Three Amigos SJL Rest., Inc. v. CBS News Inc.
28 N.Y.3d 82, 65 N.E.3d 35 (2016)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
For a defamation claim to be viable, the plaintiff must demonstrate that the allegedly defamatory statement could reasonably be interpreted by a person hearing or reading it as referring to them, even if not named directly; a general defamatory statement directed at a corporate entity is not typically 'of and concerning' its unnamed employees or managers.
Facts:
- On November 30, 2011, federal authorities raided the Cheetah Club in Manhattan as part of "Operation Dancing Brides."
- Authorities believed Cheetah Club was one of several strip clubs involved in a trafficking ring where members of the Bonanno and Gambino crime families illegally brought Russian and Eastern European women into the United States, placed them in sham marriages, and forced them to dance in New York City strip clubs.
- CBS 2 News reported on the raid, stating that Cheetah Club was "at the center of the operation" and "run by the mafia."
- The news report indicated that 25 men, described as ringleaders of the operation and members of crime families, were arrested for visa fraud, marriage fraud, and racketeering.
- A summary of the story was subsequently posted to the local CBS New York website, stating Cheetah Club was "one of several [strip clubs] at the center of an underground immigration ring . . . operated by colluding, organized crime entities."
- Dominica O’Neill, Shawn Callahan, and Philip Stein were employed by entities that provided management and talent services to the Cheetah Club and were involved in its daily operations.
Procedural Posture:
- Three Amigos SJL Rest., Inc. (d/b/a Cheetah Club), along with Times Square Restaurant Group, Times Square Restaurant No. 1, Inc., Dominica O’Neill, Shawn Callahan, and Philip Stein, commenced a defamation action against CBS Broadcasting Inc. in state trial court (Supreme Court, NY County).
- Defendants moved to dismiss the claims by the two Times Square Restaurant entities and individual plaintiffs O’Neill, Callahan, and Stein pursuant to CPLR 3211 (a) (1) and (7), arguing the news reports were not "of and concerning" them.
- The Supreme Court granted defendants’ motion to dismiss with respect to the two Times Square Restaurant entities and the individual plaintiffs.
- The Appellate Division (1st Department) affirmed the Supreme Court's decision, with two Justices dissenting in part.
- The individual plaintiffs, Dominica O’Neill, Shawn Callahan, and Philip Stein, appealed as of right pursuant to CPLR 5601 (a) to the New York Court of Appeals.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a general defamatory statement made about a business entity, specifically that it is 'run by the mafia,' satisfy the 'of and concerning' requirement for a defamation claim brought by its unnamed individual employees who manage its daily operations?
Opinions:
Majority - Pigott, J.
No, the general defamatory statements made about the Cheetah Club were not "of and concerning" the unnamed individual employees who managed its daily operations. To establish a prima facie case of defamation, plaintiffs must show the matter published is "of and concerning" them, meaning a person hearing or reading the statement reasonably could have interpreted it as referring to them, which is a question of law for the courts. The news broadcast stated that Cheetah’s was purportedly used by the Mafia to carry out a larger trafficking scheme and was "run by the mafia," but it did not mention any employees or managers, nor did it identify or picture the individual plaintiffs. A defamatory statement directed at a corporation cannot reasonably be understood to mean that certain unnamed individuals who facilitate its daily operations are members of organized crime; a defamatory statement directed at a corporation is generally not "of and concerning" its unnamed employees (citing Kirch v Liberty Media Corp.). The small group libel doctrine does not apply here because the challenged statements did not describe a particular, specifically-defined group of individuals who "run" the Cheetah Club, but rather referred only to the club itself, lacking sufficient particulars of identification for individual action.
Dissenting - Stein, J.
Yes, the statement that the Cheetah Club was "run by the mafia" could reasonably be interpreted as "of and concerning" the individual plaintiffs. To assert a viable defamation claim, the statement must be susceptible to a reasonable interpretation by those acquainted with the parties and the subject as referring to the plaintiff, even if not named directly, through "extrinsic facts." The question of whether a statement is "of and concerning" the plaintiff is generally one for the jury, and at the pleading stage, courts must accept the allegations as true. Plaintiffs alleged they comprised a "small and exclusive group of individuals who ‘run’ and manage" the club, were present daily, and were known by patrons and officials as those who "ran" the club. O’Neill also averred that after the broadcast, numerous individuals believed she was a Mafia member. Given these allegations, an average listener familiar with the plaintiffs could reasonably understand the statement to mean that the individuals who managed the day-to-day operations were involved with a criminal organization. This interpretation is at least as plausible as the majority's, thus its meaning should be decided by a jury, not as a matter of law. The corporate structure or lack of ownership by plaintiffs is irrelevant, as this knowledge cannot be imputed to the average patron. Furthermore, the "group" of individuals who "run" the Cheetah Club, alleged to be only three plaintiffs, is sufficiently small and identifiable to make the defamation claim viable under the small group libel doctrine, allowing reference to the individual plaintiffs to reasonably follow from the statement.
Analysis:
This case establishes a stringent interpretation of the "of and concerning" requirement in defamation law, particularly when statements target a corporate entity rather than named individuals. It reinforces that merely being an unnamed employee or manager of a defamed corporation is generally insufficient to establish a personal defamation claim, placing a high burden on plaintiffs to demonstrate specific identification. The ruling underscores the New York Court of Appeals' role in determining the reasonable interpretation of allegedly defamatory statements as a matter of law, limiting the scope of claims that can proceed to a jury where the connection to the individual is tenuous. This decision may make it more difficult for individuals associated with defamed entities to successfully pursue defamation claims without direct and explicit reference to their specific roles or identities.
