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LA LUNA ENTERPRISES, INC. v. CBS CORP.
October 20, 1999
LA LUNA ENTERPRISES, INC., PLAINTIFF,
CBS CORP., CBS BROADCASTING, INC., DAN RATHER, AND JAMES STEWART, DEFENDANTS.
The opinion of the court was delivered by: Robert L. Carter, District Judge.
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.
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
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.
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)).
In defamation cases, "the state of the plaintiff's domicile
will usually have the most significant relationship to the case,"
assuming that the defamation was published in the plaintiff's
state, because plaintiff's home state is where a plaintiff's
reputation is most likely damaged. Id. (quoting Reeves v.
American Broad. Co., Inc., 719 F.2d 602, 605 (2d Cir. 1983)).
also, Bryks v. Canadian Broad. Corp., 928 F. Supp. 381, 383
(S.D.N.Y. 1996) (Mukasey, J.) (collecting cases); Restatement
(Second) of Conflict of Laws § 150(3) (1971) ("[T]he state of
most significant relationship will usually be the state where the
corporation . . . had its principal place of business. . . .").
"Although the preference for the plaintiff's domicile is not
conclusive, the significant contacts [in a defamation case] are,
almost exclusively, the parties' domiciles and the locus of the
tort." Lee, 166 F.3d at 545 (quotations and citations omitted).
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 ...