Plaintiffs also argue that E`ola violated the implied covenant
of good faith and fair dealing because the investigation
conducted by Rogers was not "meaningful and fair." As with
plaintiffs' previous argument, there is no evidence in the record
to substantiate this contention. The implied covenant of good
faith and fair dealing recognizes the fact that "each party [to a
contract] impliedly promises that he will not intentionally or
purposely do anything which will destroy or injure the other
party's right to receive the fruits of the contract." Brown v.
Moore, 973 P.2d 950, 953 (Utah 1998) (internal quotations and
citations omitted). A violation of the covenant of good faith and
fair dealing gives rise to a claim for breach of contract. Id.
at 954 (internal citations and quotations omitted). In examining
cases to determine whether a party has breached the covenant of
good faith and fair dealing, courts may consider the entire
course of dealings between the parties. Id. Courts will not,
however, interpret the covenant to make a better contract for the
parties than they made for themselves, nor will courts construe
the covenant to establish new, independent rights or duties not
agreed upon by the parties. Id.
The E`ola distributorship agreement states that E`ola may
terminate a distributorship "at any time" if the distributor
"breaches this agreement or engages in conduct that may bring
disrepute upon E`ola. . . ." Nowhere in the distributorship
agreement does it state that E`ola is required to conduct a
meaningful and fair investigation before it may terminate a
distributorship. Thus, the court will not construe the agreement
as guaranteeing plaintiffs this right. Even so, the undisputed
facts demonstrate that the investigation conducted by E`ola into
plaintiffs' business conduct was meaningful and fair: Rogers'
investigation spanned six months; Rogers personally interviewed
every complainant and investigated every complaint made against
plaintiffs; E`ola contacted plaintiffs nine times to discuss the
allegations made against them; and, finally, Rogers and other
officers of E`ola held a hearing so that plaintiffs would have
the opportunity to respond to the evidence collected in the
investigation. In the court's view, the actions taken by E`ola in
this case reflect nothing but good faith and fair dealing and,
since plaintiffs have offered no evidence of ill will on the part
of Rogers or E`ola, their argument fails.
In a seemingly last-ditch effort to avoid summary judgment,
plaintiffs argue that the motion should be denied on the breach
of contract count because E`ola participated in "selective
enforcement" of its distributorship agreement. They assert: "Even
assuming [that] some `minor' violations [were committed by
plaintiffs], flagrant policy and procedure abusers still remain
with E`ola as distributors in good standing." The court will not
consider actions E`ola may or may not have taken against other
distributors, which are collateral and irrelevant to this
inquiry. As explained above, the undisputed facts in this case
establish that plaintiffs violated the E`ola distributorship
agreement and that, as a result, E`ola was justified under the
terms of that agreement in terminating their distributorship.
Thus, the court grants defendants' motion for summary judgment on
Count V, the breach of contract claim.
II. Counts I, II, III and IV (Defamation Per Se)
Prior to filing the pending summary judgment motion, E`ola and
Rogers moved to dismiss these counts under Fed.R.Civ.P. 12(b)(2)
for failure to state a claim upon which relief can be granted.
See Darovec Mktg. Group, Inc. v. Bio-Genics, Inc., 42 F. Supp.2d 810
(N.D.Ill. 1999). In arguing their motion, E`ola and Rogers
asserted that plaintiffs' claim must fail because the memorandum
does not fit within the recognized actionable per se categories
and it is subject to an innocent construction. See Id. at 810.
The court disagreed with E`ola and Rogers regarding both of those
arguments and found that the memorandum did fit within the third
category of defamation
per se because it contained words that impute lack of ability
in plaintiffs' trade, profession or business, and because it was
not capable of an innocent construction. See Id at 810-817.
Specifically, the court concluded that, "a natural reading of the
memorandum is that Darovec and Harrington are dishonest and lack
integrity, as demonstrated in part by their purported numerous
policy violations and blatant disregard for their fellow
distributors' welfare." Id. at 817.*fn11
Now before the court is defendants' motion for summary judgment
on these claims on the grounds that: (1) the statements in the
memorandum are true since the plaintiffs were dishonest and
lacked integrity; (2) the statements in the memorandum are
protected by a qualified privilege that was not abused; and (3)
there was no publication of the memorandum since it was sent only
to those who had already complained to E`ola about plaintiffs'
conduct. Because the court finds E`ola's statements about
plaintiffs in the memorandum to be substantially true under
Illinois law, the latter two arguments need not be addressed.
First, plaintiffs have failed to offer any evidence of falsity.
As the Supreme Court stated, it is well-settled law that where
the party opposing summary judgment bears the burden of proof on
a dispositive issue, it must offer specific evidence
demonstrating a factual basis on which it is entitled to relief.
Anderson, 477 U.S. at 256, 106 S.Ct. 2505. The party may not
rely on conclusory allegations or speculation alone to oppose
summary judgment. Anderson v. Stauffer Chemical Co.,
965 F.2d 397, 402 (7th Cir. 1992). Defamation actions, by definition,
require plaintiffs to carry the burden of proving that the
statement made by the defendant was false. Philadelphia
Newspapers, Inc. v. Hepps, 475 U.S. 767, 776, 106 S.Ct. 1558, 89
L.Ed.2d 783 (1986); Haynes v. Alfred A. Knopf, Inc.,
8 F.3d 1222, 1228 (7th Cir. 1993) ("A person does not have a legally
protected right to a reputation based on the concealment of the
truth."). Here, plaintiffs put forth no effort, other than making
blanket and sometimes insufficient denials of the truth of the
complaints against them, to show that they did not commit policy
violations or disregard the welfare of their fellow distributors.
Plaintiffs did produce four letters written by distributors and
sent to E`ola in October 1997, but these letters show only that,
at that time, plaintiffs had not done anything to offend these
As a result, under Illinois law, defendants need only prove
that the memorandum was "substantially true" to prevail in its
motion for summary judgment. See American Int'l Hosp. v. Chicago
Tribune Co., 136 Ill. App.3d 1019, 1022, 91 Ill. Dec. 479,
483 N.E.2d 965 (1st Dist. 1985). That is, to prove that a defamatory
statement is true, the defendant "need only show the truth of the
`gist' or `sting' of the defamatory material." Cianci, 298 Ill.
App.3d at 424, 232 Ill.Dec. 583, 698 N.E.2d 674. As the court
stated in Hollymatic Corp. v. Daniels Food Equip., Inc.,
39 F. Supp.2d 1115 (N.D.Ill. 1999), "while normally that
determination would be made by a jury, a court can hold that the
allegedly defamatory statement is substantially true as a matter
of law if no reasonable jury could find that substantial truth
had not been established." (citing Cianci, 298 Ill.App.3d at
424, 232 Ill.Dec. 583, 698 N.E.2d 674.) After careful examination
the briefs and supporting statements of fact, the court concludes
that no reasonable jury could find that substantial truth has not
been established in the instant case.
The fact that plaintiffs committed numerous violations of E`ola
policy was established above. In addition, the court need not
look deep to find undisputed evidence that plaintiffs blatantly
disregarded the welfare of their fellow distributors. First,
plaintiffs sold E`ola product at prices substantially below the
suggested retail price of those products and then participated in
a newspaper article making that fact known throughout the Chicago
area. This action caused significant harm to other local
distributors, especially to Forman, who was forced to close her
mall cart as a result of the assertion in the article that the
products could be purchased at plaintiffs' price from Randhurst
Mall. Also, the facts indicate that plaintiffs lied to at least
one fellow distributor, used profanity when dealing with another,
threatened to sue another, insulted another by calling her a
"disgrace to E`ola," and took another's customers. Plaintiffs
also failed to reimburse many members of their downline
organization and neglected to train or keep in regular contact
with others. As a result of plaintiffs' conduct toward members of
their downline organization, three distributors requested that
they be switched to another sponsor within a six-month period,
and a total of seventeen distributors registered complaints
against plaintiffs with E`ola. Thus, there is no genuine issue of
material fact as to whether defendants' assertion in the
memorandum that plaintiffs blatantly disregarded the welfare of
their fellow distributors is substantially true.
Having found that no reasonable jury could conclude that
defendants have not established the substantial truth of the
statements in the memorandum, the court grants defendants'
summary judgment motion on Counts I-IV, the defamation per se
Defendants' summary judgment motion is granted on all counts
and this matter is disposed of in its entirety. Because the court
has granted defendants' motion for summary judgment of Counts III
and IV, Tuck's motion to dismiss those claims is moot. Likewise,
because no adverse weight was placed herein on any of the
exhibits or testimony that was the subject of defendants' motion
to strike, that motion is moot as well.