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TREPPEL v. BIOVAIL CORPORATION

August 30, 2005.

JERRY I. TREPPEL, Plaintiff,
v.
BIOVAIL CORPORATION, EUGENE N. MELNYK, KENNETH C. CANCELLARA, MICHAEL S. SITRICK, and SITRICK AND COMPANY, INC., Defendants.



The opinion of the court was delivered by: PETER LEISURE, District Judge

OPINION AND ORDER

For the second time in this action, the Court considers a motion to dismiss for failure to state a claim brought by defendants. Defendants' first motion to dismiss was denied in part and granted in part. Three of the five defendants, Kenneth C. Cancellara, Esq. ("Cancellara"), Michael Sitrick, and Sitrick and Company (the "Sitrick Defendants"), then sought reconsideration of the Court's ruling as it related to plaintiff's claims against them. The Court granted their motion and dismissed without prejudice the balance of the claims remaining against them. Plaintiff, Jerry I. Treppel ("Treppel"), subsequently amended the Amended Complaint and re-asserted some of the dismissed claims against all defendants. In response, defendants filed the instant motion, again seeking dismissal of all claims against Cancellara and the Sitrick Defendants.*fn1 In addition, Melnyk asserted three counterclaims, which plaintiff now petitions the Court to dismiss. The Court addresses both motions below in seriatim.

  BACKGROUND

  The factual history of this case is set forth in the Court's two prior opinions, with which the Court assumes familiarity. See Treppel v. Biovail Corp., No. 03 Civ. 3002, 2005 U.S. Dist. LEXIS 2737 (S.D.N.Y. Feb. 22, 2005) ("Treppel II"); Treppel v. Biovail Corp., No. 03 Civ. 3002, 2004 U.S. Dist. LEXIS 20714 (S.D.N.Y. Oct. 15, 2004) ("Treppel I"). Plaintiff's Amended Complaint in this action asserted claims of defamation, defamation per se, tortious interference with prospective economic advantage, prima facie tort, and civil conspiracy against all five defendants. On October 15, 2004, the Court denied in part and granted in part defendants' first motion to dismiss. Specifically, the Court (1) sustained plaintiff's claims of defamation and defamation per se with respect to three of the eleven statements alleged; (2) sustained plaintiff's claim of tortious interference with prospective economic advantage; (3) dismissed plaintiff's claim of prima facie tort; and, (4) sustained plaintiff's claim of civil conspiracy. See generally, Treppel I.

  Thereafter, Cancellara, Biovail's General Counsel, and the Sitrick Defendants, who were hired by Biovail to serve as media contacts, petitioned the Court to reconsider Treppel I to the extent that it sustained plaintiff's claims for tortious interference with prospective economic advantage and civil conspiracy against them. Cancellara and the Sitrick Defendants maintained that plaintiff's claim of tortious interference failed to satisfy the more exacting standard established by the New York Court of Appeals in Carvel Corp. v. Noonan, 3 N.Y.3d 182, 190, 818 N.E.2d 1100, 1103 (2004), which this Court did not have the opportunity to consider because it was issued the day before Treppel I. Furthermore, they argued the civil conspiracy claim against them should be dismissed because it requires an underlying independent tort, and without the tortious interference claim, there would be no other surviving claim against them. On February 22, 2005, the Court granted Cancellara and the Sitrick Defendants' motion for reconsideration, and dismissed the tortious interference and civil conspiracy claims against them without prejudice. See Treppel II. Plaintiff was given 30 days to amend his claims in a manner consistent with the Court's ruling. Subsequently, Treppel filed a Second Amended Complaint ("SAC"), which re-alleges claims of defamation, defamation per se, tortious interference with prospective business advantage, and civil conspiracy against all five defendants. Treppel continues to assert that defendants launched a public smear campaign that ruined his reputation and career as a securities analyst in retaliation for his criticism of Biovail and its management. In the present motion, defendants maintain that Treppel's amendments do not substantively alter the claims against Cancellara and the Sitrick Defendants, and therefore, the four claims against them should be dismissed for essentially the same reasons that they were previously dismissed. In addition, Melnyk counterclaimed for defamation, defamation per se, and civil conspiracy, alleging that Treppel, in concert with others, has engaged in a smear campaign of his own intended to discredit Melnyk. In response, Treppel moves to dismiss for failure to state a claim on the grounds that the counterclaims are not pled with sufficient particularity, the alleged defamatory statements are non-actionable statements of opinion, and certain statements are barred by New York's one-year statute of limitations.

  DISCUSSION

  I. Rule 12(b)(6) Standard

  When determining whether plaintiff's claim should be dismissed on motion for failure to state a claim for which relief may be granted, the Court "must accept as true all of the factual allegations set out in plaintiff's complaint, draw inferences from those allegations in the light most favorable to plaintiff, and construe the complaint liberally." Gregory v. Daly, 243 F.3d 687, 691 (2d Cir. 2001) (quoting Tarshis v. Riese Org., 211 F.3d 30, 35 (2d Cir. 2000)); see also Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 740 (1976); Walker v. City of New York, 974 F.2d 293, 298 (2d Cir. 1992), cert. denied, 507 U.S. 961, and, 507 U.S. 972 (1993). Similarly, when considering a motion to dismiss a counterclaim for failure to state a claim, the Court must accept the material facts alleged in defendants' answer and counterclaim as true and construe all reasonable inferences in favor of defendants. See Twinlab Corp. v. Signature Media Servs., No. 99 Civ. 169, 1999 U.S. Dist. LEXIS 18973, at *10 (S.D.N.Y. Dec. 6, 1999) (citing, inter alia, Gant v. Wallingford Bd. of Educ., 69 F.3d 669, 673 (2d Cir. 1995)). Thus, "[t]he issue is not whether [the claimant] will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); see also Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton College, 128 F.3d 59, 62-63 (2d Cir. 1997). A party's claim should not be dismissed in this instance "unless it appears beyond doubt that the [movant] can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also Lipsky v. Commonwealth United Corp., 551 F.2d 887, 894-95 (2d Cir. 1976). However, the claim "must contain allegations concerning each of the material elements necessary to sustain recovery under a viable legal theory." Huntington Dental & Med. Co. v. Minnesota Mining & Mfg. Co., No. 95 Civ. 10959, 1998 WL 60954, at *3 (S.D.N.Y. Feb. 13, 1998).

  II. Plaintiff's Claims Against Cancellara and the Sitrick Defendants

  A. Defamation/Defamation Per Se

  Plaintiff alleges that all five defendants, acting in concert, defamed him by issuing three statements that were incorporated into articles published by print and wire media in the United States and Canada. One of the statements, Statement 31(d),*fn2 is attributed solely to Melnyk, the Chairman and Chief Executive Office of Biovail, and therefore, plaintiff does not argue that it may serve as the basis for a defamation claim against Cancellara or the Sitrick Defendants. The other two statements, 30(a) and 31(b), were attributed only to Biovail in the Amended Complaint (Amended Complaint ¶¶ 30(a), 31(b)), but are now attributed to all five defendants in the SAC (SAC ¶¶ 30(a), 31(b)).*fn3 Plaintiff argues that the statements were always attributed to all of the defendants, albeit not expressly, because a corporation can only speak through its officers, employees, and authorized agents. (See Pl. Mem. at 9.) Moreover, plaintiff emphasizes the all-inclusive prefatory language preceding both allegations, which provides that "defendants, acting in concert, also defamed Treppel by making or issuing the following oral or written statements. . . ." (Id.; SAC ¶¶ 30, 31.) Finally, plaintiff contends that the Court in Treppel I concluded that his claims for defamation and defamation per se applied to all defendants collectively, rather than only to the defendants to whom the surviving statements were attributed. (See Pl. Mem. at 10-11.)

  As the Court explained in Treppel II, "[w]ithout an allegation of a false and defamatory statement, it is axiomatic that a plaintiff cannot establish a cause of action for defamation." Treppel II, at *18-19. Therefore, the Court determined, plaintiff failed to allege a claim for defamation or defamation per se against Cancellara and the Sitrick Defendants because none of the three surviving statements were attributed to them. Id. at *19. Plaintiff's stylistic amendments to the Amended Complaint do not convince the Court that it should now depart from this view.*fn4 Plaintiff is correct that a corporation can only speak through its officers, employees and authorized agents. (See Pl. Mem. at 9.) However, that does not mean that every agent of a corporation is potentially culpable for a tort alleged against the corporation. In replacing "Biovail" with "defendants" in the SAC without adding specific allegations implicating the individual defendants, plaintiff attempts to turn the doctrine of agency liability on its head, seeking to hold four of Biovail's agents liable for a statement attributed to their principal.

  Furthermore, under New York law, "all who take part in the procurement, composition and publication of a libel are responsible in law and equally so." Brown v. Mack, 185 Misc. 368, 373 (N.Y. Sup. Ct. 1945) (citation omitted). Thus, a defamation claim cannot survive without an allegation that defendants participated in the creation or the publication of the statements at issue. See, e.g., Mahoney v. Staffa, 256 A.D.2d 827, 828 (App.Div. 1998) (affirming the dismissal of defamation claim because there was no evidence that the declarant was speaking on behalf of or at the direction of defendant); Kjar v. Jordan, 217 A.D.2d 981, 981 (App.Div. 1995) (dismissing a defamation claim where defendant "neither made the alleged defamatory statements nor participated in their publication"); Kraus v. Brandstetter, 202 A.D.2d 396, 397 (App.Div. 1994) (finding the complaint should not be reinstated against three defendants who did not participate in the publication of the alleged defamatory statement); McGill v. Parker, 179 A.D.2d 98, 106 (App.Div. 1992) (dismissing a defamation claim because the "mere receipt of an alleged libelous statement does not establish libel on the part of the person who receives the statement").

  Here, plaintiff's allegations that defendants issued Statements 30(a) and 31(b) as part of a larger effort to discredit him are insufficient to support a claim of defamation or defamation per se against Cancellara or the Sitrick Defendants. Although at all relevant times Cancellara was Biovail's General Counsel and the Sitrick Defendants served as media contacts for Biovail, without a more specific allegation, the Court cannot simply infer that they were involved in the creation or the publication of the statements at issue. If that were the case, all officers, employees and authorized agents of Biovail would be vulnerable to a defamation charge. According to the Amended Complaint and the media who incorporated the statements into articles, Statements 30(a) and 31(b) are attributable to Biovail. Other statements, including Statements 29(c) and 29(d), which were dismissed by the Court as non-actionable opinion, were attributed to Cancellara and Michael Sitrick respectively. See Treppel I, at *48-49. Plaintiff cannot avoid this important practical and legal distinction by strategically substituting "Biovail" with "defendants" in the SAC. This would elevate form over substance and the law requires a substantive allegation that each defendant played a role in the creation or the publication of ...


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