Professional Documents
Culture Documents
No. 10-16061
ZL TECHNOLOGIES, INC.,
Plaintiff-Appellant,
v.
Page
I. INTRODUCTION...............................................................................................1
i
TABLE OF AUTHORITIES
Page
Cases
al-Kidd v. Ashcroft,
580 F.3d 949 (9th Cir. 2009) ......................................................................... 12, 22
Condit v. National Enquirer, Inc.,
248 F.Supp.2d 945 (E.D. Cal. 2002) ............................................................. 20, 23
Doe v. Untied States,
419 F.3d 1058 (9th Cir. 2005) ....................................................................... 12, 15
Flamm v. Am. Ass’n of Univ. Women,
201 F.3d 144 (2d Cir. 2000) .................................................................... 16, 21, 26
Flentye v. Kathrein,
485 F.Supp.2d 903 (N.D. Ill. 2007)......................................................................24
Flowers v. Carville,
310 F.3d 1118 (9th Cir. 2002) ................................................................. 15, 16, 34
Gardner v. Martino,
563 F.3d 981 (9th Cir. 2009) ......................................................................... 30, 32
Gill v. Hughes,
227 Cal. App. 3d 1299 (1991) ..............................................................................21
Johnson v. Clark,
484 F.Supp.2d 1242 (M.D. Fla. 2007) .................................................................24
Kaelin v. Globe Communications Corp.,
162 F.3d 1036 (9th Cir. 1998) ....................................................................... 22, 23
Kelly v. Schmidberger,
806 F.2d 44 (2d Cir.1986) ....................................................................................15
Knievel v. ESPN,
393 F.3d 1068 (9th Cir. 2005) ................................................................. 17, 25, 30
Manufactured Home Communities, Inc. v. County of San Diego (“MHC”)
544 F.3d 959 (9th Cir. 2008) ........................................... 15, 16, 21, 22, 24, 31, 35
McBride v. Merrell Dow & Pharms Inc.,
717 F.2d 1460 (D.C.Cir.1983) .............................................................................15
Milkovich v. Lorain Journal Co.,
497 U.S. 1 (1990) .............................................................. 2, 13, 16, 18, 28, 29, 30
Mzamane v. Winfrey,
693 F.Supp.2d 442 (E.D. Pa. 2010)......................................................................21
ii
Overstock.com, Inc. v. Gradient Analytics, Inc.,
151 Cal. App. 4th 688 (2007) .................................................................. 24, 28, 29
Partington v. Bugliosi,
56 F.3d 1147 (9th Cir. 1995) ....................................................... 15, 19, 27, 28, 30
Posadas v. City of Reno,
109 Nev. 448 (1993) .............................................................................................15
Pub. Utility Dist. No. 1 v. Idacorp Inc.,
379 F.3d 641 (9th Cir. 2004) ................................................................................13
Rodriguez v. Panayiotou,
314 F.3d 979 (9th Cir. 2002) ............................................................. 10, 14, 16, 31
Standing Committee on Discipline v. Yagman,
55 F.3d 1430 (9th Cir. 1995) ....................................................... 19, 28, 32, 33, 34
Suzuki Motor Corp. v. Consumers Union of U.S., Inc.,
330 F.3d 1110 (9th Cir. 2003) ..............................................................................21
Swengler v. ITT Corp.,
993 F.2d 1063 (4th Cir. 1993) ..............................................................................28
Unelko Corp. v. Rooney,
912 F.2d 1049 (9th Cir. 1990) ..................................................... 13, 17, 19, 20, 22
Statutes
28 U.S.C. § 1291 ........................................................................................................2
28 U.S.C. § 1332 ........................................................................................................2
Other Authorities
1 Robert D. Sack, Sack on Defamation § 4:3.1 (4th ed. 2010) ...............................25
2 Callman on Unfair Competition Trademarks & Monopolies
§ 11:5 (4th ed. 2010) ............................................................................................20
Restatement (Second) of Torts § 566 cmt. c ............................................... 24, 32, 33
iii
I. INTRODUCTION
the Magic Quadrant Report (“the Report”), a product guide that is relied upon by
that the Report is the end result of a sophisticated and reliable analysis that,
readers which is the best software product to buy. However, in spite of its
assurances regarding the reliability of the Report, Gartner has repeatedly and
falsely claimed that products sold by Appellant ZL Technologies, Inc. lag far
given much more favorable reviews to products that are inferior to ZL’s products
by every pertinent measure, but are made by companies with which Gartner has
The district court granted Gartner’s motion to dismiss ZL’s first amended
complaint for defamation and trade libel without leave to amend, holding that
Gartner’s Reports consist mainly of opinions which are not actionable as a matter
of law. But it is well settled that opinions are actionable so long as they imply the
existence of undisclosed objective facts. That is precisely the case here: Gartner’s
performance based upon undisclosed factual data. A product reviewer like Gartner
1
cannot escape liability for publishing false and damaging statements merely by
respectfully requests that this Court reverse the judgment of the district court, and
reaffirm what the Supreme Court articulated some time ago: that there is no
1332, in that this is a civil action between citizens of different states in which the
amount in controversy exceeds $75,000. This court has appellate jurisdiction over
the district court’s final judgment granting Gartner’s motion to dismiss. See 28
U.S.C. § 1291. The district court’s final judgment was entered May 3, 2010.
Appellant’s Excerpts of Record (“ER”) 162. ZL’s timely notice of appeal followed
Quadrant Reports implies a factual assertion that ZL’s products are inferior to its
2. Whether Gartner can, at the pleadings stage, escape liability for its
2
that the Reports are nothing more than unreliable conjecture, which contradicts
Gartner’s more prominent statements that the Reports are reliable, fact-based and
Gartner is the largest and most influential provider of research and analysis
“technology acquisition and deployment.” Id. The large institutions that make up
the market for enterprise-level software products rely heavily on Gartner when
making their purchasing decisions. In Gartner’s words, “to many, we are the IT
will not make major IT decisions without asking, ‘What does Gartner say?’” ER
at issue in this case, 1 look to Gartner because Gartner digests its product analysis
1
Email archiving software allows large enterprises to store, index, search and
extract email data from their computer networks. ER 115. With the rapid growth
of email usage by companies, governments and other organizations, such software
has become a crucial tool for storing, organizing and accessing email data. ER
116. These capabilities are particularly important for enterprises subject to
governmental regulatory regimes and litigation discovery obligations that require
preservation and production of email data. Id.
3
into a form that summarizes the most salient criteria that should enter into the
reader’s buying decision. ER 117-22. The end result of that process is Gartner’s
“Magic Quadrant Report,” an annual review which sets out the company’s
conclusions about the quality of software products in a visual matrix (the “Magic
Quadrant”). ER 118-20. For example, Gartner’s 2007 Magic Quadrant for email
ER 43.
The readers of the Reports use the ratings to tell them which email archiving
readers that its research shows them “how to buy, what to buy, and how to get the
4
best return on your technology investment.” Id. The Reports, and most
example, in the introductory summary to the 2007 Magic Quadrant Report, titled
“What You Need To Know,” Gartner describes the criteria it uses to create the
Magic Quadrant. ER 42. It states that the Report ranks “enterprise-class products”
by focusing on the products’ “scalability,” that is, “their ability to address the need
of a market looking to support hundreds and thousands of users” and to tackle “the
“functionality,” that is, the features offered by a product, with particular focus on
those features needed by large, growing enterprises. Id. The introduction also
including the stability of the code underlying the product, the accuracy and
completeness of the search, and the speed of the product. Id. (explaining the
indexes,” “time to search them,” “time . . . to accomplish the archiving” and “full
5
that the Reports provide exactly what they want to know: which email archiving
product is best.
The Magic Quadrant is oriented along two axes: “Ability to Execute” and
axis primarily reflects the two performance measures that are most important to the
email archiving software consumer: (1) product performance (i.e., accuracy, speed,
committed to customer service to ensure good product support today and in the
future). ER 45, 120-21. The Report states that “Ability to Execute” emphasizes
6
and elsewhere, Gartner proclaims that its research is “fact-based,” and “objective,”
With respect to the Reports in particular, Gartner tells its customers that the
At the same time that it touts the rigorousness of its analysis and the
factual data underlying its ratings and the structure of its analytical method. ER
122-23. And, in direct contradiction to its claims that the Report is fact-based and
that companies can rely upon it, Gartner includes in the Report a boilerplate, fine-
print disclaimer in a tiny, condensed font stating that although “[t]he information
contained herein has been obtained from sources believed to be reliable,” Gartner
“[t]he opinions expressed herein are subject to change without notice.” Id.
particular to the products made by ZL. ER 43, 58, 75. For example, in 2007, the
Report placed Symantec first and ZL ninth out of fifteen ranked vendors in terms
7
which has limited and outdated software features, also ranked first in terms of
software, which offers a superior array of features, ranked thirteenth out of fifteen
score to ZL in each of the Report years at issue in this case. ER 43, 58, 75.
Indeed, in the 2007 and 2008 Reports, Symantec stood alone as a “Leader” in
Symantec the clear choice for any email archiving software consumer.
Symantec’s email archiving product “works” far better than ZL’s product and other
These factors, which Gartner states are reflected in the Reports, are:
8
(1) search speed; (2) scalability; (3) search accuracy; (4) completeness
(UA is 1,000 times faster), scalability (UA scales to one to two orders
the user is looking for and fewer unwanted results), completeness (UA
loses fewer emails) and cost (UA consumes half the server, storage
9
shorter times to resolve problems than its competitors, measurably
customer loss.
Symantec. ER 129.
On May 29, 2009, ZL filed a complaint against Gartner and Gartner’s lead
analyst for email archiving products, Carolyn DiCenzo. ER 1-37. The complaint
alleged causes of action under California law for defamation, trade libel, false or
prospective business advantage, as well as federal law claims under the Lanham
Act. ER 92. Gartner moved to dismiss the complaint, arguing with regard to the
defamation claims that its statements were protected opinion under the First
10
Panayiotou, 314 F.3d 979, 985 (9th Cir. 2002) (explaining that the First
Amendment provides a defense to state law defamation claims). The district court
granted the motion, but also granted leave to amend with regard to ZL’s
In its dismissal order, the district court concluded that ZL’s defamation
claims were barred because the statements at issue in Gartner’s Reports are pure
general tenor of the MQ Report [as] negat[ing] the impression that Gartner is
asserting an objective fact[.]” ER 101. In so holding, the district court relied upon
“opinions.” Id. The district court further relied upon its determination that the
Reports are “subjective on their face.” ER 103. And, the court concluded that
although the Report might indirectly imply that ZL’s products perform poorly, its
statements were nonetheless not actionable because Gartner had not stated that
explicitly and directly. ER 104 (“There is no allegation that Gartner actually said
that ZL is not a good choice; instead, ZL claims that its placement in the MQ
Report would lead a customer to believe that ZL is not a good choice.”); Id. (“ZL
does not allege that Gartner ever stated that ZL’s offerings are significantly inferior
11
After ZL filed its First Amended Complaint, Gartner again moved to
dismiss. ER 114, 138. The district court granted the motion, and this time denied
leave to amend. ER 138-61. The court once again rejected the argument that
Gartner’s opinions were actionable because they relied upon and implied
statements of fact, this time stating that “[m]ost opinions are based at least in part
on facts” and “[t]hat Gartner considered facts in forming opinions does not mean
that the opinions are objectively verifiable.” ER 153. The court also premised its
dismissal on its conclusion that even though the Reports encompass some factual
information, the fact that they mix fact and opinion renders them non-actionable.
upon a large body of specific yet undisclosed facts,” the court concluded that they
This court reviews the district court’s grant of a motion to dismiss de novo,
asking whether the complaint states a claim to relief that is plausible on its face.
al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). In conducting this inquiry,
this court construes the complaint in the light most favorable to the plaintiff, taking
all allegations as true and drawing all reasonable inferences in the plaintiff’s favor.
Doe v. Untied States, 419 F.3d 1058, 1062 (9th Cir. 2005).
12
This court reviews the district court’s denial of leave to amend for an abuse
of discretion. Pub. Utility Dist. No. 1 v. IDACORP Inc., 379 F.3d 641, 646 (9th
Cir. 2004). The district court abuses its discretion unless “it is clear on de novo
factfinder could conclude that the statement [at issue] implies an assertion of
objective fact.” Unelko Corp. v. Rooney, 912 F.2d 1049, 1053 (9th Cir. 1990)
(citation, alterations and internal quotation marks omitted). Here, the district court
concluded that the Reports are not actionable because their “general tenor” and
disclaimers suggest that they consist mainly of opinion. This was error.
labeled ‘opinion.’” Milkovich, 497 U.S. at 18. Instead, it is well settled that a
a false factual basis. Unelko, 912 F.2d at 1053. In this case, Gartner encouraged
its subscribers to rely upon its Reports to make important software purchasing
decisions. A reasonable reader of the Reports, having paid thousands of dollars for
Gartner’s analysis, would understand that the Reports present professional and
which the reader had no interest. Therefore, by stating that Symantec’s products
13
are vastly superior to ZL’s, Gartner either made actionable statements of fact or
basis. On either basis, the First Amended Complaint readily satisfies this Circuit’s
VIII. ARGUMENT
court incorrectly relied upon its own subjective reading of the Reports to determine
its understanding that the Reports set forth non-actionable, pure opinions.
Particularly at the pleading stage, the district court’s inquiry should have been
limited solely to determining whether any reasonable reader of the Reports could
conclude that they set forth a statement of fact, or set forth opinions that imply
reliance upon facts. When viewed in this light, the First Amended Complaint
defamation as to any other claim. See Rodriguez, 314 F.3d at 983. Thus, the court
may dismiss only if the plaintiff can allege no plausible claim for relief. See id.
The court is required to construe the complaint in the light most favorable to the
14
plaintiff, taking all its allegations as true and drawing all reasonable inferences
A court has only limited ability to hold at the pleading stage that a statement
is not defamatory as a matter of law. “It is error for a court to rule that a
166 Cal. App. 3d 1123, 1132 (1985). The issue is not “whether the court regards
construction.” Kelly v. Schmidberger, 806 F.2d 44, 46 (2d Cir. 1986). Thus, “if a
resolution of the ambiguity is a question of fact for the jury.” Flowers v. Carville,
310 F.3d 1118, 1128 (9th Cir. 2002) (quoting Posadas v. City of Reno, 109 Nev.
448 (1993)).
adjudicate the case as a matter of law if “no reasonable person could construe [the
of San Diego (“MHC”), 544 F.3d 959, 964 (9th Cir. 2008); see also Partington v.
Bugliosi, 56 F.3d 1147, 1153 (9th Cir. 1995) (explaining that the applicable test is
“whether a reasonable factfinder could conclude that the statements imply a false
15
assertion of objective fact”). Thus, even if a district court is “correct in its
assertion of opinion,” that is still insufficient to take the matter from the jury if “a
reasonable factfinder could disagree with that assessment.” MHC, 544 F.3d at
964; see also Flamm v. Am. Ass’n of Univ. Women, 201 F.3d 144, 152 n.1 (2d
Cir. 2000) (“We must ask whether the alleged interpretation is reasonable, not
whether it is ‘most likely.’”). As this Court has explained, even when there are
“persuasive reasons” for concluding that particular statements set forth pure
opinion, the court cannot adjudicate the issue as a matter of law unless that is “the
only reasonable interpretation of the statements.” MHC, 544 F.3d at 964 & n.3
(emphasis in original) (citing Milkovich, 497 U.S. at 19); Flowers, 310 F.3d at
1128 (explaining that the proper determination for the court is whether the
ZL’s allegations readily satisfy this test. The Reports tell readers that
Symantec’s products are vastly superior to ZL’s products, when in fact the
opposite is true. ER 116-117, 129, 130-31. The Reports indicate that the ratings
reflect the rated products’ scalability, speed, accuracy, functionality, code quality
and cost, and a reasonable reader of the Reports would understand them to reflect
16
those attributes. ER 42, 57, 74, 120-21, 129, 131; see Unelko, 912 F.2d at 1055
audience member who would be “familiar with the product”); Knievel v. ESPN,
393 F.3d 1068, 1077 (9th Cir. 2005) (interpreting statement on website from the
depends upon its audience believing its assurances that they can rely on the fact-
117-18. Given such assurances, the most obvious interpretation of the Reports is
To underscore the factual nature of the Reports, one need only to review the
that Symantec obliterates its competitors. This carries the inescapable implication
that the magnitude of Symantec’s superiority is premised in the data which the
Reports purportedly reflect. Readers of the Reports would and do conclude from
this that Symantec makes the best email archiving product on the market, and that
no other product comes remotely close to Symantec’s. Those same readers would
understand that, given the yawning gap between Symantec’s products and other
software products, no rational enterprise would buy any product other than
17
Symantec’s. And, those same readers would reach this conclusion based upon
their understanding regarding what makes one product better than others (i.e.,
speed, accuracy, scalability, cost, etc.). At the very least, readers would not be
unreasonable to draw this conclusion. For these reasons, the judgment of the
Even if it were true that the Reports could be interpreted only as containing
“pure” opinions (which is not the case), the Reports are still actionable because
Gartner’s statements also imply the existence of undisclosed facts. The Supreme
Court has held that there is no “wholesale defamation exemption for anything that
might be labeled ‘opinion.’” Milkovich, 497 U.S. at 18. To erect what the Court
has called an “artificial dichotomy between ‘opinion’ and fact” would impair the
“important social values which underlie the law of defamation.” Id. at 19, 22.
These include the “pervasive and strong interest in preventing and redressing
attacks upon reputation.” Id. at 22. Courts must therefore always be mindful “that
actionable. Id. at 18. Thus the statement “In my opinion John Jones is a liar” is an
knowledge of facts which lead to the conclusion that Jones told an untruth.” Id.;
see also Standing Committee on Discipline v. Yagman, 55 F.3d 1430, 1439 (9th
18
Cir. 1995) (holding that a statement of subjective opinion is actionable if it is
conclude that the statement implies an assertion of objective fact.” Unelko, 912
F.2d at 1053 (citation and internal quotation marks omitted). In order to qualify as
a nonactionable “pure” opinion, a statement must not only be framed on its face as
an opinion, but it also must “not imply facts capable of being proved true or false.”
contexts in which the general tenor of the work suggests that the author is
may imply a false assertion of objective fact and therefore fall outside the scope of
from a stated opinion, a court must once again look to the perspective of the
Unelko, 912 F.2d at 1055. In Unelko, this Court interpreted commentator Andy
Rooney’s general statement that a windshield product “didn’t work” to imply that
the product, Rain-X, “was not invisible, that rain did not disperse on contact, that
Rain-X did not repel bugs and other projectiles, that cleaning was not a snap, and
19
that Rain-X did not increase Rooney’s all-around visibility, safety, and driving
comfort.” Id. This Court further explained that the implicit meaning of a general
Id. at 1056 (stating that the phrase “it didn’t work” should be interpreted in light of
As Unelko makes clear, the implied facts doctrine exposes the speaker to
liability even when the speaker’s opinion is stated in vague or general terms. See
also Condit v. National Enquirer, Inc., 248 F.Supp.2d 945, 965 (E.D. Cal. 2002)
(holding that the word “attacks” was actionable even though it was susceptible to
to the effect that a competitor’s goods are poor . . . have been held to imply a state
ed. 2010). Thus, Rooney’s statement that a product for reducing collection of rain
nondisclosed facts about the basis for that opinion, i.e., that Rooney had used the
product and found that it did not improve visibility. Unelko, 912 F.2d at 1055. A
statement that a doctor “is an incompetent surgeon and needs more training” is
20
actionable because it “implies a knowledge of facts which lead to this conclusion
and further is susceptible of being proved true or false.” Gill v. Hughes, 227 Cal.
App. 3d 1299, 1309 (1991). Oprah Winfrey’s statement that she had “lost
actionable because it implied that as the plaintiff’s superior, Ms. Winfrey knew
Winfrey, 693 F.Supp.2d 442, 481-82 (E.D. Pa. 2010). And, a statement that a
facts that the lawyer solicited business unethically. Flamm, 201 F.3d at 147.
interpretation by the reader.2 MHC, 544 F.3d at 964 & n.3 (holding that the case
may be taken from jury only when the innocent interpretation is “the only
2
There is no First Amendment liability exemption for product reviews. For
example, in Suzuki Motor Corp. v. Consumers Union of U.S., Inc., 330 F.3d 1110,
1133 (9th Cir. 2003), this Court found a triable issue in a product disparagement
suit against the publisher of the venerable magazine Consumer Reports, which had
printed a harsh safety assessment of a popular car. The Court concluded that:
[A]lthough the dissent provides a plausible view of the evidence-
that CU acted in good faith as a skeptical consumer watchdog
should-it is not our role, at this stage, to take sides in this way.
As we discuss below, there is also another plausible view of the
summary judgment record-that CU ‘rigged’ a test to achieve a
predetermined result in order to serve its own pecuniary interests.
330 F.3d at 1133. ZL has made similar allegations regarding Gartner’s financial
bias and manipulation of its analysis, ER 126-28, and ZL’s allegations similarly
must be resolved by a fact finder.
21
reasonable interpretation of the statements” (emphasis in original)). At this stage,
view the Reports as falsely implying that Symantec’s products outperform ZL’s by
F.2d at 1053. After the parties are allowed to take discovery, ZL will furnish
evidence that readers of the Reports do in fact interpret them in this fashion. See
al-Kidd, 580 F.3d at 977 (holding that a complaint withstands a motion to dismiss
if the allegations and judicially noticeable material provide “enough fact[s] to raise
a reasonable expectation that discovery will reveal evidence to prove [the] claim”
It makes no difference that the reader of the Gartner Reports could glean a
F.3d at 964 & n.3. Gartner chose to summarize its analysis of Symantec’s and
that are of interest to the reader, including product speed, accuracy, stability,
increases its defamatory character, by making any disclaimers less likely to be read
or taken seriously. See Kaelin v. Globe Communications Corp., 162 F.3d 1036,
22
In Kaelin, the Ninth Circuit held that a newspaper headline which implies a
false statement of fact is actionable even if review of the entire article may dispel
are unlikely to read any further. Id. In such circumstances, in which the general
tenor of the headline conflicts with the general tenor of the article, the court cannot
decide the question as a matter of law because it is a “question of fact for the jury”
whether “the entirety of the publication . . . clears up any false and defamatory
meaning that could be found on the cover.” Id. at 1041; accord Condit, 248
F.Supp.2d at 966.
avoid the clear meaning of the Magic Quadrant to its typical audience. Even if
statements buried deep within the Reports or in fine print try to paint the Reports as
mere opinion, that cannot resolve this case as a matter of law. Kaelin, 162 F.3d at
1040-41. Because the Magic Quadrant places Symantec’s software so far ahead of
ZL’s and other vendors’ software, it is difficult to escape the conclusion that
At the very least, a reasonable reader could understand the magnitude of difference
23
as implying the existence of such false facts, notwithstanding Gartner’s technical
subjective.” MHC, 544 F.3d at 965 (citation and internal quotation marks
omitted). See also Johnson v. Clark, 484 F.Supp.2d 1242, 1249 (M.D. Fla. 2007)
(holding that “mixed statements of opinion and fact” are actionable); Flentye v.
Kathrein, 485 F.Supp.2d 903, 920 (N.D. Ill. 2007) (“Mixed expressions of fact and
(Second) of Torts § 566 cmt. c (explaining that “an expression of a mixed opinion
conclude” that a statement of opinion was founded “in part on an objective factual
basis,” then the question cannot be resolved as a matter of law. MHC, 544 F.3d at
965 (emphasis added). Particularly at the pleading stage, the task of the court “is
not parsing whether a published statement is fact or opinion;” rather the court must
Inc. v. Gradient Analytics, Inc., 151 Cal. App. 4th 688, 701 (2007). Here, the most
natural interpretation of the Reports is that they provide both express and implied
24
assertions of fact. It certainly would not be unreasonable for a fact finder to
examine three “totality of circumstances” factors: (1) the “broad context” of the
statement, including the “general tenor of the entire work, the subject of the
statements, the setting, and the format of the work;” (2) the “specific context,”
including “the extent of figurative or hyperbolic language used and the reasonable
expectations of the audience in that particular situation;” and (3) whether the
statement is “susceptible of being proved true or false.” Knievel, 393 F.3d at 1075
(citation omitted). Each of these factors strongly supports the conclusion that the
1. Broad Context
The first factor focuses on the setting in which the statement arose, here the
overall structure of the Reports themselves and the identity of the speaker. Id. “If
as, an assertion of fact.” 1 Robert D. Sack, Sack on Defamation § 4:3.1 (4th ed.
2010). Thus, for example, even though the statement that a lawyer is an
25
“ambulance chaser” is somewhat hyperbolic in tone, it is nonetheless actionable
when appearing in a guide to lawyers known for literal speech. Flamm, 201 F.3d
at 152. This is true because “a reasonable reader would not expect . . . hyperbole
would not be unreasonable for a reader to believe that the [defendant] would not
have printed such a statement without some factual basis and to conclude that the
This principle applies with added force to Gartner’s Reports, which the
company holds out as based upon rigorous factual analysis. Gartner encourages its
purchasing decisions, and its customers pay for and rely upon the Reports for that
very purpose. ER 117-18. Gartner promises to tell its audience “how to buy, what
to buy, and how to get the best return on your technology investment.” ER 118. It
repeatedly told its readers that Symantec is the only reasonable choice for email
archiving software consumers. Having read this, “it would not be unreasonable for
a reader to believe that [Gartner] would not have printed such a statement without
26
Gartner makes these assertions knowing that a large organization’s purchase
crashes or incapable of growing with the company, then the enterprise will lose
money and the people who chose the software package will lose their jobs. That is
why companies pay thousands of dollars for Gartner’s analysis and expect that it is
sound and reliable. That is also why a reasonable recipient of the Reports is
commentary about the products and companies involved, but instead to present the
cold hard facts about the products under discussion. Cf. Partington, 56 F.3d at
purchased the book not to read a dry description of the facts but to learn of
Bugliosi’s personal perspective about the trials . . .”). A company that “holds itself
out to its subscribers as having specialized knowledge” and which builds its
27
reflecting the truth about [reviewed] companies” can reasonably be viewed as
Overstock.com, 151 Cal. App. 4th at 706 (holding that statements in a financial
consultant’s report were actionable because the author held itself out as providing
Nor can Gartner transform its Reports into pure statements of opinion by the
simple expedient of a fine-print disclaimer. The mere use of the preface “in my
opinion” will not render a statement non-actionable. Milkovich, 497 U.S. at 18-19;
sprinkled with words to the effect that something does or does not ‘appear’ to be
thus and so; or because they are framed as being ‘in our opinion’ or as a matter of
could conclude that the publication declares or implies a provably false assertion of
fact.” Id. at 704. See also Swengler v. ITT Corp., 993 F.2d 1063, 1071 (4th Cir.
1993).
28
sources say’ or even putting in the form of a question, necessarily defuses the
impression that the speaker is communicating an actual fact.” Overstock. com, 151
Cal. App. 4th at 704 (citation omitted). And, courts have further rejected the
by its audience, not according to legal technicalities and disclaimers. Under this
test, the general context of the Reports demonstrates that they are actionable.
2. Specific Context
The second factor looks at the intrinsic qualities of the statement itself. Here
that the company uses a “rigorous mathematical model – we don’t just place
dots”).
indicator that the Report is meant to be taken non-literally or as artistic prose. This
stands in stark contrast to the typical case in which courts have found that a
29
statement constituted opinion as a matter of law. Cf. Partington, 56 F.3d at 1153-
non-literal speech because “trial lawyers[] are not known for their modesty”);
Gardner v. Martino, 563 F.3d 981, 988 (9th Cir. 2009) (explaining that the
statements made on a radio talk show had to be evaluated in light of the fact that
show “contains many of the elements that would reduce the audience’s expectation
arrogant host, and heated controversy”); Knievel, 393 F.3d at 1075 (jocular and
would negate the impression that the writer was serious[],” the statement should
As already explained, the Report’s express and implied statements that ZL’s
products lag far behind Symantec’s and other competitors’ products is readily
search and cost—the attributes that are the focus of the readers of the Reports. ER
116, 130-31. ZL’s products also provide more features and functionality than its
30
competitors, and employ cutting edge search technology. ER 130-131. And, to the
extent that the Reports suggest that ZL serves only a limited market, that too is a
determine which email archiving software will perform best for their business.
Those same readers are plainly not interested in color commentary regarding the
software industry; they want to know which product is best. See Rodriguez, 314
F.3d at 986 (holding that the court must “place itself in the position of the . . .
reader, and determine the sense of meaning of the statement according to its
3
That Gartner’s negative appraisal of ZL’s product is provably false is underscored
by the statement of its analyst, Carolyn DiCenzo, that ZL’s product and Gartner’s
product are “the same.” ER 131. This statement was understood to mean that the
products performed identically in terms of their features and objective
performance. Id. The district court erred in concluding that DiCenzo’s statement
was not independently actionable because it contradicted Gartner’s statements in
the Reports that Symantec’s products perform far better than ZL’s. ER 106, 150-
51 n.2. The statements are actionable precisely because the district court could
conclude that they are contradictory. See MHC, 544 F.3d at 964 (“If the district
court can assess the truth or falsity of the claim, that seems a strong indication that
it was a provably false assertion of fact, and therefore actionable.”). Also,
DiCenzo’s statement that the products are “the same” can be proven true or false
since ZL’s product performance is far superior to Symantec’s product
performance. The DiCenzo statement therefore provides a separate and
independent basis for reversal.
31
from the perspective of its readers, the Reports must be read as making assertions
Below, Gartner argued that even if its statements are false, it is nonetheless
immune from liability because it conceals the facts upon which its conclusions are
based and the specific manner in which it evaluated the concealed facts to arrive at
its false conclusions. In fact, the opposite is true. It is well-settled in this Circuit
defamation liability by being transparent regarding the factual basis for the
opinions. Gardner, 563 F.3d at 987 (“[W]hen a speaker outlines the factual basis
for his conclusion, his statement is not defamatory and receives First Amendment
becomes “an interpretation of the facts equally available to [the speaker] and to the
listener” rather than “an assertion of objective facts.” Id. at 988. If the underlying
facts are true, then the speaker cannot be held liable. “A simple expression of
action of defamation, no matter how unjustified and unreasonable the opinion may
(Second) of Torts § 566, cmt. c). This principle makes eminent sense, as it allows
32
speakers to issue the most stinging of critiques without having to fear liability for
defamation. All the speaker has to do is provide the audience with the facts, and
let the audience decide whether the critique is fair. Id. (“[A]n opinion which is
unfounded reveals its lack of merit when the opinion-holder discloses the factual
basis for the idea; readers are free to accept or reject the author’s opinion based on
their own independent evaluation of the facts.” (internal quotation marks omitted)).
However, a speaker like Gartner that conceals the basis for its analysis is not
entitled to this same protection. The reason for this principle is also clear: were the
rule otherwise, a clever defamer could always escape responsibility for highly
thereby allowing the listener to draw the obvious, defamatory conclusion. Cf.
Restatement (Second) of Torts § 566 cmt. c (“[I]f the recipient draws the
reasonable conclusion that the derogatory opinion . . . must have been based on
the speaker conceals the underlying facts and analysis, he makes the statement
more harmful by inviting the audience to draw the most damaging and false
conclusions.
speaker’s failure to elaborate has allowed the listener to assume the worst about
Jones, such as that “Jones stops at a bar every night after work and has three
33
martinis.” Yagman, 55 F.3d at 1439. The statement is actionable because the
supporting his view[.]” Id. It makes no difference whether the speaker’s definition
of “alcoholic” is three martinis every night or six martinis every other night.
factual basis that is untrue, then the opinion is defamatory. See id. However,
when the speaker discloses his thought process in a manner that dispels the listener
of the defamatory meaning, then the very same opinion becomes non-actionable.
[Jones] . . . only twice, in his backyard around 5:30 seated in a deck chair . . . with
a drink in his hand. I think he must be an alcoholic.” Id.; Flowers, 310 F.3d at
damaging implicit statement of fact as an opinion. Nor is there any loophole for
speakers that conceal the basis for their opinion even while suggesting an
listener in light of the overall context. At the motion to dismiss stage, the question
34
make or imply an assertion of objective fact. MHC, 544 F.3d at 964. In spite of
their technical disclaimers and hidden reasoning, the Gartner Reports do exactly
IX. CONCLUSION
For all the foregoing reasons, Appellant respectfully requests that the
judgment of the district court be reversed, and that this action be remanded for
further proceedings with regard to ZL’s defamation and trade libel claims.
57834_2.doc
35
CERTIFICATION OF COMPLIANCE WITH WORD LIMIT
and Ninth Circuit Rule 32-1, I certify that this Appellant’s Opening Brief is
By /s/ Michael Ng 5
MICHAEL K. NG
Attorneys for Plaintiffs-Appellants
ZL TECHNOLOGIES
STATEMENT OF RELATED CASES
By /s/ Michael Ng 5
MICHAEL K. NG
Attorneys for Plaintiffs-Appellants
ZL TECHNOLOGIES