The opinion of the court was delivered by: GOETTEL
This is a diversity action brought by Charles Atlas Ltd. against Time-Life Books, Inc. for breach of contract and product disparagement. Before this Court is Time-Life's motion to dismiss the amended complaint.
Product Disparagement Claim
The product disparagement claim arises from reproduction in the defendant's book, Exercising for Fitness, of the plaintiff's classic advertisement about a "97-pound weakling" who becomes a "real man" after utilizing the plaintiff's exercise system. As noted in this Court's prior opinion, the advertising reproduction is set apart from the text on the upper right hand side of the page and appears as follows:
[SEE ILLUSTRATION IN ORIGINALS]
The plaintiff alleges that the caption appearing directly above the reproduced advertisement is incorrect in describing the plaintiff's exercise system as isometric. It further alleges that this incorrect description in the caption, "coupled with the text of the book warning readers of the extreme dangers of isometric exercises was done intentionally or recklessly under such circumstances as to make clear to the reader that Plaintiff's program of exercise is dangerous to the user's health and should be avoided." Amended Complaint P30.
The defendant argues that the plaintiff's claim for product disparagement is legally insufficient. According to the defendant, the statements at issue are not disparaging, the allegedly disparaging statements were not "directly published of and concerning" the plaintiff's product, the statements at issue could not have caused the plaintiff any legally cognizable injury (in other words, the plaintiff is libel proof), the amended complaint fails to plead malice adequately, and the amended complaint fails to plead special damages adequately. This Court does not believe that these arguments warrant dismissal of the complaint at this time.
First, this Court cannot say as a matter of law that the alleged misstatements are not reasonably susceptible to a defamatory meaning and that no reasonable reader could conclude that the alleged defamatory statements are published of and concerning the plaintiff's product. The reproduction of the plaintiff's advertisement and the caption above it appears on the same page as the text delineating the dangers of isometric exercises. See supra note 2. When the caption is read in conjunction with the text, see Cianci v. New Times Publishing Co., 639 F.2d 54, 60 (2d Cir. 1980) ("allegedly defamatory passages must be considered in the context of the entire article"), a reasonable reader could conclude that the plaintiff markets an isometric exercise program, that isometric exercises have gone out of favor because they are dangerous, and that therefore, the plaintiff's exercise program is dangerous. In such circumstances, the Court concludes that the alleged misstatements are reasonably susceptible to a defamatory meaning and that a reasonable reader could conclude that the alleged defamatory statements were directly published of and concerning the plaintiff's product. Whether the trier of fact will conclude that a defamatory connotation about the plaintiff's product was indeed conveyed will have to await trial.
Second, the plaintiff is not "libel-proof." The "libel-proof" doctrine was first articulated in this Circuit in Cardillo v. Doubleday & Co., 518 F.2d 638 (2d Cir. 1975). In that case, the plaintiff, an individual with an extensive criminal record, claimed that the defendants had defamed him in their book by stating that he had engaged in various criminal activities. The Second Circuit upheld the dismissal of the action because, for purposes of that case, the plaintiff was "libel-proof." Id. at 639. "The court reasoned that since the truth of [the plaintiff's] illicit past was as damaging as the alleged falsehoods, he was unlikely to recover anything other than nominal damages. His limited reputational interest thus did not warrant risking the First Amendment interests involved." Simmons Ford, Inc., v. Consumers Union, Inc., 516 F. Supp. 742, 750 (S.D.N.Y. 1981) (Weinfeld, J.) (summarizing Cardillo v. Doubleday & Co.); See also id. at 750 (summary judgment granted because, inter alia, "the portion of the article challenged by plaintiffs, could not harm their reputations in any way beyond the harm already caused by the remainder of the article").
Reliance on the "libel proof" doctrine, however, is misplaced in this case. The defendant does not argue that the allegedly false statements in Exercising for Fitness cannot harm the reputation of the plaintiff's product in any way beyond the harm caused by truthful statements. Rather, it proffers what is essentially an estoppel argument. It contends that
"[f]or decades, the news media and books on exercise, apparently and without challenge from or exception by plaintiff, have described plaintiff's exercise system as involving isometric exercises. . . . Whatever injury occurred by allegedly mislabeling the Dynamic Tension System as involving isometric exercises is precisely the damage that has been done to plaintiff innumerable times in the past. . . . Given the existence of these prior, unchallenged statements, it is too late for plaintiff to complain now."
Memorandum of Defendant in Support of its Motion to Dismiss the Amended Complaint at 12-13.
This Court is unprepared to extend the "libel-proof" doctrine that far, especially in view of the Second Circuit's admonition that the doctrine "is a limited, narrow one, which we will leave confined to [the] factual contest [of Cardilo]." Buckley v. Littell, 539 F.2d 882, 889 (2d Cir.), cert. denied, 429 U.S. 1062, 50 L. Ed. 2d 777, 97 S. Ct. 785, 97 S. Ct. 786 (1976); see Bose Corp. v. Consumers Union, Inc., 529 F. Supp. 357, 362 (D. Mass. 1981), rev'd on other grounds, 692 F.2d 189 (1st Cir. 1982).
Third, despite the defendant's argument that the action must be dismissed because the plaintiff has not alleged facts sufficient to show common law malice, that is, ill will, spite, or hostility, this Court believes that malice is pleaded adequately. It is extremely questionable whether the plaintiff must show common law malice to state a claim for product disparagement. Rather, it appears that, to prevail on its claim, the plaintiff must, or at least can, show actual malice, that is, knowledge of the alleged false statement or reckless disregard as to the truth of the statement. See Bivas v. State, 97 Misc. 2d 524, 528, 411 N.Y.S.2d 854, 858 (Ct. Cl. 1978) (summarizing W. Prosser, Handbook of the Law of Torts § 128, at 921-22 (4th ed. 1971) (to support a claim for product disparagement, "malice, comprising either ill will, scienter or deliberate falsification, is necessary"); Restatement (Second) of Torts § 623A, Comment d (1977) ("A principal basis for liability for injurious falsehood [that is, product disparagement] has been that the publisher knew that the statement was false or that he did not have the basis of knowledge or belief professed by his assertion.").
Moreover, regardless of what type of malice must be shown, it appears that the plaintiff's amended complaint is sufficient. In paragraph 32, the plaintiff alleges that the allegedly false statements in Exercising for Fitness "were known by Defendant to be false when they were made, ...