NEWS MEDIA UPDATE · SECOND CIRCUIT · Libel · June 29, 2006
Allegation of indirect defamation not supported by law
June 29, 2006 · Indirect harm by a defamatory statement because of a close connection to the defamed party is not enough to bring a successful claim under New York law unless an average person would know the statement was meant to hurt that party, a federal appeals court ruled earlier this month.
The U.S. Court of Appeals in Manhattan (2nd. Cir.) declined to rule on whether that same statement defamed a German media conglomerate by questioning its financial standing. A unanimous three-judge panel ruled June 5 that the German-to-English translation of the original interview made it difficult to analyze whether it was permissible opinion or legally actionable fact.
The case involves the Kirch Group, a German media conglomerate that filed for bankruptcy protection and alleged its financial peril was partially caused by a conspiracy by Liberty Media Group and Deutsche Bank, including the statement by bank CEO Dr. Rolf-Ernst Breuer in an February 2002 interview with Bloomberg Television. Bloomberg’s online service produced a brief English-language, online version of the story.
Kirch Group, undergoing a reorganization that required several billion dollars in new capital for inter-company transactions, alleged that Liberty viewed Kirch Group as a competitor.
In the interview with Bloomberg Television, Breuer said of Kirch Group’s capital financing plans: “All that you can hear and read about this is that the financial sector is not willing to provide further debt or equity under current conditions.”
Kirch Group alleged that the statement was false, Breuer knew it was false, and it led to investors and lenders losing confidence in the company. International Television Trading Corp. (ITTC) — Kirch Group’s exclusive agent in North America — also was named in the suit, filed in February 2003.
The three-judge panel, in an opinion by Judge Robert D. Sack, dismissed the portion of the suit against ITTC, ruling that Breuer’s statements were not “of and concerning” the company.
“We know of no principle of defamation law that permits someone to recover for a defamation of another solely because the communication contains an allegedly false implication that the person bringing suit is at risk of loss,” according to Sack, who was the original author of Sack on Defamation: Libel, Slander, and other Problems, an authoritative text on libel law. “A false disparaging statement about IBM, for example, would not, we think, ordinarily be a defamatory statement ‘of and concerning’ all of IBM’s suppliers, employers, and dealers, however much they may be injured as a result.”
U.S. District Court Judge Naomi Reice Buchwald had dismissed the entire complaint, finding Breuer’s comments to be pure opinion and thus not legally actionable. The appeals court reversed that holding regarding KirchGroup and returned the case to the lower court to determine if a U.S. federal court is the proper forum for a dispute between German companies.
(Kirch v. Liberty Media Corp., Rodney A. Smolla, University of Richmond School of Law for Dr. Leo Kirch; Michael E. Petrella, Law Offices of Sean F. O’Shea, New York, for International Televison Trading Corp.; R. Stan Mortenson, Baker Botts, New York, for Liberty Media Corp.) — PS