GS Plasticos Limitada v Bureau Veritas & Bur. Veritas Consumer Prods. Servs.

[*1] GS Plasticos Limitada v Bureau Veritas & Bur. Veritas Consumer Prods. Servs. 2010 NY Slip Op 52467(U) Decided on April 16, 2010 Supreme Court, New York County Madden, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 April 16, 2013
Supreme Court, New York County

GS Plasticos Limitada, Plaintiff,

against

Bureau Veritas and Bureau Veritas Consumer Products Services, Defendants.



650242/09

Joan A. Madden, J.

Plaintiff GS Plasticos Limitada ("GS") moves pursuant to CPLR 3211(a) to dismiss the counterclaim for libel per se asserted against it by defendant Bureau Veritas Consumer Products Services ("BVCPS"), based on documentary evidence and for failure to state a cause of action. BVCP opposes the motion, which is granted for the reasons below.

BACKGROUND

GS is a Brazilian manufacturer of toy "premiums" for the promotional market, which are small plastic toys like those found McDonald's Happy Meals. BVCPS is a provider of testing and inspection services for consumer products.[FN1]

BVCPS was evaluated and accredited by non-party American Association for Laboratory Accreditation ("A2LA") to, inter alia, "perform specified chemical, physical and mechanical tests on toys and juvenile products to applicable safety standards."(Complaint, ¶ 20). The complaint describes BVCPS "as one of three established and accredited third party conformity testing companies" on which major companies rely to ensure the safety of their products (Complaint ¶ 19). It is further alleged that "in the small world of conformity testing, a company is easily damaged by a third-party conformity tester's negative assessment" (Id ).

This action arises out of allegations, inter alia, that between August 2006 and October 2006, BVCPS issued six reports to Kellogg Brazil, a subsidiary of the Kellogg Company ("Kellogg"), that incorrectly found that GS's stamps which were to be used in promotional inserts in Kellogg's products contained dangerously high levels of arsenic. The complaint alleges that GS "was determined to limit the damage caused by [BVCPS's] unfit employees or faulty machinery, implements, facilities and testing facilities [and that].. it was becoming clear that either [BVCPS's] accreditation status was meaningless or [BVCPS] was failing to meet A2LA standards" (Complaint ¶ 43). Thus, GS engaged four other accredited testing laboratories to test the promotional stamps. After these laboratories found that the stamps passed the tests with arsenic levels within the legal limit, "it became impossible for [BVCPS] to argue that it had [*2]responsibly conducted its analyses with due care and taken appropriate steps to perform its services in a skillful and competent manner " (Id., ¶ 55). It is further alleged that "[BVCPS] materially deviated from professional standards of third party conformity testers, or had employed malicious, fraudulent or deceitful acts, including materially lying about [GS] to prevent [GS] from contracting with Kellogg" (Id.).

The complaint, which was filed on or about April 24, 2009, contains causes of action for negligence, res ipsa loquitor, tortious interference with existing contractual relations, and tortious interference with prospective economic relations.

BVCPS's counterclaim for libel is based on a letter dated May 28, 2009 ("The May 28 Letter") which was sent by counsel for GS to Ms. Teresa C. Barnett, Quality Manager for A2LA. The counterclaim alleges that the May 28 Letter contains the statements made "with deliberate intent to harm BVCPS's business and business relations" and thus constitute libel per se (Amended Answer and Counterclaim, ¶ ¶'s 16, 20, 22). Specifically, the counterclaim alleges that the following in the May 28 letter are actionable: " it is likely that the same A2LA accredited Buffalo Laboratory [BVCPS's] has conducted many deficient and wrongful assessments. The A2LA accredited Buffalo laboratory [BVCPS] may continue in these practices'" (Id., ¶ 16); and"A2LA should [c]onsider suspending or withdrawing the Buffalo laboratory's accreditation, or undertake other action that insulates A2LA from the Buffalo laboratory's deficient practices, sheer lack of competence or other behavior'" (Id., ¶ 20). In addition, the counterclaim alleges that the May 28 Letter contains statements that "implicitly link BVCPS with scandals such as the poisoning of babies in China through melamine tainted baby formula,'" and that these statements also constitute libel per se. (Id., ¶ 22). It is alleged that in publishing these statements GP "acted in a grossly irresponsible manner without due consideration for the standards of information gathering and dissemination ordinarily followed by responsible persons" (Id., ¶'s 19, 21). The counterclaim alleges that before the May 28 Letter was sent, in response to communications by GS' counsel on May 11, 2009, "the A2LA conducted a surprise assessment and audit and BVCPS' Buffalo facility [and that] during the assessment, A2LA's auditors had with them copies of GS' Complaint from this action" (Id., ¶ 11).

The counterclaim does not allege any special damages but seeks punitive damages exceeding ten million dollars based on allegations that GS's "actions in publishing the May 28 Letter were intentional, willful, malicious, wanton and with reckless disregard for the truth of BVCPS's rights" (Id., ¶ 28)

GS moves to dismiss the counterclaim, arguing that the May 28 Letter, which was intended to notify the A2LA of this action, is not defamatory and does not constitute a basis for a claim of libel per se. Moreover, GS asserts that the statements identified in the counterclaim as defamatory constitute protected opinion, hyperbole and conjecture. GS also argues that since the statements in the May 28 Letter address matters of public concern, BVCPS must show that the statements were published in "a grossly irresponsible manner," and that the BVCPS has not met this burden, particularly as the letter was sent only to A2LA, BVCPS and BVCPS's counsel. In addition, GS contends that given the purpose of the letter and that it was only sent to A2LA, BVCPS and BVCPS's counsel, it cannot be said that statements were made with malice or ill will of the kind that would trigger the right to recover punitive damages.

In support of its motion, GS submits, inter alia, evidence that prior to filing the complaint, [*3]GS counsel visited A2LA's website, and via the online complaint form, informed A2LA that GS was preparing to bring an action in New York State court and "was likely to mention BV/BVCPS's A2LA accreditation." In response, Ms. Barnett of Quality Control at A2LA emailed GS' counsel and stated that "[w]e would appreciate any updates you can provide when/if the case is brought before the New York State Court." Ms. Barnett also emailed GS' counsel on April 10, 2009 and April 22, 2009 to express interest in the case. GS argues that this evidence, together with the contents of the May 28 Letter demonstrates that the main purpose of letter was to inform A2LA of this action, and that the statements in the letter when understood in this context were not defamatory.

In opposition, BVCPS argues that the counterclaim states a valid claim of libel per se since the statements in the May 28 Letter impugn its competency in its trade, business or profession and that even read in "context" the statements are defamatory. In addition, BVCPS argues that the libelous statements do not constitute protected opinion and that at best, the statements at issue are "mixed opinion" and is actionable since they imply a basis in undisclosed facts. BVCPS argues that the issues here are not matters of public concern and that in any event the counterclaim alleges that GS acted in a "grossly irresponsible manner" and thus is sufficient to state a cause of action. BVCPS also argues that the counterclaim sufficiently alleges that the statements were made with malice, spite and ill will so as to provide a basis for recovery of punitive damages.

DISCUSSION

On a motion pursuant to CLR 3211 (a) (7), the court is limited to ascertaining whether the pleading states any cause of action and not whether there is evidentiary support for the complaint Guggenheimer v Ginzburg, 43 NY2d 268 (1977). The complaint must be liberally construed in the light most favorable to the plaintiff, and all factual allegations must be accepted as true. Id.; Morone v Morone, 50 NY2d 481 (1980). At the same time, " [i]n those circumstances where the legal conclusions and factual allegations are flatly contradicted by documentary evidence they are not presumed to be true or accorded every favorable inference'" Morgenthow & Latham v. Bank of New York Company, Inc., 305 AD2d 74, 78 (1st Dept 2003), quoting, Biondi v. Beekman Hill House Apt. Corp., 257 AD2d 76, 81 (1st Dept 1999), aff'd, 94 NY2d 659 (2000). In such cases, "the criterion becomes whether the proponent has a cause of action, not whether he has stated one.'" Id., quoting, Guggenheimer v. Ginzburg, 43 NY2d at 275. However, dismissal based on documentary evidence may result "only where it has been shown that a material fact as claimed by the pleader is not a fact at all and no significant dispute exists regarding it.'" Acquista v. New York Life Ins. Co., 285 AD2d 73, 76 (1st Dept 2001), quoting, Guggenheimer v. Ginzburg, 43 NY2d at 275.

The elements for a claim for defamation are "a false statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum a negligence standard, and, it must either cause special harm or constitute defamation per se." Dillon v. City of New York, 261 AD2d 34, 38 (1st Dept 1999) (citation omitted). Defamation arises from "making a false statement which tends to expose the plaintiff to public contempt, ridicule, aversion or disgrace, or induce an evil opinion of [her] in the minds of right-thinking persons, and to deprive [her] of their friendly intercourse in society.'" Foster v. Churchill, 87 NY2d 744, 751 (1996) (citations omitted).In determining whether a claim for defamation has [*4]been adequately pleaded "the words must be construed in the context of the entire statement or publication as a whole, tested against the understanding of the average reader, and if not reasonably susceptible of a defamatory meaning, they are not actionable and cannot be made so by a strained or artificial construction." See Dillon v. City of New York, 261 AD2d at 38 (citation omitted). A statement that tends to injure plaintiff in its business or trade may be actionable as defamation per se without a showing of any special damages. Liberman v. Gelstein, 80 NY2d 429, 435 (1992).

The statements at issue are alleged to be libelous per se since they call into question the competency of BVCPS's testing procedures and thus tend to injure BVCPS in its business. However, such statements must be considered in light of the context in which they were made. Dillon v. City of New York, 261 AD2d at 38. Here, it is evident that the May 28 Letter was written to A2LA for the purpose of providing it with a copy of the summons and complaint in this action, to describe the nature of the action, and to request that in light of the claims in this action that A2LA conduct an investigation of BVCPS and consider withdrawing BVCPS's accreditation. Thus, the May 28 Letter begins by with the following "I write you regarding a complaint against an A2LA accredited laboratory. As you know, on April 24, 2009, my client GS... commenced legal action against defendants [BV]...and [BVCPS]. The lawsuit was served on each defendant [on] April 28, 2009. A copy of the Summons and Complaint are enclosed." The letter next describes the scope of A2LA's accreditation of BVCPS, emphasizing its accreditation for testing relevant to this action, i.e. "certain chemical, physical and mechanical tests on toys and juvenile products to applicable safety standards.'"

The following paragraph describes "GS as a manufacturer of toy premiums'" and states that "the core of GS' complaint is that... [BVCPS] ...incompetently or maliciously conducted conformity tests in a manner that stigmatized GS and caused GS significant injury. The conformity tests that are the subject of the Complaint were conducted in the A2LA accredited laboratory." The next sentence, which the counterclaim alleges is actionable as libel per se, states that "[i]t is likely that the same A2LA accredited Buffalo laboratory has conducted many deficient or wrongful assessments (emphasis supplied). The A2LA accredited Buffalo laboratory may continue in these practices" (emphasis supplied).

The letter's next paragraph, which BVCPS also asserts in libelous per se, states that "[in] light of such scandals such as poisoning of babies in China through melamine tainted baby formula, practices that put our most vulnerable consumers at risk are currently under scrutiny. The passing of the Consumer Product Safety Improvement Act of 2008 is an example of such scrutiny."

The final paragraph states that "A2LA should demonstrate that it is not complicit in [BV/BVCPS'] behavior. I urge the A2LA to review the enclosed Complaint and, as clarified in the A2LA's/October 2008 R101—General Requirements: Accreditation of ISO/IEC 17025 Laboratories, require the Buffalo laboratory to undergo an Extraordinary Assessment. The last sentence of this paragraph, which the counterclaim alleges is libelous per se, states that A2LA should " [c]onsider suspending or withdrawing the Buffalo laboratory's accreditation, or undertake other action that insulates A2LA from the Buffalo laboratory's deficient practices, sheer lack of competence or other behavior."

As a preliminary matter, the court notes to the extent the May 28 Letter constitutes "a [*5]publication of a fair and true report of a judicial proceeding," the statements in the letter are protected by an absolute privilege under section 74 of the Civil Rights Law. See Fishof v. Abady, 280 AD2d 417, 418 (1st Dept 2001). " For a report to be characterized as fair and true within the meaning of the statute ...it is enough if the substance of the [report] be substantially accurate...the language used therein should not be dissected and analyzed with a lexicographer's precision.'" Ford v. Levinson, 90 AD2d 464, 465 (1st Dept 1982), quoting, Holy Spirit Ass'n for Unification of World Christianity v. New York Times, Co., 49 NY2d 63, 67 (1979). "[T]he absolute privilege under the statute extends to background material with regard to the case...so long as the statement is a substantially accurate description of the allegation....[and] [t]his is certainly true where the description of the case is offered by a party's legal counsel." See Fishof v. Abady, Id., at 417-418 (citations omitted).

Here, the complaint alleges that BVCPS conducted incompetent tests and had deficient testing procedures in violation of A2LA's standards which undermined BVCPS's accreditation status. Thus, the statement in the May 28 Letter referring to BVCPS's "deficient practices, sheer lack of competence or other behavior" reflects the substance of this action and does not suggest more serious conduct that alleged in the complaint. Hughes Training Inc. , Link Div. v. Pegasus Real-Time, Inc., 255 AD2d 729, 730 (3d Dept 1998); Denise Rich Songs, Inc. v. Hester, 5 Misc 3d 1013(A)(Sup Ct NY Co 2004). Furthermore, while the request that A2LA take action based on BVCPS's alleged conduct is not part of the complaint, the request in and of itself is not susceptible to defamatory meaning.

Next, while the statements in the letter that "[i]t is likely that the same A2LA accredited Buffalo laboratory has conducted many deficient or wrongful assessments...[and that] [t]he A2LA accredited Buffalo laboratory may continue in these practices," appear to go beyond the allegations in the complaint in this action and therefore would not subject to protection under section 74 of the Civil Rights Law, they are nonactionable expressions of opinion. The issue of whether a statement is a fact or opinion is for the court to resolve "on the basis of what the average person hearing or reading the communication would take it to mean." Steinhilber v. Alphonse, 68 NY2d 283, 290 (1986). The Court of Appeals analyzes the following factors to distinguish fact from 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.'" Gross v. New York Times Co., 82 NY2d 146, 153 (1993) (quoting Steinhilber v. Alphonse, supra).

Applying this test here, the court finds that the statements at issue are protected opinion. Notably, as the statements use the words "it is likely" and "may" when describing BVCPS's purported misconduct, an average reader would understand these words " as mere allegations to be investigated rather than as facts.'" Vengroff v. Coyle, 231 AD2d 624, 625 (2d Dept 1996), quoting, Brian v. Richardson, 87 NY2d 46, 53 (1995). In addition, while the statements at issue arguably are capable of being proven true or false, this factor alone is not dispositive, particularly when, as discussed below, the context in which the statements are made demonstrates that the words would not be understood as statements of fact as opposed to opinion or conjecture. Steinhilber v. Alphonse, 68 NY2d at 294-295. [*6]

"[I]n distinguishing between actionable factual assertions and nonactionable opinion, the courts must consider the content of the communication as a whole, as well as its tone and apparent purpose. Rather than sifting through a communication for the purpose of isolating and identifying assertions of fact, the court should look to the over-all context in which the assertions were made..." Brian v. Richardson, 87 NY2d at 51. "In addition to considering the immediate context in which the disputed words appear, the courts are required to take into consideration the larger context in which that statements are published, including the nature of the particular forum." Id.

In this case, that statements were made in a letter to A2LA, the entity charged with BVCPS's accreditation, to report that an action had been filed arising out of allegations that BVCPS failed to use proper testing procedures and failed to follow the standards appropriate to an accredited testing company and to request that BVCPS therefore be investigated.[FN2] Notably, the May 28 Letter was only served on A2LA and counsel for the defendants in this action. Given this context, the average reader would not believe the challenged statements were assertions of fact regarding BVCPS but, rather, would understand that they were in the nature of allegations that GS was urging A2LA to investigate. Otherwise put, the statements in the context of the May 28 Letter were not meant to convey the fact that BVCPS had committed misconduct beyond the allegations in the complaint in this action but rather to inform A2LA that if BVCPS had used deficient testing procedures with respect to GS' product, it may have performed similar deficient testing in other cases, and should be investigated.

In addition, under these circumstances, and contrary to BVCPS's position, it cannot be said that the statements are actionable as "mixed opinion" based on undisclosed facts. "The actionable element of a mixed opinion' is not the false opinion itself—it is the implication that the speaker knows certain facts, unknown to the audience, which support his opinion and are detrimental to the person about whom he is speaking." Steinhilber v. Alphonse, 68 NY2d at 290. Here, the May 28 Letter did not imply that any facts were known to GS or its counsel that were not disclosed to A2LA.

Finally, the court finds that the reference in the May 28 Letter to the poisoning of babies in China through melamine tainted baby formula is not sufficiently connected with the issues concerning BVCPS's testing procedures to give rise to an claim for libel per se.

Conclusion

In view of the above, it is

ORDERED that the motion to dismiss the counterclaim is granted.

DATED: April,2010

J.S.C. Footnotes

Footnote 1: BVCPS is alleged to be the wholly owned subsidiary of defendant Bureau Veritas.

Footnote 2:Even if, as alleged by BVCPS, GS provided the complaint to A2LA before it wrote the letter, this fact alone would not change the primary intent of the letter.