNC.

Plaintiff contends that the differences between his statements and the "Murder Investigation Quote" do not alter their meaning significantly, and thus, the latter cannot be considered provably false. The quotes attributed to him are argued not to be defamatory, as they merely reflect his investigative findings, which cannot be assessed for competence without external comparison, and are not defamatory per se or per quod.

Plaintiff's findings about the email exchange between Seth Rich and WikiLeaks align with those of an unnamed federal investigator. The Article suggests that the murder investigation is stalled, echoing claims from sources close to the Metropolitan Police Department (MPDC) indicating a lack of suspects and leads. The statements made in the Article are not considered defamatory as they do not undermine Plaintiff's investigative skills and instead support his conclusions.

In relation to the Email Statement, Zimmerman indicated to Joel Rich that much of the information came from Rod Wheeler, who was hired by the Rich family. Plaintiff argues that this statement is false because "much" of the information did not originate from him. However, the subjectivity of the term "much" makes the Email Statement not provably false. 

Butowsky's tweets are similarly non-defamatory. The Amended Complaint notes that Plaintiff claimed to have been misquoted and that Fox News retracted the Article. Butowsky's assertion that the Article was pulled due to Wheeler’s comments is deemed an interpretation based on publicly available facts and is thus not provably false. His rhetorical question about the DNC is also not a factual statement. The Truth Tweet reflects Butowsky's interpretation of facts, allowing readers to draw their own conclusions. 

Plaintiff and Defendants collaborated on a sensational narrative regarding Rich's murder, and Plaintiff cannot evade the repercussions of this joint effort. Butowsky has filed for sanctions against Plaintiff and his counsel under Rule 11, while both parties seek attorneys' fees and costs related to the motion.

Rule 11 is intended for cases where a claim is obviously without merit based on existing legal precedents, and where no reasonable argument exists to alter the law. Courts have affirmed that sanctions under Rule 11 should not be applied merely for close-to-frivolous arguments, as long as there is some reasonable basis for the claims. A party that only rehashes arguments for dismissal does not justify a Rule 11 motion. Courts are discouraged from using Rule 11 to assess the legal sufficiency of pleadings, and even when violations are found, imposing sanctions is at the discretion of the district court and should be done cautiously, reserved for extreme cases.

In this context, Butowsky contends that the plaintiff's complaint fails to provide valid grounds for personal jurisdiction. However, the complaint claims that Fox News operates primarily out of New York and that Butowsky has interacted with Fox News personnel, which could imply some communication relevant to jurisdiction, albeit weak. These allegations are deemed to have "enough of a kernel of a theory" to be considered not objectively unreasonable. The arguments presented by the parties mainly reiterate their positions regarding the motion to dismiss, failing to establish grounds for sanctions. Butowsky also criticizes the inclusion of allegedly irrelevant allegations aimed at discrediting Fox News, arguing they were intended to pressure Fox into settling other cases. While these allegations might not be essential for the defamation claim, they could be perceived as providing context relevant to Fox's motivations. The circumstances alleged by Butowsky do not rise to the level of being extraordinary enough to warrant sanctions.

The Court declines to impose sanctions on the Plaintiff or their former counsel, and also denies the request for attorneys' fees and costs from both parties. Defendants' motions to dismiss are granted, while Butowsky's motion for sanctions and requests for attorneys' fees and costs are denied, as is the Plaintiff’s request for attorneys' fees in relation to the Rule 11 motion. Additionally, Seth Rich's parents have initiated a separate action against Fox News and others, alleging claims including intentional infliction of emotional distress related to Fox News's reporting on Seth Rich's murder investigation. The defendants from this case have also filed motions to dismiss and seek to compel arbitration. Certain documents, such as a transcript from an interview and a text message, are considered by the Court as incorporated by reference in the Amended Complaint. The Plaintiff asserts claims for defamation, defamation per se, and libel per quod, with the factual allegations for these claims being substantially similar. The Court observes that, due to the nature of the defamatory statements being published online, the law of the Plaintiff’s domicile, Maryland, would apply, although the outcome would remain consistent even under New York law. The Plaintiff alleges a statement made by Zimmerman regarding the imminent publication of an article.

Plaintiff's statement during the Fox 5 Interview regarding "information that's going to come out tomorrow" can be reasonably interpreted as his consent to the publication of the Article. Despite claiming he told Zimmerman he could not read drafts of the Article on May 15, Plaintiff provided quotes to Zimmerman throughout the day and later that evening, which may also be seen as consent to the Article's publication. Under Maryland law, apparent consent can serve as a defense to defamation claims. However, since Plaintiff has not established the necessary elements of a defamation claim, the court does not need to determine if his conduct implies consent. The consistency of the quotes in the Article with other sources suggests that the Defendants did not act with actual malice, defined as a reckless disregard for the truth. The court notes that Plaintiff's vague allegations do not meet the threshold for proving actual malice, particularly as he is a limited purpose public figure. This further justifies the dismissal of his claims. Additionally, Rule 11(c) allows for the prevailing party to recover reasonable expenses, including attorney's fees, related to a Rule 11 motion.