AMENDED ORDER
FACTUAL BACKGROUND
This аction arises from a broadcast on American Broadcasting Companies (“ABC”)’s television program Prime Time Live about faulty pap smear testing. On or about February 10, 1994, Defendant Robbie Gordon, an employee of Defendant ABC, telephoned Plaintiff John Devaraj, a co-owner with his wife, Carolyn Devaraj, of Medical Laboratory Consultants (d/b/a Consultants Medical Lab) (hereinafter “Medical Lab”). Ms. Gordon, who had no prior contact with Mr. Devaraj, told him that she was a cyto-technologist 1 from Georgia interested in starting a pap smear laboratory in that state and “wanted to find out more details on the costs involved ... and the financial end of running such a lab.” (Pls.[’j Resp. to Defs.[’] First Set of Interrogs., No.l, attached to Defs[’] Statement of Facts (“DSOF”) as Exh. A.) She informed Mr. Devaraj that she would be in Phoenix visiting friends or relatives and asked if she could visit his laboratory to learn more about the industry. (Id.) Mr. Devaraj claims that he asked Ms. Gordon “a few questions such as ‘Who are you?’ [and] ‘Do you- have enough funds available?’ ” (Deva-raj Dep. at 91, attached to DSOF as Exh. B.) Mr. Devaraj agreed to schedule a meeting with Ms. Gordon at Medical Lab because it “appeared to be that she would be willing to bring some business to [his] laboratory.” (Id. at 92.) In fact, Ms. Gordon was not a cytotechnologist and her only interest in Medical Lab was as a possible source of information for an upcoming episode of Prime Time Live concerning error rates in pap smear testing conducted by medical laboratories.
The meeting took place at Medical Lab on March 18, 1994. Ms. Gordon was accompanied by Jeff Cooke — who claimed he was a computer expert but was an undercover camera specialist — and another individual whose name, has not been revealed. (Id. at 212.) Ms. Gordon and Mr. Cooke entered the laboratory through an unlocked door leading into a reception room. (Id. at 213, 215.) Mr. Devaraj met them there аnd escorted them to a conference room adjoining the reception area. (Id. at 215.) The conference room had windowed French doors and was visible by an accounting clerk who was working on the other side of the door. (Id. at 216.)
During roughly two hours, they spoke generally about the laboratory industry, about Medical Lab in particular, and about Ms. Gordon’s fictitious plans to open a laboratory. Mr. Devaraj told them that Medical Lab tried to compete with larger labs by offering a “better turnaround time.”
(Id.
at 214; DSOF at ¶ 4.) In addition, Mr. Devaraj invited Ms. Gordon and Mr. Cook on a tour of the laboratory, an invitation he occasionally made to prospective customers, physicians, and others who had “proper identification.”
(Id.
at 212, 220.) At one point during the tour, Ms. Gordon appeared to be heading into Mr. Devaraj’s office and was asked not to go
Unbeknownst to Plaintiffs, Mr. Cooke filmed the entire episode with hidden cameras located in his wig. (Cooke Dep. at 14-15, attached to DSOF as Exh. E.) ABC featured footage from the interview on a broadcast designed to highlight what it perсeived were frequent errors in pap smear testing at medical laboratories. Also as part of preparation for the broadcast, Defendants sent pretested pap smear slides to Medical Lab for testing, claiming the slides were from patients at a fictitious clinic called the Huron Women’s Health Collective. When the program, which was titled Rush to Read, aired on May 19, 1994, it was reported that Medical Lab mistakenly failed to identify cervical cancer on several of the slides. Rush to Read did not identify Mr. Devaraj and Medical Lab by name but a picture of his face was published during the broadcast.
John and Carolyn Devaraj and Medical Lab (“Plaintiffs”) 2 sued ABC, KTVK-TV (ABC’s then-affiliate in Phoenix) and other individuals (“Defendants”) allegedly involved in the production of Rush to Read after it aired. In an Order dated April 25, 1996, the Court dismissed all of Plaintiffs’ claims against KTVK-TV and the public disclosure of private facts, intentional infliction of emotional distress, unfair practices, trade libel, negligent infliction of emotional distress, and conspiracy claims against the remaining Defendants. 3 Defendants now move for summary judgment on the remaining claims of intrusion, fraud, interference with contractual relations, trespass, eavesdropping, and punitive damages. Defendants Lorri Garcia-Cottrell and Rhondi Charleston independently move for summary judgment on all the claims against them. In addition, Plaintiffs have filed a Motion for an Order Granting Leave to File a Second Amended Complaint to Add Claims for Defamation & False Light to Conform to Proof. The motion for summary judgment raises a panoply of issues which have conflicted many courts for two reasons. First, it requires grappling with and finding a balance between two fervently protected fundamental rights in competition: the right of the individual to be left alone and the right of society to access information of public interest. Second, it involves a difficult analysis of common law causes of action enshrouded by the First Amendment.
LEGAL DISCUSSION
Fed.R.Civ.P. 56(c) authorizes the granting of summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Judgment for the moving party must be entered “if, under the governing law, there can be but one reasonable conclusion as to the verdict.”
Anderson v. Liberty Lobby, Inc.,
The moving party bears the initial burden of identifying the elements of the claim in the pleadings, depositions, answers to the interrogatories, affidavits, and other evidence,
I. Intrusion
Plaintiffs’ first claim for relief is that Defendants invaded Mr. Devaraj’s privacy by using false pretenses to gain entrance to Medical Lab and by secretly videotaping the conversation.
4
Arizona recognizes the four branches of the tort of invasion of privacy outlined in the Restatement: 1) intrusion on seclusion; 2) commercial appropriation; 3) publication of private facts; and 4) false light.
5
Rest. (Second) of Torts
§ 652A (1977);
Godbehere v. Phoenix Newspapers, Inc.,
A. The Intrusive Act
To prevail on an intrusion claim, a plaintiff must first show that the defendant “has intruded into a private place, or has otherwise invaded a private seclusion that the plaintiff has thrown about his person or affairs.”
Rest.
§ 652B, cmt. c;
Shulman v. Group W. Productions, Inc.,
The invasion may be by physical intrusion into a place in which the plaintiff has secluded himself, as when the defendant forces his way into the plaintiffs room in a hotel or insists over the plaintiffs objection in entering his home. It may also be by the use of the defendant’s senses, with or without mechanical aids, to oversee or overhear the plaintiffs private affairs, as by looking into his upstairs window with binoculars or tapping his telephone wires. It may be by some other form of investigation or examination into his private concerns, as by opening his private and personal mail, searching his safe or wallet, examining his private bank account, or compelling him by a forged court order to permit an inspection of his personal documents.
When an intrusion occurs in a home or other personal sphere, the plaintiffs expectation of privacy has, in most instances, been deemed to be objectively reasonable.
Dietemann v. Time, Inc.,
In the instant ease, Mr. Devaraj invited Ms. Gordon and Mr. Cooke, to his place of business for a meeting. Regardless of whether they were potential future business partners, as Mr. Devaraj thought, Ms. Gordon and Mr. Cooke were strangers who chose Mr. Devaraj from relative obscurity and called him. The conversation and office tour took place in a laboratory that was at least partially open to the public and was accessible to employees. Mr. Devaraj did not communicate to the Defendants that he expected the conversation would not be disclosed to others, nor did he take any precautions to ensure that the contents of the discussion remained confidential. Furthermore,
B. The Level of Offensiveness of the Intrusion
The second element of a claim of intrusion upon seclusion is that the intrusion must be found to be “highly offensive to a reasonable person.”
Rest.
§ 652B. Arizona cases offer little guidance regarding the type of conduct that would constitute a “highly offensive” intrusion.
7
In 1989, the Arizona Supreme Court considered the “extreme and outrageous conduct” standard that had defined the level of offensiveness then required for an intrusion or other invasion of privacy claim:
Godbehere,
However, the Restatement’s examples of intrusion offer some insight into the parameters of the “highly offensive” standard. In one example, a reporter asks a woman hospitalized with a “rare disease that arouses public curiosity” for an interview. Rest. § 652B, cmt b., illus. 1. Ignoring her refusal, the reporter goes to the hospitаl and takes her photograph over her objection. Id. In another, a private detective uses a telescope to look into someone’s upstairs bedroom window for two weeks and takes “intimate pictures” with a telescopic lens. Id. at illus. 2. These examples suggest that, while the “highly offensive” standard may require less than “extreme and outrageous conduct,” it is reserved for truly exceptional cases of intrusion.
Cases from other states also address the “highly offensive” standard of the Restatement. Offensiveness is determined by considering “ ‘the degree of the intrusion, the context, conduct and circumstances surrounding the intrusion as well as the intruder’s motives and objectives, the setting into which he intrudes, and the expectations of those whose privacy is invaded.’ ”
Deteresa v. American Broadcasting Companies, Inc.,
Although ... the First Amendment does not immunize the press from liability for torts or crimes committed in an effort to gather news, the constitutional protection of the press does reflect the strong societal interest in effective and complete reporting of events, an interest that may — as a matter of tort law — justify an intrusion that would otherwise be considered offensive. While refusing to recognize a broad privilege in newsgathering against application of generally applicable laws, the United States Supreme Court has also observed that “without some protection for seeking out the news, freedom of the prеss could be eviscerated.’
Shulman,
It is worth emphasizing that this balancing test does not protect all newsgathering activities. As
Shulman
noted, the constitutional protection afforded newsgathering “if any, is far narrower than the protection surrounding the publication of truthful material.”
Shulman,
In the instant case, it is undisputed that Defendants were reporting on potential laboratory errors in testing of pap smears, information that was clearly in the public interest because the results of the tests involve vital health issues.
See infra
note 11 and accompanying text. As part of their newsgather-ing аctivities, they conducted a hidden camera interview with an owner of a laboratory that profits from conducting such tests. They did not jeopardize the safety of anyone, nor did they intrude on Mr. Devaraj’s home or aspects of his private life.
8
While Mr. Devaraj may have preferred that the inter
C. Alternative Reasoning
Summary judgment is warranted on the intrusion claim on alternative grounds. According to the Restatement, “the intrusion itself makes the defendant subject to liability, even though there is no publication or other use of any kind of the photograph or information.” § 652B. A number, if not most, jurisdictions interpreting § 652B have refused to consider the publication of information obtained during an alleged intrusion as a factor in determining the offensiveness of the act. The result is particularly significant in cases involving hidden cameras, where, as here, the intrusion itself may be minimal and the plaintiffs primary complaint is that the information gained from the intrusion was published. In
Russell v. American Broadcasting Company,
‘The basis of the tort [of intrusion] is not publication or publicity. Rather the core of this tort is the offensive prying into the private domain of another.’ In the instant case, plaintiff alleges that defendants secretly recorded a conversation she willingly had with a co-worker at her place of business. This is hardly ‘offensive prying into the private domain of another.’ [Plaintiff] was harmed, if at all, by the publication of her conversations with [the reporter], not by the filming itself. Therefore, she does not state a claim for intrusion upon seclusion.
Id. (citations omitted) (emphasis added). The Seventh Circuit applied similar reasoning to a claim of intrusion by a basketball player whose telephone conversation with a coach from a competing university was secretly recorded by the coach and publicized. Rejecting the basketball player’s claim, the court held:
The tort of intruding upon the seclusion of another is aimed at discomfort caused by the intrusion itself — for example, someone enters your bedroom, opens your mail, or makes repeated and unwanted telephone calls to you. Eavesdropping by wiretapping may itself constitute such an invasion of privacy. In this instance, however, [plaintiff] was harmed if at all not by the telephone calls themselves (since he was a willing party) or even by the recording, but by the publication of what he said in the conversations. And under [Lovgren v. Citizens First National Bank of Princeton,126 Ill.2d 411 ,128 Ill.Dec. 542 ,534 N.E.2d 987 (Ill.1989) ], a plaintiff fails to state a claim for invaded seclusion if the harm flows from publication rather than intrusion.
Thomas v. Pearl,
II. Interference With Contractual Relations and Prospective Economic Relations
A. The Elements of the Cause of Action
Plaintiffs allege that Defendants’ production of
Rush to Read
promрted some of Plaintiffs’ customers to take their laboratory business elsewhere, constituting tortious interference with Plaintiffs’ contractual relations and prospective economic relations. Despite Plaintiffs’ effort to claim otherwise, it is clear from the record, including a letter from Plaintiffs’ own lost profits expert, that the injury to contractual relationships was caused, if at all, by the broadcast of
Rush to Read
rather than activities relating to the creation and preparation of the story. (Stamps Dep. at 50, 53, 71-73, attached to DSOF as Exh. P; Fara Dep. at 4-6, 11, attached to DSOF as Exh. Q; Letter from Pls.[’] expert G. Christopher Davis to Pls.[’] counsel, 8/29/97, attached to DSOF as Exh. S). As Defendants contend, this distinction is crucial. Because the alleged injury stems from a news broadcast, this Court must ensure that the First Amendment’s requirements for constitutionally protected speech have been met.
10
Unelko Corp. v. Rooney,
In
Unelko,
the Ninth Circuit considered claims of defamation, product disparagement, and tortious interference with business relationship against
60 Minutes
commentator Andy Rooney for broadcasting a disparaging reference regarding plaintiffs product.
When a “private figure” brings a defamation claim against a media defendant for statements involving a matter of public concern, the First Amendment requires that the plaintiff first prove that the statements were false.
Philadelphia Newspapers, Inc. v. Hepps,
Minor inaccuracies do not amount to falsity so long as ‘the substance, the gist, the sting, of the libelous charge be justified.’ Put another way, the statement is not considered false unless it “would have a different effect on the mind of the reader from that which the pleaded truth would have produced.’
Masson v. New Yorker,
the defense of substantial truth recognizes that ‘slight inaccuracies of expression are immaterial’ if the alleged defamatory statement is ‘true in substance.’ A technically false statement may nonetheless be considered substantially true if, viewed ‘through the eyes of thе average reader,’ it differs from the truth only in ‘insignificant details.’
(citations omitted);
see also, Read v. Phoenix Newspapers,
Inc.,
If Plaintiffs succeed in proving falsity, they must then demonstrate that the media defendants acted with the requisite degree of fault in making the allegedly defamatory statements.
Hepps,
The Court need not decide the issue of the appropriate level of fault because Plaintiffs have failed to establish that Defendants’ broadcast was false. Without a showing of falsity, Plaintiffs cannot prevail on an intentional interference with business relationships claim which is based on protected speech. 12
B. Plaintiffs Failure to Establish Falsity
1. Medical Lab’s Performance on the Four “Unmistakable” Slides
Plaintiffs cite several statements from the broadcast which are claimed to be substantially untrue. The first involves four slides that were sent to Medical Lab for pap smear testing. The broadcast published the following:
Diane Sawyer: So how did [Medical Lab] do on our slides? Well, on Dr. Bowen’s [sic] slides, this lab missed two of the four Dr. Bowen [sic] had called ‘unmistakable,’ both clear-cut cancer.
Dr. Matilda Bowenfsic]: Absolutely should have been picked up, yes.
Diane Sawyer: That any responsible laboratory should have picked these four up
Dr. Matilda Bowen[sic]: Yes.
(Tr. of
Rush to Read
at 7, attached to PSOF as Exh. 6.) According to Plaintiffs, Medical Lab did not misread one of the two slides that the broadcast reported Medical Lab erroneously found to be normal. Instead, Medical Lab concluded that the sample was “unsatisfactory,” meaning that it was difficult to read, and the lab therefore failed to indicate any conclusion regarding whether or not the slide contained abnormal cells. In support, Plaintiffs cite the deposition testimony of Dr. Santos-Buch, an expert used by Defendants to review the slides analyzed by the laboratories profiled in the broadcast. Plaintiffs claim that when asked if Medical Lab’s notation that the slide was unsatisfactory due to obscuring red blood cells was a misread, Dr. Santos-Buch “testified flatly, ‘That is not a misread.’ ” (Pls.f] Opp’n to Defs.[’] Mot. for Partial Summ.J. on Pls.[’] Third Claim for Relief at 9.) However, the full transcript does not support Plaintiffs’ interpretation of Dr. Santos-Buch’s testimony. The doctor acknowledged that the slide included blood cells “that were obscured either by blood or inflammation.” (Santos-Buch Dep. at 22, attached to Defs.f] Reply in Supp. of Defs.[’] Mot. for Partial Summ.J. on Pls.[’] Third Claim as Exh. B.) When asked if Medical Lab’s reading of the slide was a “misread,” Dr. Santos-Buch stated “That’s not a misread. I mean, it’s an interpretation. That, the number of red blood cells is obscuring the samples so they cannot be read. That should raise a red flag to the physician.”
Q: [D]id you remember that each of the ABC slides that you reviewed that afternoon you found to be abnormal?
A: Yes, I remember quite clearly because one of the things that one does when you test pathologists is to include normals. And I don’t remember a normal slide that day.
Q: Was there any hesitancy in your opinion that day, each of these four slides you reviewed was indeed abnormal?
A: That’s correct. It was quite evident all four were abnormal.
(Id,, at 102.) (emphasis added). The notes on which Plaintiffs rely that were taken by a colleague of Dr. Santos-Buch who was present when Dr. Santos-Buch was reviewing the slide in question are similar. While reporting that the doctor found “alot[sic] of blood” and that the sample was “limited for interpretation,” they also reveal that he concluded that there was “no question there is an abnormality here.” (Notes by Ken Shapinski, attached to Pls.[’] Additional Supplemental Local Rule 1.10(1) Statement of Facts in Opp’n to Defs[’] Mot. for Summ.J. as Exh. 47.) The broadcast reported that Medical Lab “missed” the finding that the slide was abnormal. (Tr. of Rush to Read at 7, attached to PSOF as Exh. 6.) It did so based on the unequivocal conclusion of an expert who found that the sample included “unmistakable” abnormal cells. Id. Even if the expert was unreliable, as Plaintiffs claim, the expert on whom Plaintiffs rely found there was “no question there is an abnormality.” (Notes by Ken Shapinski, attached to Pls.[’] Additional Supplemental Local Rule 1.10(1) Statement of Facts in Opp’n to Defs[’] Mot. for Summ.J. as Exh. 47.) Thus, Plaintiffs have failed to establish that the broadcast was not substantially true on this issue. See also March 31, 1998 Order (Dr. Santos-Buch’s testimony not adequate basis for false light claim.).
2. The Lost Slides
In addition to the four “unmistakable” abnormal mentioned above, which were culled from 100 slides given to Defendants by one of their experts, they also collected 523 pap smear slides from gynecologists who agreed to participate in the program by taking two pap smears from each patient and sending one to the doctor’s regular medical laboratory and the other to Prime Time Live to be tested by the four laboratories profiled on Rush to Read. (Tr. of Rush to Read at 6, attached to PSOF as Exh. 6.) Of these 523, Prime Time Live identified 19 “clear-cut pre-eaneerous abnormal slides” based on the conclusions of the experts relied on by ABC and a computer screening device known as Pap-Net. (Id.) The broadcast claimed that Medical Lab was responsible for missing three of these abnormal slides. (Id. at 7.) At some point prior to the broadcast, fifteen of the nineteen slides, including the three Medical Lab slides, were lost by the Defendants.
Plaintiffs claim that the loss of the slides made it impossible for Medical Lab to examine the three slides they purportedly missed, which precluded challenging ABC’s reading of them. They rely on Defendants’ experts’ testimony that “from a scientific perspective. . .it’s best if you can retain all of the subject matter of any study.” (Mango Dep. at 228, attached to PSOF as Exh. 21.) Plaintiffs further cite ABC staff members’ “concern” that the missing slides were lost, attempting to argue that Defendants’ distress regarding the loss evidenced an awareness that the experiment was fatally flawed or subject to legal liability.
The loss of the slides was regrettable and may have been negligent. ’However, as Defendants note, Plaintiffs were not without means to challenge the validity of the conclusion that the slides were abnormal. Plaintiffs could have reviewed the PapNet data preserved on the computer. If the PapNet data was deemed inadequate, Plaintiffs could have deposed the two experts who read the slides but Plaintiffs chose not to do so. Plaintiffs bear the burden of showing falsity. If the evidence had indicated Defendants’ conduct was in bad faith and that they had denied Plaintiffs all means to challenge the Defendants’ conclusion, the Court might have been persuaded to exercise its discretion to allow a jury to draw an adverse inference from the loss of the slides.
Unigard Sec. Ins. v. Lakewood Engineering & Mfg.,
S. The Broadcast’s Statement that Medical Lab Offered 24,-Hour Service
Plaintiffs claim that the publication thаt “[a]ll four labs offered 24-hour service, including the one in Arizona” was untrue. As evidence, they cite the comments made by Mr. Devaraj during the hidden camera interview indicating that Medical Lab’s normal turnaround time was three or four days, statements which were not included in the broadcast. (Tr. of 3/18/94 Interview at 12, attached to PSOF as Exh. 7.) In addition, Plaintiffs point out that Medical Lab did not actually finish ABC’s slides in 24 hours. However, the broadcast does not assert that Medical Lab always offered a 24 hour turnaround time. Furthermore, a letter that the fictitious Huron Women’s Health Collective sent to Mr. Devaraj regarding Medical Lab’s agreement to read the slides states: “To confirm our agreements: you have promised a 24 hour turn-around on the slides.” (Letter from Charleston to Devaraj of 3/17/94, attached to PSOF as Exh. 2.) Mr. Devaraj admitted that this letter constituted an “agreement” Medical Lab had with the fictitious clinic. (Devaraj Dep. at 105, attached to Defs.[’] Reply in Supp. of Defs[’] Mot. for Summ.J. on Pls.[’] Third Claim.) Given this admission, there is no basis for Plaintiffs’ assertion that the broadcast was false on this issue.
A Statements Attributed to Mr. Devaraj
The broadcast published that, when told of the ABC experiment, Mr. Devaraj commented that “if mistakes were made it was an unusual circumstance, and he vowed not to take on such a large case load again.” (Tr. of Rush to Read at 7, attached to PSOF as Exh. 6.) Plaintiffs claim that the first part of the statement — “if mistakes were made it was an unusual circumstance” — implied that Mr. Devaraj conceded that Medical Lab made mistakes, which Plaintiffs’ deny. Plaintiffs further claim that the second part of the statement was also false, asserting that while Mr. Devaraj had told ABC that “he would never do this again,” (emphasis added)
What I meant by that statement was that I would never again agree to read a large number of slides over a short period of time for an out of state company that called out of the blue saying that they had heard from an unidentified source that we were a quality lab, pleading that they were backed up in reading slides due to bad weather in their city, and that if we could help them out of this pinch this one time then they would be willing to send us large shipments of slides on a monthly basis.
(Devaraj Decl. at ¶ 5, attached to PSOF as Exh. 8.) (emphasis added)
The Defendants did not claim to be quoting Mr. Devaraj directly but were clearly paraphrasing his comments. Mr. Devaraj does not deny that he said the first part of the statement, he argues that the broadcast should have included other statements he made expressing his objection to their conclusions. However, Plaintiffs do not argue that Medical Lab’s error rate was zero, acknowledging that Medical Lab does make some mistakes. Thus, it is impossible to see how the broadcast’s statement that “if mistakes were made, it was an unusual circumstance,” is either false or defamatory. If anything, the statement is favorable to Medical Lab. If mistakes were an unusual occurrence at Medical Lab, its error rate might be consistent with the five percent error rate cited by the broadcast as commendable. 13 Thus, the first part of the challenged statement is neither false nor injurious to Medical Lab’s reputation. 14
Regarding the second part of the statement, Plaintiffs admit that Mr. Devaraj’s statement — that “he would never do this again” is “open [to] interpretation.” (Pls.[’] Opp’n to Defs.f] Mot. for Partial Summ.J. on
5. The Broadcast’s Report on Error Rates in the Industry
In the broadcast, it was stated: “Experts say with human fallibility, everyone makes mistakes, but labs should strive to miss no more than five percent of the slides that are abnormal.” (Tr. of
Rush to Read
at 6, attached to PSOF as Exh. 6.) Plaintiffs claim that the actual error rate in the industry is considerably higher than five percent and that the program’s failure to include this information rendered the statement substantially false. It is apparent from the record that estimates of the national error rate for pap smear laboratories vary considerably and that some of the estimates are higher than five percent. (Santos-Buch Dep. at 16, attached to Defs.[’] Mot. for Partial Summ.J. on Pls.[’] Third Claim for Relief as Exh; B; Interview with Mango and Ruttenberg at 3, 4, 7, attached to PSOF as Exh. 15.). However, Dr. Santos-Buch, whose own lab has a zero to three percent error rate, stated: “I think you should strive for a zero negative rate, but a five percent is — if you go by our numbers was probably a pretty good goal to strive for.” (Santos-Buch Dep. at 16, attached to Defs.[’] Mot. for Partial Summ.J. on Pls.[’] Third Claim for Relief as Exh. B.) Moreover, the broadcast’s statement does not purport to cite the actual error rate within the industry, it is merely aspirational, stating that “labs should
strive to
miss no more than 5%” of abnormal slides. (Tr. of
Rush to Read
at 6, attached to PSOF as Exh. 6.) (emphasis added). The decision of whether to include additional information about the rate of error in the industry was an editorial decision protected by the First Amendment.
See Miami Herald Publ’g Co. v. Tornillo,
Ill Fraud
Plaintiffs claim that Defendants’ investigation in preparation for the broadcast constitutes fraud. 16 The only alleged fraud at issue relates to the March 18, 1994 hidden camera interview at Medical Lab during which Ms. Gordon and Mr. Cooke falsely maintained that they were in the laboratory business. Defendants have moved for summary judgment on this claim and Plaintiffs have moved for partial summary judgment only on the issue of liability.
A Defendants’ Motion for Summary Judgment
In order to prevail on a fraud claim in Arizona, a plaintiff must show:
1) a representation; 2) its falsity; 3) its materiality; 4) the speaker’s knowledge of the representation’s falsity or ignorance of its truth; 5) the speaker’s intent that it be acted upon by the recipient in the manner reasonably contemplated; 6) the hearer’s ignorance of its falsity; 7) the hearer’s reliance on its truth; 8) the right to rely on it; and 9) his consequent and proximate injury.
Echols v. Beauty Built Homes, Inc.,
The fraud damages claimed include the loss of business from several physicians, the inability to generate new business, damages for emotional distress, doctors’ bills from alleged physical and psychological injuries, and abeged uncompensated labor costs relating to the testing of the Huron Women’s Health Collective slides, a project that Plaintiffs claim they would not have undertaken if it were not for their belief that the fictitious clinic would have been a repeat customer. A substantial portion of these damages stem from the broadcast’s alleged negative portrayal of Medical Lab. However, the most damaging portion of the broadcast resulted, not from the hidden camera interview on March 18, 1994, but from Medical Lab’s own performance on the slides submitted by the fictitious Huron Women’s Health Collective. Because that aspect of the alleged fraud is not at issue, any damages flowing from the broadcast’s portrayal of the results of those slides must be disregarded.
See supra
note 15. In addition, any embarrassing or otherwise damaging statements made by Mr. De-varaj that were recorded during the March 18, 1994 interview and published were statements he made himself. A federal district court recently considered whether the Food
Food Lion’s lost sales and profits were the direct result of diminished consumer confidence in the store. While these losses occurred after the Prime Time Live broadcast, the broadcast merely provided a forum for the public to learn of activities which had taken place in Food Lion stores. Stated another way, tortious activities may have enabled access to store areas in which the public was not allowed and the consequent opportunity to film people, equipment and events from a perspective not available to the ordinary shopper, but it was the food handling practices' themselves — not the method by which they were recorded — which caused the loss of consumer confidence. Those practices were not the probable 'consequence of Defendants’ fraud and trespass and it cannot be argued under the evidence in this case that the filming of those practices by the Prime Time Dive producers set any of those activities in motion.
Food Lion, Inc. v. Capital Cities/ABC, Inc.,
Plaintiffs assert that they are entitled to recover damages for emotional distress allegedly suffered as a result of Defendants’ conduct but only pecuniary damages are allowed for fraud under Arizona law.
Echols,
B. Plaintiffs’ Motion for Summary Judgment
Plaintiffs have filed a cross motion for summary judgment on the issue of liability on their fraud claim. Because Defendants only assumed the first eight elements of fraud for purpose of their summary judgment motion, Plaintiffs must establish all eight elements of fraud so convincingly that “there can be but one reasonable conclusion as to the verdict.”
Anderson,
One of the elements of a fraud claim is that the hearer of an allegedly fraudulent representation has “the right to rely” on the statement.
Echols,
picked up some candies. Then she dropped the candies. She picked up the candy that was dropped. Then she removed the candy. Then she was trying to get the wastebasket. Didn’t seem bke it was something that a normal person would do. Seemed bke she had — acted bke she was — something that she was looking for or trying to do some kind of a placement.
(Id.
at 88.) It may be true, as Plaintiffs’ claim, that “[a] man who deals with another in a business transaction has a right to rely upоn representations of fact as truth.”
Byrnes v. Mutual Life Ins. Co. of New York,
IV. Trespass
Plaintiffs’ fourth claim is for trespass.
21
Trespass is “any unauthorized presence on another’s personal property.”
State ex rel. Purcell v. Superior Court In and For Maricopa County,
It is undisputed that Mr. Devaraj invited Ms. Gordon and Mr. Cooke to meet with him at the Medical Lab offices. However, it is also undeniable that Mr. Devaraj would not have given his consent if he had known that Defendants intended to film the interview for broadcast on national television. Thus, the question is whether Defendants’ failure to inform Mr. Devaraj of the real purpose of their presence at Medical Lab vitiates the consent given by Mr. Devaraj.
Defendants urge the Court to adopt the reasoning constructed by the Seventh Circuit in
Desnick.
a restaurant critic could not conceal his identity when he ordered a meal, or a browser pretend to be interested in merchandise that he could not afford to buy. Dinner guests would be trespassers if they were false friends who never would have been invited had the host known their true character, and a consumer who in an effort to bargain down an automobile dealer falsely claimed to be able to buy the same car elsewhere at a lower price would be a trespasser in the dealer’s showroom. The fact is that consent to an entry is often given legal effect even though the entrant has intentions that if known to the owner of the property would cause him for perfectly understandable and generally ethical or at least lawful reasons to revoke his consent.
Desnick.
First, the Seventh Circuit’s analysis does not withstand close scrutiny. The court attempts to distinguish cases reaching different results with factual distinctions — such as whether the invasion occurred in a home— that, while relevant to an intrusion claim, should not affect a trespass analysis based on ownership or possession of land.
Id.
at 1352. Additionally, while the cases upon which the Seventh Circuit relies fit into the court’s theoretical framework, they do not all involve trespass claims.
Dietemann,
Moreover, the Seventh Circuit does not satisfactorily explain how the cited examples in which fraudulently induced consent is deemed ineffectual differ from those in which consent is found to be valid. If a restaurant owner has the right to refuse the presence of reporters filming her property with visible cameras,
Le Mistral, Inc. v. Columbia Broadcasting System,
Finally, the conclusions reached in Desnick are not supported by the law in Arizona or the Ninth Circuit. Id. While Arizona courts do not appear to have squarely considered the issue of fraudulently induced consent in trespass actions, they have considered the issue in battery claims. The Restatement provides for one principle to be applied uniformly to all tort claims where the defense of consent by misrepresentation is raised. Rest. § 892B(2). Section 892B(2) of the Restatement provides:
If the person consenting to the conduct of another is induced to consent by a substantial mistake concerning the nature of the invasion of his interests or the extent of the harm to be expected from it and the mistake is known to the other or is induced by the other’s misrepresentation, the consent is not effective for the unexрected invasion or harm.
The Restatement also discusses mistakes concerning matters which do not affect the level of invasion or harm. It is stated: “The rule stated in Subsection (2) is limited to substantial mistakes, known to the actor, concerning the nature of the invasion or the extent of the harm that is to be expected. If the consent is induced by mistake concerning other matters, the rule does not apply.”
Id.
at illus. g. In a battery case involving in
The defendant’s privilege is limited to the conduct to which the plaintiff consents, or at least to acts of a substantially similar nature____ Permission to dump ‘a few stones’ upon property is not a permission to cover it with boulders. If the defendant goes beyond the consent given, and does a substantially different act, he is hable.’
Cathemer v. Hunter,
In the instant case, Mr. Devaraj, on behalf of Medical Lab, consented to the reporters’ presence in the laboratory because, based on their representations to him, he believed they merely wanted to discuss the profession and possible future collaborations. Mr. Devaraj did not consent to any videotaping of his property, an act which is hardly “substantially similar” to a business meeting with supposed colleagues.
Cathemer,
The Court notes, however, that any damages Plaintiffs might otherwise be entitled to are subject to the same causation analysis as the damages in Plaintiffs’ fraud claim.
Food Lion,
V. Title 18 U.S.C. § 2511
Defendants also move for summary judgment on Plaintiffs’ claim that they violated 18 U.S.C. § 2511, the federal eavesdropping statute, when they secretly recorded the March 18, 1994 meeting at Medical Lab. Section 2511(2)(d) provides:
It shall not be unlawful under this chapter for a person not acting under color of law to intercept a wire, oral, or electronic communication where such person is a party to the communication or where one of the parties to the communication has givenprior consent to such interception unless such communication is intercepted for the purpose of committing any criminal or tortious act in violation of the Constitution or laws of the United States or any State,
(emphasis added). Plaintiffs allege that Defendants recorded the March 18, 1994 meeting for the purpose of committing intrusion, fraud, trespass, and tortious interference with contractual and prospective economic relations. However, they offer nothing to support this claim other than a summary of the same arguments for liabilities for the underlying torts. They offer no support for the assertion that Defendants recorded the meeting for the purpose of committing a tort, which, as the statute indicates, is the proper focus of inquiry in a § 2511 claim. Even if Defendants were found liable for fraud, the question is not whether they are ultimately liable for conduct found to be tortious, but whether, at the time the recording took place, they recorded the conversation with the express intent of committing a tort.
This distinction is significant, for without it the media could be held liable for undercover reporting under § 2511 even when their sole intent was to gather news. Such a result would appear to be contrary to the legislative intent behind a 1986 amendment to § 2511.
See
Scott Golde,
Media Organizations’ Exposure to Liability Under the Federal Wiretapping Act: The Medical Laboratory Management Consultants Case,
76 Wash.U.L.Q. 431, 435 (1998). That amendment, which was passed largely in response to a case in which a media defendant was held hable under § 2511 for secretly recording an interview, was designed to thwart “attempts by parties to chill the exercise of First Amendment rights through the use of civil remedies” under § 2511.
Id.
at 435-36, citing
Boddie v. American Broadcasting Cos.,
Courts considering § 2511 claims against media defendants have agreed, failing to hold media defendants hable undеr § 2511 even when the defendants may ultimately be held hable for other tortious conduct. In
Russell,
Maybe the program as it was eventually broadcast was tortious, for we have said that the defamation count was dismissed prematurely. But there is no suggestion that the defendants sent the testers into the Wisconsin and Illinois offices for the purposes of defaming the plaintiffs by charging tampering with the glare machine.
Id.
Finally, in a decision that was affirmed by the Ninth Circuit, a Montana district court refused to hold Cable News Network (“CNN”) hable for secretly filming an investigative search of plaintiffs’ property conducted by law enforcement agents who had consented to CNN’s presence.
Berger v. Cable News Network, Inc.,
Plaintiffs have offered no convincing evidence or arguments explaining why Defendants would have any reason to record the meeting with Mr. Devaraj other than to gain information and video footage for their broadcast. Thus, they cannot prevail on their § 2511 claim. Accordingly, Defendants’ motion to dismiss Plaintiffs’ § 25U(2)(d) claim will be granted.
VI. Attorney-Client Privileged Documents
On November 4,1998, the Court denied Plaintiffs’ request that the Court compel Defendants to produce attorney-client privileged documents on the basis of the crime-fraud exception to the attorney-client privilege. In the Order, the Court noted that an opinion containing findings of fact and conclusions of law would follow. This is that opinion.
The Supreme Court has observed that “[t]he attorney-client privilege is the oldest of the privileges for confidential communications known to the common law. Its purpose is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.”
Upjohn Co. v. United States,
Where the movant seeks an
in camera
review of documents claimed to be privileged, he must demonstrate “a factual basis adequate to support a good faith belief by a reasonable - person ... that an
in camera
review of the materials may reveal evidence to establish that the crime-fraud exception applies.”
United States v. Zolin,
Plaintiffs urge the Court to follow the reasoning in
Food Lion,
where the crime-fraud privilege was held to apply to communications between ABC staff attorneys and
Prime Time Live
reporters and producers preparing for their undercover report on the grocery store. (Memorandum Opinion and Order, No. 6:92cv00592 (M.D.N.C., October 1,1996), attached to Pls.[’] Mot. for an Order Compelling Att’y-Client Privileged Docs. Withheld by Defs. to be Produced Based on the Crime-Fraud Exception as Exh. 27.) According to the court in
Food Lion,
“the ABC employees, ... at the very least, should have known that the creation of false identities, false credentials and false letters of
VII. Ms. Garcia-Cottrell
Defendant Lorri Garcia-Cottrell, who was the secretary to Ms. Gordon when Ms. Gordon was preparing for the March 18, 1994 interview, moves separately for summary judgment on the ground that she was only peripherally involved in the acts that form the basis for this lawsuit. Because the Court has granted summary judgment for all Defendants on all of Plaintiffs’ claims except for fraud, the issue is whether Ms. Garcia-Cottrell is entitled to summary judgment on that claim.
Arizona has adopted Section § 876 of the Restatement regarding persons acting in concert which states:
For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he (a) does a tortious "act in concert with the other or pursuant to a common design with him; or (b) knows that the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself; or (c) gives substantial assistance to the other in accomplishing a breach of duty to the third person.
See Estate of Hernandez by Hernandez-Wheeler v. Flavio,
Plaintiffs cite Ms. Garcia-Cottrell’s role in preparing slides for the Huron Women’s Health Collective, as well as other activities related to that aspect of the broadcast. However, as Plaintiffs know, the Huron Women’s Health Collective forms no part of the fraud action. The fraud which has survived is the March 18,1994 meeting at Medical Lab. Plaintiffs do not allege that Ms. Garcia-Cottrell ever communicated with Mr. or Ms. Devaraj or any staff members at Medical Lab in preparation for the March 18 meeting. Plaintiffs also do not allege that Ms. Garcia-Cottrell traveled to Phoenix in connection with the March meeting or that she ever attended any meetings in which strategy relating to that meeting was discussed because to do so would contradict Ms. Garcia-Cottrell’s own depositicm testimony. (Garcia-Cottrell Dep. at 149, attached to PSOF as Exh.. 13.) In fact, Ms. Garcia-Cottrell’s sole involvement in preparation for the March 18 interview was either informing Mr. Cooke to contact someone at ABC to schedule the Phoenix trip or speaking with someone at ABC to arrange the trip for him. 24 (Id.) This assistance hardly constitutes a “substantial factor in causing the resulting tort.” Rest. § 876 cmt. d. An illustration from the Restatement is instructive:
A is employed by B to carry messages to B’s workmen. B directs A to tell B’s workmen to tear down a fence that B believes to be on his own land but that in fact, as A knows, is on the land of C. Adelivers the message and the workmen tear down the fence. Since A was a servant used merely as a means of communication, his assistance is so slight that he is not liable to C.
§ 876 cmt. b, illus. 9 (emphasis added). Ms. Garcia-Cottrell’s conduct is no different from the messenger in the Restatement’s example. She merely communicated information relаted to an administrative matter to a colleague of her supervisor. Therefore, she cannot be held liable for the alleged fraud and her motion for summary judgment will be granted.
VIII. Rondi Charleston
Defendant Rondi Charleston also moves for summary judgment on Plaintiffs’ claims. As is the case with Ms. Garcia-Cottrell, the relevant inquiry is whether Ms. Charleston is liable for the alleged fraud involving the March 18, 1994 interview at Medical Lab. Plaintiffs allege no direct participation between Ms. Charleston and the March 18, 1994 interview. As Ms. Charleston’s deposition reveals, her sole involvement was with the fictitious Huron Women’s Health Collective. (Charleston Dep. at 31-33, 40-41, 45-46, 55-63, 77-78, 80, 90-92, 105-6, 109, 199-200, 208-10, 249, 258, 264-266, attached to PSOF as Exh. 1.) Plaintiffs’ only link between Ms. Charleston and the March 18, 1994 interview that forms the basis for the remaining claim is that Ms. Charleston arranged with Ms. Gordon that Ms. Charleston send the slides from the Huron Women’s Health Collective to Medical Lab on March 18, 1994 so that the hidden camera would be able to capture footage of the Medical Lab staff working on the slides. This footage was to be used in the broadcast. The Court has concluded that damages related to the broadcast were not proximately caused by Defendants’ conduct.
Food Lion,
IX. Punitive Damages
Finally, Defendants move for summary judgment on Plaintiffs’ request for punitive damages on each of Plaintiffs’ five claims. Under Arizona law, it is clear that “punitive damages are only recoverable under special circumstances.”
Rawlings v. Apodaca,
Plaintiffs have made no showing that Defendants’ conduct warrants such an “extraordinary” remedy.
Id.
Plaintiffs’ fraud claim is the only one of Plaintiffs’ claims to survive summary judgment. While punitive damages are sometimes appropriate in fraud actions,
Gonzalez v. Gonzalez,
Plaintiffs allege that Defendants engaged in outrageous behavior by videotaping Medical Lab and Mr. Devaraj by a hidden camera. In a case involving similar facts, the Seventh Circuit recently affirmed the dismissal of invasion of privacy claimsbrought by two employees of a medical office who were videotaped “undercover” by reporters posing as patients. The Court holds that conduct found not to be actionable by a federal court in a like context cannot, as a matter of law, be deemed “outrageous” here.
Id.
(citing
Desnick,
IT IS ORDERED that Defendants’ Motion for Partial Summary Judgment on Plaintiffs’ First Claim for Relief (Intrusion) (Doc. 218) is granted.
IT IS FURTHER ORDERED that Defendants’ Motion for Partial Summary Judgment on Plaintiffs’ Second Claim for Relief (Fraud) (Doc. 201) is granted in part and denied in part.
IT IS FURTHER ORDERED that Plaintiffs’ Motion for Partial Summary Judgment on Plaintiffs’ Second Claim for Relief (Fraud) (Doc. 216) is denied.
IT IS FURTHER ORDERED that Defendants’ Motion for Partial Summary Judgment on Plaintiffs’ Third Claim for Relief (Interference with Contractual Relations and Prospective Economic Advantage) (Doc. 218) is granted.
IT IS FURTHER ORDERED that Defendants’ Motion for Partial Summary Judgment on Plaintiffs’ Fourth Claim for Relief (Trespass) (Doe. 218) is granted.
IT IS FURTHER ORDERED that Defendants’ Motion for Partial Summary Judgment on Plaintiffs’ Seventh Claim for Relief (18 U.S.C. § 2511) (Doc. 218) is granted.
IT IS FURTHER ORDERED that Defendant Lorri Garcia-Cottrell’s Motion for Summary Judgment (Doc. 218) is granted.
IT IS FURTHER ORDERED that Defendant Rondi Charleston’s Motion for Summary Judgment (Doc. 218) is granted.
IT IS FURTHER ORDERED that Defendants’ Motion for Partial Summary Judgment on Punitive Damages (Doc. 218) is granted.
IT IS FURTHER ORDERED that Plaintiffs’ Motion for an Order Granting Leave to File a Second Amended Complaint to Add Claims for Defamation & False Light to Conform to Proof (Doc. 259) is denied.
Notes
. A cytotechnologist is a medical laboratory technologist who examines cells under a pathologist’s supervision in order to diagnose cancer or other diseases.
. John and Carolyn Devaraj are Medical Lab's sole shareholders.
. Plaintiffs agreed to the dismissal of the conspiracy, negligent infliction of emotional distress, trade libel, and unfair business practices claims against all the Defendants.
Matter of Medical Laboratory Management Consultants,
. This claim is being brought by John Devaraj alone, not by Medical Lab or Carolyn Devaraj.
. On March 31, 1998, the Court dismissed Plaintiffs’ false light claim and refused to allow Plaintiffs to amend their complaint to include a claim of public disclosure of private facts. (Order, March 31, 1998.)
. No reported Arizona cases address the issue of whether a secret video taping conducted by a member of the media in a workplace setting constitutes an intrusion on seclusion. In the absence of contrary Arizona case law, Arizona courts are bound to follow the Restatement.
MacNeil v. Perkins,
. Although cases are scarce, there are early indications that Arizona courts recognize that the right to privacy should be balanced with other considerations under Arizona law. In the first Arizona case to recognize a right of privacy, the Arizona Supreme Court noted that the right to privacy:
does not exist if there has been a consent to publication, or where the plaintiff has become a public character, and thereby waived his right to privacy, nor in the ordinary dissemination of news and events, nor in connection with the life of a person in whom the public has a rightful interest, nor where the information would be of public benefit.
Reed v. Real Detective Pub. Co.,
. The instant case is distinguishable on these grounds from
Dietemann,
relied on by Plaintiffs.
. Unlike some cases, in which media defendants are charged with ambushing a news target, either with harassing requests for information or with physically aggressive behavior, there was nothing in Mr. Devaraj’s interview with Ms. Gordon and Mr. Cooke that could be deemed "highly offensive” to human sensibilities.
See, e.g., People for the Ethical Treatment of Animals,
. Unlike the cause of action of intrusion, which was allegedly complete before the publication, the claim of interference with contractual relations and prospective economic relations was inextricably intertwined with the publication.
. The Supreme Court held that "[Whether] ... speech addresses a matter of public concern must be determined by [thе expression’s] content, form, and context ... as revealed by the whole record.”
Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc.,
. If Plaintiffs had met their burden of establishing falsity, summary judgment would not be appropriate, because Plaintiffs have offered admissible evidence indicating that Defendants may have told Mr. Devaraj that they wanted to "[sjhut them down.” (Pls.[’j Resp. to Defs.f] First Set of Interrogs., No. 1, attached to PSOF as Exh. 4.) This evidence would be sufficient to raise a genuine issue of material fact on the question of fault even under the specific intent standard of
Antwerp.
. See discussion infra page 1197.
. Plaintiffs implicitly concede this by claiming that the statement "cast plaintiffs in an extremely false light” rather than arguing that the statement is defamatory. (Pl[s]' Opp. to Def[s]’ Motion for Partial Summ.J. on Pl[s]' Third Claim for Relief at 13.)
. The Court has refused to allow Plaintiffs to amend their complaint to allow an additional claim of fraud based on the transaction between Plaintiffs and the fictitious Huron Women's Health Collective to read the test pap smears. (Order, March 31, 1998.) In addition, on October 5, 1998, Plaintiffs filed a Supplemental Opposition to Defendants!'] Motion for Summary Judgment on Plaintiffs’ Third Claim for Relief. In the pleading. Plaintiffs allege additional statements made in the broadcast which they claim were knowingly false. However, Plaintiffs' brief was filed three weeks after the Court's deadline for responses to Defendants’ summary judgment motion, which was filed on June 30, 1998. The Court is not persuaded by Plaintiffs' arguments
. On October 13, 1998, Plaintiffs filed a Motion for an Order Granting Leave to File a Second Amended Complaint to Add Claims for Defamation & False Light to Conform to Proof. This is the third untimely attempt by Plaintiffs to file an amended complaint. The Court has rejected both previous efforts and has warned Plaintiffs that their time for adding new claims in this case, which was filed over three years ago, has long passed. The decision whether to grant leave to amend under Fed.R.Civ.P. 15(a) is within the sound discretion of the trial court.
Foman v. Davis,
. Although the doctrine of proximate cause varies in each state, Arizona has adopted the generally accepted principle requiring proof that the wrongful act be a substantial factor in producing the indirect damage. Carolyn K. Foley & David A. Schultz, Damage Considerations When the Press Is Sued for Gathering the News, 522 Practicing L. Inst., 129, 154(1998).
. In
Food. Lion
and
Frome v. Renner,
the courts assumed the truth of the broadcast because the plaintiffs failed to bring a defamation .or libel claim.
Food Lion,
. Defendants alternatively argue that summary judgment on Plaintiffs’ fraud claim should be granted on constitutional grounds. The First Amendment protects the media in its collеction and dissemination of information regarding matters of public interest.
New York Times v. Sullivan,
The Court declines to rely on this theory for two reasons. First, if a case can be decided on either constitutional or non-constitutional grounds, it should be resolved without reaching the constitutional issue.
Hagans v. Lavine,
415
. Because damages are not at issue in this motion, Plaintiffs only need to establish eight out of the nine elements of fraud.
. This claim is being brought only by Medical Lab because Medical Lab is the sole owner of the property.
. It is unclear whether the outcome in
Desnick
would have been the same if the videotaping had taken place in a semi-private office, as in the instant case, rather than a public eye clinic.
. In contrast, in
Baugh,
. Ms. Garcia-Cottrell apparently does not remember whether she actually spoke with someone at ABC or whether she instructed Mr. Cooke to contact ABC himself. (Id.)
