plead with the particularity of Rule 9(b) of the Federal Rules of Civil Procedure. See Ramson v. Layne, 668 F. Supp. 1162, 1170 (N.D. Ill. 1987). To the extent that plaintiffs claim any of the Defendants violated section 505/2, Rule 9(b) is satisfied only with respect to Defendants Appraisal Institute and Price, based on the misrepresentations said to satisfy the Lanham Act.
Plaintiffs seek to include the remaining Defendants within the scope of this count by alleging, without specificity, that the Defendants' "foregoing schemes" and "foregoing conduct", presumably meaning the previously alleged violations of the Sherman and Clayton Acts, constituted violations of section 505/2. Without addressing the question of whether these allegations afford sufficient notice, the Court concludes that Plaintiffs have failed to state a claim with respect to any of the remaining Defendants. According to the Supreme Court of Illinois, the act is "limited to conduct that defrauds or deceives consumers or others." Laughlin v. Evanston Hosp., 550 N.E.2d at 993; see also Sullivan's Wholesale Drug Co. v. Faryl's Pharmacy, Inc., 214 Ill. App. 3d 1073, 573 N.E.2d 1370, 1376, 158 Ill. Dec. 185 (Ill. App. Ct.) (citing Laughlin), appeal denied, 580 N.E.2d 136, 141 Ill. 2d 561, 162 Ill. Dec. 510 (Ill. 1991). Since Plaintiffs have failed to a theory of vicarious liability, they state a claim only against the Appraisal Institute and Price.
Accordingly, with respect to Defendants Appraisal Institute and Price, on Count VIII, Defendants' Motion to Dismiss is denied. With respect to the remaining Defendants, the Motion is granted.
3. Defamation and Commercial Disparagement
In Count IX, Plaintiffs Blau, Solano, Buckley, and Buckley Appraisal Services, claim that the Defendants defamed them. To state a claim for defamation, a plaintiff must show that a defendant or defendants made a false statement concerning him, that there was an improper publication to a third party with the defendant or defendants at fault, and that the statement's publication caused damage to the plaintiff. Krasinski v. United Parcel Serv., 124 Ill. 2d 483, 530 N.E.2d 468, 471, 125 Ill. Dec. 310 (Ill. 1988). Here at issue is whether the Plaintiffs have properly stated that they were damaged by the Defendants' alleged statements.
Defamatory statements may be considered defamatory per se or per quod. Statements are defamatory per se when "the words used are so obviously and materially harmful to the plaintiff that injury to his reputation may be presumed." Kolegas v. Heftel Broadcasting Corp., 154 Ill. 2d 1, 607 N.E.2d 201, 206, 180 Ill. Dec. 307 (Ill. 1992). Statements are defamatory per quod if when their defamatory character is not apparent on their face, and extrinsic facts are required to explain their defamatory meaning. Id. If a plaintiff properly pleads per se defamation, he need not make any specific allegations with respect to his damages; damages are presumed. However, if a plaintiff must demonstrate per quod defamation to prevail, he must specifically plead his special damages in his complaint. Fed. R. Civ. P. 9(g).
Here, Plaintiffs make no specific allegations with respect to their damages; they only allege that Defendants' statements injured their business reputations. These allegations are insufficient to state special damages. See Brown & Williamson Tobacco Corp. v. Jacobson, 713 F.2d 262, 270 (7th Cir. 1983). Plaintiffs must therefore must show per se defamation to proceed with their defamation claim.
Initially, the Court notes that Plaintiffs make the general allegation that the Appraisal Institute publishes and disseminates materials which assert that MAIs hold a "professional membership designation", while SRPAs do not. These allegations lack the specificity required to state a claim. See Derson Group, Ltd. v. Right Management Consultants, 683 F. Supp. 1224, 1229 (N.D. Ill. 1988).
Plaintiffs do point to one specific advertisement said to falsely impute their lack of professionalism. Plaintiffs claim that the Defendants falsely claimed in the challenged advertisement that MAIs and SRAs are the "only two professional designations for appraisers." That statement, coupled with the statement "Many call themselves appraisers but not all appraisers are professional," contained in the same advertisement, is argued to be defamatory. Plaintiffs contend that the statements that "Now there are only two professional designations for appraisers" and that "many call themselves appraisers but not all appraisers are professional," are per se defamatory because they impute lack of professionalism to SRPAs. A statement that imputes an "inability to perform or want of integrity in the discharge of duties of office or employment" is one of four categories of statements that are considered defamatory per se in Illinois. Id.
In the opinion of the Court, Defendants statements may be understood to impute a lack of professionalism to SRPAs, assuming, as Plaintiffs claim, SRPAs are professional appraisers. The alleged statement clearly limits professional appraisers to MAIs and SRAs. To a knowledgeable reader, this statement has the same effect as the statement: "SRPAs are not professional appraisers."
Defendants contend that the statements are subject to the "innocent construction" rule. The rule is stated as follows:
[A] written or oral statement is to be considered in context, with the words and the implications therefrom given their natural and obvious meaning; if, as so construed, the statement may reasonably be innocently interpreted or reasonably be interpreted as referring to someone other than the plaintiff it cannot be actionable per se.
Chapski v. Copley Press, 92 Ill. 2d 344, 442 N.E.2d 195, 199, 65 Ill. Dec. 884 (Ill. 1982). Taken in the context of the facts as set out in the Second Amended Complaint, the alleged statements cannot be given a reasonably innocent meaning. Assuming SRPAs were professional appraisers at the time the statement was published, the statements stating that only other kinds of appraisers were "professional" cannot be innocently construed. That argument is thus rejected.
Defendants also argue that the statements were not defamatory because they did not specifically refer to any of the Plaintiffs or to SRPAs in general and therefore were not "obviously and naturally hurtful" so as to be considered defamatory per se. Defendants do not provide the Court with authority that supports this position, however. The Court will therefore let this claim proceed against the Appraisal Institute.
No other Defendant is specifically alleged to have made the advertisement here found to be defamatory per se.
In addition to making its defamation allegations, Count IX is also predicated on the common law action of commercial disparagement. Although there is some dispute as to whether this type of action remains viable in Illinois, the Court, for the moment, accepts the reasoning of Judge Duff in Richard Wolf Medical Instruments Corp. v. Dory, 723 F. Supp. 37, 42 (N.D. Ill. 1989). In Dory, Judge Duff held that commercial disparagement was still actionable in Illinois.
To state an action for commercial disparagement, the plaintiff must show that the Defendant made false and demeaning statements regarding the quality of another's goods and services. Zahran v. National Guardian Life Ins., 1993 U.S. Dist. LEXIS 4730, No. 90- C-907, 1993 WL 116738 at *3 (N.D. Ill. April 14, 1993) (Grady, J.). In the opinion of the Court, Plaintiffs have stated a claim under this standard. The statement regarded as defamatory might also be reasonably construed to demean the quality of Plaintiffs appraisal services.
Accordingly, Defendants Motion to Dismiss Count IX is denied with respect to the Appraisal Institute. The Motion is granted with respect to the remaining Defendants.
4. Usurpation of a Commercial Property Right
In Count X, Plaintiffs Blau, Solano, and Buckley claim that the Defendants unlawfully interfered with their right to pursue their business. This is an attempt to plead the common law tort of tortious interference. See City of Rock Falls v. Chicago Title & Trust Co., 13 Ill. App. 3d 359, 300 N.E.2d 331, 333 (Ill. App. Ct. 1973). The elements of this tort are as follows: (1) the existence of a valid business expectancy; (2) knowledge of that expectancy by the interferer; (3) interference causing a termination of that expectancy; and (4) damages. Id.
Plaintiffs have alleged an expectancy in their SRPA designations. The Plaintiffs allegations with respect to purported anticompetitive activity are sufficient to permit this claim to proceed with respect to each of the Defendants, at least to a motion for summary judgment, if appropriate.
Accordingly, Defendants' Motion to Dismiss Count X is denied.
5. Breach of Fiduciary Duty
In Count XI, Plaintiffs Blau, Solano, and Buckley claim that Defendants Marshall, Fountain, Brown, Reese and LeGrand breach fiduciary duties owed by virtue of their positions as officers of the Society.
The Second Amended Complaint alleges that Defendants Marshall and Brown are current officers of the Society. It does not allege that Marshall and Brown were officers of the Society at the time of "unification." Any breach of fiduciary duty by either Marshall or Brown, based on either's status as an officer of the Society, must be predicated on post-unification conduct. The Second Amended Complaint fails to allege any such conduct by the Society. While these Defendants might have been involved in a conspiracy post unification, there is no indication, or permissible inference, that Marshall or Brown breached a fiduciary duty. Neither had any power relevant to the Second Amended Complaint. According to Plaintiffs' allegations, the Society lacked the power to affect the SRPA designation post-unification. Accordingly, with respect to Defendants Marshall and Brown, the motion to dismiss, on Count XI, is granted.
With respect to Defendants Fountain, Reese, and Le Grand, Plaintiffs' claims may proceed.
Accordingly, Defendants' Motion to dismiss is granted in part and denied in part, as indicated.
For the foregoing reasons, Defendants' Motion to Dismiss is denied in part and granted in part. Plaintiffs are granted leave to file a final amended complaint within thirty days of the date of this Memorandum Opinion and Order.
JOHN A. NORDBERG
United States District Judge
DATED: February 4, 1994