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LA LUNA ENTERPRISES, INC. v. CBS CORP.

October 20, 1999

LA LUNA ENTERPRISES, INC., PLAINTIFF,
v.
CBS CORP., CBS BROADCASTING, INC., DAN RATHER, AND JAMES STEWART, DEFENDANTS.



The opinion of the court was delivered by: Robert L. Carter, District Judge.

    OPINION

Plaintiff La Luna Enterprises, Inc., ("La Luna" or the "corporation") asserts a claim of defamation against defendants CBS Corporation, CBS Broadcasting Inc., ("CBS"), Dan Rather, and James Stewart arising out of a televised report on the "CBS Evening News with Dan Rather" (the "broadcast") concerning Russian organized crime and containing interior footage of plaintiff's restaurant and nightclub. Plaintiff also asserts claims of fraud and trespass arising out of defendants' procurement of its permission to film its restaurant. Defendants now move to dismiss plaintiff's amended complaint (the "complaint") pursuant to Rule 12(b)(6), F.R.Civ. P., for failure to state a claim upon which relief can be granted.

BACKGROUND

In September, 1997, CBS contacted La Luna to request permission to film its cabaret show for background footage for a broadcast about tourism in Miami Beach. (Cplt. ¶¶ 12-13.) Plaintiff, relying on this representation, permitted CBS to film its show. Contrary to plaintiff's expectations, on October 29, 1997, CBS featured the footage of plaintiff's restaurant in a broadcast graphically depicting the violent threat posed by the new Russian mob in America and, in particular, in Miami. (Cplt. ¶¶ 16-17.) The broadcast began with footage of La Luna and, in a voiceover narration, CBS correspondent Stewart stated:

  Inside, you'd swear this was Russia. Everything from
  the food to the music says Moscow, but one look
  outside [visual of Miami Beach scene] and you know
  its not. This is Miami Beach, and the Russians aren't
  just coming anymore, they're already here. [return to
  visual of La Luna] But just who, wonders American law
  enforcement lately, are these people? Are they hard
  working immigrants or are they from Russia's violent
  underworld, [visual of individuals covered in blood
  on a Russian street], the criminal side of
  immigration that's turned the old Soviet Union into a
  war zone. . . .

(Defs.' Exh. 1.)*fn1 The broadcast then discussed how elements of Russian organized crime were moving into America. It included interviews with a former KGB agent and an FBI special agent who discussed their efforts to track down Russian mobsters in the United States. The broadcast finished with more footage of La Luna and a final visual of a filled body bag lying on a sidewalk in Russia, near a pool of blood.

The complaint alleges that contrary to defendants' implication, law enforcement officials had no reason to believe that La Luna's employees and patrons were part of Russia's violent underworld. (Cplt. ¶ 18.) It also alleges that, by reason of defendants' implication that La Luna itself was involved with organized crime, (Cplt. ¶ 29), plaintiff has suffered injury to its reputation and a downturn in its business. (Cplt. ¶ 34.) Plaintiff filed its complaint on August 17, 1998, seeking damages of $1,000,000 on each of its three claims of defamation, fraud and trespass.

DISCUSSION

The court may dismiss plaintiff's complaint pursuant to Rule 12(b)(6) only if it "`appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir. 1998) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). In ruling on defendants' motion, the court must accept as true all factual allegations in the complaint and draw all reasonable inferences in favor of plaintiff. See Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996).

I. Choice of Law

As a threshold matter, the parties dispute the law applicable to plaintiff's claims. Since jurisdiction is based on diversity of citizenship, 28 U.S.C. § 1332 (1999), the court must apply the choice of law rules of the forum state. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Lee v. Bankers Trust Co., 166 F.3d 540, 545 (2d Cir. 1999). New York's choice of law rules require the court to apply the substantive tort law of the state "with the most significant interest in the litigation." Lee, 166 F.3d at 545 (citing Padula v. Lilarn Properties Corp., 84 N.Y.2d 519, 521, 620 N.Y.S.2d 310, 644 N.E.2d 1001 (1994)).

Although New York has some interest in this litigation because defendants are citizens of New York, and New York is plaintiff's chosen forum, Florida has a more significant interest because plaintiff's principal place of business is in Florida; plaintiff is incorporated in Florida; plaintiff alleges it suffered injury to its reputation in Florida;*fn2 and lastly CBS filmed footage of plaintiff's establishment, and broadcast its report, in Florida. Although CBS correctly notes that New York has an interest in protecting the free speech rights of publishers within its borders, the Second Circuit, when confronted with a similar claim of defamation against a New York based television broadcaster, affirmed the application of the defamation law of the plaintiff's home state, New Jersey. Machleder v. Diaz, 801 F.2d 46, 52 (2d Cir. 1986) ("[D]espite the interest of New York in establishing a standard of fault for its news media, New Jersey also has an important competing interest in protecting its citizens from defamation. . . . [and] governing the fault of those who come within its boundaries to investigate the news and later broadcast it there."). Since Florida has the most significant interest in this litigation, Florida law must apply to plaintiff's defamation claim. See Reeves, 719 F.2d at 605 (affirming application of law of plaintiff's home state in multistate defamation case).*fn3

The principle of decepage requires that the court independently determine which state's substantive law applies to plaintiff's claims of fraud and trespass. In the context of such conduct-regulating torts, New York's choice of law principles require that the law of the place of the wrong governs. See Sheldon v. PHH Corp., 135 F.3d 848, 853 (2d Cir. 1998) (citation omitted). The complaint is ambiguous as to precisely where defendants' allegedly fraudulent conduct took place — it simply states that "defendants . . . contacted plaintiff and requested permission to film" plaintiffs restaurant. (Cplt. ¶ 12.) Nevertheless, "when the defendant's [tortious] conduct occurs in one jurisdiction and the plaintiff's injuries are suffered in another, the place of the wrong . . . is determined by where the plaintiffs' injuries occurred." Schultz v. Boy Scouts of Am., 65 N.Y.2d 189, 195, 491 N.Y.S.2d 90, 480 N.E.2d 679 (1985); see also Rosenberg v. Pillsbury Co., 718 F. Supp. 1146, 1150 (S.D.N.Y. 1989) (Conner, J.) ("The locus of a fraud is `the place where the injury was inflicted,' as opposed to the ...


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