Sep. 6, 2022 – A trustee who sued a newspaper for defamation over an article that contained both a hyperlink to a story about elder abuse and a summary of charges made against him failed to state a claim, the U.S. Court of Appeals for the Seventh Circuit has ruled.

In Financial Fiduciaries, LLC v. Gannett, Co., Inc., No. 21-2016 (Aug. 22, 2022), the court held that the allegedly defamatory statements were substantially true. Additionally, the court held that the statements were protected by a statutory privilege.

$3 Million Trust

Thomas Batterman helped Joseph Geisler, a farmer in central Wisconsin, create a trust with assets that eventually grew to $3 million.

Under the terms of the trust, upon Geisler’s death the assets were to be distributed equally to four beneficiaries: three charities, including the American Cancer Society (ACS), and Bruce High School.

When Geisler died, Batterman became trustee for the trust. The ACS eventually filed a lawsuit against Batterman over his administration of the trust. 

Newspaper Reports on Lawsuit

In August 2018, a Gannett newspaper, the Wausau Daily Herald, published a story titled “Wisconsin financial advisor accused of violating a dead man’s trust, mishandling $3 million.”

Under a subheading titled, “What has been alleged,” the article summarized the allegations made by ACS in the lawsuit. The article said that Batterman “is accused of defrauding the charities, committing numerous breaches of trust and conspiring with his fiancée to milk the fund for trustee fees.”

The article also said that “the essence of the charities’ case against Batterman … was that he sought to hold on to Geisler’s money for as long as he could in order to profit from it through monthly fees,” and recounted the state court’s decision to remove Batterman as trustee.

Under another subhead titled “Run-ins with the law,” the article discussed Batterman’s two alcohol-related arrests and the fact that he’d been fined twice by the Securities and Exchange Commission for regulatory violations.

Additionally, the online version of the article included a hyperlink to an article titled “Five ways to fight elder abuse, financial exploitation.”

Newspaper Revises Article

Batterman demanded that the Daily Herald retract the article. The paper responded by publishing a revised article, with two changes.

The first change was the addition of a paragraph that read, in part, “Although a judge later found that Batterman had not committed fraud, theft or embezzlement, he ruled that the financial adviser had engaged in multiple acts of ‘bad faith’ and ordered him to be removed from handling the Geisler trust and to pay part of the charities’ legal fees.”

The second change added the word “criminal” to the following sentence: “Neither Batterman nor Richards had been charged with any criminal wrongdoing in the Geisler case.”

In October 2019, Batterman sued Gannett in the U.S. District Court for the Western District of Wisconsin. Gannett moved to dismiss the lawsuit for failure to state a claim.

The court granted Gannett’s motion in part; the only defamation allegation to survive was the article’s inclusion of the hyperlink to the elder abuse article. Gannett then moved for summary judgment.

The court granted Gannett’s motion, ruling that court records from the ACS lawsuit made the implication that Batterman had committed elder abuse substantially true. Batterman appealed.

Appeal Focuses on Two Statements

In his appeal, Batterman discussed only two statements made by the Daily Herald: 1) the implicit statement that he’d committed criminal acts of fraud, theft, or embezzlement; and 2) the implication, contained in the hyperlink, that he’d committed elder abuse.

In an opinion for a three-judge panel, Judge Michael Brennan explained that under Wisconsin law, defamation can include statements of implication.

Brennan noted that if the article implied that Batterman commitment criminal acts, it would be defamatory. As a result, Brennan explained, Batterman need only prove that 1) the statements were false (because truth is a defense to defamation) and 2) no privilege applied to the statements.

No Defamation by Implication

Judge Brennan noted the district court’s conclusion that the article did not reasonably convey to the reader an implication that Batterman had committed criminal acts.

Moreover, Brennan pointed out, the revised article explicitly stated that a judge had found that “Batterman had not committed fraud, theft or embezzlement.”

The statements in the article regarding Batterman’s conduct were supported by court records and substantially true, Judge Brennan explained, and therefore were not actionable because truth is a complete defense to defamation.  

“The article also prefaced its discussion of Batterman’s alleged conduct with ‘[w]hat has been alleged,’ and similar qualifying clauses,” Judge Brennan wrote. “Because the article only relayed the court’s findings about Batterman’s bad faith and dishonesty, its statements were substantially true.”

Privilege Applies

Brennan explained that the statements were also protected by the judicial-proceedings privilege under Wis. Stat. section 895.05(1). That privilege applies to newspaper publications that constitute “a true and fair report of any judicial … proceeding … or of any public statement, speech, argument, or debate in the course of such proceeding.”

“Gannett’s summary of the Geisler trust litigation falls comfortably within the judicial-proceedings privilege,” Judge Brennan wrote. “Gannett was careful to describe the allegations as such, not as facts, and the article provided Batterman’s own views throughout.”

Brennan pointed out that at oral argument, Batterman’s lawyer conceded that under his interpretation of section 895.05(1), the media would be unable to cover newly-filed lawsuits free from the fear of provoking defamation lawsuits.

“This assures us that Batterman’s position—that the privilege does not protect news media coverage of newly-filed pleadings—is incorrect,” Judge Brennan wrote.