Opinion No. 98-02CP/98-03CP

BEFORE THE NEVADA COMMISSION ON ETHICS

IN THE MATTER OF THE REQUEST FOR OPINION CONCERNING

ALLEGATIONS THAT ROBERT BEERS, incumbent candidate for State Assembly,

IMPEDED THE SUCCESS OF THE CAMPAIGN OF

DENNIS SILVERS, Candidate for State Assembly

NOTE:  By majority vote on March 26, 2003, the Commission waived the $5,000 civil penalty in this Opinion.

This Opinion is in response to a request for opinion filed pursuant to NRS 294A.345 and 281.477 with the Nevada Commission on Ethics (Commission) by Dennis Silvers against Robert Beers. Request Nos. CP98-02 and CP98-03 were combined for purposes of hearing and adjudication. A hearing on the opinion request was held on September 18, 1998. Mr. Silvers was represented by Dean Heidrich, and Mr. Beers was represented by Craig Mueller. The Commission heard testimony from Mr. Silvers, Mrs. Silvers, and Mr. Beers and accepted several exhibits into evidence. At the conclusion of this hearing, the Commission determined that it needed further research to be done regarding a legal question, so the Commission ordered the parties to brief the issue in time for a subsequent meeting the next week. A telephonic hearing on the continuation of the opinion request was held on September 24, 1998, at locations in Reno and Las Vegas, Nevada. At the conclusion of the second hearing, the Commission deliberated the matter and reached a decision. On September 28, 1998, the Commission issued Opinion Nos. CP98-02 and CP98-03. On September 29, 1998, Commission staff became aware of some items in Opinion Nos. CP98-02 and CP98-03 that required revision. The following Revised Opinion Nos. CP98-02 and CP98-03 is intended to entirely supplant and replace the Opinion Nos. CP98-02 and CP98-03 issued on September 28, 1998.

FINDINGS OF FACT

1.  Mr. Silvers and Mr. Beers were two Republican candidates running for State Assembly (District 4) in the 1998 primary campaign.

2.  About two weeks before the September 1, 1998 primary election, Mr. Beers published and distributed a campaign mailer which contained the following language pertinent to this inquiry:

Dennis Silvers, who has never voted in Nevada, said he simply lost interest in politics, adding that he was an active voter in California.

FACT: Searches of California voting records have produced no record of Dennis Silvers having voted.

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Silver's resume boasts of increasing revenue at a restaurant in California and one in Nevada

FACT: ...

By November, 1996, Alias Smith & Jones was over $20,000 in debt, 13 late rent notices, and numerous eviction notices, before the third arson fire destroyed it killing 66 pets at a nearby clinic. The fire is still under investigation. (Emphasis in original.)

3.  Regarding the "voting" allegation in the mailer, Mr. Beers testified that he had checked with the pertinent Nevada and California voting registration officials. Mr. Beers had been told by California's officials that the voting records were only retained for five years and that the records would have reflected votes by Mr. Silvers only as far back as five years before that. As a result of his searches, Mr. Beers was able to ascertain that Mr. Silvers had not voted in California through and including 1988 and that Mr. Silvers had never voted in Nevada.

4.  Regarding the "restaurant" allegation in the mailer, Mr. Beers testified that he had checked the public records in Clark County and had found that Mr. Silvers, in partnership with Greg Walls, had purchased a restaurant in Las Vegas that they called "Alias Smith & Jones" (the restaurant) in June 1995.  Mr. Beers' check of the public records showed that numerous eviction notices and notices of insufficient-fund checks had been filed against the restaurant beginning in December 1995 and through November 1996. The public records also revealed that on November 29, 1996 a fire completely destroyed the restaurant and collaterally damaged other nearby businesses. One of the nearby businesses damaged by the restaurant fire was an animal clinic at which 66 dogs and cats died as a result of the fire.  According to a newspaper article in evidence in this matter, the November 29, 1996 fire was determined to have been arsonous. The fire has been criminally investigated since November 1996, but as yet no charges have been brought against anybody as a result of the investigation. Mr. Beers found that Mr. Silvers was a defendant in a civil action filed by American Bank of Commerce on March 14, 1997 for an unpaid VISA bill of $9,687.19. Mr. Beers found that the restaurant was a defendant in a civil action filed on April 29, 1997 by the restaurant's landlord. Mr. Beers found that the liquor license for the restaurant was transferred solely to Mr. Walls in March 1997. Mr. Beers checked the Clark County business licensing records, and there was no record of a transfer of ownership. Mr. Beers did not check with the Nevada Gaming Control Board about when the restaurant's gaming licenses were transferred. Mr. Silvers testified that he sold his interest in the restaurant to his partner in July 1996 and that the gaming licenses were transferred solely to Mr. Walls at a hearing of the Gaming Control Board in December 1996.

5.  In addition to the public records check, Mr. Mueller represented that Mr. Beers had spoken confidentially with the Clark County Sheriff regarding Metro's investigation. Mr. Mueller did not tell the Commission what the substance of the conversation was because the information had been provided in strict confidence.

6.  In addition to the public information and information gathered in his conversation with the Sheriff, Mr. Beers also had in his possession Mr. Silvers' resume that contained the following statement: "At Alias Smith & Jones, a Las Vegas restaurant, increased gross revenues by 23% within two years; conceived and implemented in-house promotions which increased gaming profits by 39%."  Mr. Beers testified that he believed Mr. Silvers owned the restaurant in November 1996 based upon Mr. Silvers' statement in his resume and the lawsuit that had been filed by American Bank of Commerce against Mr. Silvers in March 1997.

7.  Mr. Silvers did not substantively deny the facts as set out in paragraphs 3-6 above. Mr. Silvers vehemently denied the conclusions drawn by Mr. Beers from the above facts.

8.  On September 1, 1998, the primary election was held. Mr. Beers defeated Mr. Silvers, and Mr. Beers is now the Republican nominee for the upcoming general election.

ANALYSIS AND OPINION

The Commission has jurisdiction over this matter and these parties pursuant to NRS 294A.345 and 281.477 because they are both candidates as defined in NRS 294A.OO5.

At issue in this matter was NRS 294A.345(1)(f), which provides:

1.  A person shall not, with actual malice and the intent to impeded the success of the campaign of a candidate, cause to be published a false statement of fact concerning the candidate, including, without limitation, statements concerning:

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(c) Whether the candidate committed, was indicted for committing or was convicted of committing a felony or other crime involving moral turpitude, dishonesty or corruption.. (Emphasis supplied.)

According to NRS 281.477(7), the person who makes the request (in this case Mr. Silvers) bears the burden of proving the elements of the offense under NRS 294A.345 by clear and convincing evidence. The Commission will analyze, separately the two separate opinion requests that have been combined for purposes of hearing and adjudication after discussing legal principles that underlie our analysis of both requests.

The Question of Whether Falsity Can Be Found Through Implication

Underlying both opinion requests is the question whether this Commission may find a violation of NRS 294A.345 where technically true statements reasonably imply a false conclusion.

NRS 294A.345 essentially codifies the holding in New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), applied specifically to political campaigns in Nevada. Thus, case law developed in the wake of the New York Times case is guiding in our consideration of this issue.

In Milkovich v. Lorain Journal Co., 497 U.S. 1, 110 S.Ct. 2695, 111 L.Ed.2d 1 (1990), the Supreme Court reviewed a case involving statements made in a newspaper column that stated that a local wrestling coach had lied when he testified at a civil trial. The column used the words "lie" and "lied" at least three times to describe the coach's testimony at the trial. One of the questions before the Supreme Court was whether the statements describing the coach's testimony as "lies" implied that the coach had committed the crime of perjury.

After finding that the coach was a "public figure" to whom the heightened standards of the New York Times opinion would apply, the Supreme Court discussed the question of defamation by implication, stating:

If a speaker says, "In my opinion John Jones is a liar," he implies a knowledge of facts which lead to the conclusion that Jones told an untruth. Even if the speaker states the facts upon which he bases his opinion, if those facts are either incorrect or incomplete, or if his assessment of them is erroneous, the statement may still imply a false assertion of fact. Simply couching such statements in terms of opinion does not dispel these implications; and the statement, "In my opinion Jones is a liar," can cause as much damage to reputation as the statement, "Jones is a liar."

Milkovich, 497 U.S. at 18-19, 110 S.Ct. at 2705-6, 111 L.Ed.2d at 26-27. The Supreme Court ultimately held that the statements in the newspaper column did imply that the coach had committed perjury, and were thus defamatory, stating:

The dispositive question in the present case then becomes whether a reasonable factfinder could conclude that the statements in the Diadiun column imply an assertion that petitioner Milkovich perjured himself in a judicial proceeding. We think this question must be answered in the affirmative. As the Ohio Supreme Court itself observed: "The clear impact in some nine sentences and a caption is that [Milkovich] 'lied at the hearing after...having given his solemn oath to tell the truth.'" Scott, 25 Ohio St. 3d at 251, 496 N.E.2d at 707. This is not the sort of loose, figurative, or hyperbolic language which would negate the impression that the writer was seriously maintaining that petitioner committed the crime of perjury. Nor does the general tenor of the article negate this impression.

We also think the connotation that petitioner committed perjury is sufficiently factual to be susceptible of being proved true or false. A determination whether petitioner lied in this instance can be made on a core of objective evidence by comparing, inter alia, petitioner's testimony before the OHSAA board with his subsequent testimony before the trial court. As the Scott court noted regarding the plaintiff in that case: "Whether or not H. Don Scott did indeed perjure himself is certainly verifiable by a perjury action with evidence adduced from the transcripts and witnesses present at the hearing. Unlike a subjective assertion the averred defamatory language is an articulation of an objectively verifiable event.  (Emphasis supplied.)

Id, 497 U.S. at 21-22,110 S.Ct. at 2707, 111 L.Ed.2d at 31-33. We have quoted the Milkovich opinion at such great length because the Supreme Court's discussion and holding clearly apply to and guide our analysis of this matter.

Analysis of the “Restaurant" Statement (Request No. CP98-02)

The first statement from Mr. Beers' mailer that we have been asked to analyze under NRS 294A.345 is: "By November, 1996, Alias Smith & Jones was over $20,000 in debt, 13 late rent notices, and numerous eviction notices, before the third arson fire destroyed it killing 66 pets at a nearby clinic. The fire is still under investigation." (The "restaurant" statement). Our analysis must begin by acknowledging that every factual statement made in this portion of the mailer is true. It is true that by November 1996, the restaurant had received late rent and eviction notices (and it is likely true that the restaurant was in debt, although this fact was not proven at hearing). It is true that a third fire destroyed the restaurant and that the fire also resulted in the death of 66 cats and dogs. It is true that the restaurant fire was to be determined to be arsonous and that it is still under investigation.

Mr. Beers' recitation of the true facts leads intentionally and unavoidably to the false conclusion that Mr. Silvers committed or was involved in the crime of arson by burning down his own restaurant. Mr. Beers provides plenty of motive for Mr. Silvers' arson by reciting the restaurant's debt and consequences of debt. Mr. Beers shows the deliberation of the arson by pointing out that this was the "third arson fire." Mr. Beers displays the charred bodies of 66 dead cats and dogs.  Finally, just to make sure that the implication is not lost on the reader, Mr. Beers states that the "third arson fire" is still under investigation, thus placing Mr. Silvers squarely under the cloud of such investigation.

The clear implication of Mr. Beers' statement is provably false by the statement itself. Mr. Beers implies that Mr. Silvers committed arson, and yet Mr. Beers' statement also states that the restaurant fire is still under investigation.  Only if the investigation was completed, and only then if Mr. Silvers had been at least charged with arson, could Mr. Beers' implication be true. Since the investigation is ongoing, Mr. Beers' implied charge that Mr. Silvers is an arsonist is provably, ascertainably, and undeniably false.

"Arson" is undoubtedly a loaded word. Arson is a felony. Arson is committed to further insurance fraud. Arson that kills 66 cats and dogs is even more heinous. Mr. Beers' unavoidable implication that Mr. Silvers was involved with the arson of the restaurant was intended to inextricably intertwine Mr. Silvers with "arson" and all the negative connotations that the word bears.

At hearing, Mr. Beers defended his statement by claiming that he was merely trying to show that Mr. Silvers was not as good a businessman as Mr. Silvers claimed. Had that been true, Mr. Beers' statement would have read, "By November, 1996, Alias Smith & Jones was over $20,000 in debt, 13 late rent notices, and numerous eviction notices." The final prepositional phrase and the final sentence of the actual "restaurant" statement were entirely unnecessary to prove that Mr. Silvers was a bad businessman. Mr. Beers conceded the same at hearing. In fact, at the time the incidents involving the fire occurred, Mr. Silvers testified that he had not owned an interest in the restaurant for four months preceding the fire. The final prepositional phrase and the final sentence were included only to link Mr. Silvers to a terrible fire and its ghastly consequences.

Most disturbing, though, is a statement made by Mr. Beers in his Memorandum in Support of Motion to Dismiss Ethics Complaint Filed by Mr. Dennis Silvers. In this Memorandum, Mr. Beers listed eight facts (mentioning the word "arson" four times), and then Mr. Beers stated: "These facts create the inference that Mr. Silvers was not a good businessman. They also create the inference that Mr. Silvers had something to do with the fire." (Emphasis supplied.) The highlighted sentence ends all argument about Mr. Beers' intent. By his own words, Mr. Beers concedes that he believes that Mr. Silvers "had something to do with the fire," and Mr. Beers surely structured his "restaurant” statement to assure that every reader of the statement drew the same conclusion.

We are satisfied that our analysis of this matter is squarely within the discussion and holding in Milkovich. The connotation in Mr. Beers' statement that Mr. Silvers committed arson is "sufficiently factual to be susceptible of being proved true or false," (Id, 497 U.S. at 21, 110 S.Ct. at 2707, 111 L.Ed.2d at 32), and it is false. We find that the construction of Mr. Beers' statement, particularly his characterization of the fire as the "third arson fire," intended to and did "imply an assertion," (Id, 497 U.S. at 21, 110 S.Ct. at 2707, 111 L.Ed.2d at 31), that Mr. Silvers committed arson, an assertion that is demonstrably false. We find that Mr. Beers' implied assertion was supported by clear and convincing evidence in our record. Under Milkovich, Mr. Beers' statement regarding the restaurant is a "false statement of fact” that violates NRS 294A.345(1).

Analysis of the “Voting" Statement (Request No. CP98-03)

The second statement from Mr. Beers' mailer that we have been asked to analyze under NRS 294A.345 is: "Searches of California voting records have produced no record of Dennis Silvers having voted." (The "voting" statement). This statement is true. Mr. Beers' search of the California voting records shows that Mr. Silvers had not voted in California since 1988, a fact conceded by Mr. Silvers. Mr. Silvers' voting record is clearly germane in a political contest. Had Mr. Beers' concluded the statement with the simple words "since 1988," his statement would have been more fair and would surely have been incontrovertible. Unlike the "restaurant" statement analyzed above, we cannot and do not conclude that the "voting" statement inexorably implies that Mr. Silvers has never voted. Thus, under Milkovich, we cannot find that Mr. Beers' true statement of Mr. Silvers' voting record implies a false assertion. Mr. Beers did not violate NAS 294A.345(1) with his "voting" statement in his mailer.

Analysis of Whether the “Restaurant" Statement Was Made with Actual Malice

NAS 294A.345(5)(a) defines the term "actual malice" as meaning "knowledge of the falsity of a statement or reckless disregard for whether a statement is true or false." This definition of "actual malice" is simply a codified restatement of the standard taken from the New York Times case. While the term "reckless disregard" "cannot be fully encompassed in one infallible definition," it does require "sufficient evidence to permit the conclusion that the [maker of the, statement] in fact entertained serious doubts as to the truth of his publication." St. Amant v. Thompson, 390 U.S. 727, 731, 88 S.Ct. 1323, 1325 (1968).

We find that Mr. Beers' "restaurant" statement was made both with knowledge of the falsity of its implication and with reckless disregard for the truth of the implication. Mr. Beers knew at the time that he made the "restaurant" statement that the matter of the fire at the restaurant was still under investigation, and, therefore, that Mr. Silvers had neither been charged with nor convicted of arson. In fact, Mr. Beers knew details of the investigation that he would not make part of the record of this proceeding because Mr. Beers personally spoke with the Sheriff about the investigation. Mr. Beers implied that Mr. Silvers committed arson upon the restaurant --in fact even admitting in his Memorandum that the facts he had marshaled created "the inference that Mr. Silvers had something to do with the fire" --all the while knowing that Mr. Silvers had not been charged or convicted of arson, so his implied assertion was made both knowingly and with reckless disregard for the truth. Furthermore, the "restaurant" statement was obviously made with the intent to impede the success of Mr. Silvers' campaign; that was precisely the intent of Mr. Beers' mailer. Therefore, Mr. Beers violated NRS 294A.345(1) by causing to be published a false statement of fact concerning Mr. Silvers with actual malice and the intent to impede the success of Mr. Silvers' campaign.

For this violation, we impose a civil penalty of $5,000 upon Mr. Beers pursuant to NRS 281.551(4). Mr. Beers shall pay the penalty by cash or by cashier's check or money order made payable to "State of Nevada, Office of the Treasurer," to be received by the Commission office no later than 5:00 p.m. P.S.T. on October 23, 1998. Failure to pay the penalty shall result in such legal action as is necessary to collect the penalty.

CONCLUSION

Based upon the record, Mr. Beers violated NRS 294A.345(1) in Request No. CP98-02 (the "restaurant" statement) and did not violate NRS 294A.345(1) in Request No. CP98-03 (the "voting" statement). For his violation of NRS 294A.345(1), the Commission assesses a civil penalty of $5,000 against Mr. Beers.

COMMENT

It is specifically noted that the foregoing Opinion applies only to these specific facts and circumstances. The provisions of the Nevada Revised Statutes quoted and discussed above must be applied on a case-by-case basis, with results which may vary depending on the specific facts and circumstances involved.

DATED:  September 30, 1998.

NEVADA COMMISSION ON ETHICS

By:  /s/  MARY E. BOETSCH, Chairwoman

NOTE:  By majority vote on March 26, 2003, the Commission waived the $5,000 civil penalty in this Opinion.