Cummins v. Suntrust Capital Markets, Inc.

10-1373-cv
Cummins v. Suntrust Capital Mkts.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY
PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of
New York, on the 25th day of March, two thousand eleven.
PRESENT: PIERRE N. LEVAL,
REENA RAGGI,
PETER W. HALL,
Circuit Judges.
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ROBERT P. CUMMINS,
Plaintiff - Appellant,
v. No. 10-1373-cv
SUNTRUST CAPITAL MARKETS, INC.,
AMIT HAZAN, JONATHAN BLOCK,
Defendants - Appellees.
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APPEARING FOR APPELLANT: JULIUS GLICKMAN (Ashton Bachynsky, Carter
& Bachynsky, LLP, Houston, Texas; Robert
O’Hare, O’Hare Parnagian, LLP, New York, New
York, on the brief), Law Office of Julius
Glickman, Houston, Texas.
APPEARING FOR APPELLEES: JEFFREY J. SWART (Judson Graves, Robert R.
Long, Tejas S. Patel, Alston & Bird LLP, Atlanta,
Georgia; Nelson Boxer, Alston & Bird LLP, New
York, New York, on the brief), Alston & Bird
LLP, Atlanta, Georgia.
Appeal from the United States District Court for the Southern District of New York
(John G. Koeltl, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment entered on August 24, 2009, is AFFIRMED.
Plaintiff Robert Cummins, the former Chief Executive Officer of Cyberonics, Inc.,
appeals from an award of summary judgment in favor of defendants SunTrust Capital
Markets, Inc., Amit Hazan, and Jonathan Block, on his defamation claim, and from a March
16, 2010 order denying his motion for reconsideration. We review an award of summary
judgment de novo, see El Sayed v. Hilton Hotels Corp., 627 F.3d 931, 933 (2d Cir. 2010),
and we will affirm only where “the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law,” Fed. R. Civ. P. 56(a).
We review the denial of a motion for reconsideration for abuse of discretion. See Lora v.
O’Heaney, 602 F.3d 106, 111 (2d Cir. 2010). We assume the parties’ familiarity with the
facts and record of prior proceedings, which we reference only as necessary to explain our
decision.
We affirm for substantially the reasons stated in the district court’s thorough and
well-reasoned opinion. See Cummins v. Suntrust Capital Mkts., Inc., 649 F. Supp. 2d 224
(S.D.N.Y. 2009). Like the district court, we conclude that the thirty-seven alleged
defamatory statements, considered individually and as a whole, are either (1) substantially
true, see Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 516-17 (1991); McIlvain v.
Jacobs, 794 S.W.2d 14, 15-16 (Tex. 1990); or (2) constitutionally protected opinion, see
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Bentley v. Bunton, 94 S.W.3d 561, 579-81 (Tex. 2002); Brown v. Swett & Crawford of Tex.,
Inc., 178 S.W.3d 373, 383 (Tex. App. 2005).1 We write only to address certain arguments
raised by Cummins on appeal.
1. Substantial Truth
Cummins argues that a fact question exists as to the substantial truth of defendants’
analyst reports and statements to the media concerning the June 15, 2004 issuance of stock
options to Cummins and other Cyberonics executives because defendants (1) incorrectly
reported that management, rather than the board of directors, granted the options; and (2)
failed to disclose certain facts demonstrating that there was “nothing wrong” with the option
grants. He contends that these undisclosed facts created a “substantially false and
defamatory impression.” Turner v. KTRK Television, Inc., 38 S.W.3d 103, 115 (Tex. 2000).
None of the facts identified by Cummins, however, is material to the “gist,” McIlvain v.
Jacobs, 794 S.W.2d. at 16, of defendants’ statements, i.e., that Cummins’ conduct in
connection with the options grant was self-interested and not aligned with the interests of
shareholders. Moreover, the gist of the statements is fully substantiated by the undisputed
facts that Cummins (1) knew the board was granting him options at the June 14 share price,
(2) knew the share price would rise the next day on favorable news regarding the Food and
Drug Administration panel approval, (3) was aware that other shareholders could not
capitalize on this news because trading was closed, and (4) accepted responsibility for
distributing similarly priced options to other Cyberonics executives. See id.; Klentzman v.
1
The parties do not dispute on appeal the applicability of Texas law.
3
Brady, 312 S.W.3d 886, 898-99 (Tex. App. 2009). While Cummins argues that the gist of
defendants’ statements is broader, suggesting that he profited from illegal backdated options,
the statements at issue are not “reasonably capable” of such a defamatory meaning. Musser
v. Smith Protective Servs., Inc., 723 S.W.2d 653, 654-55 (Tex. 1987).
Even if it would have been more accurate to state that the board granted the options,
the gist of defendants’ statements does not hinge on the technicality of who granted the
options or their actual propriety. See, e.g., Gustafson v. City of Austin, 110 S.W.3d 652, 657
(Tex. App. 2003) (disregarding detail of “secondary importance” in substantial truth
analysis); Barbouti v. Hearst Corp., 927 S.W.2d 37, 65 (Tex. App. 1996) (en banc) (holding
that statements, although “not 100 percent accurate in every detail,” were substantially true).
In the mind of an average reader, the statement that management granted the options is not
more harmful than the literal truth, i.e., that Cummins accepted options granted to him with
full knowledge of the circumstances surrounding their timing and exercise price. See
McIlvain v. Jacobs, 794 S.W.2d at 16; cf. Carr v. Mobile Video Tapes, Inc., 893 S.W.2d.
613, 619 (Tex. App. 1994) (holding statement that plaintiff avoided arrest more harmful than
literal truth that he had not avoided arrest). Because the central facts underlying the gist of
the statements are undisputed, the district court correctly concluded that they were
substantially true as a matter of law. See Hearst Newspaper P’ship v. Macias, 283 S.W.3d
8, 11 (Tex. App. 2009); accord McIlvain v. Jacobs, 794 S.W.2d at 16.
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2. Non-actionable Opinions
Cummins submits that the district court erred in concluding that defendants’ various
characterizations of the option grants as, inter alia, self-interested, abusive, unethical,
unjustifiable, a manipulation of securities regulations, and akin to backdating were
non-actionable. Contrary to Cummins’ contention, defendants’ critiques of the option grants,
as well as their doubts regarding the credibility of Cyberonics’ management and predictions
about possible regulatory action, constitute subjective, non-verifiable opinions. See Bentley
v. Bunton, 94 S.W.3d at 579-81 (citing Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990));
see also Robertson v. S.W. Bell Yellow Pages, Inc., 190 S.W.3d 899, 903 (Tex. App. 2006);
Brown v. Swett & Crawford of Tex., Inc., 178 S.W.3d at 383; El Paso Times, Inc. v. Kerr,
706 S.W.2d 797, 798-99 (Tex. App. 1986). While Cummins quarrels with the negative
implications of these characterizations, such implications do not transform the
characterizations from expressions of opinion into statements of fact.
Cummins’ reliance on Bentley v. Bunton, 94 S.W.3d at 585, is misplaced. Unlike in
Bentley, the statements at issue here do not imply the existence of undisclosed verifiable
facts as the basis for defendants’ opinions. Instead, defendants’ general characterizations of
the option grants are based solely on the circumstances in which they were awarded, i.e.,
their timing and exercise price, as set forth in defendants’ reports. Further, defendants
included several disclaimers that they could not say whether the options were actually
backdated or otherwise illegal. Although Cummins asserts that defendants’ opinions are
actionable because they were based on (1) the incorrect statement that management granted
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the options and (2) incomplete facts regarding the basis for defendants’ opinions, see id. at
583, the facts Cummins identifies have no bearing on the opinions expressed by defendants,
i.e., that the option grants were inappropriate regardless of whether they complied with the
letter of the law.2
3. Motion for Reconsideration
Because we agree with the district court’s assessment of Cummins’ claims, we
identify no abuse of discretion in its denial of reconsideration. As the district court observed,
Cummins sought reconsideration only to relitigate issues that had already been decided. See
Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995) (“[A] motion to reconsider
should not be granted where the moving party seeks solely to relitigate an issue already
decided.”).
4. Conclusion
We have considered Cummins’ remaining arguments and conclude that they are
without merit. For the foregoing reasons, the August 24, 2009 judgment and March 16, 2010
order are AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
2
Because we conclude that the statements were either substantially true or protected
opinion, we do not address defendants’ other arguments.
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