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United States District Court, S.D. New York

May 27, 2004.


The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge


Plaintiff Waturu Iwata ("Iwata") has moved pursuant to Fed.R. Civ. P. 15(a) to amend the complaint against defendant MaggieMoo's International, LLC ("MMI") to add a claim of defamation. For the reasons set forth below, the motion is denied.

Prior Proceedings

  On December 11, 2003, Iwata, along with other plaintiffs, filed this action. A first amended complaint was filed on February 27, 2004. On April 15, 2004, each of the plaintiffs moved to file a second amended complaint.

  On May 19, 2004, the claims of all plaintiffs except Iwata were transferred to the United States District Court for the District of Maryland. See G&R Moojestic Treats v. MaggieMoo's Int'l, 03 Civ. 10027, 2004 WL 1110423 (S.D.N.Y. May 19, 2004). In addition, each of Iwata's claim, except for a single fraud claim, were dismissed.

  Because the claims of the plaintiffs besides Iwata have been transferred, the motion will be treated as having been made by Iwata alone. After exchange of briefs, the motion was taken on submission on May 12, 2004. Facts

  Iwata seeks to add a defamation claim based on a statement allegedly made by MMI's Chief Executive Officer and President Jon Jameson ("Jameson") in an interview for publication in the March 2004 issue of LJN's Franchising Business & Law Alert (the "Law Alert "). According to the proposed second amended complaint, the Law Alert is a national publication with a wide multi-state distribution. At the end of the article, entitled "Maggiemoo's Ice Cream, Two Franchisees Appear Headed to Court," Jameson is quoted as saying:

It is our belief that the plaintiffs may be interested in defaming our name and reputation, and may be engaging in practices approaching extortion. While we prefer and encourage straightforward and open discussion, Maggiemoo's International, LLC will not shy away from aggressive defense of our brand and good name, including the possibility of counterclaims if deemed appropriate.
The article names the two prospective franchisees, G&R Moojestic and JI International, LLC, as well as the owner of JI International, Jun Iwata, who is Iwata's brother. Iwata is not named in the article.

 Discussion Rule 15(a) of the Federal Rules of Civil Procedure provides that the district court should freely grant leave to amend "when justice so requires." Fed.R.Civ.P. 15(a). However,

amendment is not warranted in the case of, among other things, "futility." A proposed amendment to a pleading would be futile if it could not withstand a motion to dismiss pursuant to Rule 12(b)(6).
Oneida Indian Nation of New York v. City of Sherrill, New York, 337 F.3d 139, 268 (2d Cir. 2003) (internal citations omitted). A district court may also deny leave to amend where it is "unlikely to be productive." Ruffolo v. Oppenheimer & Co., 987 F.2d 129, 131 (2d Cir. 1993).

  MMI argues that amendment of the complaint would be futile because the statement made by Jameson is not defamatory because it does not accuse plaintiffs of the crime of extortion or even of "practices approaching extortion."

  Although neither party raises the issue, New York law governs this matter because Iwata is a New York resident and the statement was published in a nationwide publication. "Under New York choice-of-law rules in defamation cases the state of the plaintiff's domicile will usually have the most significant relationship to the case, and its law will therefore govern." Hamilton Bank, N.A. v. Kookmin Bank, 245 F.3d 82, 94 (2d Cir. 2001) (quoting Lee v. Bankers Trust Co., 166 F.3d 540, 545 (2d Cir. 1999)). "Although the preference for the plaintiff's domicile is not conclusive, xthe significant contacts [in a defamation case] are, almost exclusively, the parties' domiciles and the locus of the tort.'" Lee 166 F.3d at 545 (quoting AroChem Int'l, Inc. v. Buirkle, 968 F.2d 266, 270 (2d Cir. 1992)).

  Jameson's "use of the word `extortion', which is defined as a felony in Penal Law ยง 155.05(2)(e), does not necessarily make his remarks actionable statements of fact. Depending upon the context in which it is used, such an accusation can be understood as mere `rhetorical hyperbole' or a `vigorous epithet,' which is not actionable." Trustco Bank of New York v. Capital Newspaper Div. of Hearst Corp., 213 A.D.2d 940, 942, 624 N.Y.S.2d 291, 293 (3d Dep't 1995) (citing Gross v. New York Times Co., 82 N.Y.2d 146, 155, 603 N.Y.S.2d 813, 623 N.E.2d 1163 (1993); 600 W. 115th St. Corp. v. Von Gutfeld, 80 N.Y.2d 130, 143-145, 589 N.Y.S.2d 825, 603 N.E.2d 930 (1992)).

  Considering the context of Jameson's statements in an article describing the lawsuit against MMI, "no reasonable reader could understand [Jameson's] statements as saying that plaintiff committed the criminal act of extortion." Trustco Bank, 213 A.D.2d at 942. It would make little sense for Jameson to invite "straightforward and open discussion" with parties he believed to be criminally extorting his company. As the United States Supreme Court held in an analogous case considering whether accusations of `blackmail,' constituted libel, "even the most careless reader must have perceived that the word was no more than rhetorical hyperbole, a vigorous epithet used by those who considered [plaintiff's] negotiating position extremely unreasonable." Greenbelt Coop. Publ'g Ass'n, Inc. v. Bresler, 398 U.S. 6, 14 (1970). The defamation claim against Iwata would therefore not withstand a motion to dismiss, and amending the complaint to add the defamation claim would be futile.


  For the reasons set forth above, Iwata's motion pursuant to Rule 15(a) for leave to amend the complaint to assert a claim of defamation is denied.

  It is so ordered.


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