Armstrong v. Simon & Schuster, Inc.

• Decision Date: 28 March 1995
• Citation: 85 N.Y.2d 373,625 N.Y.S.2d 477,649 N.E.2d 825
• Court: New York Court of Appeals Court of Appeals
• Parties: , 649 N.E.2d 825, 23 Media L. Rep. 1532 Michael F. ARMSTRONG, Respondent, v. SIMON & SCHUSTER, INC., et al., Appellants.

Page 477

625 N.Y.S.2d 477

85 N.Y.2d 373, 649 N.E.2d 825, 23

Media L. Rep. 1532

Michael F. ARMSTRONG, Respondent, v. SIMON & SCHUSTER, INC., et al., Appellants.

Court of Appeals of New York.

Decided March 28, 1995.

Simpson Thacher & Bartlett, New York City (Roy L. Reardon, Robert F. Cusumano and Edward Johnson, of counsel), Lankler Siffert & Wohl, New York City (Roderick C. Lankler and David S. Jones, of counsel), for respondent.

Weil, Gotshal & Manges, New York City (R. Bruce Rich, Linda Steinman and Elizabeth Stotland Weiswasser, of the Illinois Bar, admitted pro hac vice, of counsel), Kay Murray, Stuart D. Karle, Kenneth M. Vittor, Slade R. Metcalf, New York City, Tonda F. Rush, Jeffery R. Keeler, of the Virginia Bar, admitted pro hac vice, George Freeman, Leon Friedman, New York City, J. Laurent Scharff, of the District of Columbia Bar, admitted pro hac vice, and Connie Heymann, New York City, for Association of American Publishers, Inc., and others, amici curiae.

OPINION OF THE COURT

KAYE, Chief Judge.

This libel action arises out of the past decade of insider trading scandals and Wall Street intrigue, when the media was filled with reports of arbitrageur Ivan Boesky's stock schemes, investment banker Michael Milken's deployment of junk bonds in deals for Drexel Burnham Lambert, and "the country's most expensive, aggressive lawyers [who] maneuvered frantically on behalf of their powerful clients." So advertised the dustcover of "Den of Thieves," a book written by defendant James B. Stewart, edited by defendant Laurie P. Cohen, and published in 1991 by defendant Simon & Schuster. Spanning nearly 450 pages, the book is in two parts--"Above the Law," detailing the alleged intricate scheme of illegal insider trading crafted by Boesky, Milken and other Wall Street figures, and "The Chase," describing how law enforcement officials discovered and prosecuted them.

By this action, plaintiff Michael F. Armstrong, a criminal defense attorney who represented individuals involved in these events, now seeks damages for an allegedly defamatory paragraph about him.

The following facts are drawn from the verified amended complaint and its ten exhibits. ¹ As Armstrong alleges, he primarily represented Michael Milken's brother, Lowell, an attorney who worked for Drexel on Michael's partnership ventures and tax issues. In their corporate dealings, the Milkens were represented by a small in-house firm which included Craig M. Cogut, who mainly worked on partnership issues for Lowell. In 1986, Boesky pleaded guilty to a securities felony and agreed to cooperate with Federal prosecutors in the investigation of the Wall Street community. Lowell Milken and other employees were subpoenaed to appear before both a Federal Grand Jury and the Securities and Exchange Commission. Cogut then hired Armstrong to represent him pursuant to a retainer letter which stated that should a conflict of interest arise, Cogut would obtain other counsel as Armstrong would continue to represent Lowell.

After learning that Cogut recalled overhearing a key 1986 telephone conversation between Lowell and Boesky's auditors that bore on an alleged improper transfer of funds and was favorable to Lowell, Armstrong conferred with Cogut. Based on their discussions, as well as subsequent memoranda prepared by Armstrong and annotated by Cogut, Armstrong drew up an affidavit for Cogut and submitted it to him. The intention was to send Cogut's affidavit concerning the telephone conversation to the U.S. Attorney on behalf of Lowell, who had become a target of the investigation, in order to convince the prosecutors that Lowell should not be indicted. Cogut consulted about the affidavit with attorney Thomas Fitzpatrick (recommended by Armstrong), and separately retained his own counsel (Theodore Miller and Thomas Pollack), though Armstrong continued to represent him on routine matters related to the investigation.

After several revisions, on September 28, 1988, Cogut signed an affidavit which, according to the complaint, contained essentially the same facts as the original affidavit Armstrong had prepared. ² The next day, Cogut sent the signed affidavit to Armstrong with a cover letter authorizing him to present the affidavit to the U.S. Attorney "based upon your assurances that you will place my affidavit in an appropriate context by making it clear to the U.S. Attorney's Office when you provide the affidavit that I do not recall whether I was present during the entire conversation or all of the conversations between Lowell Milken and the accountants, and that my memory as to the events of that day are necessarily vague."

Armstrong transmitted Cogut's affidavit to the U.S. Attorney with a 24-page submission dated October 18, 1988, and signed by Lord Day & Lord (Armstrong's law firm). The submission stated that "Mr. Cogut recalls being present when Lowell Milken spoke to the accountants," that "Craig Cogut believes that he was present during all of the 'substantive discussion,' " that "Cogut's careful qualifications of his two and a half year old recollections should not be used to discount his testimony," and that the "most significant thing about Craig Cogut is the fact that he was there."

In "Den of Thieves," these events were portrayed in the following paragraph on pages 396-397: ³

"After news of the Boesky agreement, Cogut had agreed to be represented by New York criminal lawyer Michael Armstrong, Lowell's lawyer. But like Maultasch and Dahl, ⁴ Cogut had become uneasy about his attorney's possible conflict of interest [the differing needs of his attorney's several clients]. Lowell's interests were too close to Mike Milken's. Cogut's concern had increased when, earlier in 1988, Armstrong came to him with an affidavit he had prepared for Cogut to sign. Its intent had been to exonerate Lowell, based on assertions of fact by Cogut. Cogut read it over and had only one problem: the facts weren't true. He angrily refused to sign, and began looking for new lawyers, eventually hiring Los Angeles lawyers Tom Pollack and Ted Miller. [In September 1988 Cogut submitted an affidavit.]"

This paragraph is the focus of the present litigation.

Prior to the publication of "Den of Thieves," Armstrong obtained a copy of the manuscript and wrote to Simon & Schuster that the book contained false statements about his client Lowell and himself. Attorneys for Simon & Schuster met with Armstrong, who primarily pressed the references to Lowell Milken that he claimed were false but also discussed the passage at issue and later presented them with a written list of 21 claimed inaccuracies in the book (19 of them relating to Lowell or Milken activities).

With regard to the paragraph at issue, Armstrong wrote: "The affidavit referred to in this paragraph was completely truthful and was signed and sworn to by Cogut, not angrily rejected." Armstrong further explained that Cogut's retainer letter disclosed the conflict of interest, and he clarified that Cogut had consulted both with the attorney referred by Armstrong and with separate counsel. Armstrong suggested that, because the book had already been printed, the publisher include an errata sheet. The book was released without changes and without an errata sheet.

Armstrong now charges that the quoted paragraph is materially false and defamatory in that it depicts him as "attempting unsuccessfully to procure the perjured oath of his client, Craig M. Cogut, by preparing for Cogut's signature a false affidavit exonerating another client, Lowell Milken, which affidavit Cogut 'angrily refused to sign' because 'the facts weren't true.' " Plaintiff asserts that these statements were published with gross irresponsibility or actual malice and demands $10,000,000 in compensatory damages and $25,000,000 in punitive damages.

Prior to answering, defendants moved to dismiss the complaint arguing that all facts contained in the paragraph were true or substantially true, that the plaintiff could not sustain a cause of action based upon false implications, and that defendants were protected by the defenses of "opinion" and the "single instance" rule. The trial court denied defendants' motion, concluding that the cited passage was susceptible of a defamatory meaning and that the statements at issue were not protected by either of the claimed defenses. The Appellate Division affirmed, 197 A.D.2d 87, 610 N.Y.S.2d 503, as do we. ⁵

We begin our analysis by underscoring the procedural posture of this case. All that is before us is plaintiff's verified amended complaint and defendants' motion to dismiss on the...