TRAGER, District Judge.
Among other issues, this case raises an interesting and somewhat novel defamation question. In an age of increasingly efficient information collection, the case highlights the conflict between the justifiable goal of more efficient government and a person's interest in his reputation, that "plant of tender growth, [whose] bloom, once lost, is not easily restored." Karlin v. Culkin, 248 N.Y. 465, 478, 162 N.E. 487 (N.Y.1928) (Cardozo, C.J.). Specifically, the case presents the question whether, under New York State law, the traditional rule that consent to publication bars a defamation claim should be applied where to bid on government contracts a person must place defamatory material into New York City's computerized procurement system. I conclude that the New York Court of Appeals would hold that an action for defamation should lie where a plaintiff has no
Plaintiffs are three corporations (Van-Go, Sterling Coach, and Celebrity Transit), all in the business of providing bus or van transportation, and Paul and Isaac Dachs, their two principals. Van-Go had a two year contract with the Board of Education ("BOE" or "Board") from September 1988 that had repeatedly been extended through June 30, 1996, providing transportation for severely disabled pupils in vans with a driver and two escorts. This contract required Van-Go's drivers to carry the pupils from their residences. See Compl. ¶¶ 14-15.
The events leading to this lawsuit apparently resulted from a labor dispute. In 1993, Van-Go was not organized by Local 1181-1061, Amalgamated Transit Union, AFLCIO ("Local 1181"), the primary union representing bus drivers for the BOE; instead, it paid lower wages and was organized by District 6 International Union of Industrial, Service, Transport and Health Employees ("District 6"), whose contract expired on March 31, 1994. See Compl. ¶ 25. In October or November 1993 paid organizers from Local 1181 began organizing Van-Go employees. See Compl. ¶ 26. At the same time, District 6 filed a still-unresolved unfair labor practices complaint against Van-Go, blocking any change in union representation. See Compl. ¶ 27.
In late January or early February 1994, the BOE's Executive Director of Operational Support Services Kevin Gill placed Van-Go's contract out for re-bid "in anticipation of the successful organization of Van-Go by Local 1181 and what seems to be an inevitable job action as a result." Defs.' Ex. D, undated Ltr. from Kevin Gill ("Gill Ltr."). The letter states: "The President of Van-Go has informed us that he will not be able to pay the wages typically demanded by Local 1181 under the current terms of his Board contract." Id.
The contract between Van-Go and the BOE also required that Van-Go's employees be approved pursuant to a background check, mental fitness report, drug test, and training course. Plaintiffs assert that this process often took six months to a year. See Compl. ¶ 17. The contract between Van-Go and the BOE included a clause stating: "The Contractor must have sufficient, qualified and approved personnel to enable the Contractor to dispatch substitute escorts promptly if, when and where necessary to ensure continuous, uninterrupted and punctual service in each and every instance." Defs.' Ex. A "Extension and Second Amendment of Contract," § (D) at 10. Plaintiffs allege that it was the BOE's "uniform practice and policy to approve conditionally new employees...." Compl. ¶ 18. Plaintiffs state that the BOE has no policy limiting the number of conditional employee approvals, see Compl. ¶ 21, and had previously "certified conditionally drivers in excess of the number needed for regular service...." Compl. ¶ 23.
Van-Go learned that Local 1181 planned to initiate a strike against it around April 4, 1994; it notified the BOE by letter dated March 16, 1994. See Compl. ¶¶ 29-30. The BOE certified potential replacement workers as it had in the past. See Compl. ¶¶ 32-33. Plaintiffs allege that Local 1181 called off the strike because the BOE had conditionally certified replacement workers. See Compl. ¶ 35.
The complaint further alleges that Gill discussed Van-Go's attempts to obtain replacement workers with representatives of Local 1181. See Compl. ¶ 37. Gill, on behalf of the BOE, informed Van-Go by letter dated April 7, 1994, that it would not conditionally approve employees "`to act as strike breakers....'" Compl. ¶ 38. Plaintiffs contend that Gill's act was a deviation from its long-standing practice of conditional certification, and that as a result, Van-Go was unable to obtain replacement employees. See Compl. ¶¶ 38-42. Gill's action was appealable to the Chancellor, who acts through a Board of Review, which has the power to review Gill's decision as well as contractor qualifications. See Defs.'s Mot., Aff. of Richard Langford, Deputy Dir. of Contractual and Regulatory Affairs dated Sept. 15, 1995 ¶¶ 9-13, 21-23. Van-Go did appeal to the Board of Review, but no hearing was ever held. See Compl. ¶ 45.
Subsequently, Celebrity and Sterling, the sister companies of Van-Go, submitted proposals for the Van-Go contract. Sterling was the apparent low bidder for contract number 7200, and Celebrity was the apparent low bidder for contract number 7291. See Defs.' Ex. E, Ltr. from Gill to Paul Dachs dated July 27, 1994. In both cases, the BOE, acting through Gill, requested "written assurance and a plan" that would describe how the companies would fulfill their contracts given Van-Go's labor problems. Compl. ¶¶ 55-58, Defs's Ex. E. At the time the bids were submitted, Sterling had no employees. See Defs.' Ex. H, Test. of Paul Dachs at Board of Review Hr'g November 9, 1994, at 5. Plaintiffs assert that this request was an additional requirement not in the bid materials, not ordinary practice, and that other contractors were not subjected to this requirement. See Compl. ¶ 57. By letter dated August 4, 1994, Celebrity and Sterling provided a plan to Gill proposing that replacement workers be used in the event of a strike. See Compl. ¶ 59.
On August 23, 1994, the BOE informed Celebrity and Sterling that it was awarding the contracts to other contractors because their refusal to perform without conditional certification of workers constituted a "qualification [conditional submission] of the bid." Compl. ¶ 60; Defs.' Ex. F, Ltr. from Richard W. Scarpa, Acting Director of Purchasing to Paul Dachs dated August 23, 1994 ("Scarpa Ltr."). This letter also stated that the BOE had received allegations of criminal activity, specifically, "the possibility of criminal activity constituting the offer of gratuities to government officials," which provided another ground for refusal to award the bid. Scarpa Ltr. Plaintiffs allege that this statement was false, and made with knowledge of its falsity, or with reckless disregard for its accuracy. See Compl. ¶ 62.
Plaintiffs appealed to the Board of Review on August 29, 1994. See Compl. ¶ 64. On October 14, 1994, plaintiffs requested that the BOE produce the names of the persons who were the sources of the allegations concerning gratuities. The BOE refused to provide these names, but also stated that no testimony concerning gratuities would be permitted at the hearing. See Compl. ¶¶ 64-66; Defs.' Ex. G. No testimony regarding the allegations was presented at the hearing; plaintiffs allege this lack of testimony was due to defendants' knowledge that the accusations were false. The Board of Review, finding that Sterling and Celebrity submitted "qualified" bids, denied the appeal on November 23, 1994, and issued a formal decision on April 26, 1995. See Compl. ¶¶ 67-69; Defs.' Ex. H.
Plaintiffs further allege that the BOE's acts were taken on behalf of Local 1181; that the false allegations regarding gratuities have been entered into the City's procurement system, resulting in their reappearance for every City bid; that the Department of Transportation delayed in awarding a contract to Celebrity because of the allegations; and that the plaintiffs have had no opportunity to refute the allegations of gratuities. See Compl. ¶¶ 70-73.
Plaintiffs brought suit in this court on June 30, 1995. Their complaint alleged five causes of action. Two counts were brought under 42 U.S.C. § 1983, alleging violations of federal labor law and due process.
Because both parties submitted materials beyond the complaint the remaining part of the motion was converted into one for summary judgment. Upon notice to the parties of the conversion, and additional oral argument, this remaining portion of the motion was granted in part and denied in part on February 6, 1997. This opinion explains the reasons for that decision.
Count V of the complaint alleges that two defamatory statements were made. The complaint first alleges that
Compl. ¶ 107. This allegation is based on the Scarpa letter, which states in pertinent part:
The second defamatory statement ("second claim") is alleged to be contained in the Gill letter, which the complaint refers to as follows:
Compl. ¶ 109. The letter stated:
The complaint alleges that "these statements falsely impugned the basic trustworthiness and integrity of plaintiff's business, and are libel per se." Compl. ¶ 110. The complaint also alleges that the statements were made with actual malice, and that they "were wilful, intentional and wanton." Compl. ¶ 111.
In support of their motion, defendants make several arguments. Defendants argue that the Gill letter is not defamatory, that the statements are true or substantially true, and that the communication is privileged. Defendants argue that the Scarpa letter is not defamatory when considered in context, that there was no publication of the letter's contents, that the communication is qualifiedly privileged, and that plaintiffs failed to plead special damages.
Motion Conversion and Summary Judgment Standard
Although defendants moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), they submitted additional evidence in the form of letters, exhibits, affidavits, and a declaration. Plaintiffs submitted a declaration that incorporates by reference the statements in the complaint. The motion was converted, upon notice and an opportunity to be heard, into one for summary judgment. See Fed. R.Civ.P. 12(c); Kennedy v. Empire Blue Cross and Blue Shield, 989 F.2d 588, 592 (2d Cir.1993); In re G & A Books, Inc., 770 F.2d 288, 295 (2d Cir.1985).
On a motion for summary judgment, the moving party bears the burden of showing the absence of a genuine issue of material fact. See B.F. Goodrich v. Betkoski, 99 F.3d 505, 521 (2d Cir.1996) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970)). "[A]ll inferences from the underlying facts must be drawn in the non-movant's favor." B.F. Goodrich, 99 F.3d at 521 (citing Quaratino v. Tiffany & Co., 71 F.3d 58, 64 (2d Cir.1995)). The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion, and identifying the materials submitted that demonstrate the absence of a genuine issue of material fact. See Cubby, Inc. v. CompuServe, Inc., 776 F.Supp. 135, 138 (S.D.N.Y.1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986)). In cases such as this, "where the moving party does not bear the ultimate burden of proof on an issue ... that party [can satisfy its] burden by `point[ing] to the absence of evidence to support an essential element of the non-moving party's claim.'" J & J Sheet Metal Works, Inc. v. Picarazzi, 793 F.Supp. 1104, 1108 (N.D.N.Y.1992) (applying standard to defendant's motion for summary judgment in defamation action) (quoting Brady v. Town of Colchester, 863 F.2d 205, 211 (2d Cir.1988)). Once the moving party has met its burden, "[t]he non-movant may defeat summary judgment only by producing specific facts showing that there is a genuine issue of material fact for trial." Samuels v. Mockry, 77 F.3d 34, 35 (2d Cir.1996). The court's function is to determine whether genuine issues of fact exist, not to decide them: "`Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution.'" B.F. Goodrich, 99 F.3d at 522 (quoting Gallo v. Prudential Residential Svcs., 22 F.3d 1219, 1224 (2d Cir.1994)).
Under New York law, a plaintiff seeking damages for libel must plead and prove four elements: (1) a defamatory statement
Id. at 594, 493 N.Y.S.2d 1006, 483 N.E.2d 1138 (citations omitted). In Aronson, the court held that the expression of unhappiness with an employee's performance was not libelous as a matter of law. See id. In James v. Gannett Co., 40 N.Y.2d 415, 419-20, 386 N.Y.S.2d 871, 353 N.E.2d 834 (N.Y.1976), the court found that the statement "Men is my business" was not defamatory, because in the context of the article about the plaintiff (a belly dancer), it was clear that her remark meant that men came to her show to see her dance and talk to her, and that it was not reasonable to infer from this statement that she was a prostitute. Conversely, in Carney v. Mem'l Hosp. and Nursing Home of Greene County, 64 N.Y.2d 770, 772, 485 N.Y.S.2d 984, 475 N.E.2d 451 (N.Y.1985) the court held that the statement that a hospital employee had been dismissed "for cause" was susceptible to a defamatory connotation, and, therefore, the question of whether it was in fact defamatory was a question for the jury.
Related to their contention that the statements are not defamatory, defendants also argue that the plaintiffs' complaint is deficient because it does not plead special damages. Plaintiffs initially captioned this cause of action "trade libel." In New York, trade libel is the disparagement of a business's goods or services. It requires a showing of false, defamatory statements published to a third party, malice, and special damages. See Kirby v. Wildenstein, 784 F.Supp. 1112, 1115 (S.D.N.Y.1992). The gravamen of trade libel is revealed by its alternative name: product disparagement. See id. It does not protect the reputation of the business as such. See Ruder & Finn, Inc. v. Seaboard Sur. Co., 52 N.Y.2d 663, 670-71, 439 N.Y.S.2d 858, 422 N.E.2d 518 (N.Y.1981). Here, the gist of the plaintiffs' complaint is that the statements "falsely impugned the basic trustworthiness and integrity of [their] business...." Compl. ¶ 110. As a result, these claims do not sound in trade libel, but rather, in a claim for reputational injury to their business.
Reputational injury to a person's business, or to a company, consists of a statement that either imputes some form of fraud or misconduct or a general unfitness, incapacity, or inability to perform one's duties. See Liberman v. Gelstein, 80 N.Y.2d 429, 436, 590 N.Y.S.2d 857, 605 N.E.2d 344 (N.Y. 1992) (holding that a statement that does not reflect upon a person's competence in their role, rather than as a person, is not defamatory as to that person's business); see also Carney, 64 N.Y.2d at 772, 485 N.Y.S.2d 984, 475 N.E.2d 451 (holding that a statement that might suggest plaintiff is incompetent has pled a valid libel cause of action). Thus, the statement need not subject a person or business to ridicule or similar contempt; however, the statement must impugn the plaintiff's ability to perform his or her specific occupation. See Liberman, 80 N.Y.2d at 436, 590 N.Y.S.2d 857, 605 N.E.2d 344. Because a statement impugning the plaintiff's business reputation is libel per se, special damages need not be pled. See Ruder & Finn, 52 N.Y.2d at 670, 439 N.Y.S.2d 858, 422 N.E.2d 518. A statement may be shown to be libelous per se by pleading extrinsic
Applying these precedents, the Gill letter is not defamatory as a matter of law. Plaintiffs allege that the statements are defamatory because they impugn the ability of the firm to perform. This claim fails for several reasons. First, the letter explicitly states that the defendants' concern springs from the fact that Van-Go has informed the BOE that it cannot pay the higher wages "typically demanded by Local 1181 under the current terms of [the] contract." Defs.' Ex. D (emphasis added). Thus, the letter refers to a single issue, about a single contract. There is no indication that the BOE or Gill is suggesting that Van-Go is generally untrustworthy or incapable of performing its contracts. Had the letter simply stated that the plaintiffs cannot perform the contract if they must pay higher wages it would fall within the rule that a statement alleging a single mistake or error is not actionable. See November v. Time, Inc., 13 N.Y.2d 175, 178, 244 N.Y.S.2d 309, 194 N.E.2d 126 (N.Y.1963).
Additionally, the letter is not defamatory because taken as a whole it does not impugn plaintiffs' business. The letter does state that because Local 1181 will succeed in its organization of Van-Go's employees, there will be an "inevitable job action" and a possible "disruption of service." Without more, the statement might well be susceptible of a defamatory meaning, at least at this stage in the proceedings. However, a statement must be judged in the context of the entire communication. See James v. Gannett Co., 40 N.Y.2d 415, 419-20, 386 N.Y.S.2d 871, 353 N.E.2d 834 (N.Y.1976). The same letter states: "The school bus company [Van-Go] currently providing this service ... provides excellent service to the children. Normally we would have no reason to bid this work." Gill Ltr. The letter also states: "Bidders should also be aware that in the event there is no job action, we do not intend to make an award." Id. The assertion by plaintiffs that these statements are defamatory is directly contradicted by the praise for Van-Go, coupled with the statement that if there is no action, then there will be no award of the contract. Taken in its worst light, the statements only imply that due to forces beyond Van-Go's control it may be unable to fulfill its contract. This is not a libelous statement about plaintiffs' business, however, because the basis for the statement is the act of an external factor over which Van-Go has no control: Local 1181. When read with the entire statement it is clear that no impugning of plaintiffs' business is evident. Nor do any of the extrinsic facts pleaded in the complaint render the statements libelous, for even if all the facts pled in the complaint were known to the recipients of the Gill letter, its import would still be the same. Only a strained and highly implausible reading of the letter could permit a defamatory meaning to emerge, and so this statement is not defamatory as a matter of law.
The Scarpa letter presents several different issues. Unlike the Gill letter, the
Defendants argue that plaintiffs have suffered no damages, citing the fact that Celebrity has since been awarded a contract by the City. However, when the action is for libel per se, as it is here, the injury is presumed. See Ruder & Finn, Inc. v. Seaboard Sur. Co., 52 N.Y.2d 663, 670, 439 N.Y.S.2d 858, 422 N.E.2d 518 (N.Y.1981) ("Where a statement impugns the basic integrity or creditworthiness of a business, an action for defamation lies and injury is conclusively presumed.") Plaintiffs need not plead special damages. See id.; see also Yesner v. Spinner, 765 F.Supp. 48, 52 (E.D.N.Y.1991) ("It has long been the law in New York that a defamatory statement that is a direct attack upon the business, trade or profession of the plaintiff is considered defamation `per se', and therefore actionable without any proof of special damages.") (citing cases). Presumed damages are not limited to "out-of-pocket loss but, rather, also include impairment of reputation and standing in the community, personal humiliation and mental anguish and suffering." Wachs v. Winter, 569 F.Supp. 1438, 1446 (E.D.N.Y.1983) (citing Gertz v. Robert Welch, Inc., 418 U.S. 323, 350, 94 S.Ct. 2997, 3012, 41 L.Ed.2d 789 (1974) and holding that "where the language alleged is libelous per se, the plaintiff need not plead or prove special damages in order to recover them.") (footnote and citation omitted). Even where the plaintiff can show no actual damages at all, a plaintiff who has otherwise shown defamation may recover at least nominal damages. See Meehan v. Snow, 494 F.Supp. 690, 695-96 (S.D.N.Y.1980), reversed on other grounds, 652 F.2d 274 (2d Cir.1981) (awarding compensatory damages to lawyer who had been slandered even though lawyer's business increased after the defamatory statement); see also Buckley v. Littell, 539 F.2d 882 (2d Cir.1976) (awarding one dollar in compensatory damages).
The defendants also argue that the plaintiffs are barred from bringing a defamation action because the plaintiffs themselves placed the defamatory matter into the City's Vendex system. Put differently, they argue that the plaintiffs' compliance with the City's bidding requirements should be construed as a consent to the publication, barring their claim. Because this defense raised the novel issue of compelled self publication, the parties were asked to discuss publication by means of reproduction in the City's Vendex system.
A business must submit a Vendex questionnaire when it submits a bid for a contract for more than $100,000.00, or for a bid of more than $10,000.00 awarded through a sole source procedure, or when the aggregate business of the contractor totaled more than $100,000.00 for the prior year, or if the entity wishes to be placed on a prequalified list. See "A Vendor's Guide to Vendex" ("Guide") at 1, attached to Ltr. to court from Susan Shapiro, Esq. counsel for defendants dated May 2, 1996 ("Shapiro Ltr."); 9 R.C.N.Y. § 5-02.
Persons wishing to contract with the City are instructed to list on the Vendex questionnaire all incidents of contract denials, suspensions, terminations, rejections and the basis for those actions. See Business Entity Questionnaire ("BEQ") Question 12, attached to Shapiro Ltr. Additionally, the questionnaire requires information on criminal and civil investigations within a five year period. Significantly, the Guide states that when answering Question 17, "if you suspect that the submitting business, its principal owners and officers and/or its affiliates were the subject of an investigation but are unsure, answer `Yes' and attach an explanation of the reasons for your suspicion(s)." Guide at 8. The Guide further states that a statement that is materially false and fraudulently or willfully made "in connection with this questionnaire
The forms for Celebrity and both Dachs listed the reason for denial of Celebrity's contract as "qualified bid and unsubstantiated allegation of offering gratuity to inspector." "Principal Questionnaire" for Paul Dachs ("Dachs PQ") at 7, attached to Shapiro Ltr. Printouts of the information displayed on the Vendex program computer screens for plaintiffs indicate that this information appeared in data files on all of the plaintiffs, but in modified form. Despite the statement by the Board of Review that the bribery allegation would not be considered at the hearing, and presumably would not be at issue, the Vendex system lists "bribery" as the reason for the denial of the bid, and a comments field displays the language plaintiffs used: "qualified bid and allegation of offering grat[uity]." Vendex VDMXQ802, attached to Shapiro Ltr.
Defendants make several arguments regarding Vendex publication. First, they assert that the Vendex notices are not punitive because the purpose of the system is to allow the City to "make well-informed decisions with respect to those with whom it contracts." Shapiro Ltr. at 3. This argument misses the mark. There is no doubt that the City can establish the Vendex system for the legitimate purpose of monitoring its contracting relationships. Cf. Sanitation and Recycling Ind., Inc. v. City of New York, 107 F.3d 985, 990-94 (2d Cir.1997) (upholding city's carting regulatory scheme); Valmonte v. Bane, 18 F.3d 992, 1003 (2d Cir.1994) (noting that state has a strong interest in maintaining centralized child abuse registry); Lee TT v. Dowling, 87 N.Y.2d 699, 708-9, 642 N.Y.S.2d 181, 664 N.E.2d 1243 (N.Y.1996) (holding that state's registry of suspected child abusers is a legitimate exercise of the police power).
That power, however, is not limitless. As the Court of Appeals for the District of Columbia Circuit stated in a similar context: "Thus to say that there is no `right' to government contracts does not resolve the question of justiciability. Of course there is no such right; but that cannot mean that the government can act arbitrarily, either substantively or procedurally, against a person...." Gonzalez v. Freeman, 334 F.2d 570, 574 (D.C.Cir.1964). While it may well be that to be effective, a system like Vendex must inevitably contain defamatory matter, nothing in New York law supports the proposition that the power to establish the Vendex system confers an unqualified right to defame.
Defendants make two additional arguments regarding publication, one of which appears to be an open question under New York law. First, they assert that there can be no liability because the plaintiffs effectively consented to the publication of the statements. Second, they argue that even if publication is found, that the statements are subject to a qualified privilege, and that, therefore, liability cannot attach. In response, plaintiffs argue that because they merely repeated what Scarpa's letter stated, and because the BOE knew that the plaintiffs were required to report the unsubstantiated allegations in the Scarpa letter, see Ltr. to court from Robert J. Jossen, Esq. counsel
Publication of a libel to a third party is a necessary element of a defamation claim. See Youmans v. Smith, 153 N.Y. 214, 218, 47 N.E. 265 (N.Y.1897). Publication occurs when the libelous words are read "by someone other than the person libeled and the person making the charges." Fedrizzi v. Washingtonville Cent. Sch. Dist., 204 A.D.2d 267, 268, 611 N.Y.S.2d 584 (2d Dep't 1994). To be liable for defamation, the defendant must induce or cause publication in some fashion; a person who makes a defamatory remark is not liable for its repetition if they have no control over the publication. See Schoepflin v. Coffey, 162 N.Y. 12, 17, 56 N.E. 502 (N.Y.1900). In New York, consent to publication is a bar to a defamation action. See Teichner v. Bellan, 7 A.D.2d 247, 251, 181 N.Y.S.2d 842 (4th Dep't 1959). This rule is subject to the important qualification that a plaintiff who authorizes an inquiry is not to be deemed to have consented unless she has reason to think that the statement will be defamatory. See id.
Plaintiffs' defamation claim is best seen as one for compelled self publication, a narrow exception to the rule of no liability. This concept embraces several theories. A defendant may be liable for defamation if the defendant "`knew or could have foreseen that the plaintiff would be compelled to repeat the defamatory statement.'" J. Crew Group, Inc. v. Griffin, No. 90 Civ. 2663, 1990 WL 193918 at *2 (S.D.N.Y. Nov.27, 1990) at *2 (quoting Churchey v. Adolph Coors Co., 759 P.2d 1336, 1344 (Colo.1988) (en banc)). The second theory "`imposes liability if the defendant knew or could have foreseen that the plaintiff was likely to repeat the statement.'" J. Crew, at *2 (quoting Churchey at 1344). Another approach is suggested by the Restatement (Second) of Torts, which finds publication to have occurred when a defamed plaintiff communicates a defamatory statement "without an awareness of the defamatory nature of the matter and if the circumstances indicated that communication to a third party would be likely...." Restatement (Second) of Torts § 577 cmt. m (1976).
Generally, the issue of compelled self publication arises in employee termination cases, where the terminated plaintiff asserts that she is compelled to repeat the defamatory statement in the process of applying for a new job. See Lewis v. Equitable Life Assurance Society of the United States, 389 N.W.2d 876, 886 (Minn.1986) (collecting cases). The argument is essentially a proximate cause one:
McKinney v. Santa Clara County, 110 Cal.App.3d 787, 797-98, 168 Cal.Rptr. 89 (1st Dist.1980). Most courts that have endorsed the theory have adopted a standard composed of compulsion and foreseeability rather than a standard that allows liability on a lesser showing of likelihood or reasonableness. See, e.g., Chrzanowski v. Lichtman, 884 F.Supp. 751, 755 (W.D.N.Y.1995); J. Crew Group, at *3; Elmore v. Shell Oil Co., 733 F.Supp. 544, 546 (E.D.N.Y.1988); Lewis, 389 N.W.2d at 888 (holding that liability exists only where "defamed person has no reasonable means of avoiding publication of the statement or avoiding the resulting damages").
There is scant law on this issue in New York. In a memorandum decision, Wieder v. Chemical Bank, 202 A.D.2d 168, 170, 608 N.Y.S.2d 195 (1st Dep't 1994), lv. to appeal denied, 83 N.Y.2d 759, 615 N.Y.S.2d 876, 639 N.E.2d 417 (1994), the First Department flatly rejected a claim of compelled self publication in the case of a lawyer who was discharged for misconduct. However, the Weider decision rests on the holding in Weintraub v. Phillips, Nizer, Benjamin, Krim, & Ballon, 172 A.D.2d 254, 255, 568 N.Y.S.2d 84
More recently, a trial court adopted the self publication rationale, although it limited the relief to a name-clearing hearing. In Wright v. Guarinello, 165 Misc.2d 720, 635 N.Y.S.2d 995 (Sup.Ct.Kings Cty.1995), plaintiff Wright brought an Article 78 proceeding following his termination by a social service agency against the state Office of Mental Retardation and Developmental Disabilities. Wright was terminated for "misconduct" after a report that he improperly handled a disabled person. Pursuant to state regulations Wright's employer was required to report this charge of abuse. Wright argued that he was faced with the choice between failing to disclose information that was available through a state maintained system and full disclosure, which would result in his inability to obtain a job. See id. at 721-22, 635 N.Y.S.2d 995. The court ordered a name clearing hearing and suggested that the theory of compelled self publication should be adopted in New York, at least in a situation where a potentially defamatory statement must be reported:
Id. at 725, 635 N.Y.S.2d 995. While this case, (like Valmonte and Lee TT) is concerned with the harm that flows from disclosure to third parties, that fact is not dispositive here. The critical similarity between Wright and this case is the plaintiff's lack of control over the publication.
Interestingly, there is more law in the Second Circuit discussing the application of this doctrine in New York, but there is no consensus on its application. The Eastern District has recognized the doctrine. See Elmore v. Shell Oil Co., 733 F.Supp. 544, 546 (E.D.N.Y.1988). In Elmore the court held that a plaintiff fired after being accused of wrongdoing stated a claim for compelled self publication because he would be unable to fabricate a story about his sudden discharge after 15 years of employment. See id. The doctrine was also adopted in the Western District, in Weldy v. Piedmont Airlines, No. CIV-88-628E, 1989 WL 158342 (W.D.N.Y. Dec.22, 1989) (Elfvin, J.), where the court stated its belief that the New York Court of Appeals would adopt this doctrine:
Id. at *6.
The Southern District has repeatedly considered the question but has not arrived at a consensus. In Mandelblatt v. Perelman, 683 F.Supp. 379, 386 (S.D.N.Y.1988), the court discussed the doctrine in some detail, but found it unnecessary to decide whether New York would adopt it. In Burger v. Health Ins. Plan of Greater New York, 684 F.Supp. 46, 52 (S.D.N.Y.1988), the court declined to exercise pendent jurisdiction over a defamation claim, holding that on such a matter of important policy, a New York court should make the initial decision. In J. Crew Group,
In reviewing these cases, two trends seem apparent. When actually required to decide, most federal district courts hold that New York would adopt the doctrine of self-publication. Further, they largely agree that the Weldy formulation is the proper one, and that properly understood it requires a plaintiff to show both foreseeability and compulsion. See, e.g., J. Crew Group, at *4.
It seems reasonable to assume that the New York Court of Appeals would adopt the doctrine in a form that allowed for liability where, such as in the instant case, there was a high degree of compulsion that required the reporting of the defamatory matter. Because of the Court of Appeals's historic concern for unlimited liability, however, the doctrine may be subject to qualification. See, e.g., Tobin v. Grossman, 24 N.Y.2d 609, 612, 301 N.Y.S.2d 554, 249 N.E.2d 419 (N.Y. 1969). The court might be more likely to adopt an approach limiting defamation claims where some consent to publication existed to only those claims where plaintiffs could show a lack of control over the publication. See Schoepflin v. Coffey, 162 N.Y. 12, 17, 56 N.E. 502 (N.Y.1900). Implicit in the concept of consent is the conception that the consenting party have the power to control the publication. See id. Thus, there can be no finding of consent where, as here, there is no effective control over the dissemination of the defamatory material. This approach would accord with older New York cases. See, e.g., Schoepflin at 17, 56 N.E. 502; see also Mandelblatt v. Perelman, 683 F.Supp. 379, 383 (S.D.N.Y.1988) (noting that under New York law consent to a publication does not entail consent beyond the scope of the consent).
Assuming that New York would adopt such a cause of action, plaintiff has sufficiently pled both elements of compelled self publication. Given the structure of the Vendex system, it was foreseeable that the allegation would be reproduced by plaintiffs. The element of compulsion also exists, inasmuch as plaintiffs would be required to report the reason for their failure to obtain the bid when submitting a new bid. The fact of plaintiffs' consent to the Vendex system does not establish an absolute bar. See Mandelblatt at 683. A contractor's desire to compete for government contracts does not strip that contractor of all rights any more than it can cloak irrational, arbitrary, or malicious government action with total immunity. Thus, plaintiffs have established publication.
Assuming for the purposes of this motion that the bribery allegation is false, defendants argue that the statement was, nonetheless, privileged. "Qualified privilege attaches to otherwise actionable defamatory words when `[a] communication [is] made bona fide upon any subject-matter in which the party communicating has an interest, or in reference to which he has a duty ... if made to a person having a corresponding interest or duty.'" Elmore v. Shell Oil Co., 733 F.Supp. 544, 546 (E.D.N.Y.1988) (quoting Shapiro v. Health Ins. Plan of Greater New York, 7 N.Y.2d 56, 60, 194 N.Y.S.2d 509, 163 N.E.2d 333 (N.Y.1959)). To assert a qualified privilege, a party "must establish that the allegedly defamatory statement
Here, the relevant communication is between Scarpa and the other users of the Vendex system, presumably City agencies. The statement made by Scarpa is precisely of the kind that a privilege is intended to cover: a statement alleging bribery of a government official would be an allegation that City agencies attempting to award contracts to responsible bidders would wish to be informed of, and it is a matter of common concern.
A qualified privilege is not, however, unlimited: "The shield provided by a qualified privilege may be dissolved if plaintiff can demonstrate that defendant spoke with `malice.'" Liberman v. Gelstein, 80 N.Y.2d 429, 437, 590 N.Y.S.2d 857, 605 N.E.2d 344 (N.Y.1992) (citation omitted). Plaintiffs argue that because they have pled that defendants acted with malice, the privilege is overcome. However, merely asserting that the defendants acted with malice is not sufficient, for an allegation of malice "must be supported by sufficient evidentiary facts." Shamley v. ITT Corp., 869 F.2d 167, 173 (2d Cir.1989) (applying New York law).
Two types of malice are recognized: actual malice, which the Supreme Court has defined as "`knowledge that [the statement] was false or ... reckless disregard of whether it was false or not,'" Liberman v. Gelstein, 80 N.Y.2d 429, 438, 590 N.Y.S.2d 857, 605 N.E.2d 344 (N.Y.1992) (quoting New York Times Co. v. Sullivan, 376 U.S. 254, 279-80, 84 S.Ct. 710, 726, 11 L.Ed.2d 686 (1964)), and common law malice, defined as meaning "spite or ill will." Liberman, 80 N.Y.2d at 437, 590 N.Y.S.2d 857, 605 N.E.2d 344. Either form of malice will dissolve a qualified privilege. See id. at 438, 590 N.Y.S.2d 857, 605 N.E.2d 344. Under the actual malice standard, a plaintiff must show, at a minimum, that the defendant is aware that the statement is probably false. See id. (holding that under Supreme Court standard, defendant's admission that he did not know if a bribery allegation was in fact true did not raise a triable issue regarding actual malice). Neither the defendant's ill will, nor a failure to investigate the veracity of the allegation will establish actual malice. See, e.g., World Boxing Council v. Cosell, 715 F.Supp. 1259, 1266-67 (S.D.N.Y.1989) (citing cases). A failure to investigate a statement may give rise to an inference of malice if the failure to investigate amounts to a "purposeful avoidance," that is, conduct that "evinces an intent to avoid the truth." Sweeney v. Prisoners' Legal Servs. of New York, Inc., 84 N.Y.2d 786, 793, 622 N.Y.S.2d 896, 647 N.E.2d 101 (N.Y.1995) (citing Harte-Hanks Communications, Inc. v. Connaughton, 491 U.S. 657, 692, 693, 109 S.Ct. 2678, 2698, 2698-99, 105 L.Ed.2d 562 (1989)).
Plaintiffs' argument that malice can be reasonably inferred from the facts averred in the complaint is unavailing, because while plaintiffs repeatedly assert that the defendants acted with malice or reckless disregard, nowhere in plaintiffs' complaint are there facts that would reasonably allow an inference of actual malice to be drawn. Actual malice cannot be inferred from the fact that Scarpa's letter states the allegations in a qualified fashion because "there is a critical difference between not knowing whether something is true and being highly aware that it is probably false. Only the latter establishes reckless disregard in a defamation action." Liberman, 80 N.Y.2d at 438, 590 N.Y.S.2d 857, 605 N.E.2d 344. Here, plaintiffs have not pled facts to permit the inference that Scarpa was "highly aware"
Plaintiffs' complaint fares no better under a common law malice analysis. In Shapiro v. Health Ins. Plan of Greater New York, 7 N.Y.2d 56, 194 N.Y.S.2d 509, 163 N.E.2d 333 (N.Y.1959), the Court of Appeals established that in the context of a summary judgment motion, a plaintiff's affidavit that alleged malice and demonstrated prior conflicts between himself and defendants was insufficient to overcome a qualified privilege:
Id. at 61, 194 N.Y.S.2d 509, 163 N.E.2d 333 (internal quotation and citations omitted). The New York Court of Appeals found that plaintiff's allegation that defendants were motivated by malice was insufficient in the face of an investigation by the defendants into plaintiff's alleged incompetence. See id. at 64, 194 N.Y.S.2d 509, 163 N.E.2d 333. Thus, plaintiffs must proffer sufficient facts to allow a jury to infer that "malice [is] the one and only cause for the publication." Stukuls v. State, 42 N.Y.2d 272, 282, 397 N.Y.S.2d 740, 366 N.E.2d 829 (N.Y.1977) (citation omitted).
New York courts have held that malice may be inferred in a variety of situations. A statement made in the course of a communication that is not necessary to the interest furthered by the communication will support an inference of malice. See Herlihy v. Metropolitan Museum of Art, 214 A.D.2d 250, 259-60, 633 N.Y.S.2d 106 (1st Dep't 1995) (holding that malice "may be inferred from a defendant's use of expressions beyond those necessary for the purpose of the privileged communication") (citation omitted). However, an otherwise defamatory communication that furthers the interest giving rise to the privilege will not permit an inference of malice, regardless of the libeler's feelings or ill will. See Liberman, 80 N.Y.2d at 439, 590 N.Y.S.2d 857, 605 N.E.2d 344. A rumor that is passed on as true, where the defendant is not under a duty to report such a rumor, will allow an inference of malice. In Pecue v. West, 233 N.Y. 316, 135 N.E. 515 (N.Y.1922), the defendant passed on as fact an unverified statement from an anonymous writer. The court held that malice could be inferred because the was no basis for the writer to assert the facts as such, and explicitly distinguished the case from the example of the transmission to a district attorney of "suspicions, rumors, or gossip." Id. at 323, 135 N.E. 515.
If Scarpa doubted the validity of the allegations, and there was no purpose in Scarpa's repeating the allegations, one could reasonably infer that the statement regarding the allegations exceeded the privilege in a fashion that would allow an inference of malice to be drawn. Here, however, the interest that gives rise to the disclosure is the same for both paragraphs: both inform the bidder
Summary judgment is, nevertheless, not proper on this record. Plaintiffs have not proffered evidence to overcome the qualified privilege, but they have not had the opportunity to depose Scarpa or other relevant parties on the issue of malice.
Moreover, by failing to offer any evidence on this material point, defendants have failed to show that there is no genuine issue of material fact regarding malice, and, therefore, have not met their burden on this motion. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157-61, 90 S.Ct. 1598, 1608-10, 26 L.Ed.2d 142 (1970).
For the foregoing reasons, the motion for summary judgment is granted in part and denied in part. The Gill letter is not defamatory as a matter of law, and summary judgment is granted to defendants on that portion of plaintiffs' claim. Summary judgment
If a low bidder is determined to be non-responsive, "the Contracting Officer shall promptly notify the lowest bidder in writing of that determination. The notification shall state the reasons upon which the determination is based and, where applicable, shall inform the bidder of the right to appeal the determination of non-responsiveness to the Agency Head." 9 R.C.N.Y. § 7-02(b).