## Facts

- Martindale-Hubbell Law Directory, Inc. published a widely read law directory used by lawyers to evaluate other lawyers and to forward and refer legal business.
- The directory assigned ratings (shown by symbols) reflecting a lawyer’s ability and standing as understood by directory users.
- S. E. Ellsworth, a North Dakota attorney, received very high ratings in the directory from about 1907 through 1926.
- In the 1928 directory, Ellsworth’s ratings dropped, becoming mainly “fair.”
- In the 1929 directory, Ellsworth’s ratings were left blank, which Ellsworth alleged would be taken to mean his professional performance was so poor that he did not merit any rating.
- Ellsworth sued for defamation, alleging the downgrade and blank listing were false and defamatory and caused lawyers and others who consulted the directory to withhold business from him.
- In an earlier stage of the litigation, the court treated the publication as not actionable as libel per se, requiring Ellsworth to allege special damages (pecuniary loss) and to plead a defamatory meaning understood from the publication.
- Ellsworth filed an amended complaint alleging special damages by pleading a general decline in his gross professional income after the challenged publications and alleging the decline resulted from the directory’s rating change.
- Ellsworth’s amended complaint included gross-income figures for multiple years, including: 1928 ($4,171.06), 1929 ($2,958.55), 1930 ($3,047.20), 1931 ($2,784.65), and 1932 ($1,704.40).
- Martindale-Hubbell demurred to the amended complaint, arguing the special-damage allegations were still insufficient because Ellsworth did not identify specific lost clients or transactions.
- The trial court overruled the demurrer, and Martindale-Hubbell appealed from that order.

## Issues

1. Whether, in a libel action requiring special damages, an amended complaint sufficiently pleads special damages by alleging a general diminution of professional business and income, supported by before-and-after income figures and an allegation of causation, without naming specific lost clients.

## Decision

- The Supreme Court of North Dakota affirmed the order overruling Martindale-Hubbell’s demurrer to the amended complaint.
- The court held Ellsworth’s amended complaint adequately alleged special damages at the pleading stage by stating his income before and after the publication, and alleging the decrease resulted from the challenged directory ratings.
- The court treated the sufficiency of the special-damages pleading as the only contested issue on this appeal, because the defendant conceded the amended complaint adequately alleged the defamatory meaning/understanding.

## Legal Principles

- When an alleged libel is not actionable per se, the plaintiff must plead special damages showing a concrete pecuniary loss caused by the publication.
- Special damages in a libel-per-quod case may be pleaded as a general diminution of business or professional income, rather than only as the loss of identified customers, when the nature of the publication and audience makes identification of specific lost business impracticable.
- Where damages are claimed from a general reduction in professional business and income, it is sufficient—when more detail is not reasonably possible—to plead what the business or income was before the publication and what it was after the publication, and to allege the reduction resulted from the publication.
- A defendant is not entitled, at the demurrer stage, to dismissal solely because the plaintiff cannot name particular clients lost to a widely disseminated publication that allegedly affected an indefinite set of potential referrers.
- The pleading inquiry is distinct from proof at trial; an adequately pleaded causal connection and stated pecuniary decline permit the action to proceed to evidence.

## Conclusion

The North Dakota Supreme Court held that Ellsworth’s amended defamation complaint, alleging that Martindale-Hubbell’s downgraded and blank directory ratings caused a general decline in his professional income and supporting that claim with year-by-year income figures, sufficiently pleaded special damages despite not identifying specific lost clients, so the order overruling the demurrer was affirmed.


Ellsworth v. Martindale-Hubbell Law Directory, Inc., 280 N.W. 879 (1938)