A. Report on a Judicial Proceeding
Allegedly defamatory statements are protected by Section 74 only where the statements report on a judicial proceeding. Williams v. Williams, 23 N.Y.2d at 599-600. If the context in which the statements are made make it "impossible for the ordinary viewer to determine whether defendant was reporting on a trial or simply from interviews and independent research, the absolute statutory privilege does not attach." Corporate Training Unlimited, Inc. v. Nat'l Broadcasting Co., 868 F. Supp. 501, 509 (E.D.N.Y 1994).
Wenz asserts that Becker's statement that Wenz could have been fired for cause was not a report on a judicial proceeding at the time it was made to Fortune magazine because there was not yet a judicial proceeding on which to report. In March 1995, when Becker allegedly made the statement to Fortune magazine during an interview, ProGroup had not yet filed its answer and counterclaims in which the assertion was contained. In other words, Wenz claims that the actual filing of ProGroup's answer and counterclaims was a necessary precursor to Becker's invocation of the Section 74 privilege, since the statement at issue relates to ProGroup's defense. This position is without merit. By its own terms, Section 74 applies to a report of "any judicial proceeding." N.Y. Civ. Rights Law § 74. A judicial action is commenced by the filing of a complaint with the Court or by the service of a summons upon a defendant. Phillips v. Murchison, 252 F. Supp. at 519; see also State v. Mitchell, 593 S.W.2d 280, 287 (Sup. Ct. Tenn.) (filing of a complaint constitutes initiation of a judicial procedure), cert. denied, 449 U.S. 845 (1980). Moreover, once the pendency of the judicial proceeding has been established, the privilege pursuant to Section 74 attaches and applies to any pleading in the course of the proceeding. Phillips v. Murchison, 252 F. Supp. at 519; Branca v. Mayesh, 101 A.D.2d 872, 873, 476 N.Y.S.2d 187 (2d Dep't), aff'd 63 N.Y.2d 994, 483 N.Y.S.2d 1011, 473 N.E.2d 261 (1984). Thus, the Tennessee Lawsuit, which was commenced in November 1994, was already pending when Becker made the allegedly defamatory statement to Fortune in March 1995. That ProGroup had not yet performed the ministerial act of filing its answer and counterclaims at the time the statement was made is irrelevant to the applicability of Section 74 to Becker's statement if it in fact reported on ProGroup's defense in the Tennessee lawsuit. See, e.g., McNally v. Yarnall, 764 F. Supp. 853 (S.D.N.Y. 1991) (statement to press relating to a potential defense which might be asserted at trial was a "report on a judicial proceeding").
Wenz also asserts that Becker's statement about terminating Wenz for cause was not a report on the Tennessee Lawsuit because the statement was not clearly tied to the lawsuit. According to Wenz, Becker did not report on the nature or status of the pending litigation. Rather, he simply issued an independent attack on Wenz's integrity. In support of this argument, Wenz relies on the following facts: (1) the focus of the Article was not the Tennessee Lawsuit, but rather the difficulties ProGroup has experienced recently, as relayed by Becker; (2) Becker's statement precedes the sentences describing Wenz's allegations against ProGroup; and (3) Becker's statement is not qualified by clear language, such as "affirmative defense," indicating that the statement refers to a judicial proceeding.
These allegations, taken together, raise a genuine issue of fact as to whether Becker's statement was in fact a report on a judicial proceeding. First, although the only statement by Becker alleged to be defamatory is that he became convinced that ProGroup could have terminated Wenz for cause, the context of the entire Article is relevant in determining whether Becker was reporting on the Tennessee Lawsuit when he made that statement. Second, the fact that Becker's sentence precedes the description of Wenz's allegations against ProGroup raises a factual question as to whether Becker was responding to interview questions about the Tennessee Lawsuit or, on the other hand, issuing unsolicited and independent comments on the circumstances surrounding Wenz's termination.
Finally, the absence of legal terminology labeling Becker's statement an "affirmative defense" though not determinative, is a factual issue whose importance is subject to differing opinions. Although such language is not required under Section 74, the significance of its absence is a matter to be considered by the factfinder.
B. Fair and True Report
For a report to be "fair and true" within the meaning of Section 74, "it is enough that the substance of the article be substantially accurate." Corporate Training Unlimited, Inc. v. Nat'l Broadcasting Co., 868 F. Supp. at 508 (quoting Holy Spirit Assoc. for Unification of World Christianity v. New York Times, Co., 49 N.Y.2d 63, 67, 424 N.Y.S.2d 165, 399 N.E.2d 1185 (1979)). The standard is whether the published account of the proceeding would have a different effect on the reader's mind than the actual truth if published. Daniel Goldreyer, Ltd. v. Van De Wetering, 217 A.D.2d 434, 436, 630 N.Y.S.2d 18 (1st Dep't 1995). Wenz asserts that even if Becker's statement constitutes a report on the Tennessee Lawsuit, Becker's statement is not privileged pursuant to Section 74 because it is neither fair nor true. According to Wenz, Becker's statement suggests more serious wrongful conduct than that alleged in ProGroup's answer and counterclaims.
A comparison of ProGroup's Second Affirmative Defense and Becker's statement to Fortune reveals an undisputable similarity between the two allegations. Nonetheless, Wenz contends that by omitting certain facts in his interview with Fortune which were included in ProGroup's answer and counterclaims, Becker created a false impression as to the nature and severity of ProGroup's allegations against Wenz. Specifically, Wenz claims that Becker's reference to "ProGroup's books" created the false impression that Wenz altered ProGroup's financial statements. According to Wenz, Becker intentionally failed to explain that ProGroup believed it was entitled to fire him because of his alleged submission of improper personal expenses and alleged failure to disclose certain anticipated losses, not because of any embezzlement or alteration of ProGroup's financial statements. This allegation raises at least two material issues of fact: (1) whether Becker reported these details of ProGroup's defense to Fortune and they were simply not included in the Article; and (2) if in fact Becker failed to disclose these facts to Fortune, whether the omission renders Becker's statement an unfair or untrue report of ProGroup's defense.
Thus, summary judgment is inappropriate at this time.
For the reasons set forth above, Becker's motion for summary judgment pursuant to Federal Rule of Civil Procedure 56 is denied.
SHIRLEY WOHL KRAM
United States District Judge
Dated: New York, New York
December 17, 1996