ALF, CHRISTOPHER J. v. THE BUFFALO NEWS, INC. ( 2012 )

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
931
CA 12-00560
PRESENT: CENTRA, J.P., PERADOTTO, CARNI, LINDLEY, AND SCONIERS, JJ.
CHRISTOPHER J. ALF, PLAINTIFF-APPELLANT,
V MEMORANDUM AND ORDER
THE BUFFALO NEWS, INC., DEFENDANT-RESPONDENT.
CARTER LEDYARD & MILBURN LLP, NEW YORK CITY (JOHN J. WALSH OF
COUNSEL), AND HARRIS BEACH PLLC, BUFFALO, FOR PLAINTIFF-APPELLANT.
HISCOCK & BARCLAY, LLP, BUFFALO (JOSEPH M. FINNERTY OF COUNSEL), FOR
DEFENDANT-RESPONDENT.
Appeal from an order of the Supreme Court, Erie County (Gerald J.
Whalen, J.), entered December 28, 2011 in a defamation action. The
order, among other things, granted defendant’s motion for summary
judgment.
It is hereby ORDERED that the order so appealed from is affirmed
without costs.
Memorandum: Plaintiff, the chairperson and sole shareholder of
National Air Cargo Holdings, Inc., which wholly owns National Air
Cargo, Inc. (NAC), commenced this defamation action after defendant
published a series of articles stemming from a guilty plea by NAC in
federal court. Supreme Court properly granted defendant’s motion for
summary judgment dismissing the amended complaint based on the defense
of absolute privilege under Civil Rights Law § 74. That statute
provides in relevant part that “[a] civil action cannot be maintained
against any person, firm or corporation, for the publication of a fair
and true report of any judicial proceeding” (id.). The term “fair and
true report” has been given a liberal interpretation (see Cholowsky v
Civiletti, 69 AD3d 110, 114; Becher v Troy Publ. Co., 183 AD2d 230,
233). “ ‘When determining whether an article constitutes a “fair and
true” report, the language used therein should not be dissected and
analyzed with a lexicographer’s precision. This is so because a
newspaper article is, by its very nature, a condensed report of events
which must, of necessity, reflect to some degree the subjective
viewpoint of its author’ ” (Becher, 183 AD2d at 234, quoting Holy
Spirit Assn. for Unification of World Christianity v New York Times
Co., 49 NY2d 63, 68). A report is “fair and true” within the meaning
of the statute if it is “substantially accurate” (Holy Spirit Assn.
for Unification of World Christianity, 49 NY2d at 67; see Tenney v
Press-Republican, 75 AD3d 868, 868; Cholowsky, 69 AD3d at 114).
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The crux of the amended complaint is that the factual premise of
the defamatory articles, i.e., that plaintiff and NAC admitted that
they repeatedly and fraudulently overcharged the government by
millions of dollars, was utterly false and defamatory. The statements
referencing NAC only, and not plaintiff, were not “of and concerning”
plaintiff, and the amended complaint therefore was subject to
dismissal to the extent that the allegedly defamatory statements did
not name plaintiff (Carlucci v Poughkeepsie Newspapers, 57 NY2d 883,
885), apart from the defense of absolute privilege under Civil Rights
Law § 74. The statements “of and concerning” plaintiff set forth,
inter alia, that plaintiff avoided any jail time based on a plea deal,
and only one statement of the 36 allegedly defamatory statements set
forth in the amended complaint directly asserted that plaintiff
cheated the government. We agree with defendant that the articles
read as a whole, including all of the allegedly defamatory statements
(see Miller v Journal-News, 211 AD2d 626, 627), would lead the average
reader to conclude that NAC, not plaintiff himself, had cheated the
government.
We further agree with defendant in any event that the defense
under Civil Rights Law § 74 applied to all of the allegedly defamatory
statements. NAC pleaded guilty to only a single charge of falsifying
a proof of delivery document, but the plea agreement also included a
provision requiring NAC to pay almost $28 million in fines and
restitution. The prosecutor set forth the reasoning supporting the
fines and restitution, i.e., that NAC agreed “for purposes of relevant
conduct and for this plea agreement that the loss to the United States
has been established by the government to be the sum of $4,400,000 for
the time period January 1999 to and including March 2002.” The
prosecutor further stated that NAC’s owner would not “be processed by
my office . . . for the criminal offenses that relate to the facts set
forth in paragraph 4 of the [plea] agreement, which are the
falsifications, proofs of delivery sent as confirmation of delivery
dates.”
In view of the agreement by NAC to the amount of the government’s
loss, together with its admission to submitting a false document to
the government on at least one occasion, we conclude that the
statements in the articles that NAC repeatedly overcharged the
government, and that there would be no jail time for plaintiff and
other company officials, were substantially accurate (see generally
Mills v Raycom Media, Inc., 34 AD3d 1352, 1353). Indeed, we note that
the Department of Justice’s own press releases were similar to the
statements made in the newspapers articles that plaintiff alleges were
defamatory. Plaintiff contends that the articles were false because
NAC settled with the government to avoid being suspended as an air
freight forwarder, and the dispute over air versus truck transport
stemmed from a good-faith dispute over the applicable federal
regulations. However, there is “no requirement that the publication
report the plaintiff’s side of the controversy” (Cholowsky, 69 AD3d at
115; see Tenney, 75 AD3d at 868-869; Glendora v Gannett Suburban
Newspapers, 201 AD2d 620, 620, lv denied 83 NY2d 757).
All concur except CARNI and SCONIERS, JJ., who dissent in part and
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CA 12-00560
vote to modify in accordance with the following Memorandum: We
respectfully disagree with the conclusion of our colleagues that
Supreme Court properly granted defendant’s motion for summary judgment
dismissing the amended complaint in its entirety, and we therefore
dissent in part. We conclude that the statements that were “of and
concerning” plaintiff were “reasonably susceptible of a defamatory
connotation” (James v Gannett Co., 40 NY2d 415, 419, rearg denied 40
NY2d 990; see Bee Publs. v Cheektowaga Times, 107 AD2d 382, 382-383,
386) and that defendant is not entitled to the protection afforded by
Civil Rights Law § 74 for those statements. We thus would modify the
order by denying defendant’s motion to the extent that it concerns the
statements pertaining specifically to plaintiff, and we would strike
the affirmative defense of Civil Rights Law § 74 as to those
statements.
On October 25, 2007, general counsel for National Air Cargo, Inc.
(NAC), with approval from NAC’s board of directors, pleaded guilty on
behalf of NAC to one count of filing a false statement. The plea
agreement was described by the Federal District Court as a “global
settlement” in satisfaction of “all Federal offenses committed” by the
corporation during the relevant time period. In the days and weeks
following the plea, defendant published a series of articles reporting
that the company, inter alia, admitted to “cheating” the United States
military out of millions of dollars. Throughout the series of
articles, defendant made numerous statements naming plaintiff
specifically, and reporting that plaintiff had evaded serving jail
time as a result of the plea deal by employing “the best lawyers money
could buy” and a “dream team” of attorneys. An editorial published on
November 8, 2007, asked “why in the name of decency should the leaders
of National Air Cargo escape personal punishment for cheating the U.S.
Defense Department—and, therefore, American troops and
taxpayers—during wartime?” It went on to say, “there’s no law that
says companies and their leaders can’t be moral, ethical, patriotic
and plain honest.” In another article, published March 2, 2008,
defendant reported that “[t]he couple [referring to plaintiff and his
wife] also maintains that it stopped cheating the government in 2005.”
Notably, plaintiff was not a named defendant in the federal criminal
action against NAC and there was no admission of criminal liability on
the part of plaintiff during the proceedings (see generally Fraser v
Park Newspapers of St. Lawrence, 246 AD2d 894, 895-896).
“For a report to be characterized as ‘fair and true’ within the
meaning of [Civil Rights Law § 74], . . . it is enough that the
substance of the article be substantially accurate” (Holy Spirit Assn.
for Unification of World Christianity v New York Times Co., 49 NY2d
63, 67). Because the various reports impute wrongdoing to plaintiff
as an individual, they produce “a different effect on the mind of the
reader from that which the pleaded truth would have produced” (Dibble
v WROC TV Channel 8, 142 AD2d 966, 967 [internal quotation marks
omitted]) and “suggest[] more serious conduct than that actually
suggested in the official proceeding” (Daniel Goldreyer, Ltd. v Van de
Wetering, 217 AD2d 434, 436). We therefore conclude that, with
respect to the reports specifically concerning plaintiff, defendant
did not act “ ‘as the agent of the public, reporting only that which
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CA 12-00560
others could hear for themselves were they to attend the
proceedings’ ” (Dibble, 142 AD2d at 968, quoting Hogan v Herald Co.,
84 AD2d 470, 477-478, affd 58 NY2d 630). Thus, in our view, defendant
is not entitled, as a matter of law, to protection under Civil Rights
Law § 74 for the statements pertaining to plaintiff specifically.
Entered: November 16, 2012 Frances E. Cafarell
Clerk of the Court