CHURCH OF SCIENTOLOGY OF CALIFORNIA, Plaintiff-Appellant,
Michael J. FLYNN, Defendant-Appellee.
United States Court of Appeals,
Argued and Submitted Sept. 7, 1984.
Decided Oct. 3, 1984.
An action for defamation was filed. The United States District Court for the
Central District of California, Manuel L. Real, Chief Judge, dismissed the suit
with prejudice for failure to state a claim upon which relief could be
granted. Appeal was taken. The Court of Appeals, Beezer, Circuit Judge, held
that: (1) although the defendant did not specifically accuse plaintiff of
attempting to cause his death, it was reasonable to infer a defamatory meaning
from his remarks and, therefore, the complaint sufficiently alleged the
existence of a defamatory meaning to withstand a motion to dismiss; (2) the
group libel rule did not preclude a finding that the defendant's statements
were "of and concerning" the plaintiff; (3) the plaintiff's pleadings were
sufficient to survive a motion to dismiss on the element of whether the remarks
were "of and concerning" the plaintiff; and (4) the dismissal could not be
upheld on the ground that the defendant's remarks were an expression of opinion
as a matter of law.
Reversed and remanded.
 LIBEL AND SLANDER
Existence of defamatory meaning is generally question of fact for jury.
 LIBEL AND SLANDER
Although defendant did not specifically accuse plaintiff of attempting to cause
defendant's death, it was reasonable to infer defamatory meaning from
defendant's remarks and, therefore, plaintiff's defamation complaint was
sufficient to withstand motion to dismiss for failure to state claim upon which
relief could be granted. Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A.
 LIBEL AND SLANDER
Group libel rule applies when group member brings defamation suit based on
statements made regarding group.
 LIBEL AND SLANDER
Group libel rule did not preclude finding that defendant's allegedly defamatory
statements were "of and concerning" plaintiff where jury could reasonably find
that defendant was referring to a specific actor, rather than to group as a
 LIBEL AND SLANDER
In defamation action, plaintiff's pleadings were sufficient to survive motion
to dismiss for failure to state claim upon which relief could be granted on
element of whether defendant's remarks were "of and concerning" plaintiff.
Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A.
 CONSTITUTIONAL LAW
Because of First Amendment concerns, defamation actions may not be based on
statements of opinion. U.S.C.A. Const.Amend. 1.
 LIBEL AND SLANDER
Where plaintiff pleaded that defendant's remarks were understood in defamatory
sense and circumstances surrounding remarks were not revealed by record,
defendant's remarks did not constitute opinion as matter of law. U.S.C.A.
 LIBEL AND SLANDER
If plaintiff's allegations were correct, defendant directly accused plaintiff
of attempting to kill him and, therefore, dismissal of plaintiff's defamation
action could not be upheld on ground that defendant's statement was opinion as
matter of law. U.S.C.A. Const.Amend. 1.
*695 Jonathan Lubell, New York City, c/o Taylor, Roth & Hunt, Los Angeles,
Stephen M. Lang, Lewis, D'Amato, Brisbois & Bisgaard, Los Angeles, Cal., for
Appeal from the United States District Court for the Central District of
Before TUTTLE, [FN*] Senior Circuit Judge, NORRIS, and BEEZER, Circuit Judges.
FN* Hon. Elbert Parr Tuttle, Senior Judge, United States Court of Appeals
for the Eleventh Circuit, sitting by designation.
BEEZER, Circuit Judge:
This is an action for defamation brought by the Church of Scientology of
California ("CSC") against Michael J. Flynn. The district court dismissed the
suit with prejudice for failure to state a claim upon which relief can be
granted. We reverse.
FACTS AND PROCEEDINGS BELOW
Flynn is a Massachusetts attorney who frequently represents former
Scientologists against CSC. On June 25, 1983, Flynn allegedly made the
following remarks to an audience of eighty persons in Los Angeles:
Among the things that occurred to me in the four years that I have been
litigating with an enormous organization that has a few people that control
huge amounts of money, to hire armies of lawyers to try to destroy me and my
clients and whether you know it or not yet, people like yourself, is what the
whole war and game and battle is about.
In October 1979, shortly after I rejected an offer from the Church of
Scientology that is to say whoever that is to get a refund for a client which
I'm going to explain to you a little bit about, I was flying up to South Bend,
Indiana and my airplane engine quit after an hour and a half in the flight, and
for those of you who are pilots, you know that any degree of condensation you
pick up on a pre flight examination from your fuel tanks. Well I was an hour
and a half into the flight and we lost power entirely and we made an emergency
landing and my eleven year old son was in the plane, another lawyer and a
college classmate of mine, a Vietnam Veteran, and we drained off quarts of
water from my fuel tanks. And as I indicated, it was shortly after I rejected
an offer that I'm going to talk to you people about.
* * *
And that's when their lawyer showed up and offered me a check for her money
plus a little bit. And I told the lawyer what he could do with his check and
that took place shortly before the plane incident. Now for a number of years,
I dismissed the plane incident as being simply too preposterous to believe that
this organization could do it.
CSC brought this action in federal district court, claiming over $10,000 in
damages. Flynn filed a motion to dismiss under Fed.R.Civ.P. 12(b)(6). The
district court granted the motion with prejudice.
A. The Standard of Review
A dismissal under Fed.R.Civ.P. 12(b)(6) is "freely reviewable as a question
of law." Compton v. Ide, 732 F.2d 1429, 1429 (9th Cir.1984). [FN1] The
conditions that must be *696 met before a motion may be granted under
Fed.R.Civ.P. 12(b)(6) are quite strict. "[A] complaint should not be
dismissed for failure to state a claim unless it appears beyond doubt that the
plaintiff can prove no set of facts in support of his claim which would entitle
him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2
L.Ed.2d 80 (1957); see Rae v. Union Bank, 725 F.2d 478, 479 (9th
Cir.1984). In applying this standard, we must treat all of the plaintiff's
allegations as true. See Hospital Building Co. v. Trustees of Rex Hospital,
425 U.S. 738, 740, 96 S.Ct. 1848, 1850, 48 L.Ed.2d 338 (1976); Experimental
Engineering, Inc. v. United Technologies Corp., 614 F.2d 1244, 1245 (9th
FN1. Flynn argues that the court should accord great deference to the
district court's opinion because it is an interpretation of the law of the
state in which the district court sits. This circuit, however, has
abandoned the deferential standard. In re Complaint of McLinn, 739 F.2d
1395 at 1397 (9th Cir.1984) (en banc) ("Today we adopt as the law of the
circuit the rule that questions of state law are reviewable under the same
independent de novo standard as are questions of federal law.").
We emphasize the procedural setting of this case. We are called upon to
decide whether CSC's complaint was sufficient to survive a motion to dismiss,
not whether Flynn is liable to CSC for defamation.
B. The Existence of Defamatory Meaning
 Flynn contends that the district court's decision should be upheld
because his statements lacked defamatory meaning. The existence of a
defamatory meaning is generally a question of fact for the jury. See
Maidman v. Jewish Publications, Inc., 54 Cal.2d 643, 355 P.2d 265, 269, 7
Cal.Rptr. 617, 621 (1960); Gallagher v. Chavalas, 48 Cal.App.2d 52, 58, 119
P.2d 408 (1941). This case, however, involves a dismissal on the pleadings.
The California Supreme Court recently stated the standard for reviewing a
dismissal as follows: [FN2]
FN2. Federal law, rather than state law, sets the standard for dismissal
under Fed.R.Civ.P. 12(b)(6). See 5 C. Wright & A. Miller, Federal
Practice and Procedure s 1357, at 174 (Supp.1984). Since the issue before
us is whether the complaint states a cause of action under California law,
however, the standard for dismissal in state court is highly relevant.
In determining the propriety of the trial court's [dismissal], this court's
inquiry is not to determine if the communications may have an innocent meaning
but rather to determine if the communication reasonably carries with it a
defamatory meaning.... Just as the court must refrain from a "hair-splitting
analysis" of what is said in an article to find an innocent meaning, so must it
refrain from scrutinizing what is not said to find "a defamatory meaning which
the article does not convey to a lay reader."
Forsher v. Bugliosi, 26 Cal.3d 792, 803, 608 P.2d 716, 722, 163 Cal.Rptr.
628, 634 (1980) (quoting Mullins v. Thierot, 19 Cal.App.3d 302, 304, 97
Cal.Rptr. 27, 28 (1971)). Thus, the district court's decision cannot be upheld
on this ground if "by reasonable implication a defamatory meaning may be found
in the communication." Id. 26 Cal.3d at 806, 608 P.2d at 723, 163 Cal.Rptr.
 Although Flynn did not specifically accuse CSC of attempting to cause
his death, it would be reasonable to imply a defamatory meaning from his
remarks. It is well settled that the "arrangement and phrasing of apparently
nonlibelous statements" cannot hide the existence of a defamatory meaning.
Kapellas v. Kofman, 1 Cal.3d 20, 33, 459 P.2d 912, 919-20, 81 Cal.Rptr. 360,
367-68 (1969). Indeed, the meaning of a statement is often dependent upon its
context. See Mullins v. Brando, 13 Cal.App.3d 409, 414-15, 91 Cal.Rptr.
796, 798-99 (1970), cert. denied, 403 U.S. 923 (1971). It would be entirely
reasonable for a jury to conclude that Flynn was accusing CSC of attempting to
cause his death, rather than merely describing something that had happened to
him. See id.; see also Okun v. Superior Court, 29 Cal.3d 442, 450, 629
P.2d 1369, 1373, 175 Cal.Rptr. 157, 161 ("[A] writing's susceptibility to
innocent meaning does not in itself preclude a finding that an ordinary reader
would understand it in a libelous sense."), cert. denied, 454 U.S. 1099, 102
S.Ct. 673, 70 L.Ed.2d 641 (1981). We conclude that *697 CSC's complaint
sufficiently alleges the existence of a defamatory meaning. [FN3]
FN3. Flynn asserts that the remarks contain cautionary words and
qualifying phrases that negate any conceivable defamatory meaning. See
Forsher, 26 Cal.3d at 804-05, 608 P.2d at 722-23, 163 Cal.Rptr. at 634-
35. In fact, the remarks contain only one such statement: "Now for a
number of years, I dismissed the plane incident as being simply too
preposterous to believe that this organization could do it." That
statement is hardly cautionary; it could be read to mean that Flynn no
longer thought the accusation was "too preposterous to believe."
C. Identification of the Plaintiff
Flynn contends that his statements were not defamatory because they did not
adequately identify CSC. Flynn argues that the statements referred to
Scientology as a whole and are therefore subject to the group libel rule.
[FN4] The group libel rule generally bars defamation actions to which it
applies. See Barger v. Playboy Enterprises, Inc., 564 F.Supp. 1151, 1153
(N.D.Cal.1983) (applying California law); Restatement (Second) of Torts s
564A(a) (1977). Because "Scientology" refers to over 300 churches, Flynn
argues that CSC lacks standing to sue for defamation.
FN4. California recognizes the group libel rule. See Smith v. Harnish,
167 Cal.App.2d 115, 333 P.2d 815, 817 (1959); Noral v. Hearst
Publications, Inc., 40 Cal.App.2d 348, 104 P.2d 860, 862 (1940). See
generally Comment, Group Defamation and Individual Actions: A New Look
at an Old Rule, 71 Calif.L.Rev. 1532, 1533-36 (1983).
 We find, however, that the group libel rule does not apply in this
case. The group libel rule applies when a group member brings a defamation
suit based on statements made regarding the group. In contrast, CSC has
alleged that Flynn's remarks were reasonably understood to refer specifically
to CSC, rather than to Scientology as a whole. Flynn's remarks support this
theory. Flynn referred to "an enormous organization," "the Church of
Scientology," and "this organization." A jury could reasonably find that Flynn
was referring to a specific actor, rather than to Scientology as a whole. If
that is the case, the group libel rule would not preclude a finding that
Flynn's statements were "of and concerning" CSC. [FN5]
FN5. CSC's claim would also fall within a well-established exception to
the group libel rule that allows a group member to sue upon a showing that
"the circumstances of a publication reasonably give rise to the conclusion
that there is particular reference to the member." Restatement (Second) of
Torts s 564A(b) (1977). This approach is not analytically different
from our conclusion that the group libel rule does not apply. See
Comment, supra, at 1536 (noting that this principle is not really an
exception to the group libel rule, but rather "is merely a recognition that
one who is individually defamed can sue even if the defamation is disguised
as a group slur").
 But even though the group libel rule does not apply, CSC still must
establish that the remarks were "of and concerning" CSC. Under California
law, "[t]here is no requirement that the person defamed be mentioned by
name.... It is sufficient if from the evidence the jury can infer that the
defamatory statement applies to the plaintiff ... [or] if the publication
points to the plaintiff by description or circumstance tending to identify
him." DiGiorgio Fruit Corp. v. AFL-CIO, 215 Cal.App.2d 560, 30 Cal.Rptr.
350, 355 (1963); see also Bindrim v. Mitchell, 92 Cal.App.3d 61, 75-76, 155
Cal.Rptr. 29, 37-38 (upholding a jury finding that the depiction of a
fictitious character in a novel defamed the plaintiff even though the
description of the character differed from the plaintiff in several respects),
cert. denied, 444 U.S. 984, 100 S.Ct. 490, 62 L.Ed.2d 412 (1979).
CSC has pleaded several facts that would establish this element. First, CSC
pleaded that Flynn's remarks were "understood by the listening public to be of
and concerning Plaintiff." Second, Flynn allegedly referred to the
organization "that I have been litigating with." By Flynn's admission, that
was CSC. Third, CSC pleaded that Flynn's remarks were made in Los Angeles,
which is CSC's principal place of business. Fourth, CSC pleaded that Flynn
intended to refer to CSC. [FN6] Finally, CSC *698 pleaded that the members
of the audience requested over $10,000 in refunds and repayments from CSC. We
conclude that CSC's pleadings are sufficient to survive a motion to dismiss on
FN6. CSC claims that it can prove this by producing affidavits by Flynn
from unrelated litigation. If CSC proves that Flynn intended to refer to
CSC and that his audience actually understood him to refer to CSC, no
further proof is required to establish this element. Restatement (Second)
of Torts s 564 comment a (1977).
D. Statement of Opinion
 Because of first amendment concerns, see Gertz v. Robert Welch, Inc.,
418 U.S. 323, 339, 94 S.Ct. 2997, 3006, 41 L.Ed.2d 789 (1974), defamation
actions may not be based on statements of opinion. Lewis v. Time Inc., 710
F.2d 549, 553 (9th Cir.1983); Underwood v. CBS, Inc., 150 Cal.App.3d 460,
198 Cal.Rptr. 48, 51 (1984). Flynn contends that his remarks constitute
opinion as a matter of law. See Lewis, 710 F.2d at 553; cf. Good
Government Group, Inc. v. Superior Court, 22 Cal.3d 672, 682, 586 P.2d 572,
576, 150 Cal.Rptr. 258, 262 (1978) (holding that the opinion issue raises a
jury question under certain circumstances), cert. denied, 441 U.S. 961, 99
S.Ct. 2406, 60 L.Ed.2d 1066 (1979).
 It is not always easy to distinguish between fact and opinion. [FN7] In
deciding whether a particular statement is an opinion,
FN7. See generally Note, Fact and Opinion After Gertz v. Robert Welch,
Inc.: The Evolution of a Privilege, 34 Rutgers L.Rev. 81
(1981) (discussing the alternative methods of distinguishing facts from
opinions after Gertz ).
it is important to keep three factors in mind. First, it is established that
words are not defamatory unless they are understood in a defamatory sense....
A second factor ... is that even apparent statements of fact may assume the
character of statements of opinion, and thus be privileged, when made in public
debate, heated labor dispute, or other circumstances.... The final
consideration in the fact/opinion analysis is the language of the allegedly
Information Control Corp. v. Genesis One Computer Corp., 611 F.2d 781, 783-
84 (9th Cir.1980) (applying California law). With regard to the first factor,
CSC has pleaded that the remarks were understood in a defamatory sense. With
regard to the second factor, the circumstances surrounding the statement are
not revealed by the record. Thus, the first two factors do not support Flynn's
 Flynn focuses on the third factor, arguing that the language of his
remarks expresses an opinion. If Flynn's remarks had been " 'cautiously
phrased in terms of apparency,' " this factor would favor finding an opinion.
Information Control, 611 F.2d at 784 (quoting Gregory v. McDonnell
Douglas Corp., 17 Cal.3d 596, 603, 552 P.2d 425, 429, 131 Cal.Rptr. 641, 645
(1976)). Despite Flynn's assertions, however, his remarks were not phrased as
opinions. If CSC's allegations are correct, Flynn directly accused CSC of
attempting to kill him. This was neither a "broad, unfocused, wholly
subjective comment," Lewis, 710 F.2d at 554, nor a statement accompanied by
express statements of opinion, see Information Control, 611 F.2d at 784, but
rather was a statement of facts that could reasonably be construed as charging
CSC with attempted murder, see Fisher v. Larsen, 138 Cal.App.3d 627, 638,
188 Cal.Rptr. 216, 224-25 (1982). We conclude that the district court's
decision cannot be upheld on this ground.
Flynn has failed to establish that CSC's complaint is insufficient as a matter
of law. Accordingly, the decision of the district court is REVERSED and