BYD Company Ltd. v. VICE Media LLC

• Decision Date: 31 March 2021
• Docket Number: 20-cv-3281 (AJN)
• Citation: 531 F.Supp.3d 810
• Parties: BYD COMPANY LTD., Plaintiff, v. VICE MEDIA LLC, Defendant.
• Court: U.S. District Court — Southern District of New York

531 F.Supp.3d 810

BYD COMPANY LTD., Plaintiff,

v.VICE MEDIA LLC, Defendant.

20-cv-3281 (AJN)

United States District Court, S.D. New York.

Signed March 31, 2021

Christian Alexander Jordan, Lan Vu, Charles John Harder, Harder LLP, Beverly Hills, CA, for Plaintiff.

Amanda Brooke Levine, Rachel Fan Stern Strom, Davis Wright Tremaine LLP, New York, NY, for Defendant.

OPINION & ORDER

ALISON J. NATHAN, District Judge:

Plaintiff BYD Company Ltd. ("BYD") initiated this defamation action against Defendant VICE Media LLC ("VICE") on April 27, 2020. See Dkt. No. 1. VICE has moved to dismiss the Complaint. Dkt. No. 17. For the reasons that follow, VICE's motion to dismiss is GRANTED.

I. BACKGROUND

For the purpose of resolving Defendant's motion to dismiss, the Court accepts all well-pleaded facts in the Amended Complaint as true, and draws all reasonable inferences in Plaintiff's favor. See Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 237 (2d Cir. 2007).

Plaintiff BYD is one of the world's largest producers and suppliers of electric vehicles, solar panels, lithium batteries, and protective masks and equipment, among other products. Dkt. No. 1 ("Compl.") ¶¶ 2–3, 18. Berkshire Hathaway is one of BYD's major investors. Id. ¶ 2. In the early months of the COVID-19 pandemic, BYD won a contract to supply the state of California with around $1 billion worth of masks. Id.

On April 11, 2020, VICE published an article on its website with the headline Trump Blacklisted This Chinese Company. Now It's Making Coronavirus Masks for U.S. Hospitals. Id. ¶¶ 4, 28 & Ex. B. As relevant here, the article discusses the legislative history of a provision of the 2020 National Defense Authorization Act that prohibited the use of federal funds for the purchase of rail cars and buses from companies owned or subsidized by the Chinese government—a group of which BYD was a part. See Compl. ¶¶ 10, 29 & Ex. B. And the article also discussed a report by a group called the Australian Strategic Policy Institute ("ASPI" and "ASPI Report"), which included BYD in a list of 83 companies that had been associated with factories that had allegedly used forced Uyghur labor. See Compl. ¶¶ 5, 23–25 & Ex. A at 3, 5; see also Compl., Ex. B. BYD alleges that ASPI is biased and notes that the organization has been "repeatedly criticized publicly for making false statements of fact, with an anti-Chinese bias." Id. ¶¶ 5, 19–22.

Besides including BYD on that list of companies, the ASPI Report also discusses BYD's relationship to one of the subsidiaries that allegedly used forced labor, though in its discussion the Report does not allege that the factory ever produced any products or raw materials for BYD. Compl. ¶ 6. The Report mentions BYD's relationship to one of its suppliers named Dongguan Yidong Electronic Co. Ltd., and also mentions that a subsidiary of Dongguan employed 105 Uyghur workers. Id. ¶ 27.

In bringing this defamation action, BYD claims that VICE misrepresented the ASPI Report—specifically, that contrary to the representations made in the article, the report did not state that BYD used forced Uyghur labor in its supply chain. Id. ¶¶ 4, 6. And BYD also objects to the headline of the article, which included the word "blacklisted;" BYD insists that no such "blacklist" ever existed. Id. ¶¶ 8–11. According to BYD, members of Congress included that provision in the NDAA due to the actions of a different Chinese company, even though BYD concedes that it was one of the companies affected by the legislation. Id. ¶¶ 10, 29. Still, BYD insists that the reference to a "blacklist" misrepresents the purpose behind the inclusion of that legislation by creating the appearance that Congress specifically targeted BYD. Id. BYD contends, in sum, that regardless of its criticisms of the ASPI Report, the Report never stated or intimated that BYD used forced Uyghur labor in its supply chain. Id. ¶ 30.

According to BYD, the article was defamatory for both of those reasons: First, for its allegations regarding Uyghur labor and BYD, and second, for its use of the word "blacklist." Id. ¶ 31. And BYD claims that VICE published those statements despite knowing that there was no "blacklist" and that the ASPI Report did not support the claim that BYD used forced labor in its supply chain. Id. BYD also alleges that VICE cited the ASPI Report with reckless disregard of ASPI's reliability. Id. According to the Complaint, several third parties have cited the VICE article as a reason to delay or end contemplated business transactions with BYD. Id. ¶ 32. And BYD insists that the article will continue to effect significant reputational damage. Id. Two days after the article was published, BYD requested a retraction, but on April 20, 2020, VICE refused BYD's request. Id. ¶ 33.

On April 27, 2020, BYD initiated this defamation action against VICE. See Dkt. No. 1. VICE moved to dismiss the Complaint on August 17, 2020. Dkt. No. 17. The Court then offered BYD an opportunity to amend the Complaint, warning that declining to amend would constitute a waiver of its right to use the amendment process to cure any defects made apparent by VICE's motion to dismiss. Dkt. No. 21 (citing Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC. , 797 F.3d 160, 190 (2d Cir. 2015) ). BYD declined to amend, Dkt. No. 22, and it filed its opposition to the motion to dismiss on September 14, 2020, see Dkt. No. 23. The motion is fully briefed. See Dkt. No. 26.

The Court has diversity jurisdiction under 28 U.S.C. § 1332, because there is complete diversity between the parties and because the amount in controversy surpasses $75,000. See Compl. ¶¶ 13–15. The Court has personal jurisdiction over VICE because VICE is based in New York, and venue is proper under 28 U.S.C. §§ 1391(b)(1) and (2) because VICE is located in this district and because the article was edited and published in this district. Id. ¶¶ 14, 16.

II. LEGAL STANDARD

When deciding a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must accept as true all well-pleaded facts and draw all reasonable inferences in the light most favorable to the non-moving party. See Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 237 (2d Cir. 2007). Although factual allegations are afforded a presumption of truth, a court is "not bound to accept as true a legal conclusion couched as a factual allegation." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ) (internal quotation mark omitted).

"To survive a motion to dismiss, the plaintiff's pleading must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ); see also Biro v. Conde Nast ("Biro II "), 807 F.3d 541, 544–45 (2d Cir. 2015) (" Iqbal makes clear that, Rule 9(b)’s language notwithstanding, Rule 8's plausibility standard applies to pleading intent"). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Twombly , 550 U.S. at 570, 127 S.Ct. 1955. A plaintiff is not required to provide "detailed factual allegations" in the complaint. Id. at 555, 127 S.Ct. 1955.

In addition to the allegations in the complaint itself, a court may consider documents attached as exhibits, incorporated by reference, or relied upon by the plaintiff in bringing suit, as well as any judicially noticeable matters. See Halebian v. Berv, 644 F.3d 122, 131 n.7 (2d Cir. 2011) ; In re Harbinger Capital Partners Funds Investor Litig., No. 12-CV-1244 (AJN), 2013 WL 5441754, at *15 n.6 (S.D.N.Y. Sept. 30, 2013). "If a document relied on in the complaint contradicts allegations in the complaint, the document, not the allegations, control, and the court need not accept the allegations in the complaint as true." TufAmerica, Inc. v. Diamond, 968 F.Supp.2d 588, 592 (S.D.N.Y. 2013) (quoting Poindexter v. EMI Record Grp. Inc., No. 11-CV-559 (LTS), 2012 WL 1027639, at *2 (S.D.N.Y. Mar. 27, 2012) ) (internal quotation marks omitted).

III. DISCUSSION

BYD brings a single cause of action for defamation. See Compl. ¶¶ 34–38. In moving to dismiss, VICE principally argues that the article's headline is a fair index of its truthful content and that the headline is a privileged fair report of governmental proceedings. See Dkt. No. 18 ("Def. Br.") at 10–14. VICE further argues that its reporting on the ASPI report is not actionable, id. at 15–16, that VICE's reliance on the ASPI Report precludes a finding of actual malice, id. 16–23, and that VICE's reporting is covered by the neutral reportage privilege, id. at 23.

New York law applies to this diversity action. "In diversity jurisdiction cases such as this, it is well settled that a federal court must look to the choice of law rules of the forum state." Curley v. AMR Corp. , 153 F.3d 5, 12 (2d Cir. 1998) (citations omitted). The "preferred analytical tool in tort cases" under New York choice of law rules "is to apply ‘interest analysis,’ where the policies underlying the competing laws are considered." Fin. One Pub. Co. v. Lehman Bros. Special Fin. , 414 F.3d 325, 336 (2d Cir. 2005) (cleaned up). Here, VICE is headquartered in New York, and the VICE article was published in New York. BYD has not disputed this application, and both sides cite exclusively to New York law in their respective briefings.

Under New York law, a defamation plaintiff must establish "(1) a written defamatory statement of and concerning the plaintiff, (2) publication to a third party, (3) fault, (4) falsity of the defamatory statement, and (5) special damages or per se actionability." Palin v. New York Times Co. , 940 F.3d 804, 809 (2d Cir. 2019) ; ...