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NBCU Beats Scottie Pippen's Defamation Claim on Appeal

The former NBA superstar argued that media outlets were reckless in reporting that he was bankrupt after he informed them otherwise.

Scottie Pippen - P 2013
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Scottie Pippen

Scottie Pippen has shot an air ball in his lawsuit over false media reports of his bankruptcy.

On Wednesday, the 7th Circuit Court of Appeals affirmed the dismissal of his complaint against NBCUniversal and other media outlets. His lawsuit failed because as a public figure, Pippen couldn't make the case that the media acted with "actual malice" when reporting about his financial state.

The outcome isn't surprising. After all, celebrities like the former Chicago Bulls superstar have had a heightened standard for proving defamation ever since New York Times Co. v. Sullivan, a Supreme Court case decided nearly 60 years ago.

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What might be more noteworthy from Wednesday's ruling is appeals judge Frank Easterbrook's discussion of whether online media outlets have a duty to correct false statements.

In this case, Pippen alleged that erroneous reports of his bankruptcy impaired his ability to earn a living through product endorsements and personal appearances.

Judge Easterbrook looks at the allegations, the different types of action for defamation, and finds a flaw in the basketball Hall of Famer's logic in how the media reports caused third parties to cease doing business with him.

"It appears to be an example of the post hoc ergo propter hoc fallacy," writes the judge. "Since Pippen's opportunities diminished after the statements were made, he believes they must have diminished because the statements were made. This theory of causation is weak for professional athletes, whose earnings related to past stardom drop as time passes since their playing days."

Nevertheless, as a matter of pleading, the judge says Pippen did enough to continue.

Where Pippen shot and missed was in the particular burdens that go with being a public figure. Thanks to the above-mentioned Supreme Court case, Pippen has to demonstrate that the defendants acted with actual malice, that they either knew the statements to be false or were recklessly indifferent to the truth.

In this case, the media outlets appear to have not even asked Pippen whether he had declared bankruptcy, but such failure to investigate is insufficient to establish reckless disregard, notes Judge Easterbrook.

The situation becomes more nuanced upon word that after the reports appeared, Pippen alerted the defendants by e-mail that he had not entered bankruptcy. It doesn't make a difference for traditional media under an Illinois statute known as the Uniform Single Publication Act, which provides that a claim for relief for defamation is complete at the time of first publication and that later circulation of the original story doesn't trigger fresh claims.

But how about online publishers, whom, Judge Easterbrook notes, "do not face the same logistical hurdles or costs in correcting a false statement as their old-media counterparts"?

Pippen's attorneys argued that an online story that isn't altered to be truthful constitutes an actionable republication.

Illinois courts haven't considered how the single-publication rule applies to Internet publication, Judge Easterbrook says,  "so our job is to predict how the state's highest court would answer the question if asked."

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There are a host of cases around the country where such a question has come up -- for example, here's one involving a rap superstar -- and from reading them, Judge Easterbrook concludes "the theme of these decisions is that excluding the Internet from the single-publication rule would eviscerate the statute of limitations and expose online publishers to potentially limitless liability."

Applying that analysis to defamation claims, the judge writes, "A publisher's degree of control over its content does not matter to Illinois's test for whether redistribution of a defamatory statement amounts to a republication. Instead, courts must  ask whether the 'act of the defendant [was] a conscious independent one.'"

Doing nothing to correct appears to have not hurt NBCU.

E-mail: Eriq.Gardner@THR.com
Twitter: @eriqgardner