Bakhshandeh v. American Cyanamid Company

• Decision Date: 19 November 1962
• Citation: 211 F. Supp. 803
• Parties: Noorollah BAKHSHANDEH, Plaintiff, v. AMERICAN CYANAMID COMPANY, Defendant.
• Court: U.S. District Court — Southern District of New York

211 F. Supp. 803

Noorollah BAKHSHANDEH, Plaintiff, v. AMERICAN CYANAMID COMPANY, Defendant.

United States District Court S. D. New York.

November 19, 1962.

Casey, Lane & Mittendorf, New York City, for plaintiff (Samuel M. Lane and Arthur S. Olick, New York City, of counsel).

George J. Conway, New York City, for defendant.

COOPER, District Judge.

The litigation culminating in this trial commenced more than a decade ago. Tried before the court without a jury, this case has spawned a record which assumes rather substantial proportions, consisting of more than 1500 pages of trial testimony as well as scores of exhibits and several lengthy depositions. Yet, the pivotal issues remain relatively simple and free from complexity.

Plaintiff, Noorollah Bakhshandeh, is a citizen and resident of Iran. He seeks to recover damages in the sum of Five Hundred Thousand ($500,000) Dollars from the American Cyanamid Company, alleging that Cyanamid's agent and employee, one Dennis T. Manet, maliciously and falsely uttered certain defamatory statements in Teheran, Iran, regarding plaintiff's practices in the drug and pharmaceutical trade in that country. In addition, Noorollah Bakhshandeh alleges that Cyanamid's agents and employees falsely and maliciously repeated such statements in New York City to various persons (1456-1457)^* and thereby injured his reputation and business.

Defendant, a Maine corporation with principal offices in this District, employed Manet in its Lederle Laboratories Division as a sales representative in connection with the sale and commercial promotion of its pharmaceutical products in the Near and Middle East. Plaintiff, during the period from February 1950 to August 31, 1951, acted as Lederle's franchised importer and distributor in Iran under a contract which afforded either party the right to terminate the agreement upon ninety days' notice. In substance, Lederle undertook to supply the pharmaceuticals and plaintiff was to promote and conduct the sale of such products in Iran (Exh. 1). Jurisdiction in this case rests upon the diversity of citizenship provisions of 28 U.S.C.A. ¶ 1332.

Specifically, the complaint alleges that on or about April 28, 1951, the defendant, acting through its employee Manet, maliciously and falsely stated to "various persons" in Teheran, Iran, that "Our agent in Iran (referring to the plaintiff) has promoted Lederle products by bribing Iranian doctors." (Complaint, ¶ 7). Also, the complaint avers that Manet, while in Teheran in April and December 1951, maliciously and falsely stated to "various persons" that "He (plaintiff) is a disreputable merchant; his name was unknown in the drug and pharmaceutical trade in Iran; he sold bottles labeled as Aureomycin which in fact did not contain Aureomycin but were filled with some other harmless drug." (Complaint, ¶ 8).

Plaintiff asserts, in addition, in broad, general terms (¶ 9), that Manet, at Teheran, Iran, maliciously made "numerous false and defamatory statements concerning the plaintiff" which conveyed to them "the impression that the plaintiff lacked a good business reputation in Iran and that he was not an honest and reputable merchant." Further, he complains in paragraph 10 (as amended) that defendant's "officers and/or employees", in New York City, during June and July, 1961, "maliciously and falsely stated * * * that the plaintiff was a dishonest person and that he had bribed physicians and that he had smuggled Aureomycin out of Iran and that he had sold samples and refilled bottles of Aureomycin, and that in general he was a disreputable person." (1456). These, then, are the allegations upon which plaintiff premises this action for slander.

Defendant denies that Manet ever uttered the alleged statements to "various persons" in Teheran and further denies that any of its officers or employees ever uttered such statements in New York. In addition, it alleges by way of defense: (1) failure to state a claim, (2) privilege, and (3) truth. (1453; Exh. HH).

At the close of plaintiff's case, the Court reserved decision on defendant's motions to dismiss for failure to state a claim under Iranian law and for a directed verdict on the ground of lack of proof.¹ (1460-1461).

Manifestly, the initial question for determination is: what law applies? In cases such as this, founded upon diversity of citizenship, a federal district court applies the substantive law of the state wherein it sits, including the rules of conflict of law prevailing in that state. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Jaftex Corp. v. Randolph Mills, Inc., 282 F.2d 508 (2d Cir., 1960). New York's rule of conflict of law, therefore, furnishes the guide. It plainly provides that the substantive law applicable to an alleged tort is the lex locus delicti, the law of the place where the tort occurred. Loucks v. Standard Oil Co., 224 N.Y. 99, 120 N.E. 198 (1918); Metcalf v. Reynolds, 267 N.Y. 52, 195 N.E. 681 (1935). Accordingly, the substantive law of Iran governs the determination of plaintiff's right to recover damages for those statements allegedly uttered by Manet in Teheran in April and December, 1951. With respect to those statements allegedly made in New York City, however, the substantive law of New York applies. Komlos v. Compaigne Nationale Air France, 209 F.2d 436 (2d Cir., 1953); Goodrich on Conflict of Law 189 (2d Ed. 1938).

Although the parties stipulated (Exh. 40) that any action which plaintiff then had would be brought either in the courts of the State of New York or in this Court, that stipulation clearly did not carry with it an agreement to apply the substantive law of New York to the various allegations in this action. Neither can such intention of the parties be spelled out, here, by implication of law. At the trial, Cyanamid strenuously urged the Court that Iranian law should govern the adjudication of any claim based upon statements alleged to have been made in Iran.²

While the complaint in this case did not plead foreign law, the Court after expressing its belief that the law of Iran applied, afforded plaintiff full and ample opportunity to set forth his proof as to Iranian law (Siegelman v. Cunard White Star, 221 F.2d 189 (2d Cir., 1955)) and, indeed, both sides proceeded to present extensive expert testimony on that subject (499-747; 1374-1402; 960-1208). Plaintiff, of course, retains the burden of proving Iranian law as a fact; and in this regard, the Court advised counsel at the outset that, in the exercise of its discretion, it would not take judicial notice of Iran's laws. See Rule 46, F.R. Civ.P., 28 U.S.C.A.; N.Y.Civ.Pract.Act, ¶ 344-a; Cuba R.R. Co. v. Crosby, 222 U.S. 473, 479, 32 S.Ct. 132, 56 L.Ed. 274 (1912); Dainese v. Hale, 91 U.S. 13, 23 L.Ed. 190 (1875); Telesphor Couture v. Watkins, 162 F.Supp. 727 (E.D.N.Y. 1958).^**

Concededly, Manet went to Teheran in April 1951, and again in December 1951. One of his purposes on these trips was to instruct the franchised Lederle distributor and its staff in the promotion of the Lederle line of pharmaceuticals and in the management of the distributorship according "to the methods of business of Lederle, New York." (Exh. LL, p. 12). Manet traveled to several other Near and Middle Eastern Countries before arriving in Teheran on April 16, 1951 (Exh. LL., pp. 13, 75).

A day or two after his arrival, Manet cabled Lederle in New York that wholesalers and retailers "claimed" an "unusual trade inability" on the part of its distributor in Teheran and he therefore would "suggest suspend shipments (of) samples (and) literature pending thorough investigation of facts" (Exh. 11). The cable also indicated that he would advise the Lederle home office further regarding the situation.

Thereafter, as a result of his inquiries and observations, Manet sent back to Lederle's main office in New York certain reports or letters dealing with his findings in regard to the operation of Lederle's Iranian distributorship (Exh. 12-14). Plaintiff's counsel does not dispute that all these communications are deemed "qualifiedly privileged" under both New York and Iranian law and that, as such, their contents cannot constitute either libel or slander in the absence of proof of malice (789-792). See Shapiro v. Health Ins. Plan, 7 N.Y.2d 56, 60-61, 194 N.Y.S.2d 509, 163 N.E.2d 333 (1959); Loewinthan v. Beth David Hospital, 290 N.Y. 188, 190, 48 N.E.2d 319 (1943); Forsythe v. Durham, 270 N.Y. 141, 200 N.E. 674 (1936); Fowles v. Bowen, 30 N.Y. 20 (1864); Seelman, The Law of Libel and Slander in the State of New York 647-48, 653 (1st Ed. 1933).

Thus, the material allegations of the complaint do not rely upon the reports or letters as in any way themselves constituting defamation, but, instead, relate only to oral statements allegedly uttered "in the presence and hearing of various persons" in Teheran and in New York City (Complaint, ¶¶ 7-10).

With respect to these alleged oral statements, however, the Court finds itself constrained to conclude that plaintiff clearly failed to sustain his burden of proof.

Both quantitatively and qualitatively, the total proof on the essential elements of the complaint is extremely thin. It rises to the status of prima facie sufficiency, but hardly goes beyond that. Paucity of proof remains, in this case, a pervasive defect.

The allegation that Manet made slanderous statements to persons in Teheran in April and December, 1951, rests almost exclusively on the unsupported testimony of plaintiff and his brother, both of whom were obviously interested witnesses. Neither the nature of their testimony nor their demeanor as witnesses impressed the Court.

Moreover, despite the extended and prolix nature of the trial record, the Court finds it entirely devoid of any sort of convincing corroborative proof with respect to the alleged slanders made in the presence of merchants and doctors in Iran.

The patent inadequacy of plaintiff...