Vivera Pharm., Inc. v. Gannett Co.
| Decision Date | 26 March 2021 |
| Docket Number | Case No. CL-2020-14458 |
| Court | Circuit Court of Virginia |
| Parties | Re: Vivera Pharmaceuticals, Inc. v. Gannett Co., Inc., et al. |
Chad R. Bowman, Esquire
BALLARD SPAHR LLP
1909 K Street, 12th Floor
Washington, DC 20006
Jack White, Esquire
Grace Williams, Esquire
FH+H, PLLC
1751 Pinnacle Drive, Suite 1000
Tysons, VA 22102
Dear Counsel:
BACKGROUND
Spring 2020 marked the onset of the Covid-19 pandemic, which led to the increased demand for supplies to respond to the outbreak. Companies began producing more medical supplies and Covid-19 tests as well as antibody tests. Plaintiff Vivera Pharmaceuticals Inc. ("Vivera") is one company that began manufacturing Covid-19 home test kits.
As more antibody tests flooded the market, the public wanted reviews of the products. Defendant Gannett Satellite Information Network, LLC, better known as USA Today, published an article (the "Article") in June 2020 discussing the U.S. Food and Drug Administration's regulation of antibody tests. The article featured Vivera as a prime example of an antibody test manufacturer with limited experience managed by a questionable CEO. It specifically highlighted Vivera CEO. Paul Edalat's troubled history with regulators and his legal entanglements. Vivera viewed this Article as a "scattershock attack" news report that disparaged its business.
For this reason, Vivera objected to the Article and demanded that USA Today retract certain statements. When the statements were not removed, Vivera filed a Complaint for defamation in federal court and then voluntarily dismissed the action in August 2020. On September 21, 2021, Vivera filed suit in this Court for defamation, defamation per se, and tortious interference with a business expectancy. Vivera seeks $500 million in damages as well as $350,000 in punitive damages. In the current matter, Defendants demur to all counts raised in Vivera's Complaint.
The purpose of a demurrer is to test whether a pleading states a cause of action upon which relief can be granted. Va. Code Ann. § 8.01-273(A); Tronfeld v. Nationwide Mutual Insurance Co., et al., 272 Va. 709, 712-13, 636 S.E.2d 447, 449 (2006); Welding, Inc. v. Bland County Service Authority, 261 Va. 218, 226, 541 S.E.2d 909, 913 (2001). Ward's Equipment, Inc. v. New Holland N. America, Inc., 254 Va. 379, 382, 493 S.E.2d 516, 518 (1997) (quoting Fox v. Custis, 236 Va. 69, 71, 372 S.E.2d 373, 374 (1988)). A demurrer does not speak to the strength of proof of the facts alleged. E.g., Phillip Abi-Najm, et al. v. Concord Condominium, LLC, 280 Va. 350, 357, 699 S.E.2d 483, 486 (2010).
I. Defamation
A. Actionable Statement
A defamation claim requires the publication of an actionable statement with the requisite intent. See Schaecher v. Bouffault, 290 Va. 83, 91, 772 S.E.2d 589, 594 (2015) (citing Tharpe v. Saunders, 285 Va. 476, 737 S.E.2d 890, 892 (2013)). A statement is considered "actionable" when it is false and defamatory. See, e.g., Spirito v. Peninsula Airport Comm'n., et al., 350 F.Supp.3d 471, 480 (E.D.Va. 2018).
Defendants call upon this Court to exercise its gatekeeping function and dismiss Vivera's defamation claims based on their assertion the Article is accurate. Yet, at the pleading stage, the Court's function is limited to determining as a matter of law whether a statement is defamatory - not to verify its truth.1 Id. at 482; Handberg v. Goldberg, 297 Va. 660, 666, 831 S.E.2d 700, 705(2019); Schaecher v. Bouffault, 290 Va. 83, 94, 772 S.E.2d 589 (2015) (citing Perk v. Vector Res. Group, Ltd., 253 Va. 310, 316-17, 485 S.E.2d 140 (1997)); see Webb v. Virginian-Pilot Media Cos., 287 Va. 84, 90, 752 S.E.2d 808 (2014). Rather, determining the falsity of a statement is a question for the factfinder at trial. E.g., Goldberg, 297 Va. at 666, 831 S.E.2d at 705.
The only question the Court must ask regarding the statements' falsity on demurrer is whether the alleged defamatory statement has a "provably false factual connotation and thus [is] capable of being proven true or false.'" Goldberg, 297 Va. at 666, 831 S.E.2d at 705 (quoting Schaecher, 290 Va. at 98, 772 S.E.2d at 597) (emphasis added). Thus, for a statement to satisfy the falsity prong on demurrer, it must, at a minimum, have the potential to be substantiated. Id.
In the instant matter, it is undisputed the statements within the Article can be proven true or false. Our inquiry here is whether the Article and the statements within it are defamatory.
A statement is defamatory if it has the "requisite defamatory sting to one's reputation." Id. at 668 (internal citations omitted). The language must "tend to injure one's reputation in the common estimation of mankind, to throw contumely, shame, or disgrace upon him, or which tends to hold him up to scorn, ridicule, or contempt, or which is calculated to render him infamous, odious, or ridiculous." Id. at 668 (internal citations omitted). The general rule is the challenged language must be considered in its plain meaning and as other people would understand it. See generally, Carwile v. Richmond Newspapers, Inc., 196 Va. 1, 8, 82 S.E.2d 588, 592 (1954).
If the language does not appear defamatory on its face, it may still be disparaging through suggestion or innuendo. Webb, 287 Va. at 88, 752 S.E.2d at 811. "In determining whether words and statements complained of in the case are reasonably capable of the meaning ascribed to them by innuendo, every fair inference that may be drawn from the pleadings must be resolved in the plaintiff's favor." Spirito, 350 F.Supp.3d at 482 (quoting Webb, 287 Va. at 89-90, 752 S.E.2d at 811). The Court must review the statements in light of the circumstances in which they were made. If the conduct alleged was innocent but the statement implied wrongdoing, the statement has defamatory implications. Spirito, 350 F.Supp.3d at 482.
For example, in Pendleton v. Newsome, a school was held liable for defamation after issuing a statement saying the parent is responsible for providing the child's health information, a health emergency plan, and medications after the child died from an allergic reaction. 290 Va. 162, 772 S.E.2d 759 (2015). The Court determined this statement implied the mother was responsible for the child's death and thus defamatory. Id.
Applying these principles to the challenged statements, the majority of them can be proven true or false. Thus, the matter before the Court is whether the statements are defamatory. Even if they are not ostensibly defamatory, they may still be defamatory through innuendo.
The Article focuses mainly on Vivera's CEO, Paul Edalat2 and his independent business ventures and lawsuits. Defendants easily dismiss these statements because they reason Vivera cannot bring a defamation claim on someone else's behalf. However, these statements concern Vivera's reputation and perhaps could be construed as to Vivera.
To prevail on a defamation claim, a complainant must demonstrate the statements were "of or concerning" him. E.g., Dean v. Dearing, 263 Va. 485, 488, 561 S.E.2d 686, 689 (2002) ().
Unlike the plaintiff in Dean, Vivera properly pled throughout the Complaint (hat the statements about Mr. Edalat concern Vivera and its business. For example, in paragraph 55 of the Complaint, Vivera states, "This statement is false and misleading by implying that, because an opposing party in litigation made false and misleading accusations about Edalat and accused Edalat of fraud, there must be something wrong with Vivera's antibody tests."
Additionally, a person reading the Article would understand Mr. Edalat's reputation to reflect poorly on Vivera. Although some statements are not blatantly about Vivera, they suggest Vivera is managed by an unscrupulous individual and is therefore unethical. The CEO is the face of the company and any misgivings about his honesty or transparency place Vivera's credibility into question.
The Article's first paragraph refers to the lawsuit investors filed against Paul Edalat and that the FDA barred him against selling supplements after repeatedly failing inspections. It then states, "[y]et Paul Edalat's company, Vivera Pharmaceuticals is one of more than 150 with the FDA's blessing to sell coronavirus antibody tests..." (Plaintiff's Opposition Brief Exh. 1).
The Article begins by suggesting Vivera should not be making tests because of its CEO's character. The same implications are weaved throughout the Article. Consequently, these statements imply Vivera and its products are unreliable. The statements about Mr. Edalat not only concern Vivera, but are defamatory through innuendo. Therefore, the defamation claim against Gannett Satellite Information Network, LLC, d/b/a USA Today and the authors3 of the article survive demurrer.
For our purposes, it is necessary to read the Article in its entirety. Even though some statements are ostensibly...
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