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      ELI LILLY & CO., Painewebber, Inc., and Ronald Nordmann, Defendants.
                             No. 90 CIV. 7009 (MJL).
                  United States District Court, S.D. New York.
                                 Aug. 14, 1992.
  Morrison, Cohen, Singer & Weinstein, By Jonathan W. Lubell, New York City, for
  Cravath, Swaine & Moore, By Alan J. Hruska, New York City, for defendants.
                                OPINION AND ORDER

  MARY JOHNSON LOWE, District Judge
  *1 Before this Court is the motion of defendants PaineWebber Incorporated
 and Ronald Nordmann for summary judgment in the above-captioned action pursuant
 to Fed.R.Civ.P. 56.  For the reasons set forth below, the motion is denied.
  Procedural History
  This is an action for defamation brought by the Church of Scientology
 International ("CSI") and Citizens' Commission on Human Rights ("CCHR").  On
 December 6, 1990, the defendants moved to dismiss the complaint pursuant to
 Fed.R.Civ.P. 12(b)(6).  On December 21, 1990, these motions were referred to
 Magistrate Judge Nina Gershon for Report and Recommendation ("R & R").
 Magistrate Judge Gershon issued her Report and Recommendation on March 28,
 1991, and recommended granting the motions in full.  By Opinion and Order of
 October 25, 1991, this Court affirmed the R & R with respect to defendant Lilly
 and reversed the R & R with respect to defendants PaineWebber and Nordmann.
 Plaintiff subsequently moved for relief from that portion of the October 25,
 1991 Opinion which dismissed the plaintiffs' claims against defendant Lilly.
 By Opinion and Order of April 3, 1992, that motion was denied.  Defendants now
 move for summary judgment.
  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
 within 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
   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.
  *2 Plaintiffs maintain that two of 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.  With
 respect to the first statement, Nordmann claims that Lilly employees told him
 that Wesbecker was a member of CSI.  Nordmann dep. at 70-72, Ex. 7 to Affidavit
 of Jonathan W. Lubell.  However, those Lilly employees who had contact with
 Nordmann deny having provided him with such information.  Graper Aff. at PP 5-
 10, Thompson Aff. at P 3.  According to the deposition testimony of Robert
 Graper, Lilly's Director of Investor Relations, after Graper advised Nordmann
 that Lilly had no information that Wesbecker was a Scientologist, Nordmann
 commented, "I guess I will have to make a change."  Graper dep. at 55, Ex. 11
 to Affidavit of Jonathan W. Lubell.  Subsequently, however, Nordmann published
 the advisory as originally written.
  Rule 56(c) provides that summary judgment is proper "if the pleadings,
 depositions, answers to interrogatories, and admissions of file, together with
 the affidavits, if any, show that there is no genuine issue as to any material
 fact and that the moving party is entitled to judgment as a matter of law."
 Celotex Corp. v. Catrett, 477 U.S. 317 (1986).  As to what constitutes a
 material fact, "the substantive law will identify which facts are material for
 purposes of summary judgment.  Id.
  Plaintiffs in this defamation case are public figures to which the standards
 of New York Times v. Sullivan, 376 U.S. 242 (1964), and its progeny, apply.
 The Supreme Court has held that where the factual dispute concerns actual
 malice, clearly a material issue in a New York Times case, the appropriate
 summary judgment question will be whether the evidence in the record could
 support a reasonable jury finding either that plaintiff has shown actual malice
 by 'clear and convincing' evidence or the plaintiff has not."  Anderson v.
 Liberty Lobby, Inc., 477 U.S. 242, 255 (1986), See also Saenz v. Playboy
 Enterprises, Inc., 841 F.2d 1309, 1317 (7th Cir.1988).
  The burden of proving "actual malice" requires plaintiff to demonstrate with
 clear and convincing evidence that defendant realized, at the time the
 defamatory falsehood was published, that his statement was false or that he
 subjectively entertained serious doubts as to the truth of his statement.
 New York Times, 376 U.S. at 280, St. Amant v. Thompson, 390 U.S. 727,
 731 (1968).  See also Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S.
 485, 511 (1984).
  In the case at the bar, one of defendant Nordmann's statements asserts that
 Wesbecker is a member of the Church of Scientology.  Nordmann contends that he
 was told by Lilly employees that Wesbecker was a member of the Church.  As
 evidence that Nordmann knew his statement was false at the time he published
 it, plaintiffs offer the sworn affidavits and deposition testimony of those
 Lilly employees who had contact with Nordmann in which they deny providing him
 with such information.  Lilly employee, Robert Graper testified in his
 deposition that after he had advised Nordmann that Lilly had no information as
 to whether Wesbecker was a Scientologist, Nordmann said, "I guess I will have
 to make a change."  Nowhere in any of their submissions to this Court do
 defendants deny that Nordmann made such a statement.
  *3 Therefore, this court finds that a reasonable jury could find that
 plaintiff has shown by clear and convincing evidence that Nordmann entertained
 serious doubts as the truth of his statement that Wesbecker was a member of the
 Church of Scientology at the time he published the statement.  Thus, plaintiffs
 have met their evidentiary burden with regard to showing actual malice.
  Defendants' argue that standing alone, Nordmann's statement that Wesbecker is
 a member of the Church of Scientology is non-defamatory as a matter of law and
 is, therefore, non-actionable.  Defendants attempt to bolster their argument by
 citing this Court's Opinion and Order denying plaintiffs' 60(b) motion dated
 April 3, 1992 in which we found that "[Nordmann's] statements must be taken
 together in order to establish a reasonable possibility that they could be
 interpreted as defamatory."  Opinion and Order, April 3, 1992, at 4.
 Defendants reason that if the statements must be taken together, then no one
 statement, standing alone, can be defamatory.
  However, when this Court denied plaintiff's 12(b)(6) motion, we found that
 defendant Nordmann's statements, in juxtaposition and in context, are
 reasonably susceptible of a defamatory connotation.  See Opinion and Order,
 October 25, 1991, at 10.  The false statement concerning Mr. Wesbecker's
 membership in the Church is one such statement.  In context and juxtaposed with
 the other statements surrounding it in the Advisory, the statement is an
 integral part of a whole which is susceptible of a defamatory connotation.
 Clearly, it would defy logic for this Court to now take the statement out of
 context and subject it to scrutiny standing alone.
  Instead, we find that plaintiffs have offered clear and convincing evidence
 such that a jury could find that Nordmann knew his statement regarding
 Wesbecker's membership in the Church was false when he published it.  Thus,
 plaintiffs raise a question as to the defendant's state of mind when he wrote
 the advisory.  We must conclude, therefore, that the more prudent course of
 action, in this case, is to let the matter proceed to trial where a jury can
 assess all the evidence pursuant to its full explication by the parties.  In
 doing so, this Court is mindful of the Supreme Court's recommendation that the
 trial Court deny summary judgment "in a case where there is reason to believe
 that the better course would be to proceed to a full trial."  Anderson v.
 Liberty Lobby, 477 U.S. at 255.
  Based on our finding that the actual malice question constitutes a genuine
 issue of material fact which precludes summary judgment in this case,
 defendant's motion is denied.
  It Is So Ordered.

End of file...