Laxalt v. McClatchy

• Decision Date: 18 November 1985
• Docket Number: No. CV-R-84-407-ECR.,CV-R-84-407-ECR.
• Parties: Paul LAXALT, Plaintiff, v. C.K. McCLATCHY; McClatchy Newspapers, a corporation; The Sacramento Bee, a newspaper; Frank McCulloch; Michael Kidder; Dennis Walsh; Art Nauman; the Fresno Bee, a newspaper; George Gruner; Don Slinkard; the Modesto Bee, a newspaper; Sanders LaMont; Ray Nish; Doe Corporations I through XX; Doe Partnerships I through XX; Doe Associations I through XX; and Does I through XX, Defendants.
• Court: U.S. District Court — District of Nevada

622 F. Supp. 737

Paul LAXALT, Plaintiff, v. C.K. McCLATCHY; McClatchy Newspapers, a corporation; The Sacramento Bee, a newspaper; Frank McCulloch; Michael Kidder; Dennis Walsh; Art Nauman; the Fresno Bee, a newspaper; George Gruner; Don Slinkard; the Modesto Bee, a newspaper; Sanders LaMont; Ray Nish; Doe Corporations I through XX; Doe Partnerships I through XX; Doe Associations I through XX; and Does I through XX, Defendants.

No. CV-R-84-407-ECR.

United States District Court, D. Nevada.

November 18, 1985.

COPYRIGHT MATERIAL OMITTED

Richard L. Davenport, Reno, Nev., James E. Beasley, Philadelphia, Pa., for plaintiff.

Kathleen V. Fisher, Ray Larroca, James L. Brosnahan, Linda E. Shostak, San Francisco, Cal., for all defendants except Walsh.

Thomas E. Kotoske, Palo Alto, Cal., for defendant Walsh.

ORDER

EDWARD C. REED, Jr., District Judge.

On September 21, 1984, the plaintiff, a United States Senator from Nevada, filed a complaint in the First Judicial District Court of the State of Nevada against the named defendants. The named defendants are McClatchy Newspapers, C.K. McClatchy, the president, editor, and director of defendant McClatchy Newspapers, and three newspapers, namely The Sacramento Bee, The Modesto Bee, and The Fresno Bee, which are not separate legal entities but are owned entirely by McClatchy. The other individual defendants include Frank McCulloch, executive editor of McClatchy, Denny Walsh, staff reporter at McClatchy, Michael Kidder, managing editor at McClatchy, and Art Nauman, ombudsman of The Sacramento Bee. Also named in the complaint were George Gruner and Don Slinkard, executive director and managing editor, respectively, of The Fresno Bee; and Sanders LaMont and Ray Nish, executive editor and managing editor, respectively, of The Modesto Bee. The case was removed to this court pursuant to defendants' petition for removal filed in this court on October 3, 1984.

The lawsuit concerns a series of articles written by defendant Walsh and published in all three newspapers on November 1, 1983, entitled "Agents Say Casino `Skimmed' During Senator Laxalt's Ownership." Another article published the same day in all three newspapers written by defendant Nauman was entitled "Laxalt Donors Included Gaming Figures With Mob Ties." A third article was also authored by Nauman, entitled "Laxalt Buried" and was published on November 6, 1983, in the Sacramento Bee. All of the articles purport to establish links between Senator Laxalt and organized crime.

Plaintiff's complaint is in three counts. The first is for libel and defamation, the second for an alleged conspiracy among all defendants to commit the libel, and the third for intentional infliction of emotional distress. Defendants have moved to dismiss the defendants Sacramento Bee, Fresno Bee, and the Modesto Bee on the grounds that these newspapers have no legal existence separate from McClatchy Newspapers. In addition, the defense seeks to dismiss the employees of the Fresno and Modesto Bees on the grounds that there is no personal jurisdiction over them in this forum. Finally, defendants have moved this Court to dismiss plaintiff's cause of action for civil conspiracy, on the grounds that it fails to state a claim for which relief can be granted.

After the plaintiff filed suit, and after the defendants had removed to this court, the defendants counterclaimed for alleged violations of their first amendment rights and for abuse of process. Plaintiff filed a motion to dismiss these counterclaims, alleging that they failed to state a claim for which relief could be granted.

This case comes to this court by way of the United States Magistrate, who has heard oral arguments on the various motions, and has tendered her report and recommendation to this Court. The report recommends the following:

1. That the defendants' motion to dismiss be granted and denied in the following respects:

A. The motion to dismiss The Sacramento Bee, The Fresno Bee, and The Modesto Bee pursuant to Rule 17(b) should be granted.

B. George Gruner, Don Slinkard, Sanders LaMont, and Ray Nish's Motion to Dismiss for lack of personal jurisdiction should be denied, without prejudice to refiling of the motion after the close of discovery pursuant to a schedule ordered later by the Court.

C. The motion to dismiss plaintiff's cause of action for civil conspiracy should be granted.

2. That the plaintiff's motion to dismiss the defendants' counterclaims for failure to state a claim be granted.

Having reviewed the Magistrate's report according to the proper standards, this Court finds it to be an accurate statement of the law, and hereby affirms and adopts it.

DEFENDANTS' MOTION TO DISMISS

Defendants have moved this Court, pursuant to Fed.R.Civ.P. 12(b)(6), to dismiss various parts of the complaint. Such a motion may not be granted unless it appears to a certainty that the claimant would be entitled to no relief under any state of facts that could be proved. On a motion to dismiss the complaint, the Court presumes that the facts alleged by the claimant are true. Halet v. Wend Inv. Col., 672 F.2d 1305, 1309 (9th Cir.1982). It is the material facts pleaded, however, and not the characterizations or conclusions drawn from them which are entitled to a presumption of truth. See Ivey v. Board of Regents, 673 F.2d 266 (9th Cir.1982); Kennedy v. H & M Landing, Inc., 529 F.2d 987 (9th Cir.1976). The essential elements of the claim asserted must be supplied by the factual pleadings, or the claim will fall to the motion to dismiss. Rae v. Union Bank, 725 F.2d 478, 480 (9th Cir.1984); Admiralty Fund v. City National Bank, 677 F.2d 1315, 1316-17 (9th Cir.1982).

Defendants' motion to dismiss is in three separate parts. Initially, they move to dismiss The Sacramento Bee, The Modesto Bee, and The Fresno Bee from the action entirely, in that the newspapers lack legal standing to sue or be sued and are not the real parties in interest in this suit. As the papers are but wholly owned subsidiaries of McClatchy Newspapers, and because McClatchy has already been named as a defendant, defendants argue, the individual newspapers should be dismissed under Rule 17(b).

There is no doubt that the three newspapers are wholly owned subsidiaries of McClatchy. The plaintiff has admitted as much in paragraph 3 of his complaint. Plaintiff contends, however, that the dependent nature of the newspapers is not relevant, in that the Sacramento Bee has been allowed to sue in its own stead on various occasions. See McClatchy Newspapers d/b/a The Sacramento Bee v. Central Valley Typographical Union No. 46, 686 F.2d 731 (9th Cir.), cert. denied 459 U.S. 1071, 103 S.Ct. 491, 74 L.Ed.2d 633 (1982); The Sacramento Bee, published by McClatchy Newspapers v. United States District Court, 656 F.2d 477 (9th Cir.), cert. denied 456 U.S. 983, 102 S.Ct. 2257, 72 L.Ed.2d 861 (1982). The inclusion of the Sacramento Bee in the caption of these cases, contends the plaintiff, clearly indicates that these courts viewed the Bee as the real party in interest. A close reading of these cases, however, indicates that the courts involved viewed McClatchy as the real party in interest and not the Bee.

Plaintiff, nonetheless, cites Country Set Division of Evan-Picone, Inc. v. Interstyle, Inc., 1978-2 Trade Reg.Rep. (CCH) ¶ 62,366 (S.D.N.Y. November 22, 1978), for the proposition that a division of a corporation can be a real party in interest, and can therefore be named as a defendant in a lawsuit. In that case, Country Set, a subsidiary corporation of Evan-Picone, brought an anti-trust action in its own name against the defendant, Interstyle, Inc. The defendant, however, moved to dismiss Country Set from the action, contending that it was merely a trade name owned by Evan-Picone, and not itself a legal entity.

The court denied the motion to dismiss, finding that Country Set was not merely a trade name, but was in fact a subsidiary corporation of Evan-Picone. In that the subsidiary was itself a corporation, the court found that Country Set had the capacity to sue and be sued. Id. (citing American Jerex Co. v. Universal Aluminum Extrusions, Inc., 340 F.Supp. 524 (E.D.N.Y.1972)). This case is clearly distinguishable from the present one, however, in that neither The Sacramento Bee, The Modesto Bee, nor The Fresno Bee are separate corporations, as the Magistrate has found. Instead, these newspapers are simply d.b.a.s of McClatchy Newspapers, which is the corporate entity in this action. In that the newspapers do not have a separate legal existence from McClatchy, the Interstyle case is completely inapplicable here, and the inclusion of the three newspapers is merely surplusage. In this sense, they may be dismissed from the action under Fed.R.Civ.P. 17(b). See Iding v. Anaston, 266 F.Supp. 1015 (N.D.Ill.1967) (court held that naming d.b.a.s was insufficient under Rule 17(b), and that actual corporate bodies were real parties in interest); see also Standard Lime and Cement Co. v. United States, 503 F.Supp. 938 (W.D. Mich.1980) (where corporate division retained only formal independent existence, parent corporation was real party in interest).

DISMISSAL OF FRESNO AND MODESTO BEE EMPLOYEES

The defendants have also moved for the dismissal of The Fresno Bee, The Modesto Bee, and their employees George Gruner, Don Slinkard, Sanders LaMont, and Ray Nish for lack of jurisdiction over the person. The dismissal of the Fresno and Modesto Bees for lack of legal capacity renders this portion of the motion moot as to those defendants. The Court must thus determine only whether the four individual defendants should be dismissed for lack of personal jurisdiction.

In order to determine whether a federal court has personal jurisdiction over a defendant, the Ninth Circuit has developed a two-step analysis. First, the court must apply the long-arm statute of the state in which the court sits. Hedrick v. Daiko Shoji Co., Ltd., Osaka, 715 F.2d 1355, 1357 (9th...