CHURCH OF SCIENTOLOGY INTERNATIONAL, Citizens' Commission on Human Rights,
Plaintiffs,
v.
ELI LILLY & CO., PaineWebber Inc., and Ronald Nordmann, Defendants.
No. 90 Civ. 7009 (MJL).
United States District Court,
S.D. New York.
Oct. 25, 1991.
Church and affiliated organization brought defamation action against
securities brokerage firm, securities analyst employed by the firm, and
manufacturer of a prescription drug. Defendants moved to dismiss action for
failure to state claim upon which relief could be granted. The District Court,
Lowe, J., held that: (1) statements were reasonably susceptible to defamatory
connotation; (2) statements were not opinions entitled to First Amendment
protection; and (3) plaintiff's bare allegations that employee of drug company
made statements to market analyst failed to state defamation claim against drug
company.
Motion granted in part and denied in part.
[1] FEDERAL CIVIL PROCEDURE
Complaint should not be dismissed unless, looking solely at complaint and its
exhibits and taking supported allegations therein as true, it appears beyond
doubt that plaintiffs can prove no set of facts in support of claim which would
entitle them to relief. Fed.Rules Civ.Proc.Rules 10(c), 12(b)(6), 28
U.S.C.A.
[2] LIBEL AND SLANDER
Under New York law, elements of libel are false and defamatory statement of and
concerning plaintiff, publication to third party, fault, the degree of which
depends upon status of libeled party, and special harm or per se actionability.
[3] LIBEL AND SLANDER
Statements made on computerized stock brokerage firm's data base were
"published" to third parties, as required to state colorable claim of libel
under New York law.
See publication Words and Phrases for other judicial constructions and
definitions.
[4] LIBEL AND SLANDER
Libel plaintiff who is public figure must plead actual malice, which may
include reckless disregard of truth of statement. U.S.C.A. Const.Amend. 1.
[5] LIBEL AND SLANDER
Whether person or organization is public figure is question of law for court to
decide. U.S.C.A. Const.Amend. 1.
[6] EVIDENCE
District court would not take judicial notice of public controversy surrounding
prescription drug Prozac.
[7] CONSTITUTIONAL LAW
Plaintiffs, by virtue of their visibility as "the mother church of the
scientology religion" and "a public-service investigatory agency," and their
appearance in prominent newspaper's article, were "public figures" for First
Amendment purposes. U.S.C.A. Const.Amend. 1.
See publication Words and Phrases for other judicial constructions and
definitions.
[8] LIBEL AND SLANDER
Under New York law, words are libel per se, thus eliminating need to plead
special damages, if they affect person in his or her profession by imputing
misconduct, incapacity, unfitness, or lack of any qualification deemed
necessary for conduct of profession.
[9] LIBEL AND SLANDER
Allegations that stock brokerage firm published statement in its data base that
man, who allegedly committed mass murder while taking prescription drug, was
member of plaintiff church and that church and affiliated organization were
pursuing hostile critique of drug, were sufficient to allege libel per se,
thereby eliminating requirement for pleading special damages in defamation
cause of action under New York law.
[10] LIBEL AND SLANDER
Whether statements are reasonably susceptible of defamatory connotation is
question of law for court.
[11] LIBEL AND SLANDER
In determining whether statement is reasonably susceptible of defamatory
connotation under New York law, court decides whether words are susceptible of
one or more meanings to average reader and whether one of these meanings could
be defamatory.
[12] LIBEL AND SLANDER
If allegedly defamatory statement is susceptible of more than one meaning,
under New York law it is question of fact for jury as to which meaning was
actually understood by readers.
[13] LIBEL AND SLANDER
Under New York law, statements that man, who allegedly committed mass murder
while taking a prescription drug, was member of plaintiff church and that
church and affiliated organization were "on a vendetta to discredit" the drug,
were reasonably susceptible of defamatory meaning, and issue was for the jury.
[14] LIBEL AND SLANDER
Whether statement constitutes personal opinion or statement of fact is question
of law for determination by court. U.S.C.A. Const.Amend. 1.
[15] CONSTITUTIONAL LAW
In determining whether allegedly defamatory statements are statements of
opinion, protected by First Amendment, or unprotected statements of fact, court
considers plain import or common meaning of specific words used, whether
statements are capable of verification for truth or falsity, and context or
type of speech. U.S.C.A. Const.Amend. 1.
[16] CONSTITUTIONAL LAW
First Amendment protects speech in instances where imprecise language and
unusual setting would signal reasonable observer that no actual facts were
being conveyed about individual, including rhetorical hyperbole, vigorous
epithets, and lusty and imaginative expression. U.S.C.A. Const.Amend. 1.
[17] LIBEL AND SLANDER
If allegedly defamatory statement suggests underlying facts, concerning
plaintiff and capable of being proven false, statement is not classified as
opinion and not shielded from actionability. U.S.C.A. Const.Amend. 1.
[18] CONSTITUTIONAL LAW
In determining whether allegedly defamatory statements are opinions entitled to
First Amendment protection, court must consider impression created by words
used as well as general tenor of expression, from point of view of reasonable
person. U.S.C.A. Const.Amend. 1.
[19] CONSTITUTIONAL LAW
Statements that man, who allegedly committed mass murder while taking
prescription drug, was member of plaintiff church and that church and
affiliated organization were pursuing hostile critique of drug, were statements
of fact and, as such, were not protected by First Amendment. U.S.C.A.
Const.Amend. 1.
[20] LIBEL AND SLANDER
Bare allegation that defamatory statements were told by employee of drug
manufacturer to securities analyst who included statements in published
advisory report was not sufficient to state claim against manufacturer for
defamation under New York law.
*663 Morrison Cohen Singer & Weinstein by Jonathan W. Lubell, New York
City, for plaintiffs.
Dewey Ballantine by Harvey Kurzweil, New York City, for defendant Eli Lilly &
Co.
Cravath Swaine & Moore by Alan J. Hruska, New York City, for defendants
PaineWebber Inc. and Ronald Nordmann.
OPINION AND ORDER
LOWE, District Judge.
Before this Court are the motions of defendants Eli Lilly & Co.
("Lilly"), PaineWebber, Inc. ("PaineWebber"), and Ronald Nordmann ("Nordmann")
to dismiss the above-captioned action pursuant to Fed.R.Civ.P. 12(b)(6).
For the reasons set forth below, the motion of Lilly is granted, and the joint
motion of PaineWebber and Nordmann is denied.
BACKGROUND
Procedural Background
This is an action for defamation brought by Church of Scientology
International ("CSI") and Citizens' Commission on Human Rights ("CCHR").
Plaintiffs are non-profit corporations incorporated in California, having their
principal places of business in California. Defendant Lilly is a
pharmaceutical company incorporated in Indiana, having its principal place of
business in Indiana. Defendant PaineWebber is a stock brokerage and securities
firm incorporated in Delaware, having its principal place of business in New
York. Defendant Nordmann is a market analyst employed by PaineWebber, and a
citizen of New York. Complaint at P 1.
In their Complaint of 10/31/90, plaintiffs allege that defendants defamed them
in the total amount of $40,200,000, id. P 39, by publishing two false and
defamatory statements, of and concerning plaintiffs, on PaineWebber's database,
with reckless disregard for the truth or falsity of the statements. On 12/6/90
defendants PaineWebber and Nordmann filed a motion, pursuant to Fed.R.Civ.P.
12(b)(6), to dismiss the complaint for failure to state a claim for which
relief can be granted. Memorandum of Defendants PaineWebber and Nordmann in
Support of Their Motion to Dismiss the Complaint ("PaineWebber Memo"). On the
same day, defendant Lilly filed a separate motion to dismiss, adopting
PaineWebber's grounds and also making an alternate argument of its own.
Memorandum of Defendant Lilly in Support of its Motion to Dismiss the
Complaint ("Lilly Memo").
*664 On 12/21/90 this Court referred this action to Magistrate Judge Nina
Gershon pursuant to 28 U.S.C. s 636(b)(1)(B). In her Report and
Recommendation of 3/28/91 ("Report"), Magistrate Judge Gershon advised
dismissal of this action in its entirety. Report at 9. Plaintiffs CSI and
CCHR filed a timely objection, disputing the reasoning and conclusion of the
Magistrate Judge. These objections, along with defendants' responses, are now
before this Court.
Under the Federal Rules the District Court is required to make a de novo
determination of those issues in the Magistrate Judge's report to which
objections are made in writing. "The district judge may accept, reject, or
modify the recommended decision, receive further evidence, or recommit the
matter to the magistrate with instructions." Fed.R.Civ.P. 72(b). For the
reasons discussed below, we affirm the Magistrate Judge's Report with respect
to defendant Lilly, but reverse the Report with respect to defendants
PaineWebber and Nordmann.
Factual Background
On July 18, 1990 the Wall Street Journal featured an article entitled "Prozac
Said to Spur Idea of Suicide," describing the controversy over the anti-
depressant medication Prozac, which is manufactured by Lilly. The subject of
the article was a lawsuit filed against the drug company, alleging that the
drug "caused [a New York woman] to commit acts of self-destruction and to make
attempts at suicide." Ex. A to Complaint. The article described "a Los
Angeles-based consumer organization associated with the Church of Scientology"
which collected the complaints of patients taking Prozac, and subsequently
identified this group as CCHR. The article described Lilly's response as
"[believing that] some of the complaints are being drummed up by the
Scientology group, which has a history of criticizing the use of psychiatric
drugs." Id.
The following day, Nordmann, a market analyst for PaineWebber who
followed Lilly stock, wrote an Advisory responding to the Journal article
and recommending continued purchase of Lilly stock, despite the concern of
investors. Complaint at P 9. Plaintiffs allege that Nordmann was acting in
the scope of his employment when he authored the statements, and that "the
Advisory was prepared for, published by and distributed on PaineWebber's
nationwide communications system to PaineWebber's sales personnel, customers
and others, and all of PaineWebber's branch offices." Id. PP 7, 15. The
advisory described Prozac's success and Lilly's "highly ethical promotion
practices," which included regular updates of package inserts. Ex. B to
Complaint. In this context Nordmann wrote the statements of which plaintiffs
complain:
"The final addition to Prozac's package insert in May concerned one case of
'violent behavior.' In this case, a depressed man taking Prozac committed mass
murder. Interestingly, this man, Mr. Wes Becker (sic), happened to be a member
of the Church of Scientology. The Church and other related special interest
groups have, in our opinion been on a vendetta to discredit Prozac." [FN1]
(Emphasis added).
FN1. The entire text of Nordmann's Advisory of July 19, 1990 reads:
"An article in yesterday's (7/18) edition of the Wall Street Journal
regarding Prozac is the cause of significant investor concern. The article
discusses a lawsuit filed against [Lilly] by a New York woman who charges
that Prozac 'caused her to commit acts of self-destruction and to make
attempts at suicide'. In our opinion, investors should not be unduly
concerned, and we recommend purchase of [Lilly] shares on weakness. We
retain our Buy (1) rating on the stock. Due to the stock's dramatic
appreciation in recent months, it is not surprising to see some investors
locking in profits now and asking questions about Prozac's safety later."
"Prozac has been utilized by more than two million depressed patients
worldwide since it was first introduced in 1988. Its sales have risen
dramatically from $125 million that year to $350 million in 1989. Sales in
1990 are expected to exceed $700 million. The drug should comfortably
surpass the $1 billion mark in 1991 and become one of the ten largest
selling drugs in the world. The lay press has given the drug a great deal
of publicity. For example, Prozac has graced the cover of both Newsweek
and New York magazines. Because of the company's history with Oraflex,
an overpromoted arthritis drug that was removed from the market following a
number of deaths, it has not 'touted' Prozac, in our opinion. The drug was
initially introduced and promoted only to mental health professionals,
primarily psychiatrists. Highly ethical promotional practices have been
employed by [Lilly] throughout the drug's short time on the market."
"We understand that every reported side effect on (sic) Prozac is
immediately relayed to the FDA by the company for incorporation in the
drug's package insert and prescribing information. In fact, Prozac's label
was just routinely updated in May to incorporate a few additional adverse
reactions. One case of reversible pancreatitis was added as were six cases
of 'suicidal ideation' first reported by a Harvard University research
psychiatrist in the February issue of the American Journal of Psychiatry.
These patients reportedly had 'intolerable anxiety in which thoughts of
self-destruction were a natural consequence'. According to a recently
published text on the subject, the annual rate of suicide for depressed
patients is 22-36 times higher than the rate for the general population.
Consequently, the Harvard report included in the aforementioned medical
journal should not come as a surprise to mental health professionals. The
final addition to Prozac's package insert in May concerned one case of
'violent behavior'. In this case, a depressed man taking Prozac committed
mass murder. Interestingly, this man, Mr. Wes Becker (sic), happened to be
a member of the Church of Scientology. The Church and other related
special interest groups have, in our opinion, been on a vendetta to
discredit Prozac."
"It is important that investors separate the medical facts from
sensationalism in the lay press. To date, more than two million depressed
people have been greatly aided by Prozac therapy. Reported serious side
effects have been minimal and in proportion to other antidepressants. The
FDA is fully aware of the 'suicidal ideation' issue. Dr. Paul Leber, Chief
of the FDA's Division of Neuropharmacological Products, stated that 'At
present, our reporting system hasn't picked up (suicidal thoughts) as a
problem more common than might be expected in this population of users,
especially give the drug's high rate of use'. Prozac use is growing
dramatically. We estimate that total prescriptions for the drug in the
U.S. surpassed 1 million in the month of June alone. considering, its
extensive use in the depressed population, it is not surprising to
encounter an unusual adverse reaction periodically. We believe the
'suicidal ideation' issue is of primary importance primarily to the
financial community. We doubt that the medical community will seriously
consider decreasing its use".
"The information contained herein is based on sources we believe to be
reliable, but its accuracy is not guaranteed. PaineWebber Incorporated
and/or Rotan Mosle, Inc. and/or Mitchell Hutchins Asset Management Inc.,
Affiliated Companies and/or their officers, directors, employees or
stockholders may at times have a position, including an arbitrage or option
position, in the securities described herein and may sell or buy them to or
from customers. These customers may from time to time act as consultant to
a company being reported upon."
Ex. B to Complaint.
Nordmann's term "other related special interest groups," in the third
paragraph, clearly refers to CCHR, the particular Scientology group
identified in the Journal article.
*665 According to the Complaint, these statements "were told to Nordmann by
an employee of Lilly within the scope of the employee's employment" for the
purpose of having Nordmann publish the statements, in order to shore up Lilly's
stock in the wake of the worrisome Journal piece. Id. P 10.
Plaintiffs maintain that both these statements are false: Wesbecker was never
a member of CSI, and neither plaintiffs nor any other Scientology organization
is "on a vendetta" against Lilly's drug. Id. PP 12, 13. On October 31,
1990 plaintiffs commenced the instant action.
DISCUSSION
[1] In her Report, Magistrate Judge Gershon correctly states the liberal
standard of review for a motion to dismiss pursuant to Rule 12(b)(6):
"[T]he complaint should not be dismissed for failure to state a claim unless it
appears beyond doubt that plaintiffs can prove no set of facts in support of
their claim which would entitle them to relief." Report at 4 (citing Conley
v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)). For
purposes of this motion, the court looks solely at the complaint and its
exhibits. Fed.R.Civ.P. 10(c). The plaintiffs' allegations are taken as
true, with the caveat that a bald, unsupported allegation is insufficient to
pass the pleading threshold. 5A Charles A. Wright & Arthur R. Miller, Federal
Practice and Procedure s 1357, at 318 (2d ed. 1990). The court may find that a
plaintiff's complaint, though neither artful nor of great specificity in its
claim, states within its text a theory of law upon which plaintiffs may
*666 be permitted to proceed with their cause of action. 5A id. s 1356,
at 296.
[2] The issue before this Court is whether plaintiffs CSI and CCHR have
stated something more than an accusation as to each element of the tort of
defamation under the laws of New York. "The complaint must be deemed
sufficient if plaintiff has pleaded a colorable claim of libel." Lasky v.
American Broadcasting Companies, 606 F.Supp. 934, 938 (S.D.N.Y.1985), (citing
Davis v. Ross, 754 F.2d 80 (2d Cir.1985). [FN2] The four elements are: a
false and defamatory statement of and concerning plaintiff; publication to a
third party; fault, the degree of which depends upon the status of the
libelled party; and special harm or per se actionability. Angio Medical
Corp. v. Eli Lilly & Co., 720 F.Supp. 269, 272 (S.D.N.Y.1989).
FN2. The parties dispute whether the substantive law of New York or
California applies to plaintiffs' claim. Nevertheless, they have agreed
that, for purposes of the pending motions to dismiss, the law of both
states is the same.
[3][4][5][6][7][8][9] The first element, defamatory meaning, is discussed at
greater length below. As to the second element, publication to a third party,
the computerized PaineWebber Advisory was, by its nature, published to third
parties. As to the third element, fault, the Complaint alleges the highest
level which could possibly be required. [FN3] With regard to the fourth
element, special harm, under New York law, words are libel per se if they
"affect a person in his or her profession by imputing to the person misconduct,
incapacity, unfitness or lack of any qualification deemed necessary for the
conduct of the profession." Lasky, 606 F.Supp. at 937; Davis, 754 F.2d
at 82. As plaintiffs' Complaint articulates, this action meets this
requirement, therefore special damages do not have to be pleaded. Complaint
at PP 33, 37. All other elements of an action for defamation being
recognizable, we are left to determine the issue of defamatory meaning.
FN3. As this Court did in Lasky, we find the standard for pleading
fault satisfied on the face of the complaint. Id. at 938-39 n. 11.
Under New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11
L.Ed.2d 686 (1964) and its progeny, a libel plaintiff who is a public
figure must plead actual malice. James v. Gannett, 40 N.Y.2d 415, 420-
21, 353 N.E.2d 834, 838-39, 386 N.Y.S.2d 871, 875 (1976) (relying on New
York Times v. Sullivan ). This standard is satisfied by pleading reckless
disregard for the truth. Contemporary Mission, Inc. v. New York Times
Co., 665 F.Supp. 248 (S.D.N.Y.1987). Whether or not a person or an
organization is a public figure is a question of law for the court to
decide. 353 N.E.2d at 839-40, 386 N.Y.S.2d at 875-76. While this court
does not take judicial notice as such of the public controversy surrounding
Prozac, as defendants PaineWebber and Nordmann request, PaineWebber Memo at
6-8, James stands for the proposition that plaintiffs' appearance in
the Journal article grants them this status. Furthermore, the
visibility of plaintiffs, by their own admission "the Mother Church of the
Scientology religion," Complaint at P 3, and "a public-service (sic),
investigatory agency," id. P 37, easily subjects their allegation to
this high standard. Plaintiffs have satisfied this standard in Paragraph
11 of their Complaint and elsewhere in the pleadings.
Susceptibility to Defamatory Meaning
In this case the primary issue of law in dispute is the existence of
defamatory meaning in the PaineWebber Advisory. This Court disagrees with
Magistrate Judge Gershon and finds that the statements could reasonably convey
a defamatory meaning.
[10][11][12] Whether the statements are reasonably susceptible of a
defamatory connotation is a question of law for the court. First, the court
decides whether the words are susceptible of one or more meanings to the
average reader. Davis, 754 F.2d at 82. If they are ambiguous, then the
court decides if one of these meanings could be defamatory. Id. If so, it
is a question of fact for the jury as to which meaning was the one actually
understood by readers of the statements. Lasky, 606 F.Supp. at 938.
The principle of construction in New York is summed up in Lasky:
"1. The Court must consider the publication as a whole and not pick out and
isolate particular phrases."
"2. The publication should be tested by its effect on the average reader.
The Court should neither construe the words *667 with technical precision or
strain to place a particular interpretation on them, nor should the Court
interpret the words in their mildest and most inoffensive sense to hold them
non-libelous."
"3. The Court should read the accused words against the background of their
issuance with respect to the circumstances of their publication and the scope
and apparent object of the writer." Id. at 939.
[13] Magistrate Judge Gershon agreed with defendants that the defamatory
meanings alleged by plaintiffs are unreasonable. While Magistrate Judge
Gershon made a technically logical dissection of the sentences and their
meanings, this Court finds that the statements, in juxtaposition and in
context, are reasonably susceptible of a defamatory connotation. Thus, we find
that the statements must be submitted to a jury for a determination of whether
the ordinary and average person would understand these words as defamatory.
Constitutional Protection of Opinion
[14] Under the standards of the Federal Constitution, certain
statements of opinion are protected under the First Amendment. "[W]hether a
statement constitutes a personal opinion or a statement of fact is a question
of law for determination by the court." Davis, 754 F.2d at 85. Under the
federal standard, recently enunciated in Milkovich v. Lorain Journal Co.,
497 U.S. 1, 110 S.Ct. 2695, 111 L.Ed.2d 1 (1990), we find that defendants'
statements are not exempted from actionability by the First Amendment.
[15][16] The three parts of the federal standard are: the plain import or
common meaning of the specific words used; whether the statements are capable
of verification for truth or falsity; and the context or type of speech. Only
a particular type of speech is protected: "rhetorical hyperbole, vigorous
epithets, and lusty and imaginative expression ... [I]nstances where the
[Supreme Court] ha[s] determined that the imprecise language and unusual
setting would signal the reasonable observer that no actual facts were being
conveyed about an individual." Immuno AG v. Moor-Jankowski, 77 N.Y.2d 235,
244, 567 N.E.2d 1270, 1274, 566 N.Y.S.2d 906, 910 (1991).
[17][18] Applying the Milkovich standard in Immuno, New York's highest
court stated, "[t]he key inquiry is whether challenged expression, however
labeled by defendant, would reasonably appear to state or imply assertions of
objective fact." Id. 567 N.E.2d at 1273, 566 N.Y.S.2d at 909. If an
underlying fact, concerning plaintiffs and capable of being proven false, is
suggested by the statement, then the statements at issue are not classified as
opinion, and therefore not shielded from actionability. As with the
determination of defamatory meaning, the circumstances of the statements are
also considered in this inquiry: "In determining whether speech is actionable,
courts must additionally consider the impression created by the words used as
well as the general tenor of the expression, from the point of view of the
reasonable person." Id. 567 N.E.2d at 1273-74, 566 N.Y.S.2d at 909-10.
[19] Applying the Milkovich/Immuno standard to the facts of this case,
we find that Nordmann's two statements plainly assert two facts: 1) that
Wesbecker was a member of CSI, and 2) that CSI and associated organizations
were pursuing a hostile critique of Prozac. While the latter accusation may be
somewhat more vague and difficult to prove than the first, the public nature of
CCHR's activities and the public profile of the Prozac controversy indicate
that this is also a factual dispute with a determinable answer. The general
tenor of the Advisory was a partisan one, but it purported to be the true story
of the Prozac 'suicidal ideation' issue. Nordmann advised, in his professional
capacity, that investors who sought to cash in on their lucrative Prozac
investments were selling unwisely. ("Due to the stock's dramatic appreciation
in recent months, it is not surprising to see some investors locking in profits
now and asking questions about Prozac's safety later." Ex. B to Complaint.)
*668 Furthermore, the context is substantially equivalent to an
internal memo, and its tone is business-like and solemn. Compare Immuno,
567 N.E.2d 1270, 566 N.Y.S.2d 906 (letter to the editor). Although subjective
in tone, the commentary purports to be based on actual facts, and to be
pointing out their implications, not to be making a personal prediction or
hyperbolic characterization. The impression created by these words in the mind
of a reasonable person could be that they were purporting to state the truth of
the matter, not merely the author's opinion. [FN4]
FN4. The Immuno court's Milkovich-directed federal review was
corroborated on independent state constitutional grounds. Immuno, 567
N.E.2d at 1272, 566 N.Y.S.2d at 908. While pronouncements of the New York
Court of Appeals are binding on this Court for actions brought under
diversity jurisdiction, we do not find it necessary or appropriate to reach
the state constitutional question at this juncture. The Immuno court
was divided on the proper approach to these so-called dual constitutional
questions, and the majority acknowledged that it has analyzed protected
speech questions in a variety of ways. There is a range of possible
choices for this Court in terms of New York elaborations on the federal
standard. Id., 567 N.E.2d at 1278-79, 1282 n. 6, 566 N.Y.S.2d at 914-
15, 918 n. 6. None of these appear to this Court, without the benefit of
briefing by the parties, to be embraced in New York to the exclusion of the
others.
Additionally, although plaintiffs have indicated that they accept the
choice of New York law as opposed to California law, as previously stated,
this is solely for the purposes of the motion to dismiss. Given the
satisfaction of the federal constitutional standard, as discussed above,
and the remaining opportunity to consider this issue, if necessary, since
this Court has elected not to dismiss this claim in its entirety, deferral
of state law review of the constitutional question is appropriate at this
juncture. If at a later stage of the proceedings this issue again presents
itself, this Court will consider it in detail at that time.
Failure to State a Claim as to Lilly
[20] This Court agrees with the Magistrate Judge that plaintiffs have failed
to adequately allege that Lilly made the statements at issue. Plaintiffs
allege only that the statements at issue, written by Nordmann, "were told to
Nordmann by an employee of Lilly within the scope of the employee's
employment." Complaint at P 10.
Plaintiffs fail to provide both the context and the precise language of these
statements, or to further identify their author. Neither sentence is
attributed by Nordmann to anyone in particular. The language of each sentence
is subjective on its face, and therefore gives the impression of having been
created solely by Nordmann. For example, the choice of the word
"interestingly" to qualify the alleged CSI membership of Wesbecker connotes an
idea of the author's own. More significantly, on its face the second sentence
could not have been communicated by Lilly, because "[b]y definition, Lilly
could not be the author of PaineWebber's opinion." Lilly Memo at 10.
Without more precision in the pleadings, plaintiffs attribution of Nordmann's
Advisory, written as a PaineWebber report on one product manufactured by an
independent client, is on its face mere speculation as to Lilly's role in the
Advisory's making. Such conclusory allegations will not survive a motion to
dismiss for failure to state a claim.
CONCLUSION
Plaintiff's Complaint can be construed as setting forth a claim of defamation
as to defendants PaineWebber and Nordmann only. Defendant Lilly's motion to
dismiss the Complaint for failure to state a claim is therefore granted.
Defendant PaineWebber's and defendant Nordmann's motion to dismiss the
Complaint for failure to state a claim is denied.
It Is So Ordered.