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Rice v. Alley
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	2002 ME 43
Docket:	Han-01-234
on briefs:	January 17, 2002
Decided:	March 22, 2002	




	[¶1]  Defendant Lynda Alley (f/k/a Lynda Spreng) appeals from a
judgment of the District Court (Ellsworth, Mills, J.) awarding Ruth Rice
$20,000 in compensatory damages in her action for defamation.  Alley
challenges the judgment on numerous grounds.  We agree with Alley's
contention that her statements were conditionally privileged, and that Rice
presented insufficient evidence to show that the privilege was abused. 
Accordingly, we vacate the District Court's judgment.
	[¶2]  In the early 1990s, Rice's husband, William Rice, became a member
of the Ellsworth Lodge Number 2743 of the Benevolent and Protective Order of
Elks, a nonprofit fraternal organization, and Rice joined the Ladies Auxiliary,
which operated under the sponsorship of the Lodge.
	[¶3]  The Lodge conducted bingo games to raise money.  Upon entering
the lodge to play bingo, a player would purchase bingo cards for the evening. 
The player could purchase cards for the "regular" bingo game, the "bonanza"
game, and the "early bird" game.  The player would receive a receipt that
showed the number of cards purchased for the various games.  The receipt was
a two-part, carbonless-copy receipt.  One copy was given to the player and the
other copy was kept on file by the Lodge.
	[¶4]  The bonanza bingo game was unique.  A player would review and
compare the bonanza cards he or she purchased to pre-posted letters and
numbers on the bingo board.   If not satisfied with the bonanza cards initially
purchased, the player could purchase additional bonanza cards.  A receipt
evidencing the additional purchase was not usually made out.
	[¶5]  On bingo nights, the Lodge offered a 50-50 raffle with door prizes to
players.  One of the prizes was a free night of bingo.  This prize entitled the
winner to receive without cost, for use at the Lodge's next bingo night, the
same number and type of games purchased on the night of the raffle, as
indicated on the entry receipt.  The receipt would be annotated with the term
"free cards" and signed by a Bingo Committee member.  Only Bingo Committee
members could validate raffle winners' receipts.
	[¶6]  Rice regularly attended bingo games held at the lodge.  She also
assisted in the operation of the games as an Auxiliary member of the Bingo
Committee until 1993, when the Lodge adopted a rule that prohibited members
of the Auxiliary from working at the bingo games if they were also going to
participate as a player. 
	[¶7]  On March 31, 1994, Rice attended bingo night.  She purchased
thirty-one playing cards; fifteen regular, ten early bird, and six bonanza.  She
obtained a receipt from a member of the Bingo Committee that evidenced this
purchase.  Rice, dissatisfied with the bonanza cards she originally bought,
purchased four additional bonanza cards.  She modified her receipt to reflect
the additional purchase without notifying any member of the Bingo
Committee.  Rice won the 50-50 raffle that evening, entitling her to free cards
for the next scheduled bingo night.
	[¶8]  On April 20, 1994, Rice again attended the Lodge's bingo game.  She
initially purchased fifteen regular cards, ten early bird cards, and four bonanza
cards.  She purchased ten additional bonanza cards and revised her entry
receipt to reflect the additional purchase.  Rice won the 50-50 raffle again,
entitling her to free cards at the next bingo night. 
	[¶9]  On April 21, 1994, Rice presented her receipt from the night before
for the purpose of getting the free cards.  Robert Sargent, the Chairman of the
Bingo Committee, looked at Rice's receipt, compared the Lodge's file copy of the
receipt to Rice's copy, and asked her about the alteration.  Rice explained that
she had altered the receipt to reflect the additional bonanza cards she had
purchased.  Sargent told Rice that she was not authorized to alter receipts and
provided her with only the number of cards originally purchased as evidenced
by the Lodge's copy on file.  
	[¶10]  Sargent then reviewed all the receipts for the last three months to
see if any other alterations had been made.  The only other instance of
alteration he found by anyone was the alteration made by Rice on her
March 31 receipt.  Sargent informed the members of the Bingo Committee of
the incident.  On July 31, 1994, at the request of the Committee, Sargent
consulted with the Maine State Police Gaming Commission about what
recourse the Lodge might take.
	[¶11]  During the first week of May of 1994, Sargent informed Alley and
various members of the Auxiliary that Rice had altered her receipt on two
occasions.  The Auxiliary members agreed to present the issue at their next
meeting scheduled for May 9, 1994.
	[¶12]  Rice was the President Elect of the Auxiliary and slated to become
the President.  She did not attend the May 9 meeting, however, because she
was ill.  Sargent did attend the meeting.  He explained Rice's receipt
alterations to the group and answered questions by the members.  He then left
the meeting because of the Auxiliary's confidentiality and members only
	[¶13]  The Auxiliary voted to request that Rice resign as President due to
"inappropriate actions befitting an officer of the Ladies Auxiliary."  Everyone
present signed a letter explaining their decision.  The letter was mailed to Rice.
	[¶14]  In response to the letter, Rice retained an attorney.  Her attorney
sent a letter, dated May 24, 1994, to the Auxiliary, threatening litigation if a
"full description" of all the allegations was not received by June 1, 1994.  
	[¶15]  The Auxiliary informed the leadership of the Elks Lodge about the
letter. On the advice of the Lodge leadership, the Secretary of the Auxiliary sent
Rice's attorney a letter requesting an extension of the June 1 deadline to June
16.  The letter also stated that "Rice may appear [at the next scheduled
meeting] to hear the allegations of inappropriate behavior and reply.  Perhaps
this matter could be handled within [the Auxiliary's] own organization."
	[¶16]  The Auxiliary scheduled a special meeting to discuss the issue for
June 7, 1994.  Rice went to the meeting with her attorney.  The members of the
Auxiliary requested that her attorney leave the meeting due to the
confidentiality and members-only requirements governing all Auxiliary
meetings.  Rice refused to stay without the presence of her attorney and, along
with her attorney, left the meeting.
	[¶17]  After Rice left the meeting, Rice's altered receipts were again
discussed.  Alley stated that Rice's actions in altering the receipts were
intentional, dishonest, and illegal.  The Auxiliary voted to remove Rice as
President and notified her by a letter signed by the Secretary and mailed to
	[¶18]  Within a matter of days, on June 13, 1994, Rice brought a
Complaint alleging that she was defamed by numerous defendants, including
Sargent and Alley, Sharon Piper, Vicki Lewis, Donna Scott, Mary Astbury, Alice
Jordan, Evelyn Hardison, and Patricia Buteau.{1}  Sargent died before trial, and
all claims against him were dismissed.  Following a trial, the District Court
entered a judgment in favor of all the remaining defendants, except Alley.  The
court found that Alley's statements at the June 7, 1994, Ladies Auxiliary
meeting constituted defamation per se and assessed damages at $20,000.  Alley
then filed this appeal.
	[¶19]  Defamation consists of:
(a) a false and defamatory statement concerning another;
(b) an unprivileged publication to a third party;
(c) fault amounting at least to negligence on the part of the
publisher; and 
(d) either actionability of the statement irrespective of special harm
or the existence of special harm caused by the publication.
Lester v. Powers, 596 A.2d 65, 69 (Me. 1991).  
	[¶20]  Alley contends that her statements at the June 7, 1994, Ladies
Auxiliary meeting were conditionally privileged and that she did not abuse the
privilege.  Rice contends that Alley's statements were unprivileged because
Maine law does not recognize a privilege "for fraternal organizations or their
affiliates."  We agree with Alley.
	[¶21]  "One who publishes defamatory matter concerning another is not
liable for the publication if (a) the matter is published upon an occasion that
makes it conditionally privileged and (b) the privilege is not abused." 
Restatement (Second) Torts § 593 (1976).  Whether a defendant is entitled to
the common law conditional privilege is a question of law; whether the
defendant abused the privilege is a question of fact.  Cole v. Chandler, 2000 ME
104, ¶¶ 6-7, 752 A.2d 1189, 1193-94.  
	[¶22]  "A conditional privilege against liability for defamation arises in
settings where society has an interest in promoting free, but not absolutely
unfettered speech."  Lester, 596 A.2d at 69.  A conditional privilege "may arise
in any situation in which an important interest of the recipient of a
defamatory statement will be advanced by frank communication."  Cole, ¶ 6,
752 A.2d at 1193 (quoting Rippett v. Bemis, 672 A.2d 82, 87 (Me. 1996)).  
Conditional privilege is based upon the circumstances of "the
occasion upon which the defendant published defamatory matter,"
and we use the Restatement approach when determining the
existence of such circumstances.
	The Restatement does not prescribe a list of particular
settings to which conditional privileges are restricted.  Instead, it
uses a weighing approach based on the totality of the
circumstances, in view of the interests of the publisher and the
recipient.  Any situation in which an important interest of the
recipient will be furthered by frank communication may give rise to
a conditional privilege.
Lester, 596 A.2d at 70.  See also Restatement (Second) Torts § 594 ("An
occasion makes a publication conditionally privileged if the circumstances
induce a correct or reasonable belief that (a) there is information that affects a
sufficiently important interest of the publisher, and (b) the recipient's
knowledge of the defamatory matter will be of service in the lawful protection of
the interest.").
	[¶23]  "If a conditional privilege exists, liability for defamation attaches
only if the person who made the defamatory statements loses the privilege
through abusing it."  Lester, 596 A.2d at 69.  "Abuse includes making the
statement outside normal channels or with malicious intent.  For purposes of
defamation claims, malice means when the originator of the statement knows
[her] statement to be false, recklessly disregards its truth or falsity, or acts
with spite or ill will."  Cole, ¶ 6, 752 A.2d at 1194.  An inadequate investigation
of the truth of the statement by the publisher is not sufficient to show actual
malice.  Id.
	[¶24]  A comparison of the benefits to the Auxiliary and its members if
the substance of Alley's statements was accurate with the harm that would be
done to Rice's reputation if the statements were proved to be inaccurate
persuades us that the statements were privileged.  The members of the
Auxiliary have a common interest in ensuring the integrity of the organization,
its officers, and the honesty of their fund raising activities.  They have a
substantial interest in ensuring that one of their own members is not stealing
from the Elks Lodge.  If the statements were true, then Rice, who was
scheduled to become President of the Auxiliary, was stealing from the
organization.  If the statements were false, then the members of the Auxiliary
would wrongly believe for a limited amount of time that Rice abused the bingo
system by improperly procuring bonanza cards.  The Auxiliary's interests in
preventing abuse of the bingo games by one of its own members is substantial,
and Rice had voluntarily sought a leadership position with the organization.
	[¶25]  Moreover, the Ladies Auxiliary did not intend to act on Alley's
statements at the June 7 meeting until after investigating the truth of the
statements by speaking with Rice directly.  Despite knowing that false
allegations were being made, Rice voluntarily left the meeting and refused to
explain her actions.  It is not surprising that the members of the Auxiliary
assumed that Alley's statements were true and took the action they did.  We
are satisfied that Alley's statements were conditionally privileged.   
	[¶26]  Having determined that Alley's statements were made in a
privileged context, we must examine the record to determine if there is
sufficient evidence that the privilege was abused.  Rice has the burden of
producing evidence of abuse, Cole, ¶ 6, 752 A.2d at 1194, and our review of the
record leads us to conclude that there is insufficient evidence suggesting that
Alley abused the privilege.
	[¶27]  Alley's comments were made exclusively to members of the
Auxiliary within the confines of confidential Auxiliary proceedings, and were
not repeated outside of the confidential June 7 meeting.  Only Rice's
commencement of litigation has kept this topic alive in any venue.  
	[¶28]  Furthermore, Alley relied on the reports of Sargent, the Chairman
of the Bingo Committee, who described Rice's actions as improper and
unlawful.  That reliance was not reckless.  Sargent, as the Chairman of the
Bingo Committee, was charged with ensuring the integrity of the Lodge's bingo
games.  His investigation included a review to detect irregularities of the
receipts for the three months prior to April 20, 1994.  He sought the advice of
the entire Bingo Committee before acting.  Sargent also discussed the issue
with the Maine State Police and acted on their specific advice.  Based on these
facts, Alley did not abuse the conditional privilege.
	[¶29]  Because we find that Alley's statements were conditionally
privileged and that she did not abuse the privilege, it is unnecessary to discuss
Alley's other contentions.
	The entry is:
Judgment vacated.  Remanded for the entry of a
judgment in favor of Alley.

Attorney for plaintiff: Joel A. Dearborn Sr., Esq. P O Box 609 Brewer, ME 04412 Attorney for defendant: Christopher J. Whalley, Esq. P O Box 516 Ellsworth, ME 04605
FOOTNOTES******************************** {1} . All of the defendants except Sargent were members of the Auxiliary.