ATI, Inc. v. Ruder & Finn, Inc.

• Decision Date: 06 October 1977
• Parties: , 368 N.E.2d 1230 ATI, INC., Appellant, v. RUDER & FINN, INC., et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 864

398 N.Y.S.2d 864

42 N.Y.2d 454, 368 N.E.2d 1230

ATI, INC., Appellant, v. RUDER & FINN, INC., et al., Respondents.

Court of Appeals of New York.

Oct. 6, 1977.

Gerald Alch, Boston, Walter Feldesman, Justin W. D'Atri, Stuart B. Newman and Kenneth I. Haber, New York City, for appellant.

Martin London, Simon H. Rifkind and Richard M. Zuckerman, New York City, for respondents.

COOKE, Judge.

The issue in this case arises in the context of a motion to dismiss on the grounds that the complaint fails to state a cause of action. Plaintiff is a contract packager primarily engaged in the manufacture and packaging of proprietary, household and pharmaceutical aerosol products. Basically, it is claimed that plaintiff suffered losses from adverse publicity concerning the use of aerosols and that defendants, through their public relations activities, intentionally caused these losses.

A description of each of the defendants is necessary to an understanding of plaintiff's argument. Defendant Ruder & Finn is a public relations firm of which defendant Norman Weissman is senior vice-president. Defendant William Ruder is president of Ruder & Finn and was the founder of defendant PIPR, Inc., apparently a nonprofit organization formed to engage in public relations endeavors in the public interest. Ruder & Finn employs defendant Lynn Deming as an account executive and has sometimes loaned her services to PIPR. It bears commenting that, although the circumstances suggest varying degrees of responsibility, and as to some defendants perhaps no intention to harm, plaintiff's pleadings are drafted in terms which, for the most part, ascribe the alleged intention to harm all defendants.

Underlying this litigation is plaintiff's allegation that starting in February, 1974 defendants engaged in a scheme and conspiracy to intimidate it into retaining Ruder & Finn to do public relations work to combat publicity centering around a theory linking fluorocarbon propellants used in certain aerosol products to the destruction of the earth's ozone layer. Assuming this theory is proven, the concern is that depletion of the ozone layer through the use of aerosols will increase the amount of ultra violet radiation reaching the earth from the sun, the result of which would be significant increases in the incidence of skin cancer.

The adverse publicity concerning aerosol products stems at least partly from, and may even have originated with, the activities of the Natural Resources Defense Council, Inc. (NRDC), an organization seeking to protect the environment, which urged the Federal Consumer Products Safety Commission to ban the use of certain aerosol products. Defendant PIPR was retained by NRDC to promote NRDC's position and, to this end, a press conference was organized to bring to the attention of the public the ozone depletion theory. Shortly thereafter, in connection with discussions concerning plaintiff's possible retention of Ruder & Finn to combat adverse publicity, plaintiff's president received a letter from William Ruder. The letter, which is almost entirely reproduced herein, speaks for itself:

"About a year ago I personally started a Public Interest PR firm which is a nonprofit organization known as PIPR, Inc. It is supported by a couple of foundations who have given us money to work on three accounts. One is the Natural Resourc Defense Council (in connection with their work in the atomic and nuclear energy field) * * *.

"Through a whole series of circumstances, NRDC got involved in this aerosol situation and asked PIPR to help. We loaned Lynn Deming from the Ruder & Finn staff to them to help put on that press conference.

"The net result of all of this is that we are about as close to NRDC and this new thing that they have taken on (which is really beyond our original charter) as anybody can be. It would seem to me that this would be about as useful a relationship to you and your associates in the aerosol industry as possible, simply because of my dual relationship (90% with Ruder & Finn and 10% with PIPR) and that we really could function as a membrane through which some reasonable and thoughtful communications could take place, rather than permit NRDC to square off on an uninformed basis at whatever target might be in sight. Once or twice this exact situation has arisen between Nader and Coca-Cola in respect to the caffeine situation, and simply because of my relationship with both I have arranged several marvelously productive sessions between Ralph and Paul Austin that resulted in Ralph understanding the situation backing off, and nothing coming out in the public press.

"In this crazy society one of the key things is to get people to start acting reasonably and putting them into meaningful communications rather than underwriting 'hollering matches.'

"I want to emphasize that PIPR has an entirely separate and public Board of Directors. It is not part of Ruder & Finn. I give it a little bit of time and occasionally Ruder & Finn lends it personnel. That's about the whole story as honestly and as straight as I can give it to you."

Ruder & Finn was not retained by plaintiff which thereafter suffered substantial losses resulting from a decline in sales of aerosol products. Plaintiff commenced this action, seeking six million dollars in consequential damages and six million in punitive damages, alleging that its losses result from the activities of the defendants in furtherance of the scheme and conspiracy to intimidate it to retain Ruder & Finn and the continued harassment of the aerosol industry by PIPR and NRDC. It should be noted that plaintiff is not seeking damages in respect to fees it never paid but rather is seeking to recoup losses allegedly resulting from public concern over the use of aerosols.

Special Term construed the pleadings as purporting to frame four possible theories of recovery (conspiracy, duress, defamation and prima facie tort) and, rejecting each of these, dismissed the complaint for failure to state a cause of action. Leave to replead was also denied, and the Appellate Division affirmed on the opinion of Special Term.

Before this court, plaintiff argues that its complaint, or an amended complaint, states a valid cause of action for prima facie tort and that dismissal of the action under CPLR 3211 (subd. (a), par. 7) was premature. For the reasons that follow, we reject these arguments.

It is well established that one may recover for injury resulting from what has been styled a "prima facie tort" (see, e. g., Advance Music Corp. v. American Tobacco Co., 296 N.Y. 79, 70 N.E.2d 401; Opera on Tour v. Weber, 285 N.Y. 348, 34 N.E.2d 349). In this country, this tort evolved from the principle, expressed by Mr. Justice Holmes, that "prima facie, the intentional infliction of temporal damage is a cause of action, which * * * requires a justification if the defendant is to escape" (Aikens v. Wisconsin, 195 U.S. 194, 204, 25 S.Ct. 3, 5, 49 L.Ed. 154). The concept has developed since then and it has been commented that "(t)he key to the prima facie tort is the infliction of intentional harm, resulting in damage, without excuse or justification, by an act or a series of acts which would otherwise be lawful" (Ruza v. Ruza, 286 App.Div. 767, 769, 1 A.D.2d 669, 146 N.Y.S.2d 808, 811; see, e. g., Board of Educ. v. Farmingdale Classroom Teachers...