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Pope v. Chronicle Publishing Co.

September 10, 1996

RONALD R. POPE AND SERENDIPITY: RUSSIAN CONSULTING & DEVELOPMENT, LTD., PLAINTIFFS-APPELLANTS,

v.

THE CHRONICLE PUBLISHING COMPANY, D/B/A "THE PANTAGRAPH," DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Central District of Illinois. No. 93-1174 Joe Billy McDade, Judge.

Before KANNE, ROVNER, and DIANE P. WOOD, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

ARGUED FEBRUARY 15, 1996

DECIDED SEPTEMBER 10, 1996

With the best of intentions, Ronald Pope embarked on a mission to assist the former Soviet Union in its difficult transition from a planned economy to a market economy. He formed a corporation, Serendipity: Russian Consulting & Development, Ltd. ("Serendipity"), that would, through a combination of philanthropy and old-fashioned Yankee entrepreneurialism, begin these efforts with the construction of the "First American Home in Russia." The house was built (complete, we are interested to see, with two-car garage, three bedrooms, two baths, and a patio with built-in barbecue pit), but it turned out that some of the Russian recipients were not as grateful as they might have been. When the local newspaper in Pope's home of Bloomington-Normal, Illinois, the Pantagraph, published first an article and then an editorial reporting on the Russian criticism, Pope was not pleased. This lawsuit resulted, claiming that the Chronicle Publishing Company (a Nevada corporation with its principal place of business in California), which owned the Pantagraph, defamed him and his company and cast him in a false light on both occasions. Pope appeals from the district court's decision granting summary judgment for the defendants on all counts.

I.

Pope is an associate professor in the Department of Political Science at Illinois State University, where he teaches courses in Soviet/Russian politics and foreign policy. In April 1989, he served as one of the interpreters for a delegation of officials from Vladimir, Russia, who were visiting Bloomington-Normal to inaugurate a Sister City relationship between the two cities. He paid a visit to Vladimir in mid-1990 and returned home inspired to try to make a difference in the great transition that even then was underway. He believed that the Russians needed exposure to a profit-oriented business that would help them improve the efficiency of their economy, but he knew that from the American side the risks of undertaking new investment in Russia were huge.

The solution to this dilemma, in Pope's eyes, was to expose the Russians to the real operations of an American-style business enterprise. He formed Serendipity to be a vehicle to do just that. Pope and some colleagues, with the encouragement of the mayor of Vladimir, I.V. Shamov, decided to construct the First American Home in (post-Communist) Russia. The project was to be a joint venture, for which Vladimir would supply land, pour the foundation, and provide room and board for visiting construction crews, and Serendipity would supply materials and construction expertise. Homebuilders from the Bloomington-Normal area were prepared to supply free labor. During a spring 1991 visit to Vladimir, Pope was interviewed by one Svetlana Bitkina, a reporter for the Vladimirskie Vedomosti, a local newspaper. Bitkina published an article in the Vedomosti on June 21, 1991, that was quite positive about the project and about Pope.

During the time the project was being developed, Pope and others visited Vladimir on several more occasions. In September 1991, he went under the sponsorship of the Vladimir City Executive Committee, which was the sponsor for his Russian joint venture partner. He returned in December 1991 to discuss technical details and to obtain approval of a new site, which the City's chief architect had chosen for the home. According to Pope, whose account we accept on this appeal from an adverse summary judgment, his Russian partner INCOM paid for the American group's food, lodging, and transportation expenses, in exchange for a laptop computer that Pope gave to them, which was valuable enough to cover all of the American group's costs. At the end of the trip, on January 2, 1992, Pope (for Serendipity) and the Vladimir City officials signed an agreement for the project. The City government was to cover all expenses on the Russian side, while Serendipity would furnish materials (except for concrete) and a workforce. At the end, the house was to be jointly used by the City and Serendipity for a period of two years and then turned over to the City's complete control.

Early 1992, however, was a time of steep inflation in Russia, and the project soon developed financial problems on the Russian side. Pope thought it was critically important to follow through with the deal, notwithstanding these problems, and he wanted to do it sooner rather than later, because he feared losing claim to having the "first" American home in Russia. On February 4, 1992, Pope received a telex from Igor Eremeev, the head of the Vladimir Department for International Contacts and Sister City Relations. Eremeev warned that the City might not be able to cover its share of the expenses, and he requested in vague terms additional information on the project. Pope responded on February 5 with his own request for clarification about what information was desired, and he assured Eremeev that Serendipity would find a way to cover any expenses that the Russian side could not afford. Pope suggested that Serendipity would be willing to provide additional financial support, in exchange for fuller use of the house for a longer time period, and he warned that "failure to build this house within the stated deadline will send a very strong message to both American businessmen and tourists that Vladimir is not a good place for joint work or for visits."

Eremeev replied with another telex, dated February 24, 1992, again asking for more information and again failing to specify exactly what he wanted. He also asked Pope to keep a certain "third party" from interfering with the project, which Pope interpreted as a reference to his sole Russian representative. Pope sent another telex on February 25, telling Eremeev that he would be arriving in Vladimir on March 7, 1992, to discuss the project, again reassuring Eremeev that Serendipity would cover the expenses in exchange for greater use of the house, and again warning of adverse consequences if the project fell through. Eremeev fired off one more telex on February 27, this time tipping his hand: he wanted Serendipity to supply detailed information about the more than fifty companies participating in the project, and he wanted detailed cost information about every item the American side intended to use in the project. Pope regarded these requests as out of line. Soon after he received that telex, he received word from a German official who had contacts with Vladimir that Eremeev was a former KGB officer who could not be trusted.

During meetings from March 7 to 15 in Vladimir, Pope reiterated his suggested solution to the Russian financial problems. Mayor Shamov accepted Pope's offer and agreed to allow Serendipity to have exclusive use and possession of the property until January 1, 2003. Shortly after these meetings, the Vedomosti published two articles about the project, both written by Bitkina. In these articles, Bitkina questioned Pope's and Serendipity's motives and raised doubts about the benefits the project would have for the City. The first article, as the paper noted, had been written before the March meetings had taken place. Another article, written by Serendipity's Russian representative Tanya Veksler, appeared in the April 9-10 issue of Molva, another newspaper in Vladimir sponsored by the City Council. Bitkina responded with an article of April 15, 1992, in which she reiterated her criticisms of the project and did not retract her objection to the financing arrangements.

Construction on the house actually began in May 1992, even though the final agreement was not signed until July 3, 1992. In the meantime, however, the Pantagraph had gotten wind of the local criticism in Vladimir. On July 5, 1992, ironically while Pope himself was in Vladimir for the dedication of the house, the Pantagraph published the first article at issue here. The headline read "Vladimir newspaper questions Pope's project." The article began by stating that the project "has been plagued by cross-cultural misunderstanding and poor communication, according to articles in a Vladimir newspaper." It noted that at least one other Vladimir newspaper had given the project positive coverage, and it then summarized Bitkina's articles. Specifically, the article noted that Bitkina had raised questions about the costs and benefits of the house, the motives behind the project, and the manner in which it had been carried out. The articles, the Pantagraph reported, had objected to the characterization of the house as "humanitarian aid," if in fact it was really going to further American business interests. The Pantagraph also reported on the exchange of telexes between Pope and Eremeev. Bitkina's articles had portrayed the project as somewhat shameful to the Russians, who did not like being treated "without care" by the wealthy foreigners. Next, the Pantagraph article presented Pope's perspective from earlier articles and interviews. It did not, nor did it purport to, call him or his wife for comment. Finally, the article reported that Bitkina had questioned the December 1991 trip that she claimed cost the City Council 40,000 rubles, and concluded with her question: "what exactly does the city get out of this project?"

The Pantagraph followed up with an editorial on July 14, 1992, entitled "Let's avoid looking like 'ugly Americans.' " The editorial opined that it was not surprising that Russian newspaper stories about the Serendipity project reflected a cool local reception, since many Americans might react the same way if the shoe were on the other foot. It called Pope's idea a "worthy one," but it said that "the laudable goal was clouded by questions about business motives behind the project and whether Vladimir could afford its share of the project with its economy in disarray." Finally, it criticized Pope for warning the Vladimir officials that delaying the project would send a negative message about Vladimir as a City for business or tourism. ...


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