Rudin v. Dow Jones & Co., Inc.

• Decision Date: 26 March 1981
• Docket Number: No. 79 Civ. 0433 (MEL).,79 Civ. 0433 (MEL).
• Citation: 510 F. Supp. 210
• Parties: Milton A. RUDIN, Plaintiff, v. DOW JONES & COMPANY, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

510 F. Supp. 210

Milton A. RUDIN, Plaintiff, v. DOW JONES & COMPANY, INC., Defendant.

No. 79 Civ. 0433 (MEL).

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

March 26, 1981.

Warner & Gillers, P. C., New York City, for plaintiff; Kenneth E. Warner, Richard A. Greenberg, New York City, of counsel.

Patterson, Belknap, Webb & Tyler, New York City, for defendant; Robert D. Sack, Renee L. Cohen, New York City, of counsel.

LASKER, District Judge.

Dow Jones & Company, Inc. ("Dow") is the publisher of "Barron's Business and Financial Weekly" ("Barron's"), a weekly publication containing news and information of particular interest to the business and financial community. On November 27, 1978, in its regular column "Up & Down Wall Street," Barron's commented on the purchase of stock in the Great Lakes Dredge and Dock Company by a group including Frank Sinatra, Jr., his attorney Milton Rudin and three others:

"A GAMBLING stock it isn't, But then, Great Lakes Dredge and Dock would scarcely be mistaken for a Vegas casino. As for Atlantic City, we suspect that the closest the company would come to that spa is if perchance one of its dredges were working offshore. So why would Frank Sinatra and a group of four others, including his attorney, Milton Rudin (who not long ago joined Sinatra in buying a huge stake in Del Webb and eventually gaining a board seat before disposing of their stock this year to Ramada Inns), plunk down a cool $2.8 million to buy 107,500 shares, or slightly over 5% of the outstanding stock, of Great Lakes?

The 13D filed with the SEC by Sinatra & Friends avers that the stock was purchased for `investment purposes.' The folks at Great Lakes Dredge can't shed any more light on the matter, either. They report that business is good, profits are at record levels and the backlog is high. But as to why old Blue Eyes et al acquired the block of stock, an executive declares, `We've no idea whatsoever.' Our efforts to reach the singer and others were to no avail. One thing we do know. Say what you want about Great Lakes Dredge, a fine old company with a respectable record, show biz it's not."

(Barron's, November 27, 1978, p. 37).

Rudin wrote to Barron's in response to this item on January 2, 1979. His letter was published by Barron's on January 15, 1979 in the column "Barron's Mailbag" which consists of letters to the editor. Barron's caption for the letter, appearing in printface slightly larger than the printface of the contents of the letters and in all capitals, was "SINATRA'S MOUTHPIECE." The letter was published as follows:

"SINATRA'S MOUTHPIECE

To the Editor:

I have finally found time to deal with trivia; I am referring to the article which appeared in the Nov. 27 issue of your publication concerning the purchase by Harvey Silbert, Frank Sinatra, Jerry Weintraub and myself of over 100,000 shares of Great Lakes Dredge & Dock Co.

Your article seems to indicate that neither Mr. Sinatra and I, nor the other individuals joining us in filing as `a group,' have a limited amount of intelligence. Obviously, you are of the view that we can only understand gambling stocks or securities of companies involved in the entertainment industry.

But it astounds me that your staff, writing for a publication that claims that it reports accurately on matters relating to investments, did not have intelligence to understand why we purchased Great Lakes. In addition to being unintelligent, they are evidently very lazy.

If your writer had examined the 13D filed with the SEC, he would have noted that initial purchases were made by Mr. Sinatra and myself at a cost basis of approximately $22 a share. Also, the subsequent purchases were made under $30 a share.

On the basis of $22 a share, and noting that Great Lakes paid a dividend of $2.50 a share in 1978, your reporter, if he completed sixth grade education, should have been able to note that we are getting a 10% return on our investment.

We bought the stock prior to the announcement that Great Lakes' earnings would be approximately $7 a share. Because we don't read Barron's, I guess we very stupidly invested in this stock, which at present price levels is yielding about 7% per annum and selling at a modest multiple of five times earnings.

MILTON A. RUDIN Beverly Hills, Calif."

On January 16, 1979 Rudin's law firm sent a telegram to Barron's stating inter alia that the caption "SINATRA'S MOUTHPIECE" was a defamatory reference to Rudin in that it impugned his professional integrity and competence. The telegram also contained a demand that Barron's print an appropriate retraction. On January 22, 1979, the "Barron's Mailbag" column began with the following editorial statement:

"Milton Rudin, an attorney who represents Frank Sinatra, has objected to our referring to him as `Sinatra's mouthpiece' in last week's Mailbag column. We meant to cast no aspersions on Mr. Rudin. Our dictionary defines `mouthpiece' as `spokesman.'

Under New York law,¹ a publication is libelous per se and therefore actionable without allegation or proof of special damages, if it

"`... tends to expose a person to hatred, contempt or aversion, or to induce an evil or unsavory opinion of him in the minds of a substantial number of the community, even though it may impute no moral turpitude to him' ... or tends to disparage a person in the way of his office, profession or trade." Nichols v. Item Publishers, Inc., 309 N.Y. 596, 600-01, 132 N.E.2d 860 (1956); quoting Mencher v. Chesley, 297 N.Y. 94, 100, 75 N.E.2d 257 (1947).

Rudin alleges that Dow's use of the phrase "Sinatra's Mouthpiece" tended to disparage him in the way of his profession by suggesting that he "lacked intelligence, integrity and independence as an attorney and as a businessman-investor." (Complaint ¶ 8). Dow moves to dismiss the claim pursuant to Fed.R.Civ.Pr. 12(b)(6) on the grounds that (1) the term "mouthpiece" is not reasonably susceptible of the defamatory meaning ascribed to it by Rudin and (2) in light of Dow's retraction, no cause of action for libel exists in the absence of a claim for special damages under applicable California law.

I.

The Meaning of the Term "Mouthpiece"

The dispositive question raised by Dow's argument that its publication of the phrase "Sinatra's Mouthpiece" was not defamatory as a matter of law is whether "the words are susceptible of the meaning ascribed to them," James v. Gannett Co., 40 N.Y.2d 418, 421, 386 N.Y.S.2d 871, 353 N.E.2d 834 (1976), considering the publication in its context and giving the words their natural import and plain and ordinary meaning, November v. Time, Inc., 13 N.Y.2d 175, 244 N.Y.S.2d 309, 194 N.E.2d 126 (1963). The publication must be tested by its affect upon the average reader. James v. Gannett Co., 40 N.Y.2d at 421, 386 N.Y.S.2d 871, 353 N.E.2d 834. In making the threshold determination whether words are susceptible of a defamatory meaning, the words must not be accorded a forced and unnatural meaning which might make them libelous, Lorentz v. R. K. O. Radio Pictures, 155 F.2d 84, 87 (9th Cir.) cert. denied, 329 U.S. 727, 67 S.Ct. 81, 91 L.Ed. 629 (1946), nor should the words be interpreted according to their mildest and most inoffensive sense in order to find them non-libelous. Mencher v. Chesley, 297 N.Y. 94, 99, 75 N.E.2d 257 (1947).

Relying on Webster's Third International Dictionary, Dow contends that the plain meaning of the word "mouthpiece" is "spokesman" and demonstrates that courts and the press have often used the word in that sense. F. C. C. v. Allentown Broadcasting Corp., 349 U.S. 358, 362, 75 S.Ct. 855, 858, 99 L.Ed. 1147 (1955) ("We agree with the contention of the Commission ... Fairness to communities is furthered by a recognition of local needs for a community radio mouthpiece."); Ruby v. American Airlines, Inc., 329 F.2d 11, 25 (2d Cir. 1964) (Friendly, J., dissenting), vacated 381 U.S. 277, 85 S.Ct. 1456, 14 L.Ed.2d 430 (1965) ("it was by no means unnatural that O'Connell, the prospective future head of the merged group, should occasionally have been the mouthpiece for proposals for the engineers...."). In addition, Dow argues that the context in which it used the phrase "Sinatra's Mouthpiece" contradicts the meaning ascribed by Rudin. According to Dow, since Rudin's letter was written on behalf of Sinatra and others and Rudin expressed that fact in the letter itself, the word "mouthpiece" as used by Dow could only have meant "spokesman."

Dow does concede that the word "mouthpiece" may be defamatory if used to associate one with a person or cause held in public contempt. However, Dow argues that calling Rudin "Sinatra's Mouthpiece" does not identify Rudin with a person or cause held in public contempt because Rudin does not claim that Sinatra is held in public contempt. Moreover, Dow contends that even if the caption was derogatory, it does not follow that it was defamatory. Rather, Dow maintains that its use of the term "mouthpiece" expressed at most an unflattering view of Rudin akin to mere name-calling. According to Dow, the caption was not capable of inflicting substantial harm to Rudin's reputation and therefore under the "mere epithet" rule it is not defamatory. See Curtis Publishing Co. v. Birdsong, 360 F.2d 344, 348 (5th Cir. 1966) (phrase "'those bastards"' could only be understood as a "mere epithet" expressing "a strong emotional feeling of dislike" rather than "as statements of fact").

Rudin argues that the term "mouthpiece" not only means "spokesman," as Dow contends, but also has a pejorative connotation, especially when applied to an attorney. Rudin notes that the Oxford English Dictionary itself states that "mouthpiece" is a slang term for "criminal lawyer" and, Rudin demonstrates, its additional slang meanings are "an unscrupulous criminal lawyer" or a lawyer "in sympathy with the underworld." The American Thesaurus of Slang (1942). The term is, Rudin contends, synonymous with "puppet, cat's paw, tool, instrument, operative,...