Schwartz v. American College of Emergency Physicians
215 F.3d 1140 · Court of Appeals for the Tenth Circuit · 2000
Facts
Dr. George Schwartz, a physician and author, was sued by Coastal Healthcare Group for defamation after publishing an editorial critical of hospital management companies and taking a "short" position in Coastal's stock. Subsequently, an article published by Brian McCormick quoted Dr. John McCabe stating that Dr. Schwartz was "being sued for stock fraud." Dr. Schwartz then filed a defamation suit against McCormick, the American Medical Association, and the American College of Emergency Physicians, alleging the "stock fraud" statement was materially false.
Issue
The central issue is whether the statement that Dr. Schwartz was "being sued for stock fraud" was legally false, or if it was substantially true given that he was being sued for making deceptive statements to influence stock prices while holding a "short" position.
Holding
The Tenth Circuit Court of Appeals affirmed the district court's grant of summary judgment for the defendants, concluding that Dr. Schwartz failed to establish the legal falsity of the published statement. The court found that although "stock fraud" might be technically inaccurate, the "gist" or "sting" of the statement was substantially true.
Rule
Under New Mexico defamation law, a plaintiff must prove the falsity of the statement, but minor inaccuracies do not amount to falsity if the "substance, the gist, the sting" of the defamatory charge can be justified. Substantial truthfulness is a defense, and a statement is only considered false if it produces a "different effect on the mind of the reader from that which the pleaded truth would have produced."
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