Friedman v. Bloomberg L.P., No. 16-1335 (2d Cir. 2017)
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The Second Circuit affirmed the district court's dismissal of this defamation action as to the out-of-state defendants, holding that Connecticut General Statute 52‐59b—which provides for long‐arm jurisdiction over certain out‐of‐state defendants except in defamation actions—does not violate plaintiff's First or Fourteenth Amendment rights. The court affirmed the district court's dismissal of plaintiff's defamation claim based on the "as much as $500 million" statement under the New York Civil Rights Law 74, but held that the district court erred in dismissing plaintiff's claim based on the "repeatedly tried to extort" statement. Therefore, the court reversed in part the dismissal of plaintiff's claim against the Bloomberg Defendants and remanded for further proceedings.
The court issued a subsequent related opinion or order on March 1, 2018.
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16 1335 cv Friedman v. Bloomberg L.P., et al. 1 2 In the 3 United States Court of Appeals 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 For the Second Circuit ________ AUGUST TERM, 2016 ARGUED: OCTOBER 31, 2016 DECIDED: SEPTEMBER 12, 2017 No. 16 1335 cv DAN FRIEDMAN, Plaintiff Appellant v. BLOOMBERG L.P., CHRISTOPHER DOLMETSCH, ERIK LARSEN, MICHAEL HYTHA, ANDREW DUNN, MILLTOWN PARTNERS, PATRICK HARVERSEN, D.J. COLLINS, OLIVER RICKMAN, PALLADYNE INTERNATIONAL ASSET MANAGEMENT B.V., ISMAEL ABUDHER, LILY YEO, Defendants Appellees. ________ Appeal from the United States District Court for the District of Connecticut. No. 15 Civ. 43 – Alvin W. Thompson, Judge. ________ Before: WALKER, HALL, and CHIN, Circuit Judges. ________ 2 No. 16 1335 cv 1 Plaintiff appellant Dan Friedman appeals from a decision of 2 the United States District Court for the District of Connecticut (Alvin 3 W. Thompson, J.) dismissing his defamation action and entering 4 judgment in favor of the defendants appellees. At issue in this case 5 is whether Connecticut General Statute § 52 59b—which provides 6 for long arm jurisdiction over certain out of state defendants except 7 in defamation actions—violates Friedman’s First or Fourteenth 8 Amendment rights. We conclude that it does not and AFFIRM the 9 district court’s dismissal of this action as to the out of state 10 defendants. We also consider whether the allegedly defamatory 11 statements at issue in this case, which were reported and published 12 by the remaining defendants, are privileged under New York Civil 13 Rights Law § 74 as a fair and true report of judicial proceedings or 14 are protected expressions of opinion. We AFFIRM in part and 15 REVERSE in part the district court’s determinations regarding these 16 statements and REMAND this action for proceedings against the 17 remaining defendants consistent with this opinion. 18 19 ________ 3 No. 16 1335 cv 1 2 3 4 ALAN H. KAUFMAN, Kaufman PLLC, New York, NY (Stephen G. Grygiel, Silverman, Thompson, Slutkin & White, LLC, Baltimore, MD, on the brief) for Plaintiff Appellant. 5 6 7 8 9 SHARON L. SCHNEIER (Yonatan S. Berkovits, on the brief), Davis Wright Tremaine LLP, New York, NY, for Defendants Appellees Bloomberg L.P., Christopher Dolmetsch, Erik Larsen, Michael Hytha, and Andrew Dunn. 10 11 12 13 14 15 DEREK J.T. ADLER, Hughes Hubbard & Reed LLP, New York, NY, for Defendants Appellees Palladyne International Asset Management B.V., Ismael Abudher, Lily Yeo, Milltown Partners LLP, Patrick Haverson, David John Collins and Oliver Rickman. ________ 16 JOHN M. WALKER, JR., Circuit Judge: 17 Plaintiff appellant Dan Friedman appeals from a decision of 18 the United States District Court for the District of Connecticut (Alvin 19 W. Thompson, J.) dismissing his defamation action and entering 20 judgment in favor of the defendants appellees. At issue in this case 21 is whether Connecticut General Statute § 52 59b—which provides 22 for long arm jurisdiction over certain out of state defendants except 23 in defamation actions—violates Friedman’s First or Fourteenth 24 Amendment rights. We conclude that it does not and AFFIRM the 25 district court’s dismissal of this action as to the out of state 4 No. 16 1335 cv 1 defendants. We also consider whether the allegedly defamatory 2 statements at issue in this case, which were reported and published 3 by the remaining defendants, are privileged under New York Civil 4 Rights Law § 74 as a fair and true report of judicial proceedings or 5 are protected expressions of opinion. We AFFIRM in part and 6 REVERSE in part the district court’s determinations regarding these 7 statements and REMAND this action for proceedings against the 8 remaining defendants consistent with this opinion. 9 BACKGROUND 10 This defamation action arises out of a news article published 11 by Bloomberg News that reported on a lawsuit Friedman filed 12 against his former employer, Palladyne International Asset 13 Management, and others. Friedman alleged in the lawsuit that 14 Palladyne, a purported hedge fund based in the Netherlands, 15 fraudulently induced him into working as its “head of risk” in order 16 to create the appearance that it was a legitimate company. Friedman 17 claimed that, over the course of nearly eight months, Palladyne and 18 an executive recruiting firm made numerous misrepresentations to 19 persuade him to accept this position, including that Palladyne was 5 No. 16 1335 cv 1 “a diversified investment company” with a “worldwide clientele” 2 and “consistent, optimized returns.” App’x at 15, 49, 61. 3 In November 2011, Friedman moved to the Netherlands and 4 began working for Palladyne. According to Friedman, he soon 5 discovered that Palladyne was a “kickback and money laundering 6 operation for the former dictatorial Ghaddafi [sic] regime in Libya,” 7 App’x at 39, and that Palladyne’s primary purpose was to channel 8 funds at the behest of the then head of Libya’s state run National Oil 9 Company, who was the father in law of Palladyne’s chief executive 10 officer. Friedman also learned that the United States Department of 11 Justice and the Securities and Exchange Commission were 12 conducting investigations that implicated Palladyne. In February 13 2012, after Friedman voiced concerns to a colleague that Palladyne 14 was not engaging in legitimate investment activities and could face 15 criminal exposure, he was “abruptly terminated with no legally 16 cognizable explanation.” App’x at 75. 17 On March 25, 2014, Friedman sued Palladyne and the firm 18 that had recruited him for the position, as well as several of their 6 No. 16 1335 cv 1 employees. Friedman asserted seven counts in his complaint, 2 including fraudulent inducement, and sought monetary damages 3 totaling $499,401,000, plus interest, attorneys’ fees and costs. He also 4 sought, as additional punitive damages, two years of the employee 5 defendants’ salaries and bonuses. Friedman requested that “this 6 Court enter judgment on all Counts for the plaintiff.” App’x at 88. 7 On March 27, 2014, Bloomberg L.P. published online the 8 article at issue in this case. Entitled “Palladyne Accused in Suit of 9 Laundering Money for Qaddafi,” the article reported on Friedman’s 10 lawsuit. Friedman responded to this article by filing the instant 11 defamation action against (1) Bloomberg L.P. and the authors and 12 editors of the article (collectively, the “Bloomberg Defendants”); (2) 13 the Netherlands based Palladyne and two of its senior officers 14 (collectively, the “Palladyne Defendants”); and (3) Milltown 15 Partners, LLP—a public relations company based in the United 16 Kingdom that worked for Palladyne and allegedly was a source of 17 information for the article—and several of its employees 18 (collectively, the “Milltown Defendants”). 7 Friedman alleged that the following statements in the article 1 2 No. 16 1335 cv were false and caused him serious and irreparable harm: 3 4 5 6 7 8 9 (1) A statement that “[Palladyne] was sued in the U.S. for as much as $500 million.” (2) A quote from Palladyne that “[t]hese entirely untrue and ludicrous allegations [in Friedman’s earlier lawsuit] have been made by a former employee who has repeatedly tried to extort money from the company. . . . He worked with us for just two months before being dismissed for gross misconduct.” 10 App’x at 19, 37 38. Friedman further alleged that the Bloomberg 11 Defendants negligently published these statements without 12 contacting him for a response or otherwise verifying their accuracy, 13 and acted with reckless disregard by failing to correct or retract the 14 statements even after his lawyer alerted several of the Bloomberg 15 Defendants to their inaccuracy.1 16 The Milltown and Palladyne Defendants moved to dismiss 17 this case pursuant to Federal Rules of Civil Procedure 12(b)(2) for 18 lack of personal jurisdiction and 12(b)(6) for failure to state a claim. 19 In granting the motion, the district court concluded that Conn. Gen. There is an updated version of this article in the parties’ joint appendix that includes a response from Friedman’s lawyer. Because Friedman does not mention this version or attach it to his complaint, we do not consider it for purposes of this appeal. 1 8 No. 16 1335 cv 1 Stat. § 52 59b, which provides for jurisdiction over non resident 2 individuals, foreign partnerships, and foreign voluntary associations 3 except in defamation cases, deprived it of personal jurisdiction over 4 the Milltown and Palladyne Defendants, all of which are foreign 5 entities. The district court further determined that even if 6 Palladyne—organized under the laws of the Netherlands as a 7 besloten vennootschap—were categorized as a corporation and not a 8 foreign partnership, Conn. Gen. Stat. § 33 929 would deprive it of 9 personal jurisdiction over Palladyne. 10 The Bloomberg Defendants also filed a motion to dismiss the 11 complaint pursuant to Rule 12(b)(6) for failure to state a claim, 12 which the district court granted. The district court held that the 13 statement that Friedman had sued Palladyne for “as much as $500 14 million” was protected by N.Y. Civ. Rights Law § 74 because it was a 15 fair and true report of Friedman’s complaint and that the statement 16 that Friedman “has repeatedly tried to extort money from 17 [Palladyne],” while not covered by the same privilege, was a 9 No. 16 1335 cv 1 protected expression of opinion. Friedman timely appealed the 2 dismissal of his complaint. DISCUSSION 3 4 Friedman argues on appeal inter alia that (1) the district court 5 has personal jurisdiction over the individual Milltown and 6 Palladyne Defendants pursuant to Conn. Gen. Stat. § 52 59b because 7 the statute’s exclusion of defamation actions is unconstitutional2; (2) 8 the “for as much as $500 million” statement is defamatory because it 9 fails to clarify that he could not have been awarded this amount 10 even if his lawsuit were successful; and (3) the “repeatedly tried to 11 extort money” statement suggests that he engaged in criminal 12 conduct and implies undisclosed facts that are detrimental to his 13 character. 14 I. Connecticut General Statute § 52 59b 15 We review de novo an appeal from a district court’s dismissal 16 for lack of personal jurisdiction. Whitaker v. Am. Telecasting, Inc., 261 Friedman also asserts that the lower court had jurisdiction over the corporate defendants under Conn. Gen. Stat. § 33 929. However, he fails to raise any arguments on this point and, therefore, we do not address the district court’s determination to the contrary. 2 10 No. 16 1335 cv 1 F.3d 196, 208 (2d Cir. 2001). The plaintiff bears the burden of 2 demonstrating that the court has personal jurisdiction over each 3 defendant. Id. In determining whether such jurisdiction exists, a 4 court “must look first to the long arm statute of the forum state. . . . 5 If the exercise of jurisdiction is appropriate under that statute, the 6 court must decide whether such exercise comports with the 7 requisites of due process.” Id. at 208 (citation omitted). The 8 relevant long arm statute, Conn. Gen. Stat. § 52 59b(a), provides: 9 10 11 12 13 14 15 16 17 [A] court may exercise personal jurisdiction over any nonresident individual, foreign partnership or foreign voluntary association . . . who in person or through an agent . . . (2) commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; (3) commits a tortious act outside the state causing injury to person . . . within the state, except as to a cause of action for defamation of character arising from the act. 3 18 Based on the plain language of Conn. Gen. Stat. § 52 59b, the 19 district court did not have personal jurisdiction in this defamation 20 action over the individual Milltown and Palladyne Defendants, who Section 52 59b(a)(1) provides jurisdiction over certain out of state defendants who “[t]ransact[] any business within the state.” Friedman did not appeal the district court’s decision that this provision does not apply. 3 11 No. 16 1335 cv 1 are not Connecticut residents. Friedman argues, however, that the 2 long arm statute’s exclusion of out of state defendants in 3 defamation actions violates his First Amendment right to petition 4 and Fourteenth Amendment right to equal protection. We disagree. 5 The First Amendment provides, in relevant part, that 6 “Congress shall make no law . . . abridging . . . the right of the 7 people . . . to petition the Government for a redress of grievances.” 8 U.S. CONST. amend. I. The right to petition, which applies to the 9 states through the Fourteenth Amendment, “extends to all 10 departments of the Government, including the courts.” City of N.Y. 11 v. Beretta U.S.A. Corp., 524 F.3d 384, 397 (2d Cir. 2008) (citation and 12 internal quotation marks omitted). A plaintiff’s “constitutional right 13 of access to the courts is violated where government officials 14 obstruct legitimate efforts to seek judicial redress.” Id. (citation and 15 brackets omitted); see also Christopher v. Harbury, 536 U.S. 403, 413 16 (2002) (noting right of access concerns are implicated when 17 “systemic official action frustrates a plaintiff or plaintiff class in 18 preparing and filing suits at the present time”); Bounds v. Smith, 430 12 No. 16 1335 cv 1 U.S. 817, 828 (1977) (requiring prison authorities to provide inmates 2 with adequate law libraries or legal assistance to permit meaningful 3 litigation of appeals). 4 A plaintiff’s right of access to courts is not violated when, as 5 here, a state’s long arm statute does not provide for jurisdiction over 6 certain out of state defendants. Indeed, “[t]here is nothing to 7 compel a state to exercise jurisdiction over a foreign [defendant] 8 unless it chooses to do so, and the extent to which it so chooses is a 9 matter for the law of the state as made by its legislature.” Brown v. 10 Lockheed Martin Corp., 814 F.3d 619, 626 (2d Cir. 2016) (quoting 11 Arrowsmith v. United Press Int l, 320 F.2d 219, 222 (2d Cir. 1963) (en 12 banc)). In International Shoe Co. v. Washington, the Supreme Court 13 held that, under the Due Process Clause of the Fourteenth 14 Amendment, state courts could exercise jurisdiction over out of 15 state defendants if the defendants had “certain minimum contacts 16 with [the forum state] such that the maintenance of the suit does not 17 offend ‘traditional notions of fair play and substantial justice.’” 326 18 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 13 No. 16 1335 cv 1 (1940)). The Supreme Court described the extent to which it would 2 be constitutionally permissible for state courts to exercise 3 jurisdiction over these defendants; it did not hold that state courts 4 were required to exercise such jurisdiction. See id. Relying on this 5 principle, state legislatures enacted long arm statutes setting forth 6 the terms under which their courts could exercise jurisdiction over 7 out of state defendants. See Robert D. Sack, Sack on Defamation: Libel, 8 Slander, and Related Problems, § 15.1.2A (4th ed. 2012). Although 9 many states’ long arm statutes provide for jurisdiction that is 10 coextensive with the limits of the Due Process Clause, some do not 11 permit the exercise of jurisdiction to the full extent allowed by the 12 federal Constitution. Id.; see Best Van Lines, Inc. v. Walker, 490 F.3d 13 239, 244 45 (2d Cir. 2007). 14 The Connecticut long arm statute at issue here, which 15 precludes its courts from exercising jurisdiction over certain foreign 16 defendants in defamation actions,4 does not provide for jurisdiction We note that Conn. Gen. Stat. § 52 59b(a)(1) does permit jurisdiction over out of state defendants in defamation actions if the defendant “[t]ransacts any business within the state.” 4 14 No. 16 1335 cv 1 to the limits of due process. See Conn. Gen. Stat. § 52 59b; see also 2 International Shoe, 326 U.S. at 316. The statute’s limitation does not, 3 however, violate Friedman’s First Amendment right of access to 4 courts. As we have noted, “[t]here is nothing to compel a state to 5 exercise jurisdiction over a foreign [defendant] unless it chooses to 6 do so,” Brown, 814 F.3d at 626, and Friedman does not have any 7 right to assert a claim against a foreign entity in the absence of a 8 long arm statute that provides jurisdiction over such an entity. See 9 Whitaker, 261 F.3d at 208; see also George v. Strick Corp., 496 F.2d 10, 12 10 (10th Cir. 1974) (“[P]ertinent federal cases do not compel state courts 11 to open their doors to every suit which meets the minimum contacts 12 requirements of the due process clause of the federal constitution.”); 13 Jennings v. McCall Corp., 320 F.2d 64, 68 (8th Cir. 1963) (“[A] state 14 court is free to choose for itself the standards to be applied in 15 determining the circumstances under which a foreign [entity] would 16 be amenable to suit, assuming of course that minimum due process 17 requirements are met. . . . [It is] a state s privilege to impose its own 18 jurisdictional limitations.”). Friedman, therefore, has failed to show 15 No. 16 1335 cv 1 that this statute violates his First Amendment right of access to 2 courts.5 3 Conn. Gen. Stat. § 52 59b also does not violate Friedman’s 4 equal protection rights under the Fourteenth Amendment. 5 Friedman argues that, applying strict scrutiny, the statute violates 6 the Equal Protection Clause by “restricting the rights of defamation 7 plaintiffs as a class without utilizing the least restrictive means.” 8 Appellant’s Br. at 44 45. However, we apply strict scrutiny only 9 when the challenged statute either (1) burdens a fundamental right 10 or (2) targets a suspect class. See Heller v. Doe, 509 U.S. 312, 319 11 (1993). Friedman has not shown that his claim falls within either 12 category. As we have discussed, a state is not required to extend its 13 courts’ jurisdiction over specific foreign defendants and, in the 14 absence of a long arm statute providing for such jurisdiction, a Friedman also states, without explanation, that the long arm statute’s exception for out of state defendants in defamation actions violates his due process rights. Federal due process, however, does not compel a state to provide for jurisdiction over out of state defendants. Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 440 (1952) (“The suggestion that federal due process compels the State to open its courts to such a case [against a foreign defendant] has no substance.”). Instead, the Due Process Clause limits the extent to which a state court may exercise jurisdiction over such defendants. See International Shoe, 326 U.S. at 316. 5 16 No. 16 1335 cv 1 plaintiff does not have a fundamental right to bring an action 2 against those foreign defendants. Further, Friedman does not argue 3 that state residents defamed by out of state entities are a suspect 4 class. 5 Under rational basis review, which is applicable here, “we are 6 required to defer to the legislative choice, absent a showing that the 7 legislature acted arbitrarily or irrationally.” Gronne v. Abrams, 793 8 F.2d 74, 77 (2d Cir. 1986). The party challenging the law, therefore, 9 “must disprove every conceivable basis which might support it.” 10 Windsor v. United States, 699 F.3d 169, 180 (2d Cir. 2012) (citation and 11 internal quotation marks omitted), aff’d, 133 S. Ct. 2675 (2013). 12 Friedman argues that the statute’s legislative history does not state a 13 rational basis for excluding defamation actions. A legislature, 14 however, “need not actually articulate at any time the purpose or 15 rationale supporting its classification. . . . Instead, a classification 16 must be upheld against [an] equal protection challenge if there is 17 any reasonably conceivable state of facts that could provide a 17 No. 16 1335 cv 1 rational basis for the classification.” Heller, 509 U.S. at 320 (citations 2 and internal quotation marks omitted). 3 Conn. Gen. Stat. § 52 59b was modeled after a nearly identical 4 provision in New York state’s long arm statute. See N.Y. C.P.L.R. § 5 302; Savin v. Ranier, 898 F.2d 304, 306 (2d Cir. 1990). We have 6 previously noted, in the context of the New York statute, that one 7 rational basis for excluding defamation actions against out of state 8 defendants is “to avoid unnecessary inhibitions on freedom of 9 speech” and that “[t]hese important civil liberties are entitled to 10 special protections lest procedural burdens shackle them.” Best Van 11 Lines, 490 F.3d at 245 (quoting Legros v. Irving, 38 A.D.2d 53, 55 (N.Y. 12 App. Div. 1st Dep’t 1971)); see also SPCA of Upstate N.Y., Inc. v. Am. 13 Working Collie Ass n, 18 N.Y.3d 400, 404 (2012) (“Defamation claims 14 are accorded separate treatment to reflect the state s policy of 15 preventing 16 expression.”). The New York state exception for defamation actions 17 was initially intended, at least in part, to ensure that “newspapers 18 published in other states [would not be forced] to defend themselves disproportionate restrictions on freedom of 18 No. 16 1335 cv 1 in states where they had no substantial interests.” Best Van Lines, 2 490 F.3d at 245 (quoting Legros, 38 A.D.2d at 55). 3 For the first time in his reply brief on appeal, Friedman 4 challenges this rational basis by arguing that “[t]he internet . . . 5 dramatically changes the impact of the long arm defamation 6 exclusion” and “creates a wide defamation liability free zone for out 7 of state publishers,” such as Bloomberg L.P., if they publish 8 defamatory statements online. Appellant’s Reply Br. at 25 30. At 9 issue in this appeal, however, is the statute’s defamation exception 10 with respect to the individual Milltown and Palladyne Defendants, 11 who are the alleged sources for the challenged statements in the 12 Bloomberg article. As we described earlier, one conceivable basis 13 for affording special protection to out of state defendants in 14 defamation actions is to avoid any unnecessary inhibition on their 15 freedom of speech. See Best Van Lines, 490 F.3d at 245; see also 16 Vincent C. Alexander, Practice Commentaries, N.Y. C.P.L.R. § 302, at 17 C302:10 (McKinney 2008) (“The [New York State long arm statute’s] 18 exclusion . . . recognizes the ease with which a written or oral 19 No. 16 1335 cv 1 utterance may occur in New York, thereby subjecting numerous 2 individuals . . . to suit in New York despite their potentially remote 3 connection to the state.”). Because Friedman fails to counter this 4 rational basis, we conclude that his equal protection argument is 5 unavailing. See Windsor, 699 F.3d at 180. 6 In sum, we agree with the district court that Conn. Gen. Stat. § 7 52 59b does not violate Friedman’s First or Fourteenth Amendment 8 rights. We therefore affirm the district court’s dismissal pursuant to 9 this statute of Friedman’s defamation claim against the Milltown 10 and Palladyne Defendants for lack of personal jurisdiction. II. 11 12 The Allegedly Defamatory Statements Because the parties do not dispute that we have personal 13 jurisdiction over the Bloomberg Defendants for their allegedly 14 defamatory statements, we turn to the district court’s dismissal of 15 Friedman’s claim against those defendants for failure to state a 16 claim. We review de novo a district court’s grant of a motion to 17 dismiss under Rule 12(b)(6), accepting as true the factual allegations 20 No. 16 1335 cv 1 in the complaint and drawing all inferences in the plaintiff s favor. 2 Biro v. Conde Nast, 807 F.3d 541, 544 (2d Cir. 2015). a. The “For As Much As $500 Million” Statement 3 4 We first address the Bloomberg Defendants’ argument that 5 the article’s statement that Friedman sued Palladyne “for as much as 6 $500 million” is protected under N.Y. Civ. Rights Law § 74. This 7 statute provides that “[a] civil action cannot be maintained against 8 any person, firm or corporation, for the publication of a fair and true 9 report of any judicial proceeding.” N.Y. Civ. Rights Law § 74. New 10 York courts adopt a “liberal interpretation of the ‘fair and true 11 report’ standard of . . . § 74 so as to provide broad protection to news 12 accounts of judicial . . . proceedings.” Becher v. Troy Publ’g Co., 183 13 A.D.2d 230, 233 (N.Y. App. Div. 3d Dep’t 1992). A statement is 14 deemed a fair and true report if it is “substantially accurate,” that is 15 “if, despite minor inaccuracies, it does not produce a different effect 16 on a reader than would a report containing the precise truth.” 17 Karades v. Ackerley Grp. Inc., 423 F.3d 107, 119 (2d Cir. 2005) (citations 18 omitted). 21 No. 16 1335 cv 1 Here, the Bloomberg Defendants’ statement that Friedman’s 2 suit was “for as much as $500 million” was a fair and true report of a 3 judicial proceeding. The statement was a description of the prayer 4 for relief in Friedman’s complaint, which requested that “the Court 5 enter judgment on all Counts for the plaintiff,” totaling $499,401,000, 6 exclusive of attorneys’ fees and costs. App’x at 89. Nowhere did the 7 complaint state that Friedman was pleading any counts in the 8 alternative or that the damages could not be aggregated. Even 9 though some of these damages would be barred as duplicative if 10 Friedman were successful in his lawsuit, it was not necessary for this 11 explanation to be included in the article. The Bloomberg 12 Defendants’ characterization of the damages sought was an accurate 13 description of what was written in the complaint. See Lacher v. Engel, 14 33 A.D.3d 10, 17 (N.Y. App. Div. 1st Dep t 2006) (“Comments that 15 essentially summarize or restate the allegations of a pleading filed in 16 an action . . . fall within § 74 s privilege.”). As the district court 17 noted, “[t]o the extent there was an inaccuracy here, it is found in 22 No. 16 1335 cv 1 the language [Friedman] used in the prayer for relief.” Special 2 App’x at 31. 3 Friedman argues, however, that the statement was neither fair 4 nor substantially accurate because Bloomberg L.P. did not contact 5 him for a response and, as a sophisticated media company, it should 6 have known that Friedman would not have been able to recover as 7 much as $500 million. Friedman cites no case law in support of his 8 argument that the Bloomberg Defendants were compelled to seek 9 his response in order for an accurate report of the language of his 10 complaint to be “fair.” And the outcome that Friedman requests— 11 that we require “sophisticated” reporters to determine the legal 12 question of whether claims asserted in a complaint are duplicative 13 even if they are not pled in the alternative—would be excessively 14 burdensome for the media and would conflict with the general 15 purpose of § 74. Cf. Becher, 183 A.D.2d at 234 (“Newspapers cannot 16 be held to a standard of strict accountability for use of legal terms of 23 No. 16 1335 cv 1 art in a way that is not precisely or technically correct by every 2 possible definition.” (citation omitted)).6 3 Accordingly, because we find that § 74 applies, we affirm the 4 district court’s dismissal of Friedman’s defamation claim based on 5 the “as much as $500 million” statement. b. The “Repeatedly Tried to Extort” Statement 6 7 We next address Palladyne’s quote in the Bloomberg article 8 that Friedman “has repeatedly tried to extort money from the 9 company.” App’x at 38. Friedman argues that this statement is 10 reasonably susceptible to a defamatory meaning—that he engaged 11 in criminal conduct—and implies the existence of undisclosed facts 12 that are detrimental to his character. We agree that the district court 13 erred in dismissing Friedman’s claim based on this statement. Friedman further argues that he is entitled to discovery to determine the source of this statement. However, “once it is established that the publication is reporting on a judicial proceeding, how a reporter gathers his information concerning a judicial proceeding is immaterial provided his or her story is a fair and substantially accurate portrayal of the events in question.” See Cholowsky v. Civiletti, 69 A.D.3d 110, 115 (N.Y. App. Div. 2d Dep’t 2009) (citations and brackets omitted). We therefore find this argument unpersuasive. 6 24 No. 16 1335 cv 1 Under New York law, which the parties do not dispute 2 applies here, a plaintiff must establish the following elements to 3 recover a claim for libel: 4 5 6 7 8 (1) a written defamatory statement of fact concerning the plaintiff; (2) publication to a third party; (3) fault (either negligence or actual malice depending on the status of the libeled party); (4) falsity of the defamatory statement; and (5) special damages or per se actionability. 9 Celle v. Filipino Reporter Enters. Inc., 209 F.3d 163, 176 (2d Cir. 2000). 10 With respect to the first element of this cause of action, which is the 11 focus of this appeal, we must consider whether (1) “the challenged 12 statements reasonably imply the alleged defamatory meaning” and 13 (2) “if so, whether that defamatory meaning is capable of being 14 proven false.” See Flamm v. Am. Ass n of Univ. Women, 201 F.3d 144, 15 150 51 (2d Cir. 2000). A defendant is not liable for “statements that 16 cannot reasonably be interpreted as stating actual facts about an 17 individual, including statements of imaginative expression or 18 rhetorical hyperbole.” Id. (citation and internal quotation marks 19 omitted). 20 Here, the district court found that, based on the context in 21 which Palladyne’s statement was made, a reasonable reader would 25 No. 16 1335 cv 1 understand Palladyne’s use of the word “extort” to be “rhetorical 2 hyperbole, a vigorous epithet . . . reflect[ing] Palladyne’s belief that 3 an upset former employee had filed a frivolous lawsuit against 4 Palladyne in order to get money.” Special App’x at 44. In 5 dismissing Friedman’s claim, the district court relied in particular on 6 Greenbelt Coop. Publ’g Ass’n v. Bresler, 398 U.S. 6, 14 (1970). There, 7 the Supreme Court determined that statements in a newspaper, 8 reporting that attendees of city council meetings had characterized 9 the plaintiff’s negotiations with the city as “blackmail,” were merely 10 “rhetorical hyperbole” and were not actionable defamatory 11 statements. Id. The Court dismissed the defamation claim, 12 concluding that: 13 14 15 16 17 18 19 20 21 22 23 24 It is simply impossible to believe that a reader who reached the word “blackmail” in either article would not have understood exactly what was meant: it was [plaintiff’s] public and wholly legal negotiating proposals that were being criticized. No reader could have thought that either the speakers at the meetings or the newspaper articles reporting their words were charging [plaintiff] with the commission of a criminal offense. On the contrary, even the most careless reader must have perceived that the word was no more than rhetorical hyperbole, a vigorous epithet used by those who considered [plaintiff’s] negotiating position extremely unreasonable. 26 No. 16 1335 cv 1 Id. (footnote omitted). On appeal, the Bloomberg Defendants also 2 cite to several New York state cases in which courts have held that, 3 in certain contexts, a defendant’s use of the term “extort” may be 4 “rhetorical hyperbole” that is not actionable. 5 In Melius v. Glacken, for example, the then mayor of Freeport 6 stated in a public debate that the plaintiff’s lawsuit against him and 7 other officials, alleging that they had conspired to take away the 8 plaintiff’s property, was an attempt to “extort money” because the 9 plaintiff was seeking an amount “far in excess of the appraised 10 value” of the property. 94 A.D.3d 959, 959 60 (N.Y. App. Div. 2d 11 Dep’t 2012). After the plaintiff sued the mayor for defamation, the 12 court determined that based on the context in which the challenged 13 statements were made—in response to a question about the 14 plaintiff’s lawsuit and in a “heated” public debate—a reasonable 15 listener would have understood that the mayor was stating his 16 opinion about the merits of plaintiff’s lawsuit and not accusing the 17 plaintiff of criminal conduct. Id. at 960. The court held that the 18 statement was not actionable because the mayor had explained the 27 No. 16 1335 cv 1 factual basis for his belief that the plaintiff was attempting to extort 2 money—that the plaintiff sought an amount “far in excess of the 3 appraised value” of the property—and therefore his statement did 4 not imply the existence of undisclosed facts that were detrimental to 5 the plaintiff’s character. Id. at 960 61; see also Sabharwal & Finkel, LLC 6 v. Sorrell, 117 A.D.3d 437, 437 38 (N.Y. App. Div. 1st Dep’t 2014) 7 (defendant’s statement that plaintiff had broached topic of 8 settlement “to ‘extort’ money” not actionable because reasonable 9 readers would understand it was an “opinion[] about the merits of 10 the lawsuit and the motivation of [the] attorneys, rather than [a] 11 statement[] of fact”); G&R Moojestic Treats, Inc. v. Maggiemoo s Int l, 12 LLC, No. 03 CIV.10027 (RWS), 2004 WL 1172762, at *1 2 (S.D.N.Y. 13 May 27, 2004) (defendant’s quote in article characterizing plaintiff’s 14 lawsuit as “approaching extortion” not actionable because “no 15 reasonable reader could understand [the] statements as saying that 16 plaintiff committed the criminal act of extortion”); Trustco Bank of 17 N.Y. v. Capital Newspaper Div. of Hearst Corp., 213 A.D.2d 940, 942 28 No. 16 1335 cv 1 (N.Y. App. Div. 3d Dep’t 1995) (defendant’s use of the word 2 “extortion” to describe lawsuit filed against him not actionable). 3 Here, the Bloomberg article discussed Friedman’s lawsuit and 4 then included the following quote from Palladyne: “These entirely 5 untrue and ludicrous allegations have been made by a former 6 employee who has repeatedly tried to extort money from the 7 company. . . . He worked with us for just two months before being 8 dismissed for gross misconduct.” App’x at 38. As in the cases cited 9 by the district court and the Bloomberg Defendants, the article 10 clearly indicated that Palladyne made these statements in the 11 context of a “heated” dispute. See Melius, 94 A.D.3d at 959 60. The 12 article described Friedman’s allegations that Palladyne was “nothing 13 more than a façade created to conceal criminal transactions” and 14 noted that Friedman alleged that he had been fired by Palladyne 15 with “no legally cognizable explanation” after voicing his concerns 16 to a colleague about the firm’s criminal exposure. App’x at 37 38. 17 However, unlike the cases cited by the district court and the 18 Bloomberg Defendants, a reasonable reader could interpret 29 No. 16 1335 cv 1 Palladyne’s use of the word “extort” here as more than just 2 “rhetorical hyperbole” describing Palladyne’s belief that the lawsuit 3 was frivolous. See Flamm, 201 F.3d at 150 51. Palladyne did not 4 simply state that Friedman’s lawsuit was an attempt to extort money 5 from the company. Instead, Palladyne stated that Friedman 6 “repeatedly” tried to extort money from them. This statement can be 7 read as something other than a characterization of Friedman’s 8 underlying lawsuit against Palladyne and is reasonably susceptible 9 to a defamatory meaning—that Friedman actually committed the 10 criminal act of extortion—a statement that is capable of being 11 proven false. Id. 12 This interpretation also is reasonable when the statement is 13 read in the context of Palladyne’s entire quote. After asserting that 14 Friedman had “repeatedly” tried to extort money from them, 15 Palladyne went on to state that Friedman was “dismissed for gross 16 misconduct.” App’x at 38. Palladyne did not explain whether there 17 was a connection between these two statements. A reasonable 18 reader, therefore, could have believed that Friedman’s “gross 30 No. 16 1335 cv 1 misconduct” consisted of multiple attempts to “extort” money and 2 that Friedman was fired for engaging in this criminal conduct. 3 Further, even if a reasonable reader could interpret the word 4 “extort” as hyperbolic language describing Friedman’s conduct, and 5 not an assertion that Friedman had committed the criminal act of 6 extortion, this statement still would be actionable. A statement of 7 opinion is actionable under New York law if it implies that “the 8 speaker knows certain facts, unknown to his audience, which 9 support his opinion and are detrimental to the person about whom 10 he is speaking.” Steinhilber v. Alphonse, 68 N.Y.2d 283, 290 (1986); see 11 also Hotchner v. Castillo Puche, 551 F.2d 910, 913 (2d Cir. 1977) 12 (“Liability for libel may attach . . . when a negative characterization 13 of a person is coupled with a clear but false implication that the 14 author is privy to facts about the person that are unknown to the 15 general reader.”). Here, Palladyne’s statement can be read to imply 16 the existence of undisclosed facts that would be detrimental to 17 Friedman’s character. See Hotchner, 551 F.2d at 913. Palladyne 18 indicated that Friedman had taken prior actions that were attempts 31 No. 16 1335 cv 1 to “extort” money from the company, but Palladyne did not explain 2 what those prior acts were or provide any details that would shed 3 light on its use of the word “extort,” whether outside of the context 4 of Friedman’s lawsuit or as a reference to it. See Melius, 94 A.D.3d at 5 961. 6 The Bloomberg Defendants argue that the article makes clear 7 that Palladyne’s statement refers to the fact that Friedman voiced 8 concerns about the firm’s criminal exposure and then filed this 9 lawsuit in an attempt to extract money from Palladyne. We disagree 10 that it is clear. Although the article stated that Friedman was fired 11 after “relating his concerns about the firm’s criminal exposure to a 12 colleague,” App’x at 37, a reasonable inference remains, based on 13 Palladyne’s statement that Friedman had “repeatedly” attempted to 14 extort the company, that there were multiple acts that Friedman had 15 taken which rose to the level of “extortion.” 16 Thus, even if Palladyne was asserting an opinion about 17 Friedman’s prior conduct, Palladyne’s statement can still be read as 18 conveying a negative characterization of Friedman without stating 32 No. 16 1335 cv 1 sufficient facts to provide the context for that characterization. 2 Under New York law, such a statement is actionable. See Hotchner, 3 551 F.2d at 913. We therefore reverse the district court’s dismissal 4 of Friedman’s defamation claim based on this statement. 5 On remand, it will be up to the jury to decide both (1) whether 6 readers understood Palladyne’s statement—“repeatedly tried to 7 extort”—to mean that Friedman engaged in criminal conduct and 8 (2) whether that statement in fact defamed Friedman. See Sack on 9 Defamation § 2:4.16 (“Once the judge has determined that the words 10 complained of are capable of a defamatory meaning, that is, are not 11 nondefamatory as a matter of law, it is for the jury to determine 12 whether they were so understood and whether they in fact defamed 13 the plaintiff.”) (footnotes omitted)). We express no view as to how 14 those issues should be decided by the fact finder. 15 CONCLUSION 16 For the reasons stated above, we AFFIRM the district court’s 17 dismissal of Friedman’s claims against the Milltown and Palladyne 18 Defendants, and AFFIRM in part and REVERSE in part the dismissal 33 No. 16 1335 cv 1 of his claims against the Bloomberg Defendants. We REMAND the 2 case to the district court for further proceedings consistent with this 3 opinion.
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