Shchegol v Rabinovich

[*1] Shchegol v Rabinovich 2005 NY Slip Op 52003(U) [10 Misc 3d 1057(A)] Decided on May 6, 2005 Supreme Court, New York County Schlesinger, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 6, 2005
Supreme Court, New York County

ALEX SHCHEGOL AND ASA INSTITUTE OF COMPUTER TECHNOLOGY, INC., , Plaintiffs,

against

LEON RABINOVICH AND GLOBE INSTITUTE OF TECHNOLOGY, INC., Defendants.



115035/99

Alice Schlesinger, J.

This action involves a bitter dispute between plaintiff Alex Shchegol and defendant Leon Rabinovich, two former business partners who went separate ways and formed their own competing business schools. Shchegol commenced this action in 1999 on behalf of himself and his new business ASA Institute of Computer Technology, Inc. against Rabinovich and his company Globe Institute of Technology, Inc.

The original complaint asserted eleven causes of action sounding primarily in defamation based on various newspaper articles written about Mr. Shchegol. Thereafter, the Court permitted the amendment of the complaint to add a twelfth and thirteenth cause of action alleging interference with business and unfair competition based on certain telephone calls allegedly made by defendants.

By decision and order dated October 15, 2003, this Court severed the two newly added causes of action from the original eleven and directed that discovery proceed expeditiously as to the issue of liability only, bifurcating any issues relating to damages. Such discovery has now been completed, and defendants have moved herein for summary judgment dismissing the first eleven causes of action. Plaintiffs vigorously oppose. For the reasons, stated below, the motion is granted in substantial part.

Background Facts

All the defamation claims arise out of the publication of three articles in two Russian-language newspapers, The Monitor and Kvins Bul'var. The articles were written by Anatoly Romov, who was named herein as a third-party defendant based on Globe's claims of contribution and indemnification.[FN1] Romov has answered representing himself and has been deposed, but he has not otherwise participated in discovery. He has, however, given plaintiffs his affidavit to assist them in opposing this motion. [*2]

It was never plaintiffs' position that defendant Rabinovich or Globe employees actually wrote the articles. Rather, plaintiffs allege that defendants actively participated in the preparation and publication of the articles by, at a minimum, supplying the author, Romov, with inaccurate information which facilitated the publication of the allegedly defamatory articles. Specifically, plaintiffs (primarily through the Romov affidavit) allege that a Globe employee Tatiana Garelik met with Romov and gave him a report about Shchegol's school ASA which had been authored by the New York State Department of Education, as well as other negative information, all of which was utilized by Romov for his articles. Defendants insist that, even assuming arguendo that Garelik did supply Romov with negative information on behalf of her employer Globe to be used in the newspaper articles, plaintiffs' claims must be dismissed because the articles are not defamatory as a matter of law.

The Newspaper Articles

The first article, entitled "The Legend of Alex Shchegol," was published in The Monitor and then in Kvins Bul'var in November of 1998. Romov begins the article by describing his participation in a radio show hosted by Seva Kaplan where Romov countered what he viewed as Kaplan's misguided praise of Shchegol and Shchegol's undeserved receipt of the title "Businessman of the Year." That radio show was the subject of a subsequent newspaper article written by Romen Tsivev in which Tsivev criticized Romov for his criticism of Shchegol. In the article at issue, Romov was responding to Tsivev's criticism of him and providing further support for his own criticism of Shchegol.

Romov's article is replete with hyperbole and colorful language, including a hymn he drafted about Shchegol's business school. The most controversial part of the article, however, is Romov's discussion of the report issued by the New York State Department of Education about Shchegol's use of a state grant under the Tuition Assistance Program (TAP). There Romov discusses what he describes as Shchegol's "distortions, dead souls'," false lists, and other abuses and violations of the rules" relating to TAP.

In the second article, entitled "More About the Teacher Alex Shchegol and his Apostles," Romov again criticizes Shchegol, his training and credentials, and his alleged violation of TAP rules. He also criticizes articles written by Tsivev which had been favorable to Shchegol.

The last article, entitled "Apropos of Perfidy," is signed by "The Editors" but is admittedly written by Romov. Plaintiffs claim that the article and accompanying caricature of Shchegol cause the reader to associate Shchegol with Lenin and to view Shchegol as immoral and dishonest. The article also suggests that Shchegol arranged for the theft from newsstands of the earlier issues of the newspapers which had contained the negative articles about Shchegol.

According to plaintiffs, the three articles contain "a myriad of false assertions" which were "widely read" in the Russian community in New York, had a "devastating impact on the reputation of ASA and Shchegol," and caused ASA's enrollment within the Russian community to take "a dramatic plunge." (Plaintiffs' Memo of Law, pp 15, 12). Plaintiffs commenced this action to recover the lost business profits purportedly caused by the allegedly defamatory articles.

The Law of Defamation

The law of defamation is a complex and constantly evolving area of law. The topic was reviewed most recently by our Court of Appeals in Brian v Richardson, 87 NY2d 46 (1995) and by the Appellate Division, First Department, last year in Guerrero v. Carva, 10 AD3d 105 (1st Dep't [*3]2004). There, defamation was defined as follows:

The essence of the tort of libel is the publication of a statement about an individual that is both false and defamatory

Guerrero, 10 AD3d at 111, quoting Brian, 87 NY2d at 50-51. The Guerrero court then proceeded to explain how the courts of this state should apply that definition in light of the various decisions rendered by our Court of Appeals.

Since an essential element of a defamation claim is falsity, and only "facts" can be proven false, a defamation claim must be based on "published assertions of fact." Guerrero, supra, citing Brian, 87 NY2d at 51 (emphasis in original). In contrast, both the First Amendment of the United States Constitution and our New York State Constitution, protect statements of opinion: "false or not, libelous or not, [expressions of opinion] are constitutionally protected and may not be the subject of private damage actions." Guerrero, supra, quoting Rinaldi v. Holt, Rinehart & Winston, 42 NY2d 369, 380 (1977), cert. denied 434 US 969 (1977). An exception exists if the "statement of opinion implies that it is based upon facts which justify the opinion but are unknown to those reading or hearing it." Guerrero, 10 AD3d at 112, quoting Steinhilber v. Alphonse, 68 NY2d 283, 289 (1986). In such cases, the opinion loses its constitutional protection and becomes actionable, not because the opinion is false, but rather because it implies the existence of undisclosed facts detrimental to the person which support the opinion. Guerrero, supra, citing Steinhilber, 68 NY2d at 290; Rand v. New York Times, 75 AD2d 417, 422 (1st Dep't 1980).

The key question for this Court, then, is whether the three articles at issue in this case constitute assertions of fact (which are actionable if proven false) or assertions of opinion (which are protected unless based on undisclosed facts).[FN2] The Court of Appeals in Brian v. Richardson, reiterated the three factors to be considered when distinguishing between assertions of fact and non-actionable expressions of opinion:

(1) whether the specific language in issue has a precise meaning which is readily understood; (2) whether the statements are capable of being proven true or false; and (3) whether either the full context of the communication in which the statement appears or the broader social context and surrounding circumstances are such as to "signal * * * readers or listeners that what is being read or heard is likely to be opinion, not fact"

87 NY2d at 51, citing Gross v. New York Times Co., 82 NY2d 146, 153, (1993), quoting Steinhilber v. Alphonse, supra, at 292; accord, Immuno AG. v. Moor-Jankowski, 77 NY2d 235 (1991).

The Court of Appeals has emphasized the significance of the third factor, known as the "context" factor, essentially describing it as the factor which guides the entire analysis. The Appellate Division aptly explained the "context" analysis last year in Guerrero, 10 AD3d at 112:

The Court [of Appeals] has cautioned ... that "sifting through a communication for the [*4]purpose of isolating and identifying assertions of fact" should not be the central inquiry (Brian v. Richardson, 87 NY2d at 51). Instead, courts "should look to the over-all context in which the assertions were made and determine on that basis whether the reasonable reader would have believed that the challenged statements were conveying facts about the libel plaintiff'" (id., quoting Immuno AG v. Moor-Jankowski, 77 NY2d 235, 254 [1991], cert denied 500 US 954 [1991]).

Thus, explained the Brian court, while a statement standing alone might be reasonably construed as a statement of fact, when viewed in context the statement may be more properly construed as an expression of opinion. Equally true, on the other hand, a statement's appearance in a section of newspaper usually reserved for opinion does not automatically insulate the writer from liability for defamation. Rather, the forum in which the statement has been made, as well as the other surrounding circumstances comprising the "broader social setting," are useful gauges for determining whether a reasonable reader or listener would understand the complained of assertions as opinion or fact.

This Court can properly determine whether the subject assertions constitute fact or opinion when determining this motion for summary judgment. As the Court of Appeals recently emphasized in Millus v. Newsday, Inc., 89 NY2d 840, 842 (1996):

Whether a potentially actionable statement is one of fact or opinion is a question of law (Rinaldi v. Holt, Rinehart & Winston, 42 NY2d 369, 381), and depends on "whether a reasonable reader or listener would understand the complained of assertions as opinion or statements of fact" (Brian v. Richardson, 87 NY2d 46, 52).

Thus, while plaintiffs correctly note that summary judgment is a "drastic remedy" which should be employed only in the absence of triable issues [FN3], our courts have repeatedly granted summary dismissal of defamation actions based on a finding that the subject writing constituted protected assertions of opinion. See, e.g., Millus v. Newsday, Inc., 89 NY2d 840 (1996) (3212 dismissal based on statement in editorial that a candidate for State Assembly "is running here against [plaintiff] who admits he doesn't expect to win and is relieved by the prospect"); Brian v. Richardson, 87 NY2d 46 (1995) (3211 dismissal where defendant attorney in an article on Op Ed page accused the Department of Justice of creating a "sham" controversy regarding his client's software company and of making illegal copies of the software for use in a criminal conspiracy); Immuno A.G. v. Moor-Jankowski, 77 NY2d 235 (1991) (3212 dismissal based on letter to the editor that criticized defendant's use of chimpanzees for research, suggesting practices were designed to circumvent legal restrictions and threatened an endangered species); Steinhilber v. Alphonse, 68 NY2d 283 (1986) (3211 dismissal of claim based on union protest banner describing plaintiff as a "scab"); Polish American Immigration Relief Committee, Inc. v. Relax, 189 AD2d 370 (1st Dep't 1993) (3212 dismissal based on letter to the editor from Polish immigrant criticizing members of immigrant aid organization as "thieves who should have been put to prison long ago.")

Wholly misplaced is plaintiff's reliance (memo, p. 15) on James v. Gannett Co., [*5]40 NY2d 415, 419 (1976) for the proposition that when the Court finds words susceptible of defamatory meaning, "it becomes the jury's function to say ... the sense in which the words were likely to be understood by the ordinary and average reader." Where, as here, the Court can determine that the words are not susceptible of defamatory meaning because they constitute opinion, no factual issue exists for the jury. Indeed, the Court of Appeals in James reversed the Fourth Department and granted defendant summary dismissal of a belly dancer's claim that the newspaper interview was libelous in its suggestion that she engaged in improper conduct with male customers. Viewing the statements in context, the Court concluded "as a matter of law" that the statements were not capable of bearing a libelous meaning. 40 NY2d at 421.

Nor does a triable issue exist regarding the extent to which Tatiana Garelik conveyed negative information to Romov authorizing or intending on behalf of Globe that it be published. While a party giving information to a newspaper may under certain circumstances be responsible for damage caused by its publication (Campo v. Paar, 18 AD2d 364, 368 [1st Dep't 1963]), that issue need not be reached where, as here, the Court concludes that the statements in the articles constitute protected opinion.

Similarly, summary judgment is not precluded by the parties' dispute whether Shchegol is a public figure. To prove libel, a public figure plaintiff must satisfy a higher standard than a private person and demonstrate that the defendant acted with "actual malice - that is, with knowledge that the allegedly defamatory statement was false or with reckless disregard for the truth or falsity of the statement. Millus v. Newsday, Inc., 89 NY2d 840, 843 (1996), citing Rinaldi, 42 NY2d at 379. Since this Court finds that plaintiff cannot sustain his lesser burden as a private person, no reason exists to resolve the public figure dispute which might trigger the higher standard.

The Articles Constitute Protected Expressions of Opinion

Applying the above criteria articulated by the Court of Appeals, with particular emphasis on the "context factor," this Court concludes as a matter of law that the statements constitute protected opinion. As explained above, the first article was designed by Romov to counter criticism of him and praise of Shchegol previously given by a third party, Romen Tsivev. The editors printed a statement following the article implicitly branding it as opinion, stating that the editors did not necessarily agree with the statements and inviting others to write expressing their own point of view. While the editor's statement is not dispositive, here it accurately confirms that the article is opinion. The nature of the language used, including Romov's statement that he was writing to "set the record straight," indicate that the article was designed primarily to persuade readers to question the praise of Shchegol which had been given by others. Although specific statements appear to be claims of fact when taken out of context, and may arguably be misstatements, a reasonable reader would understand from the tenor of the article as a whole that the statements are hyperbole offered as part of the writer's opinion.

In this regard this case is similar to Polish American Immigration Relief Committee, Inc. v. Relax, 189 AD2d 370 (1st Dep't 1993). There the plaintiff Committee sued the defendant, a small Polish language magazine, based on a letter and published interview in which a Polish immigrant sharply criticized the Committee's treatment of his family upon their arrival to the United States. Using emotional and hyperbolic terms similar to those used by Romov in the instant case, the writer not only disparaged the Committee, but also [*6]accused it of specific acts of wrongdoing, including the misrepresentation of facts relating to rental apartments in order to gain a certain advantage in its request for federal funding. The Committee was branded as "thieves" and "false do-gooders" operating a "madhouse." Focusing on the content, tone and purpose of the article, the Appellate Division dismissed the action, stating (at p. 758):

The words at issue here are clearly rhetorical hyperbole and vigorous epithet, and thus constitute non-actionable expressions of opinion under Federal or State constitutional standards.

The second article written by Romov in this case is similar to the first. It is a continuation of the controversy involving the praise of Shchegol by Tsiev and the criticism by Romov. Romov expands the issues to include his opinion about higher education in this country. Again, some of the particular statements may be viewed as misstatements of fact, including some similar to those in the first article involving Shchegol's receipt of funds under the Tuition Assistance Program. However, considering the broader hyperbolic content and tone and the purpose of the article, the reasonable reader must conclude that the statements are opinion.

The third article, while apparently written by Romov, is signed by "The Editors." The content, tone and purpose are the same as the two Romov articles. The editorial further analyzes a particular interview of Shchegol. The caricature of Shchegol as Lenin is simply part of the criticism, intended to persuade readers to question any praise of Shchegol. In the same vein is the allegation that Shchegol arranged for the theft from newsstands of newspapers critical of him.

The Court must avoid the hypertechnical parsing of a possible fact' from its plain context of opinion,' as emphasized by the Court of Appeals in Immuno, 77 NY2d at 256. There, the Court concluded that a letter to the editor in a scientific journal, sharply criticizing a group's experimentation with chimpanzees, could only be viewed as "a highly partisan point of view" on the controversy of animal experimentation despite the inclusion of isolated statements of fact.

Similarly protected was the article by Elliot Richardson published by the New York Times in Brian v Richardson, 87 NY2d 46 (1995), criticizing actions by the Department of Justice to the point of suggesting illegality. The broader context, tone and purpose of the article signaled that Richardson was "not a disinterested observer," but rather an individual expressing a highly charged opinion. Id. at 352.

In sharp contrast stands Gross v. New York Times, 82 NY2d 146 (1993) where the Court of Appeals reversed the Appellate Division's affirmance of the trial court's dismissal of a libel action brought by the City's Chief Medical Examiner Elliot Gross. While reaffirming the "context factor" and other criteria discussed above, the Court found that a cause of action had been stated sufficiently to survive 3211 dismissal and allow discovery to proceed. The series of newspaper articles at issue differed from those at issue herein in that they were presented as serious, objective reporting. The articles included quotes from documents and individuals describing specific actions taken by plaintiff Gross as Medical Examiner, disagreeing with his medical conclusions in particular cases, and questioning his motives. The accusations were made in the context of a "lengthy, [*7]copiously documented newspaper series that was written only after what purported to be a thorough investigation." Id. At 156. These facts differ sharply from the facts in our case.

Based on the above principles of law, this Court concludes that the three articles at issue herein constitute protected opinion.

The Opinion is Not Based on Undisclosed Facts

As noted above (at p. 4), an otherwise protected opinion can be actionable if it suggests that it is based on facts known to the writer but undisclosed to the reader. Contrary to plaintiffs' claim, the exception does not apply in this case.

Plaintiffs focus in particular on Romov's discussion in the first two articles about Shchegol's receipt of funds from the New York State Tuition Assistance Program and related alleged improprieties noted in an official Department of Education report. They point to some particular phrases as being false statements of facts, and to other phrases as suggesting reliance on additional undisclosed facts. This Court views the statements otherwise. Like the writer in Brian v. Richardson, supra, Romov here is raising questions about the reputation of Shchegol and his school, urging readers to investigate and even including the actual website where the Department of Education report can be found. Therefore, no basis exists for finding the otherwise protected opinion actionable on the ground that it relies on undisclosed facts.

Some Causes of Action Remain

The first eight causes of action in the amended complaint claim defamation based on the three articles discussed above. Pursuant to the above analysis, summary judgment dismissing those causes of action is warranted. The parties dispute whether the ninth, tenth and eleventh causes of action sound in defamation. Defendants argue that they do and urge that they be dismissed along with the first eight (see memo, p. 28). Plaintiffs insist in conclusory fashion that the causes of action must survive dismissal because they assert claims separate from the defamation claims (see memo, p. 13, n. 5). A review of the claims is therefore required.

The ninth cause of action is denominated "intentional interference with prospective business advantage." The specific claim is that the defamatory nature of the articles caused a decrease in student enrollment. As this claim depends on the defamatory nature of the articles, it must be dismissed along with the eight defamation claims.

The tenth cause of action is denominated "unfair competition." It depends not only on the defamatory nature of the articles, but also claims that "defendants misused and/or disclosed confidential information" about ASA's business which resulted in damage to the business. That aspect of the cause of action relating to confidential information can be separated from the defamation claims and therefore survives dismissal.

The eleventh cause of action is denominated "breach of contract." It relies upon a written stipulation entered into by the parties in 1994 when they divided their business interests. Paragraph 10 of the stipulation allegedly bars any party from disparaging the other, and plaintiffs claim that the publication of the articles constitutes a breach of that paragraph. Since that aspect of the cause of action can be separated from the defamation claims, it survives dismissal.

Conclusion

Based on the above analysis, this Court finds as a matter of law that the subject articles are not defamatory, as they constitute protected statements of opinion. [*8]Accordingly, it is hereby

ORDERED that defendants' motion for partial summary judgment is granted to the extent that the first through the ninth causes of action of the complaint are severed and dismissed and the tenth and eleventh are limited in accordance with this decision; and it is further

ORDERED that the remainder of the action shall continue; and it is further

ORDERED that the parties are directed to appear before this Court in Room 222 on June 1, 2005 at 9:30 a.m. for a status conference regarding outstanding discovery for the balance of the action; and it is further

ORDERED that the Clerk of the Court is directed to enter judgment accordingly.

Dated: May 6, 2005 __________________________

J.S.C. Footnotes

Footnote 1: The two newspapers were also named as third-party defendants, but they were never served and the action against them was voluntarily discontinued.

Footnote 2:Defendants do not seriously dispute that the articles can reasonably be viewed as being defamatory or disparaging, thus satisfying the second element of the tort of libel as defined above.

Footnote 3: Plaintiffs' memo, p13, citing Andre v Pomeroy, 35 NY2d 361, 364 (1974).