Karedes v. Ackerley Group, Inc.

• Decision Date: 09 September 2005
• Docket Number: Docket No. 04-2376-CV.
• Parties: John L. KAREDES, Plaintiff-Appellant, v. The ACKERLEY GROUP, INC., WIVT Newschannel 34, WBGH Newschannel 5, Binghamton Press Company, Division of Gannett Satellite Information Network, Inc. and Gannett Company, Inc., Defendants-Appellees, The Village of Endicott, Michael E. Colella, Individually, and in his capacity as Mayor of the Village of Endicott, Jackie Sammon, in her capacity as Trustee of the Village of Endicott, Bonnie Cornick, in her capacity as Trustee of the Village of Endicott and Timothy Burns, in his capacity as Trustee of the Village of Endicott, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

423 F.3d 107

John L. KAREDES, Plaintiff-Appellant, v. The ACKERLEY GROUP, INC., WIVT Newschannel 34, WBGH Newschannel 5, Binghamton Press Company, Division of Gannett Satellite Information Network, Inc. and Gannett Company, Inc., Defendants-Appellees The Village of Endicott, Michael E. Colella, Individually, and in his capacity as Mayor of the Village of Endicott, Jackie Sammon, in her capacity as Trustee of the Village of Endicott, Bonnie Cornick, in her capacity as Trustee of the Village of Endicott and Timothy Burns, in his capacity as Trustee of the Village of Endicott, Defendants.

Docket No. 04-2376-CV.

United States Court of Appeals, Second Circuit.

Argued: July 14, 2005.

Decided: September 9, 2005.

COPYRIGHT MATERIAL OMITTED

John A. Gallagher, High, Swartz, Roberts & Seidel, LLP, Norristown, PA (Theodosis J. Totolis, Endicott, NY, on the brief), for Plaintiff-Appellant.

Walter E. Diercks, Rubin, Winston, Diercks, Harris & Cooke, LLP, Washington, DC (Jeffrey Harris, Rubin, Winston, Diercks, Harris & Cooke, LLP, Washington, DC, on the brief), for Defendants-Appellees the Ackerley Group, Inc., WIVT Television Newschannel 34 and WBGH Newschannel 5.

Charles D. Tobin, Holland & Knight LLP, Washington, DC (Kara L. Daniels, Holland & Knight LLP, Washington, DC, on the brief), for Defendants-Appellees Binghamton Press Company, a division of Gannett Satellite Information Network, Inc., and Gannett Company, Inc.

Before: WINTER and JACOBS, Circuit Judges, and GLEESON, District Judge.^*

JACOBS, Circuit Judge.

Plaintiff-appellant John L. Karedes was the manager of a public golf course undergoing renovations in the Village of Endicott, New York ("the Village"). Some of the renovations were to be paid for by the Village and some by a local charity that hosts a professional golf tournament at the course. It is alleged that Karedes re-directed invoices sent by contractors who were confused about which entity to bill for what and sent to the Village for payment some invoices that were mistakenly issued to the charity. After a financial audit of the Village criticized such irregularities (among other loose practices), local media coverage of the audit included the report that the Village suffered loss by paying invoices directed to it by Karedes.

Karedes commenced an action in the United States District Court for the Northern District of New York (Scullin, C.J.), pleading claims under New York law for libel against Binghamton Press Company and Gannett Co., owners of the Press & Sun-Bulletin (collectively, the "Press & Sun-Bulletin"), and for defamation against the Ackerley Group, Inc., WIVT News Channel 34, and WBGH News Channel 5 (collectively, "News Channel 34"). Karedes appeals from the dismissal of his claims on the pleadings.

The district court granted the motions to dismiss—filed by Press & Sun-Bulletin under Rule 12(b)(6) and by News Channel 34 under Rule 12(c)—on the ground that the reports at issue were substantially true and therefore not defamatory. We conclude that a reasonable jury could find the reports to have defamatory meaning, and to be false.

BACKGROUND

Because Karedes' claims were dismissed on motions addressed to the pleadings, the following facts are drawn from the complaint and the documents on which it relies. See Lentell v. Merrill Lynch & Co., 396 F.3d 161, 165 (2d Cir.2005).

The Village retained Karedes in 1996 to manage its public golf course, the En Joie Golf Club (the "Golf Club"). The Golf Club hosts a PGA Tour event called the "B.C. Open," which is sponsored by the Broom County Communities Charities ("BCCC") pursuant to a contract between the Village and the BCCC.

In 1995, the BCCC requested and received Village approval for certain Golf Club improvements that were deemed needed by the PGA Tour and that BCCC undertook to fund. While that project was underway, the Village decided to make additional improvements, at its own expense. The Village paid by check for materials and services used in its own improvements; each such check was drafted by the Village's Treasurer, and approved by the Village's Board of Trustees ("Board"), on the basis of invoices. All such payments were first reviewed and approved by Karedes.

The Golf Club and the renovations became the focus of public and political controversy. In the period from 1996 to 1999, while both the BCCC renovations and the Village renovations were ongoing, the Golf Club operated at a loss. In February 2000, after Mayor Michael E. Colella was sworn in, the Village's "Golf Advisory Committee" issued a report entitled "John Karedes' Budget Information," which stated that between 1997 and 1999 the Golf Club was more than $1 million over budget. Soon after, the Board nevertheless extended Karedes' management contract, but Mayor Colella refused to sign it. Instead, at the Mayor's request, the Board commissioned an independent audit of the Golf Club's accounting. According to Karedes, Mayor Colella then "embarked on a long, continual campaign to destroy Mr. Karedes' reputation and standing in the community by intentionally and repeatedly making false accusations" and invited the district attorney to investigate Karedes' contract.

The audit, which was performed by Piaker & Lyons, was released at a February 12, 2001 public town meeting. The audit identified several problems with the Village's management of the Golf Club, including that "[t]he Village paid invoices billed to and addressed to another entity." This criticism was supported by the following particulars:

In September 1996, the Village of Endicott (Owner) and Broome County Community Charities, Inc./B.C. Open (Contractor) entered into an agreement for the reconstruction of the Village's En-Joie Golf Course. Pursuant to this agreement, . . . [t]he Village was to incur none of the expenditures associated with the reconstruction except for providing the Contractor with engineering services. . . . However, during the reconstruction period, it appears that the Village paid three vendors over $153,000 for invoices billed to [BCCC].

. . .

Other invoices from two of the vendors discussed above were billed to the Village. Based on the Village of Endicott Superintendent of Public Work's review of these it appears that the work performed by the vendors is similar to the work indicated in invoices billed to BCCC/B.C. Open and paid by the Village.

. . .

The Village's procedures require the Village official originating a claim voucher to sign the claim voucher for approval and submit the invoice for approval for payment by the Board of Trustees. The claim vouchers and related invoices discussed above, with a few exceptions, were approved and submitted for payment approval by the Golf Department Management Consultant [Karedes]. However, pursuant to the Management Consultant Agreement, the Consultant was to only prepare bills and accounts payable and submit to the Village Treasurer's officer for approval.

. . .

The Village paid invoices that may not be obligations of the Village.

. . .

Village officials may wish to review all invoices during the audit period to determine if any expenditures were not the responsibility of the Village.

The audit also listed "[i]nvoices billed to BCCC / B.C. Open and paid by Village" amounting to $161,044 and "[o]ther related invoices" amounting to $46,756, but noted that $29,827 of those invoices were "determined by the Village to be [the] responsibility of [the] Village." Finally, the audit concluded that some projects were not sent out for competitive bidding, as a result of which "[t]he Village may have overpaid for goods and services, which were not received or received in an unacceptable condition or not related to golf department operations."

Kenneth Coleman, a Piaker & Lyons auditor, was present at the February 12 meeting to field questions. Mayor Colella asked about "bills that were paid by the Village for other people," and Coleman assured the Mayor that there was no finding that the Village paid money owed by anyone else:

Let me correct that. I said that those bills were invoiced to and addressed to somebody else . . . But I did not say that those bills were necessarily somebody else's bills, and I don't want to leave anybody with the impression that we've come to that conclusion. In fact, it has been indicated to us that the error was that the bills were not sent back to the vendors and the vendors, had they been sent back, would have corrected them and appropriately sent them to the Village of Endicott. We are not in a position to pass judgment one way or the other on that, but the record to us is clear that those bills are not in the name of the Village and therefore we have treated them as a question of costs.

Representatives of the Press & Sun-Bulletin and News Channel 34 witnessed these comments.

Karedes' claims are based on two reports concerning the audit published shortly after it was released: (i) a February 25, 2001 Press & Sun-Bulletin article, entitled "Taxpayers footed B.C. Open bills"; and (ii) a February 13, 2001 News Channel 34 broadcast.

At a Board meeting on February 26, 2001, one Trustee cited the "results of [the] Piaker and Lyons audit and what I read in the Sunday edition of the Press and Sun Bulletin" and, based on those sources, made a motion to fire Karedes. Karedes' contract was terminated in March 2001 without further deliberation, and Karedes (he further alleges) was "subject to public ridicule and scorn following his termination."

Karedes filed suit in September 2001. The Press & Sun-Bulletin moved to dismiss pursuant to Rule 12(b)(6), and News Channel 34 moved for judgment on the pleadings pursuant to Rule 12(c). The district court granted both motions, ruling (insofar as is relevant to this appeal): (i) that the February 25, 2001 article was neither capable of defamatory meaning nor false, and (alternatively) was protected as a privileged publication under New York Civil Rights Law Section 74, see ...