Professional Documents
Culture Documents
No. 10-16061
ZL TECHNOLOGIES, INC.,
Plaintiff-Appellant,
v.
TABLE OF CONTENTS
I. INTRODUCTION ...........................................................................................1
II. ARGUMENT ...................................................................................................2
A. Gartner Has Failed To Demonstrate That No Reasonable
Juror Could View Its Statements As Defamatory ................................. 2
1. The Reports Imply A Factual Basis ............................................ 3
2. It Is Reasonable To Understand The Reports As
Declaring Or Implying Facts About Products ............................ 4
3. Gartner’s Assurances Of The Reports’ Reliability
Demonstrate That They Are Actionable ...................................10
B. GARTNER IS NOT IMMUNE FROM LIABILITY ........................................12
1. There Is No Immunity For Vague And Ambiguous
Speech .......................................................................................13
2. There Is No Immunity For Speech That Claims
Both Objective And Subjective Bases ......................................15
3. There Is No Immunity For Speech Characterized
As “Opinion”.............................................................................16
4. There Is No Immunity For Speech Based Upon
Facts Gathered From Others, Rather Than Facts
Gathered From Product Testing ................................................17
5. There Is No Immunity For Product Comparisons ....................21
C. ZL Has Adequately Pled Mens Rea (An Issue The
District Court Never Reached) ............................................................22
D. Application Of The Well Settled Pleading Principles
Articulated By The Supreme Court And This Court Has
Not Chilled Protected Speech .............................................................24
1. Gartner Failed To Avail Itself Of Well-Established
Protections .................................................................................26
III. CONCLUSION..............................................................................................29
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TABLE OF AUTHORITIES
Cases
Aviation Charter, Inc. v. Aviation Research Group/US,
416 F.3d 864 (8th Cir. 2005) ................................................................................29
Clorox Co. Puerto Rico v. Proctor & Gamble Comm. Co.,
228 F.3d 24 (1st Cir. 2000). .................................................................................21
Compuware Corp. v. Moody’s Inv. Servs., Inc.,
499 F.3d 520 (6th Cir. 2007) ................................................................................28
Flamm v. American Ass’n of Univ. Women,
201 F.3d 144 (2d Cir. 2000) .......................................................................... 11, 18
Flowers v. Carville,
310 F.3d 1118 (9th Cir. 2002) ...................................................................... passim
Forsher v. Bugliosi,
26 Cal. 3d 792 (1980) ...........................................................................................12
Franklin v. Dynamic Details, Inc.,
116 Cal. App. 4th 375 (2004) ...............................................................................28
Goldwater v. Ginzburg,
414 F.2d 324 (2d Cir. 1969) .................................................................................19
Jefferson County Sch. Dist. No. R-1 v. Moody’s Inv. Servs., Inc.,
175 F.3d 848 (10th Cir. 1999) ....................................................................... 13, 28
Khawar v. Globe Int’l, Inc.,
19 Cal. 4th 254 (1998) ................................................................................... 18, 22
MacLeod v. Tribune Pub. Co.,
52 Cal.2d 536 (1959) ..................................................................................... 12, 13
Manufactured Home Communities, Inc. v. County of San Diego,
544 F.3d 959 (9th Cir. 2008) ....................................................................... 2, 3, 12
Masson v. New Yorker Magazine, Inc.,
501 U.S. 496 (1991) .............................................................................................19
Metabolife Int’l, Inc. v. Wornick,
264 F.3d 832 (9th Cir. 2001) ......................................................................... 19, 23
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I. INTRODUCTION
At this late stage, Appellee Gartner, Inc. now claims, extraordinarily, that no
makes this claim despite having successfully cultivated an image as the leading
resource for factual information that informs, if not controls, important software
product purchasing decisions. Indeed, Gartner has long assured its customers that
“what to buy.” Gartner’s customers pay thousands of dollars for the Reports for
exactly that purpose. They cannot now be deemed irrational for doing so.
inapposite distinctions: facts vs. opinions; products vs. vendors; vague vs. specific;
interviews. As demonstrated below, the law is clear that none of these purported
distinctions grants Gartner immunity for its false and damaging statements.
Instead, the law remains settled that if any reasonable juror could understand the
At bottom, Gartner has proposed that this Court adopt a formula that would
allow any sophisticated defamer to escape liability at the motion to dismiss stage.
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claim that the damaging statements are based on a complex and vague analytical
method, and keep secret the “mountain” of factual data upon which the statements
are purportedly based. Gartner claims this formula should work even if the
understands that message loud and clear. California and federal courts have rightly
rejected this type of loophole, and this Court should follow that settled law.
II. ARGUMENT
Gartner concedes that its burden on its motion to dismiss is to show that no
reasonable juror could conclude that the Magic Quadrant Reports state or imply
any provably false statement of fact. Answering Br. 41; see Manufactured Home
Communities, Inc. v. County of San Diego (“MHC”), 544 F.3d 959, 964 (9th Cir.
2008); Flowers v. Carville, 310 F.3d 1118, 1128 (9th Cir. 2002). Gartner’s brief
fails to carry this burden. Instead, Gartner asks this Court to weigh the evidence
and find its portrayal of the Reports to be the more compelling one. That is not the
law. Instead, if the Magic Quadrant Reports are susceptible to any reasonable
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In claiming that no reasonable juror could conclude that the Reports are
could conclude that [the defendant] implied there are other, unstated facts
supporting her comments” (citation and internal alterations omitted)). That the
upon convincing its clients that its published conclusions reflect a “mountain” of
“reliable” though undisclosed facts. Answering Br. 55; ER 41, 117-18, 122-23.
See also ER 124 (“Our opinions are grounded in a solid base of facts[.]”).
that Gartner is liable because it employs a flawed analysis. Instead, ZL claims that
the product of that analysis (the Magic Quadrant) implies a provably false factual
basis: that ZL’s products perform poorly and lack desired features and
suggesting that it can escape liability by not disclosing the “mountain” of facts
which it assures its readers is reflected in the Magic Quadrant. Answering Br. 54-
55. To the contrary, a statement of opinion becomes actionable when it “gives rise
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to the inference that there are undisclosed facts that justify the forming of the
statements does not absolve [it] from liability.” Riggs v. Clark County School
Dist., 19 F.Supp.2d 1177, 1184 n.7 (D. Nev. 1998). “If anything, it removes the
use “implied assertions of fact as a shield and a sword,” id. at 1183, by advertising
its Reports as objective, reliable and fact-based, but simultaneously claiming that
are vastly inferior to Symantec’s products because “Gartner places vendors, not
their products, into the diagram.” Answering Br. 42. This ignores the plain text of
the Reports, which use the terms “vendors” and “products” interchangeably and
On the cover of the Reports – in text larger and more prominent than
that “Email active archiving products continue to add functionality to meet new
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vendors will often win on price as their products mature and gain the interest of
larger organizations.”). Turning one page to the executive summary titled “WHAT
YOU NEED TO KNOW,” Gartner states in the very first sentence of the 2007 and
enterprise-class products.” ER 42, 57. The 2009 Report is similar, stating that the
Magic Quadrant “is designed to help enterprises identify a set of e-mail archiving
offerings).” ER 74. Indeed, the entire executive summary makes clear that what
the reader “needs to know” is that the Magic Quadrant focuses on products and
specifically the product features, performance measures and functions that are
That the terms “vendor” and “product” are used interchangeably is apparent
from the paragraph printed immediately above the Magic Quadrant diagram itself,
which states:
ER 43, 58, 74-75 (emphasis added). This statement makes clear that what is being
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Perhaps the most compelling evidence that the Reports are understood as
providing product ratings is proffered by Gartner itself. See Answering Br. 43.
Quoting the 2009 Report, Gartner points out that it told its readers that “the Magic
Quadrant does not just rate product quality or capability.” Id. (quoting ER 75).
But the necessary premise to this statement is that the Magic Quadrant does “rate
product quality [and] capability,” among other things. This statement also reveals
Gartner’s recognition that at least some readers of its prior Reports (i.e. the 2007
and 2008 Reports at issue in this case) believed that the Reports solely rate product
qualities and capabilities, and that this perception was prevalent enough that
Gartner had to remind them that the ratings include other factors. This admission
and products. This is particularly true because even in the quoted passage Gartner
75.
as speed, stability and scalability. Answering Br. 48-52. To reach this conclusion,
Gartner suggests that all reasonable readers of the Reports either do not read the
a meaningless detour into matters that are not reflected in the Reports, i.e. not what
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they need to know. Id. Contrary to Gartner’s strained reading, the introductory
section plainly does indicate that the Magic Quadrant reflects objective
• The first paragraph tells readers that the Magic Quadrant is “focused on
enterprise-class products” that can prove their ability to meet the market’s
needs. It then states that the rated products’ have sufficient “scalability and
• In the second paragraph, the introduction tells readers that one attribute that
reasonably conclude that poorly rated products do not have the breadth of
features discussed in the Report. Cf. ER 116, 129-131 (alleging that ZL’s
market – including legal discovery – and that ZL’s features are broader and
superior to Symantec’s).
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• In the third paragraph, Gartner states that “[a]lthough many vendors have
made significant improvement to their products, there are still many areas of
that products that are poorly rated in the Magic Quadrant do not scale as
well as highly rated products. Cf. ER 116-17 (alleging that ZL’s products
and monitoring tools,” which impact speed, i.e. “the time it takes to
accomplish the archiving,” “[t]he time to create those indexes” and “the time
to search them.” Indeed, search speed is a “key concern.” From this the
reader could conclude that poorly rated products are not as fast as highly
rated products. Cf. ER 116-17 (alleging that ZL’s product is 1,000 times
some instances forced to assist in working out the bugs in new programs.
Gartner further explains that “low scores for support were most often tied to
code problems.” From this a reasonable reader would conclude that poorly
rated products have unstable code and are more prone to crashes when
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product has a stable architecture that has succeeded where other products
have crashed).
does Gartner discuss any attribute or rating other than product features and
objective performance. See ER 42. Gartner does not say, as it does now, that the
Magic Quadrant solely reflects vendors’ financial health and stability. Answering
Br. 47.
Accordingly, just as this court looked to the Rain-X bottle to determine how
the audience may have understood Andy Rooney’s comment that the product
“didn’t work,” (Unelko Corp. v. Rooney, 912 F.2d 1049, 1055 (9th Cir. 1990)),
this court should examine the statements in the Magic Quadrant Reports, Gartner’s
what reasonable implications can be drawn from the Magic Quadrant Reports. In
light of that context, it is difficult to come to any other conclusion than that the
Magic Quadrant ranks products based upon the performance and functionality
attributes that software purchasers care about, and in which ZL’s products excel
See id. (evaluating Rooney’s statement in light of “what anyone familiar with the
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business meets technology,” (ER 125) and promises to tell its customers, “how to
buy, what to buy, and how to get the best return” (ER 118). These and similar
irrational to rely upon its Reports to make important product purchasing decisions.
Answering Br. 33, 46-47. Companies that pay thousands of dollars for the Reports
Answering Br. 33. Gartner’s readers clearly do not believe that blind trial-and-
error is a viable way to run a business – if they did, then they would not buy the
Reports. Nor would it make any sense for an enterprise software purchaser to buy
a shoddy product based on the representation that the vendor of that shoddy
product has sufficient financial health to continue producing the shoddy product
ZL has alleged, and discovery will prove, that Gartner’s customers purchase
the Reports precisely because they want to know what product will perform best
for their enterprise. See ER 117-118 (alleging that “large purchases of technology
are often based exclusively on Gartner’s reports” including the VA’s purchase of
$16 million in software). The Department of Veterans’ Affairs (see id.) and other
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Gartner customers cannot now be deemed irrational for having bought into
Gartner’s assurances that it will “show you how to buy, what to buy, and how to
get the best return on your technology investment.” ER 118. Instead, common
sense dictates that Gartner’s readers buy the Reports so that they will only have to
make a purchasing decision once, and expect (wrongly) that if they purchase
highly rated Symantec then they will get a high performing product with industry
leading features.
Gartner also erroneously claims that the general tenor and other contextual
information surrounding the publication of the Magic Quadrant Reports make clear
that they are not actionable. For example, Garter suggests that the use of the word
“Magic” in the Reports’ and diagrams’ title is “fanciful” and therefore somehow
suggests that they do not imply any objective facts. Answering Br. 27-29. But it is
equally if not more reasonable to conclude that the serious tenor of the Reports
Flamm v. American Ass’n of Univ. Women, 201 F.3d 144, 151 (2d Cir. 2000) (use
because the language stood out to the reader). In context, the word “Magic”
underscores for the reader that the Magic Quadrant diagram summarizes a vast
quantity of facts and data and distills them to precisely what the reader wants to
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It is not true, as Gartner suggests, that because the Reports are susceptible to
pleading stage. To the contrary, the complaint must survive if it reasonably can be
Co., 52 Cal. 2d 536, 549 (1959) (Traynor, J.). “The language used may give rise to
public at large, it is reasonable to assume that at least some of the readers will take
it in its defamatory sense.” Id. Thus at the pleadings stage the “court’s inquiry is
not to determine if the communications may have an innocent meaning but rather
meaning.” Forsher v. Bugliosi, 26 Cal. 3d 792, 803 (1980); accord MHC 544 F.3d
at 964 & n. 3.
would allow clever defamers represented by clever counsel to always find some
potential meaning that would absolve the defendant of liability. “Such hair-
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clever writer versed in the law of defamation who deliberately casts a grossly
vague and ambiguous terms. Answering Br. 28, 29-30. But as Gartner’s own
authority explains, even phrases that are vague and indefinite can give rise to
liability, so long as a false factual inference can be drawn from them. Jefferson
County Sch. Dist. No. R-1 v. Moody’s Inv. Servs., Inc., 175 F.3d 848, 856 (10th
Cir. 1999) (emphasizing that “the phrases ‘negative outlook’ and ‘ongoing
financial pressures’ are not necessarily too indefinite to imply a false statement of
fact”). “It would be a reproach to the law to hold that a defendant intent on
destroying the reputation of [the plaintiff] could achieve his purpose without
liability by casting his defamatory language in the form of an insinuation that left
room for an unintended innocent meaning.” MacLeod, 52 Cal. 2d at 551. See also
id. (rejecting a rule that would create a loophole for casting a “defamatory
Gartner also claims that its use of “abstract” terms to characterize its
analytical method somehow renders the false factual implications of its Reports
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method is not provable as true or false. All that ZL must plead is that Gartner’s
statements imply that they have an objective factual basis which is defamatory.
See, e.g., Unelko, 912 F.2d at 1053; MHC, 544 F.3d at 965. It is undisputed in this
case that Gartner claims to base its opinions on facts that it does not disclose.
Gartner’s audience therefore can and does reasonably conclude that its Reports
reflect objective facts about the products rated: that poorly rated products lack the
performance and features that are found in highly rated products. This is more
Australia, 69 F.3d 361, 367 (9th Cir. 1995) (quoting Milkovich v. Lorain Journal
Use of vague terms under circumstances in which the underlying facts are
not disclosed makes a statement more actionable, not less. “By using a vague,
nondescript word [the listener] is left no alternative but to draw his/her own
suggesting misconduct by a volleyball coach was actionable). “For that reason, the
opinion loses its protection and the statement becomes actionable.” Id.
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claim that it can shield itself from liability by mixing objective and subjective
criteria in the Magic Quadrant. According to Gartner, given the mix of criteria a
in the Magic Quadrant not because it has a poor product but rather because it is a
small company. Answering Brief at 47 (arguing that the Magic Quadrant reflects
But that does not mean it would be unreasonable for another reader to understand
that the Magic Quadrant rates ZL poorly because it is a small company and
because it makes a bad product. Indeed, because large companies such as HP and
IBM have not fared much better than ZL in the Magic Quadrant (and in some
instances have fared worse (ER 43, 58, 75)), the most reasonable interpretation is
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that the difference between the low-rated vendors and Symantec is based upon the
obtains Gartner the immunity it seeks. “A speaker can’t immunize a statement that
product. Because Gartner explicitly states that its views are based on a “mountain”
of secret factual evidence, its “opinion” that ZL makes a poor product plainly
suggests that the huge quantity of undisclosed factual evidence supports that
1
The lack of an innocent interpretation defense also disposes of Gartner’s
contention that Carolyn Dicenzo’s comment that ZL’s and Symantec’s products
are “the same” is not actionable. Answering Br. at 60-61. Gartner claims that
although ZL has alleged that the statement was understood to be referring to ZL’s
features, performance, value and quality (ER 131), the statement “also could have
been referring to other things such as user-friendliness or compatibility with
hardware.” Answering Br. 60 (citing ER 150). It makes no difference that the
statement could “also” be interpreted in this manner, because Gartner’s burden is
to show that this is “the only reasonable interpretation of the statements.” MHC,
544 F.3d at 964 n.3 (emphasis in original). Since this issue was specifically and
distinctly raised, with supporting argument, in ZL’s opening brief, it was not
waived. Gartner knows this because it included a separate section in its own brief
responding to ZL’s arguments.
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because it does not engage in direct product testing, but instead gathers the factual
information regarding the products it rates from technology professionals using the
products in the real world. Answering Br. 48-52. Here again, Gartner misstates
that “ZL’s products perform poorly” or “users of ZL’s products say that ZL’s
products perform poorly.” Both statements are factual, false and actionable.
Gartner tells its readers that it bases its ratings on a large quantity of data
from research and investigation, including hundreds of interviews with and surveys
of technology professionals. ER 58. From these sources, Gartner learns “not only
why a client is choosing or has chosen a specific vendor, but why it did not choose
other vendors that were on its shortlist.” Id. Moreover, Gartner “also learn[s]
meaning that Gartner asks its sources about product performance and reflects their
statements in the Reports. Id. (emphasis added). This tells Gartner (and
existing vendor with a new vendor solution.” Id. In these circumstances, Gartner
is liable either if: (1) Gartner’s sources falsely told it that ZL’s products perform
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or (2) Gartner’s sources truthfully stated that ZL’s products are superior to
Symantec’s, but Gartner misled it readers into believing that the opposite is true.
have adopted it and so may be held liable . . . for resulting injury to the reputation
of the defamation victim.” Khawar v. Globe Int’l, Inc., 19 Cal. 4th 254, 268
(1998). Accord Flowers, 310 F.3d at 1128 (discussing “the venerable principle
that a person who repeats a defamatory statement is generally as liable as the one
who first utters it”). Thus, for example, in Flamm, a directory of lawyers was
liable for repeating a source’s statement that the plaintiff was “an ‘ambulance
chaser’ with interest only in ‘slam dunk cases.’” Flamm, 201 F.3d at 147.
Liability was particularly appropriate because “it would not be unreasonable for a
reader to believe that the [defendant] would not have printed such a statement
without some factual basis[.]” Id. at 152. This logic applies with special force
here because Gartner assures its readers that it obtains its facts “from sources
believed to be reliable” (ER 41) and claims that its “opinions are grounded in a
solid base of facts verified by our own experienced analysts and others in the
Second, Gartner is liable if its sources reported that ZL’s products perform
strongly, but Gartner nonetheless published the Reports which falsely state or
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imply the contrary. See, e.g., Goldwater v. Ginzburg, 414 F.2d 324, 337 (2d Cir.
1969) (explaining that a defendant can be held liable for defamation if “‘melding’
statement. See Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 510-18
(1991). Liability also attaches if the defendant portrays the source’s views in a
manner that is misleading, see Price v. Stossel, __ F.3d __, 2010 WL 3307482, *6-
*11 (9th Cir. Aug. 24, 2010), or if the defendant conveys a false impression
regarding the content or reliability of the source’s views. See Metabolife Int’l, Inc.
v. Wornick, 264 F.3d 832, 848 (9th Cir. 2001) (holding that stating “Every expert
we asked said Metabolife 356 is not safe” was actionable because it implied that
Globe Int’l, Inc., 166 Cal. App. 3d 1123, 1132 (1985) (publication of fabricated
another’s statement is an extension of the implied facts doctrine. See Masson, 501
U.S. at 511, 516. Here, when Gartner publishes Reports which it knows disparage
ZL’s products, it is implying that users of ZL’s products have told it that ZL’s
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Symantec’s, but Gartner published its reports knowing that readers would believe
independent verification of its product ratings, Gartner also misstates the facts. As
alleged in ZL’s Complaint, Gartner “emphatically tells its customers about the
larger body of data Gartner claims to have in its possession but does not disclose in
the Magic Quadrant Reports themselves.” ER 123. In the process of its analysis,
Gartner promises that “[n]o stone is left unturned” so that it can provide
tells its customers that “Our opinions are grounded in a solid base of facts verified
by our own experienced analysts and others in the business and academia.” ER
the Reports that the analysts develop their own independent understanding of
product performance and that they verify their understanding with “others in
business and academia.” The Court therefore cannot assume at the pleading stage
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Gartner’s passing suggestion that any statement that one product is better
than another is non-actionable (Answering Br. 48 (citing Pizza Hut, Inc. v. Papa
John’s Int’l, Inc., 227 F.3d 489 (5th Cir. 2000)) also misses the mark. In Pizza
Hut, the Fifth Circuit ruled that the slogan “Better Pizza” was non-actionable
puffery that could not “standing alone” serve as the basis for a Lanham Act claim
brought by a competitor who was mentioned nowhere in the slogan. Id. at 491.
That holding does not apply where, as here, the alleged false statements are not
competing product.” Nutrition & Fitness, Inc. v. Mark Nutritionals, Inc., 202
F.Supp.2d 431, 435 (M.D.N.C. 2002). Nor does Pizza Hut stand for the
proposition that product comparisons are absolutely protected from liability under
the First Amendment. See id. (citing authorities for the proposition that product
comparisons are actionable under the Lanham Act); accord Clorox Co. Puerto Rico
v. Proctor & Gamble Comm. Co., 228 F.3d 24, 37 (1st Cir. 2000).
Moreover, Pizza Hut held that when the “Better Pizza” statement was
considered not in isolation but in the context of the defendant’s entire advertising
campaign, it was actionable under the Lanham Act because it suggested misleading
statements of fact about the quality of Pizza Hut’s sauce and dough. Pizza Hut,
227 F.3d at 500-02. Accordingly, although Pizza Hut is a Lanham Act case that
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does not discuss or apply Milkovich, it serves only to bolster the conclusion that
actionable, this Court should affirm on a basis not relied upon by the district court:
that that ZL has failed to plead that Gartner knew or should have known of the
implications of its speech. Answering Br. 52-53; see also ER 159 n.4. Once again,
Gartner overlooks the law and facts that foreclose its argument.
figure and therefore must plead knowledge or reckless disregard, rather than
negligence. See Milkovich, 497 U.S. at 20-21 (holding that non-public figures’
mens rea standard is set by state law); Khawar, 19 Cal. 4th at 274 (providing for
negligence standard under California law). That ZL advertises its products does
not render it a public figure. Vegod Corp. v. Am. Broadcasting Cos., 25 Cal. 3d
763, 770 (1979). Nor is there any other reason to assume ZL is a public figure,
small company.
2
Pizza Hut’s claim ultimately failed because it failed to produce evidence at trial
that consumers were actually misled. Pizza Hut, 227 F.3d at 502-03. Of course,
that says nothing about how to rule on a motion to dismiss – particularly where ZL
expects discovery to prove that Gartner’s readers did understand the Reports to
state or imply that Symantec’s product outperformed ZL’s product.
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state of mind a public figure must prove in order to recover for defamation, but it
doesn’t require him to prove that state of mind in the complaint.” Flowers, 310
F.3d at 1130. Thus all that is required is that “[m]alice, intent, knowledge, and
evidence in support of his allegations.” Id. at 1131 (citation and internal quotation
marks omitted). Accord Metabolife, 264 F.3d at 848 (“[T]he issue of ‘actual
malice’ (or, to put it another way, intent to convey the defamatory impression)
cannot be properly disposed of by a motion to dismiss in this case, where there has
been no discovery.”).
ZL has alleged that Gartner’s statements were “unprivileged and made with
actual malice, hatred, ill will, improper and malevolent purpose and with
knowledge of falsity or with reckless disregard for the truth.” ER 133. ZL further
alleges that Gartner had a “willful and conscious disregard for ZL’s rights” and
“the intent to injure ZL.” Id. In particular, Gartner “intends [the] placement within
the Magic Quadrant to be understood as a statement of fact” (ER 121), and intends
its readers to understand that ZL’s products do not outperform its competitors’
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129-30. Gartner further intended that its readers understand that “ZL was inferior
with respect to the criteria expressly stated in the Magic Quadrant Report itself,”
i.e. speed, scalability, accuracy and stability. Id. Gartner intended that the Reports
customer satisfaction.” Id. And, in issuing the Reports, Gartner was motivated by
its own economic interest in rewarding companies with which it has a close
127-28. Accordingly, whatever the requisite level of intent, ZL’s pleadings are
more than sufficient to satisfy its burden at this stage. Even if there is some
technical deficiency, ZL clearly could cure it on remand. See, e.g., Sgro v. Danone
Waters of N. Am., Inc., 532 F.3d 940, 945 (9th Cir. 2008) (remanding with leave
to amend).
Throughout its brief Gartner claims that denial of its motion to dismiss
would burden protected First Amendment activity and intolerably chill the speech
of other large publications. But as demonstrated above, the First Amendment does
only plead facts which demonstrate that Gartner has made or implied a false and
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damaging statement of fact. Flowers, 310 F.3d at 1128-29. Even when First
Amendment interests are implicated, the court “ask[s] only whether the pleadings
are sufficient, not whether the plaintiff could find evidence to support them.” Id. at
1130.
In Milkovich, the Supreme Court considered and rejected the same policy
arguments that Gartner advances here: that the First Amendment requires special
survive. 497 U.S. at 19; Answering Br. 23. Balancing the competing interests of
protecting speech rights and vindicating the states’ “pervasive and strong interest
at 19, 22. That doctrine includes the requirement that the implications must be
provably false; the protections for rhetorical hyperbole; and the requirement that
satisfied its burden with respect to each of these requirements. Its defamation
Twenty years after Milkovich, there is no reason to believe that the standard
set forth by the Supreme Court has resulted in a flood of litigation or has unduly
burdened speech. To the contrary, publications from the New York Times down to
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Nor would reversal in this case mean that ZL will ultimately prevail on
Flowers, 310 F.3d at 1131. As detailed here, ZL expects that discovery will show,
among other things, that: (1) readers of Gartner’s Reports understand the Magic
Quadrant as setting forth provably false statements and implications about software
performance; (2) that Gartner knew of and actively encouraged this understanding;
(3) that Gartner knew from the data it gathered that ZL’s software performed far
better than Symantec’s software and had superior features and functionality; and
(4) that Gartner knew of and actively encouraged the false understanding that
Symantec’s software performed far better than ZL’s software and had superior
features and functionality. If discovery reveals there is no factual support for ZL’s
claims, Gartner will surely move aggressively for summary judgment. “The
difficulty of [ZL’s] task ahead, however, is no reason to deny [it] the opportunity
to make the attempt” to prove its claims. Flowers, 310 F.3d at 1131.
at the pleading stage, Gartner ignores the protections that are already available as a
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involving speech rights. See Cal. Code of Civ. Proc. §§ 425.16 et seq. If the
plaintiff loses the SLAPP motion, the defendant is entitled to its attorneys’ fees.
Id. Most other states have adopted SLAPP statutes with analogous protections.
See, e.g., Ariz. Rev. Stat. §§ 12-751 et seq.; Haw. Rev. Stat. § 634F-1 et seq.; Nev.
Rev. Stat. §§ 41.635 et seq.; Or. Rev. Stat. §§ 31.150 et seq.; Wash Rev. Code §§
court has ever held that the anti-SLAPP procedures are required by or implicit in
the federal Constitution. Instead, in the context of defamation suits, the ordinary
constitutional safe harbor provided to speakers that disclose the factual basis for
punished only if the stated facts are themselves false and demeaning.” Yagman, 55
F.3d at 1439. Gartner is correct that its interpretation of the facts are beyond the
scope of state defamation law. See id. But by failing to disclose the facts on
which its opinions are based, Gartner has falsely implied that ZL’s products
perform poorly and lack important features. It is settled that those implications are
actionable. Id.
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which are not disclosed or otherwise accessible to the public, distinguishes this
case from the cases cited in Gartner’s brief. For example, in Franklin v. Dynamic
Details, Inc., 116 Cal. App. 4th 375, 387-88 (2004), the California Court of Appeal
law and contract law and apply that law to fully disclosed facts[.]” (emphasis
added). In Jefferson County School District, 175 F.3d at 850, Moody’s gave a
public entity a negative bond rating because of publicly known financial troubles,
including the “state’s past underfunding of the school finance act as well as legal
uncertainties and fiscal constraints” due to a voter approved tax measure. The
plaintiff admitted that these factual statements were true and could not articulate
any false factual implication that could be gleaned from the statement. Id. at 854-
56. Similarly, in Compuware Corp. v. Moody’s Inv. Servs., Inc., 499 F.3d 520
(6th Cir. 2007), Moody’s downgraded the plaintiff’s bond rating based upon
“downward market shifts” including “the bursting of the ‘internet bubble’” and
other public information. Id. at 523. The Sixth Circuit affirmed summary
judgment, holding that the plaintiff had failed to provide any evidence that the
defendant knew that its rating could be perceived as based upon something other
than the publicly available information upon which it was in fact based. Id. at 529.
And, in Aviation Charter, Inc. v. Aviation Research Group/US, 416 F.3d 864 (8th
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Cir. 2005), the defendant rated the safety of charter airlines based upon “multiple
certification data.” Id. at 870 (emphasis added); see also id. at 871 (holding that
(emphasis added)).
surveys that are not accessible to its readers. Unlike competitor publications,
Gartner does not disclose the point score assigned for each criterion or any other
information about the underlying data it has collected. The only information
available to readers is the Magic Quadrant itself. Because readers have no way to
meaningfully separate Gartner’s analysis from the facts upon which it is based,
they are left to draw reasonable inferences about those facts – including the evident
but false conclusion that ZL’s products are vastly inferior to Symantec’s. This
III. CONCLUSION
For all the foregoing reasons, ZL respectfully requests that the judgment of
the district court be reversed, and that this action be remanded for further
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61527_3.doc
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and Ninth Circuit Rule 32-1, I certify that this Appellant’s Opening Brief is
By /s/ Michael Ng 5
MICHAEL K. NG
Attorneys for Plaintiffs-Appellants
ZL TECHNOLOGIES
Case: 10-16061 10/29/2010 Page: 36 of 36 ID: 7528159 DktEntry: 20
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