Case Information
*1 ALISON J. NATHAN, District Judge:
Plaintiff BYD Company Ltd. (“BYD”) initiated this defamation action against Defendant VICE Media LLC (“VICE”) on April 27, 2020. Dkt. No. 1. VICE has moved to dismiss the Complaint. Dkt. No. 17. For the reasons that follow, VICE’s motion to dismiss is GRANTED.
I. BACKGROUND
For the purpose of resolving Defendant’s motion to dismiss, the Court accepts all well-
pleaded facts in the Amended Complaint as true, and draws all reasonable inferences in
Plaintiff's favor.
See Kassner v. 2nd Ave. Delicatessen, Inc.,
On April 11, 2020, VICE published an article on its website with the headline Trump Blacklisted This Chinese Company. Now It’s Making Coronavirus Masks for U.S. Hospitals . ¶¶ 4, 28 & Ex. B. As relevant here, the article discusses the legislative history of a provision of the 2020 National Defense Authorization Act that prohibited the use of federal funds for the purchase of rail cars and buses from companies owned or subsidized by the Chinese government—a group of which BYD was a part. Compl. ¶¶ 10, 29 & Ex. B. And the article also discussed a report by a group called the Australian Strategic Policy Institute (“ASPI” and “ASPI Report”), which included BYD in a list of 83 companies that had been associated with factories that had allegedly used forced Uyghur labor . See Compl. ¶¶ 5, 23–25 & Ex. A at 3, 5; see also Compl., Ex. B. BYD alleges that ASPI is biased and notes that the organization has been “repeatedly criticized publicly for making false statements of fact, with an anti-Chinese bias.” Id. ¶¶ 5, 19–22.
Besides including BYD on that list of companies, the ASPI Report also discusses BYD’s relationship to one of the subsidiaries that allegedly used forced labor, though in its discussion the Report does not allege that the factory ever produced any products or raw materials for BYD. Compl. ¶ 6. The Report mentions BYD’s relationship to one of its suppliers named Dongguan Yidong Electronic Co. Ltd., and also mentions that a subsidiary of Dongguan employed 105 Uyghur workers. Id. ¶ 27.
In bringing this defamation action, BYD claims that VICE misrepresented the ASPI Report—specifically, that contrary to the representations made in the article, the report did not state that BYD used forced Uyghur labor in its supply chain. Id. ¶¶ 4, 6. And BYD also objects to the headline of the article, which included the word “blacklisted;” BYD insists that no such “blacklist” ever existed. Id. ¶¶ 8–11. According to BYD, members of Congress included that provision in the NDAA due to the actions of a different Chinese company, even though BYD concedes that it was one of the companies affected by the legislation. Id. ¶¶ 10, 29. Still, BYD insists that the reference to a “blacklist” misrepresents the purpose behind the inclusion of that legislation by creating the appearance that Congress specifically targeted BYD. BYD contends, in sum, that regardless of its criticisms of the ASPI Report, the Report never stated or intimated that BYD used forced Uyghur labor in its supply chain. Id. ¶ 30.
According to BYD, the article was defamatory for both of those reasons: First, for its allegations regarding Uyghur labor and BYD, and second, for its use of the word “blacklist.” Id. ¶ 31. And BYD claims that VICE published those statements despite knowing that there was no “blacklist” and that the ASPI Report did not support the claim that BYD used forced labor in its supply chain. Id. BYD also alleges that VICE cited the ASPI Report with reckless disregard of ASPI’s reliability. Id. According to the Complaint, several third parties have cited the VICE article as a reason to delay or end contemplated business transactions with BYD. Id. ¶ 32. And BYD insists that the article will continue to effect significant reputational damage. Two days after the article was published, BYD requested a retraction, but on April 20, 2020, VICE refused BYD’s request. Id. ¶ 33.
On April 27, 2020, BYD initiated this defamation action against VICE.
See
Dkt. No. 1.
VICE moved to dismiss the Complaint on August 17, 2020. Dkt. No. 17. The Court then
offered BYD an opportunity to amend the Complaint, warning that declining to amend would
constitute a waiver of its right to use the amendment process to cure any defects made apparent
by VICE’s motion to dismiss. Dkt. No. 21 (citing
Loreley Fin. (Jersey) No. 3 Ltd. v. Wells
Fargo Sec., LLC.
,
The Court has diversity jurisdiction under 28 U.S.C. § 1332, because there is complete diversity between the parties and because the amount in controversy surpasses $75,000. See Compl. ¶¶ 13–15. The Court has personal jurisdiction over VICE because VICE is based in New York, and venue is proper under 28 U.S.C. §§ 1391(b)(1) and (2) because VICE is located in this district and because the article was edited and published in this district. Id. ¶¶ 14, 16.
II. LEGAL STANDARD
When deciding a motion to dismiss for failure to state a claim pursuant to Federal Rule of
Civil Procedure 12(b)(6), a court must accept as true all well-pleaded facts and draw all
reasonable inferences in the light most favorable to the non-moving party.
See Kassner v. 2nd
Ave. Delicatessen, Inc.,
“To survive a motion to dismiss, the plaintiff’s pleading must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v.
Iqbal,
In addition to the allegations in the complaint itself, a court may consider documents
attached as exhibits, incorporated by reference, or relied upon by the plaintiff in bringing suit, as
well as any judicially noticeable matters.
See Halebian v. Berv,
III. DISCUSSION
BYD brings a single cause of action for defamation. See Compl. ¶¶ 34–38. In moving to dismiss, VICE principally argues that the article’s headline is a fair index of its truthful content and that the headline is a privileged fair report of governmental proceedings. Dkt. No. 18 (“Def. Br.”) at 10–14. VICE further argues that its reporting on the ASPI report is not actionable, id. at 15–16, that VICE’s reliance on the ASPI Report precludes a finding of actual malice, id. 16–23, and that VICE’s reporting is covered by the neutral reportage privilege, id. at 23.
New York law applies to this diversity action. “In diversity jurisdiction cases such as
this, it is well settled that a federal court must look to the choice of law rules of the forum state.”
Curley v. AMR Corp.
,
Under New York law, a defamation plaintiff must establish “(1) a written defamatory
statement of and concerning the plaintiff, (2) publication to a third party, (3) fault, (4) falsity of
the defamatory statement, and (5) special damages or per se actionability.”
Palin v. New York
Times Co.
,
At the motion to dismiss stage, the Court “must decide whether the statements,
considered in the context of the entire publication, are reasonably susceptible of a defamatory
connotation, such that the issue is worthy of submission to a jury.”
Palin
,
A. BYD is a limited-purpose public figure
As a threshold matter, the Court must determine whether BYD is a public figure for
purposes of its defamation claim. The Supreme Court has distinguished between two kinds of
“public figures.” A general-purpose public figure is one who has “assumed [a] role[] of especial
prominence in the affairs of society.”
Gertz v. Robert Welch, Inc.
,
VICE argues that BYD is at least a limited purpose public figure. Def. Br. at 17–18.
BYD does not oppose VICE’s contention, and in its opposition brief it “assumes
arguendo
that
its public role in the distribution of needed supplies in the COVID-19 crisis makes it at least a
limited purpose public figure.” Dkt. No. 23 (“Pl. Opp. Br.”) at 6 n.1. Furthermore, the
Complaint is pled as a public-figure defamation action and, in BYD’s brief in opposition, BYD
only recites the actual malice standard that applies if plaintiffs are public figures.
See Greene v.
Paramount Pictures Corp.
,
B. BYD has failed to state a claim that article’s headline is defamatory The Court turns first to BYD’s claim that the article’s headline—“Trump Blacklisted This Chinese Company. Now It’s Making Coronavirus Masks for U.S. Hospitals”—is defamatory. According to BYD, the headline is defamatory because the reference to a “blacklist” is “qualitatively different from a statute that simply prohibits certain governmental actions.” Pl. Opp. Br. at 16. Here, BYD emphasizes the lack of any “list” as further proof of the defamatory nature of the headline. Further, BYD argues that the headline is actionable because it contains several false statements of fact—including that there was a “blacklist,” that the legislation specifically targeted BYD, and that it was Congress and not President Trump that mentioned BYD. Pl. Opp. Br. at 17–21.
Under New York law, an article’s headline is not actionable in a defamation case if it is
“a ‘fair index’ of the ‘substantially accurate’ material included in the article.”
Test Masters
Educ. Servs., Inc. v. NYP Holdings, Inc.
,
Applying these principles, the Court concludes that as a matter of law, the headline fairly indexes the content of the article and that the fair index privilege applies. BYD does not contend that the article’s summary of the NDAA legislative proceedings is inaccurate or false; it challenges the headline on the basis of its contention that President Trump did not “blacklist” BYD. But the article makes clear that the headline references the NDAA. Its second paragraph explains that BYD was “prohibited by law from bidding for some federal contracts in the United States.” And in providing context for the legislation, the article also explains that the NDAA “bans federal funds from being used to buy BYD electric buses” and that President Donald Trump “signed the ban into law in December.” Compl., Ex. B at 68. The article also provides context for why BYD, among a select few other companies, was within the scope of the provision, including Senator Jon Cornyn’s reference to BYD in explaining his reasons for supporting it. And while the headline references President Trump as the relevant actor, the article also makes clear that Congress included the provision in the NDAA and that President Trump’s role was limited to signing the NDAA into law.
BYD takes umbrage at the reference to a “blacklist,” but the context of the article makes
clear to a reasonable reader that the reference to a “blacklist” invokes a more colloquial use—
one that at most constitutes “rhetorical hyperbole.”
Greenbelt Co-op. Pub. Ass’n v. Bresler
, 398
U.S. 6, 14 (1970). Analogously, in
McDougal v. Fox News Network, LLC
the court concluded
that the use of the word “extortion” was not actionable, even though the elements of extortion
were not present, because the use of the word “extortion” was mere rhetorical hyperbole.
See
McDougal v. Fox News Network, LLC
, No. 19-CV-11161 (MKV),
The cases on which BYD relies are readily distinguishable, for they involve headlines
that directly named the defamation plaintiffs and were thus independently actionable. In
Schermerhorn v. Rosenberg
,
Separately, BYD’s claim regarding the headline also fails because the headline and the
article are privileged under New York Civil Rights Law Section 74, which 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, legislative proceeding or other
official proceeding.” The New York Court of Appeals has explained that “[w]hen determining
whether an article constitutes a ‘fair and true’ report” for purposes of Section 74, “the language
used therein should not be dissected and analyzed with a lexicographer’s precision.”
Holy Spirit
Ass’n for Unification of World Christianity v. New York Times Co.
,
BYD does not respond to this argument in its opposition brief. “Plaintiffs’ failure to
oppose Defendants’ specific argument in a motion to dismiss is deemed waiver of that issue.”
Kao v. Brit. Airways, PLC
, No. 17-CV-0232 (LGS),
Under both the fair index privilege and New York Civil Rights Law Section 74, the headline is nonactionable for defamation and BYD’s claims relying on the headline fail on these bases.
C. BYD fails to plausibly allege actual malice
In addition to challenging the headline, BYD claims that several aspects of the article as
they relate to the Report are defamatory. To plausibly plead a defamation claim, a public-figure
plaintiff must a show “that an allegedly libelous statement was made with actual malice, that is,
made ‘with knowledge that it was false or with reckless disregard of whether it was false or
not.’”
Palin
,
The actual malice standard is subjective.
Khan v. New York Times Co.
,
1. BYD fails to plausibly allege that VICE acted knowingly The Court first assesses whether BYD has plausibly pled that VICE acted knowingly.
BYD sets forth no nonconclusory allegations to support the proposition that VICE made any defamatory statements with knowledge that the statements were false. At most, its conclusory allegations rely on a purported inference that VICE must have known that it was misreporting the contents of the Report in its article or that the headline was drafted with actual malice. Compl. ¶¶ 4, 7, 31; Pl. Opp. Br. at 6, 8. Even drawing all reasonable inferences in BYD’s favor, however, the claim fails.
BYD fails to plausibly establish any basis of subjective knowledge. The Complaint
alleges no nonconclusory facts that support the proposition that VICE knew that it was reporting
falsities. Instead, in conclusory fashion the Complaint asserts that “[p]rior to publication, VICE
Media knew that there was no ‘blacklist’, and knew that the contents of the ASPI Report did not
support its claim regarding BYD’s alleged use of forced labor in its supply chain.” Compl. ¶ 31.
In addition, at no point does BYD make any allegations about specific individuals at VICE to
whom such knowledge could be imputed. This is relevant because “the state of mind required
for actual malice would have to be brought home to the persons in the . . . organization having
responsibility for the publication” of the article.
New York Times Co. v. Sullivan
,
It is true that “court[s] typically will infer actual malice from objective facts,” in
recognition of the fact that “ a defendant in a defamation action will rarely admit that he
published the relevant statements with actual malice.”
Biro II
,
To allege actual malice, BYD asserts that subjective knowledge can be assumed due to
the fact that, according to BYD, the headline is misleading and that the article misstates what the
ASPI Report said about BYD. The argument appears to conflate the falsity element of a
defamation claim with the actual malice requirement that applies to limited-purpose public
figures. But “inaccuracy itself will not demonstrate ‘actual malice’ in a libel case.”
Reliance
Ins. Co. v. Barron’s
,
Consumers Union of United States,
Even assuming that BYD could establish a plausible inference in such a manner,
however, the claim of subjective knowledge in this case is unavailing. Notably, the article does
not assert as truth that BYD had Uyghurs working in its supply chains; rather, it states that BYD
was one of the 83 companies “identified in the report.” Compl., Ex. B at 73. Furthermore, the
article also includes BYD’s previous statements denying allegations of labor abuses and noting
that “the company has been called a ‘model employer’ by labor advocates.”
Id.
at 73–74. It is
true, of course, that “merely reporting what another has said obviously does not insulate a
reporter from liability for defamation.”
Stern v. Cosby
,
To argue that BYD acted with subjective knowledge of the alleged falsity of its
statements, BYD relies on
Masson v. New Yorker Magazine, Inc.
,
But
Masson
is of limited utility to BYD because, even read liberally and finding all
inferences in its favor, BYD’s claim is not that VICE fabricated any quotations; the core of
BYD’s claim is that VICE misrepresented what the ASPI Report actually found, not that VICE
quoted the report as saying something it never said. Contrary to the alterations at issue in
Masson
, BYD’s allegation of subjective knowledge is further rendered implausible because the
objected-to language in the article—that “BYD was one of 83 companies identified in the report
as using forced Uighur labor in its supply chain,”
see
Compl. ¶ 30—parallels certain parts of the
ASPI Report. The Report states that “Uyghurs are working in factories that are in the supply
chains of at least 83 well-known global brands in the technology, clothing, and automotive
sectors,” and it lists BYD as one of those 83 brands. Compl., Ex. A, ASPI Report, at 3, 5. And
the Report also claims that “27 factories in nine Chinese provinces that are using Uyghur labour
transferred from Xinjiang since 2017,” and that those “claim to be part of the supply chain of 83
well-known global brands,” including BYD. at 4–5. The circumstances are thus different
from the misquoting at issue in
Masson
.
See Themed Restaurants, Inc. v. Zagat Surv., LLC
, 781
N.Y.S.2d 441, 447 (Sup. Ct. 2004),
aff’d
,
BYD’s reliance on
Palin v. New York Times Co
.,
At this stage, BYD is, of course, entitled to have that all reasonable inferences drawn in
its favor. But its claim that VICE acted knowingly is unsupported by any factual allegations in
the Complaint. And even at this juncture, BYD’s claim that knowledge can be inferred from the
Complaint on the basis of the text of the article is implausible. “The truth of factual allegations
that are contradicted by documents properly considered on a motion to dismiss need not be
accepted.”
In re Aegon N.V. Sec. Litig.
, No. 03-CV-0603 (RWS),
2. BYD fails to plausibly allege that VICE acted with reckless disregard for the truth
The Court next assesses whether the facts in the Complaint plausibly establish that VICE
acted with reckless disregard for the truth. For purposes of actual malice, recklessness is
measured not by “whether a reasonably prudent man would have published, or would have
investigated before publishing,” but instead “whether there is sufficient evidence ‘to permit the
conclusion that the defendant in fact entertained serious doubts as to the truth of his
publication.’”
Church of Scientology Int’l v. Behar
,
As above, there are no factual allegations regarding VICE’s subjective knowledge,
including that VICE harbored any doubts about the veracity of its reporting. BYD recapitulates
its arguments as to actual knowledge by framing them in the alternative as reckless disregard for
the truth. Pl. Opp. Br. at 1. But as above, without any factual predicate to support the
conclusory assertion that VICE acted with reckless disregard for the truth, any claim as to an
inference of actual malice based on the text of the article fails. Even read in the light most
favorable to BYD, the article’s language, standing alone, does not surpass actual malice’s “high
bar.”
McDougal v. Fox News Network, LLC
, No. 19-CV-11161 (MKV),
To the extent that BYD argues that VICE acted with actual malice by relying on a single
source, the claim runs contrary to longstanding principles governing defamation suits.
“[R]eliance on anonymous or unreliable sources without further investigation
may
support an
inference of actual malice,” where the plaintiff includes additional allegations to buttress that
inference.
Biro II
,
BYD’s claim that VICE should have investigated ASPI’s reputation prior to citing the
Report also fails as a matter of law. “A failure to investigate before publishing, even when a
reasonably prudent person would have done so, is not sufficient to establish reckless disregard.”
Harte-Hanks Commc’ns, Inc. v. Connaughton
,
BYD asserts that had VICE researched ASPI’s reputation, including on Wikipedia, it
would have been put on notice that ASPI has been criticized in the past for alleged bias. Compl. ¶¶ 20–22. But BYD’s theory would impose on VICE a duty to investigate even in
circumstances where VICE had no subjective reason to doubt the veracity of its sources; the
claim is essentially that had VICE investigated, it would have learned about the criticisms that
have been directed at ASPI in the past. In light of the fact that the Complaint is devoid of any
factual allegations to support the proposition that there were “obvious reason[s]” why VICE
should have been on notice that it had a duty to investigate further, such a failure to investigate
would at most constitute negligence.
Cf. Schatz
,
In sum, stripping the Complaint from its barebones assertions of subjective knowledge
makes clear that the remaining factual content does not “permit[] the reasonable inference that
the defendant is liable” for the kind of subjective knowledge BYD is claiming here.
Shay v.
Walters,
Because BYD has failed to plead facts that plausibly establish that VICE acted with actual malice, its defamation claim fails as a matter of law. Accordingly, the motion to dismiss is GRANTED.
D. The dismissal is with prejudice
BYD was given an opportunity to amend after VICE filed its motion to dismiss, Dkt. No.
21, and it opted not to do so, Dkt. No. 22. Because BYD was previously afforded the
opportunity to amend its Complaint, the Complaint is dismissed with prejudice.
See De Jesus v.
Sears, Roebuck & Co.
,
IV. CONCLUSION
For the reasons stated above, VICE’s motion to dismiss is GRANTED with prejudice. Because the Court resolves this motion on the papers, VICE’s request for oral argument, Dkt. No. 27, is denied. The Clerk of Court is respectfully directed to enter judgment and close the case.
This resolves Dkt. Nos. 17 and 27.
SO ORDERED.
Dated: March 31, 2021
New York, New York
__________________________________ ALISON J. NATHAN United States District Judge
Notes
[1] VICE also argues that the neutral reportage privilege protects its statements regarding the ASPI Report. Def. Br. at 23–25. The Court does not reach this argument because it concludes that BYD has failed to plausibly allege actual malice.