Suulutaaq Inc. v. Williams
| Citation | 39 Media L. Rep. 1103,782 F.Supp.2d 795 |
| Decision Date | 01 December 2010 |
| Docket Number | Case No. 3:10–cv–00048–TMB. |
| Parties | SUULUTAAQ, INC., and Samuel Boyle, Plaintiffs,v.Lance WILLIAMS, Center for Investigative Reporting, and San Francisco Chronicle, Defendants. |
| Court | United States District Courts. 9th Circuit. District of Alaska |
OPINION TEXT STARTS HERE
Michael D. White, Patton Boggs LLP, Anchorage, AK, Andrew M. Friedman, Benjamin Gaillard Chew, Patton Boggs LLP, Washington, DC, for Plaintiffs.Jon S. Dawson, Davis Wright Tremaine LLP, Anchorage, AK, Ambika K. Doran, Davis Wright Tremaine LLP, Seattle, WA, Thomas R. Burke, Davis Wright Tremaine LLP, San Francisco, CA, for Defendants.
Defendants Lance Williams, Center for Investigative Reporting (“CIR”), and the San Francisco Chronicle (the “Chronicle”) have moved for judgment on the pleadings requesting that the Court dismiss Plaintiffs Suulutaaq, Inc. (“Suulutaaq”) and Samuel Boyle's claims for defamation.1 For the reasons discussed below, Defendants' motion is GRANTED, in part, and DENIED, in part. Defendants related request for a hearing 2 is DENIED.
Suulutaaq is an Alaska Native Corporation (“ANC”) that pursues federal contracts under § 8(a) of the Small Business Act.3 Section 8(a) tasks the federal government with “negotiating or otherwise letting [procurement contracts] to socially and economically disadvantaged small business concerns” to supply various goods and services.4 The § 8(a) program is intended “to help small businesses owned and controlled by socially and economically disadvantaged individuals [and groups] ... including Alaska Native Corporations ... to compete on an equal basis in the mainstream of the economy.” 5 Under the program, the government places projects in the § 8(a) program and awards the contracts to eligible contractors. The government may award qualifying § 8(a) contracts—including contracts awarded to ANCs 6—without competitive bidding.7 Regardless, however, § 8(a) contracts must not exceed “a fair market price.” 8
Regulations restrict the contact that government officials may have with § 8(a) contractors,9 however, they do provide that the contractors may “influence” the process through “self-marketing.” 10 Under the “self-marketing” rules, § 8(a) contractors may contact agency personnel and market their services for projects that they are capable of performing.11
Consistent with the goals of the program, Suulutaaq began pursing § 8(a) contracts “shortly after its inception ... in order to ultimately alleviate some of the economic disadvantage and poverty in the isolated and rural villages of its region and to fund further cultural preservation.” 12
Boyle is the CEO for one of Suulutaaq's affiliates, TKC Aerospace, and served as “the transitional CEO” for Suulutaaq during a “reorganization” period that lasted less than one year.13 Boyle has “extensive business management experience,” 14 including consulting work where he advised companies on “their strategies, processes, business plans and operational execution.” 15 His prior experience included working with “government contractors” and “government agencies” on “long-term projects.” 16 This background provided him with “insight into federal contracting.” 17 Boyle also has “substantial experience in the Aerospace Industry” but does not have “specific construction experience.” 18 He lived in Alaska for several years during the 1980s, and currently resides in South Carolina.19
Prior to joining TKC Aerospace, Boyle was the CEO of Sailnet, a “dot-com” business.20 Sailnet declared bankruptcy in July 2005, approximately seven months after Boyle left the company.21 Before doing so, Sailnet spent approximately $13 million in venture capital. 22 Boyle and his family personally lost everything that they had invested in Sailnet when it went bankrupt.23
After leaving Sailnet, Boyle performed some consulting work for TKC Aerospace. 24 He was then asked to become the CEO in June 2005.25 In March 2009, he was asked to become the transitional President of Suulutaaq. 26
This dispute centers around a flood control construction project in Napa Valley, California.27 Suulutaaq won the contract and has been working on it as the prime contractor.28 It is unclear how Suulutaaq became aware of the Napa Valley Flood Control Project, however, it may have been through an email from the U.S. Army Corps of Engineers notifying it of the opportunity and inviting it to participate in the procurement process. 29 According to Suulutaaq, this is a typical procedure where an agency identifies an opportunity as a set aside under § 8(a) or other similar programs.30 Suulutaaq asserts that it:
cannot find any evidence suggesting that Suulutaaq, either directly or indirectly through others, made any attempt at any time to influence the U.S. Army Corps of Engineers, the Napa Valley Flood District, the City of Napa or any other local, state or federal employee, agency or legislator to determine that the Napa Valley Flood Control Project should be: 1) a set aside of any kind or 2) reserved for Suulutaaq in any manner.31
Suulutaaq has subcontracted out some of the work on the Napa Flood Control Project, but is exceeding the 15% self-performance minimum requirement under the § 8(a) program.32D. Defendants and the Allegedly Defamatory Article
Williams is a reporter who wrote an article about the Napa project (the “Article”), which contains the allegedly defamatory statements.33 CIR is “an investigative news reporting organization” that founded “California Watch,” a subsidiary that employs Williams.34 CIR published the Article on California Watch's website.35 The Chronicle is one of the largest daily newspapers in the United States and previously employed Williams. 36 It published the Article on the front page of its print edition on January 31, 2010, and on its website.37 All of the Defendants are based in California.38
The Parties agree that the three published versions of the Article are substantially similar in all material respects.39 The Article characterizes Suulutaaq as an “unusual construction company” that “won a $54 million federal contract” without competitive bidding.40 The Article refers to the Napa project as the “Wine Train project,” because the project involves constructing a new railroad bridge for the privately-owned “Napa Valley Wine Train tourist attraction.” 41 It states that the project has been “significantly” more expensive because “accommodating the Wine Train was politically necessary” in order to get the project approved.42
The Article also refers to the Napa contract as a “federal stimulus contract” and notes that the project was criticized by two Senators as being “ ‘silly and shortsighted’ and a waste of money.” 43 It states that the Senators had “suggested” that the project was not creating many new jobs, but quoted “[o]fficials involved with the project” as saying that they expected that the project would eventually “create as many as 200 jobs when work ramps up.” 44 A construction executive from a rival firm, Robert G. Brosamer, is quoted as suggesting that the Government “overspent by millions when it negotiated [the] contract with Suulutaaq rather than seeking competitive bids.” 45 He is also later quoted as saying that the project would have been cheaper if it had been put “out to bid,” and that as a consequence, the public was paying a premium for it.46 More specifically, the Article indicates that the Army Corps of Engineers initially awarded “a $6.2 million contract ... to begin work” on the project in September 2008.47 After “the federal stimulus program was announced,” however, the Army Corps of Engineers recommended the project for stimulus funding, and 48
The local construction executive is quoted as stating that the actual construction is “first rate” and the Article indicates that local officials are “pleased” with the work.49 However, it also quotes the executive as saying that “Suulutaaq isn't doing much” work on the project, and indicates that Suulutaaq subcontracted out “much of the job,” but is retaining 38 percent of the contract price.50 Suulutaaq is quoted as stating that taxpayers are “getting a ‘fair and reasonable’ price” for the work.51
The Article also indicates that Suulutaaq “rebuffed a query about whether Suulutaaq employed lobbyists by asserting that the question ‘has potential undertones of a race-based presumption.’ ” 52 It describes the § 8(a) program as being “a preferential contracting program to aid disadvantaged businesses” that allows “[q]ualifying firms [to] get federal contracts worth up to $5.5 million by negotiation, rather than competitive bidding.” 53 It further indicates that ANCs “emerged as players in federal contracting via measures crafted in the 1980s and 1990s by former Sen. Ted Stevens, R–Alaska, a powerful lawmaker whose career ended with a contracting scandal.” 54 These measures gave ANCs “special access” to § 8(a) contracts, “with no cap on the size of contracts they can obtain.” 55 The Article indicates that some support the measures as a means of “redressing centuries of grievous wrongs” against Alaskan tribes, while “critics,” such as Senator Claire McCaskill, argue that they “provide relatively few jobs and little investment income to tribes while costing taxpayers a fortune.” 56 It states that Senator McCaskill proposed “a cap on the no-bid contracts, but the measure stalled in the face of intense lobbying by tribal corporations.” 57
The Article also discusses Suulutaaq and Boyle's background. It indicates that Suulutaaq was formed in 1977 to develop a goldfield near the Kuskokwim River.58 Beginning in 2006, Suulutaaq obtained federal contracts to “replace a sewage pump” at an Airforce base, “rebuild meat lockers in Honolulu for the U.S. Defense Commissary Agency,”...
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