Wenz v. Becker

• Decision Date: 17 December 1996
• Docket Number: No. 96 Civ. 2161 (SWK).,96 Civ. 2161 (SWK).
• Citation: 948 F.Supp. 319
• Parties: Richard E. WENZ, Plaintiff, v. Arthur P. BECKER and Time, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

948 F.Supp. 319

Richard E. WENZ, Plaintiff, v. Arthur P. BECKER and Time, Inc., Defendants.

No. 96 Civ. 2161 (SWK).

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

December 17, 1996.

Schopf & Weiss by Kenneth E. Kraus, Veronica Gomez, Chicago, IL, Sullivan & Gallion by Charles Sullivan, New York City, for Plaintiff.

Seyfarth, Shaw, Fairweather & Geraldson by Nathaniel H. Akerman, New York City, Miller & Martin by Harry S. Mattice, Jr., Chattanooga, TN, for Defendant Arthur P. Becker.

David B. Wolf, New York City, for Defendant Time, Inc.

MEMORANDUM OPINION AND ORDER

KRAM, District Judge.

In this defamation action, defendant Arthur P. Becker ("Becker") moves for summary judgement pursuant to Federal Rule of Civil Procedure 56 on the ground that his allegedly defamatory statement is protected as a fair and true report on a judicial proceeding under New York Civil Rights Law Section 74. For the reasons set forth below, Becker's motion is denied.

BACKGROUND¹

From February 14, 1992 through September 26, 1994, plaintiff Richard E. Wenz ("Wenz") was employed as the chief executive officer of ProGroup, Inc. ("ProGroup"), a Tennessee corporation. During the time that Wenz was the chief executive officer of ProGroup, Becker was the chairman of the board of directors of ProGroup.

Upon termination of his employment on September 26, 1994, Wenz entered into a separation agreement and general release (the "Separation Agreement") with ProGroup. Pursuant to the Separation Agreement, Wenz relinquished certain rights under his employment agreement and in return, ProGroup agreed to pay him certain funds in the future. Subsequently, however, Pro-Group failed to make payments to Wenz as required by the terms of the Separation Agreement.

As a result of ProGroup's non-payment, on November 21, 1994, Wenz filed a complaint against ProGroup in Tennessee state court in an action entitled Richard E. Wenz v. ProGroup, Inc., No. 94-75158 (the "Tennessee Lawsuit") seeking damages pursuant to the terms of the Separation Agreement or, alternatively, his employment agreement. On May 19, 1995, ProGroup filed its answer denying liability to Wenz under either agreement. In addition, ProGroup asserted four affirmative defenses to Wenz's claims and counterclaimed for fraud, breach of fiduciary duty and breach of contract. Specifically, ProGroup claimed that when it entered into the Separation Agreement, it was unaware that it would have been justified in terminating Wenz "for cause" since Wenz had in fact perpetrated a fraud upon the company during his employment. ProGroup's Second Affirmative Defense alleges that:

ProGroup was entitled to terminate Richard E. Wenz ("Wenz") for cause ... because Wenz had engaged in fraud, malfeasance, misfeasance, and non-feasance in the performance of his duties, engaged in acts or omissions not in good faith and which involved intentional misconduct and knowing violation of civil and criminal law which had not been disclosed to, and was concealed from, ProGroup's Board of Directors prior to it entering the Separation Agreement of September 26, 1994.

ProGroup's Answer and Counterclaims, annexed to the Affidavit of Harry S. Mattice, Jr., sworn to June 18, 1996, as Exh. "B," at ¶ 24.

On June 12, 1995, Fortune magazine published an article about ProGroup entitled "How Arnie Hit Into The Rough With Golf Clubs" (the "Article").² In general, the Article reported on the financial history and control of ProGroup. The Article also specifically referred to the Tennessee Lawsuit as follows:

Last September, Becker asked Wenz to resign, and the two drew up a separation agreement that would pay Wenz his salary until 1988. But after going through ProGroup's books, Becker says he became convinced that Wenz could be terminated for cause and decided not to pay him anything. In late November, Wenz sued ProGroup for breaching the separation agreement and demanded his salary plus over $100,000 for a lost deposit on a house, unreimbursed business expenses, and accrued vacation time. Wenz also demanded $75,000 that he said in court papers he had paid to settle a claim of alleged sexual harassment, which he says he did with the expectation of continuing to work for ProGroup.

Fortune Magazine Article, annexed to the Complaint as Exh. "A."

In the action presently before this Court, Wenz claims that Becker defamed Wenz by stating that "after going through ProGroup's books, ... he became convinced that Wenz could be terminated for cause and decided not to pay him anything." Id.; see also Complaint at ¶¶ 10-11. According to Wenz, Becker gave this statement to Fortune magazine during one or more interviews in March 1995, after the complaint had been filed but a few months before ProGroup filed its answer and counterclaims. About this same time, Fortune magazine also contacted Wenz and asked for his comments on the forthcoming article on ProGroup. Wenz claims that the Fortune representative neither asked him about his departure from ProGroup nor informed him that Becker had made any statements concerning his termination. In addition, Wenz claims that as a result of the Article, he received more than one dozen negative phone calls or comments from individuals who were concerned about the seriousness of the allegations against him.

DISCUSSION

I. Standard of Law

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party must initially satisfy a burden of demonstrating the absence of a genuine issue of material fact, which can be done merely by pointing to an absence of evidence in support of the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S.Ct. 2548, 2552-54, 91 L.Ed.2d 265 (1986). The nonmoving party must then come forward with "specific facts showing that there is a genuine issue for trial," Fed.R.Civ.P. 56(e), by "a showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial," Celotex Corp. v. Catrett, 477 U.S. at 322, 106 S.Ct. at 2552.

The Court "must resolve all ambiguities and draw all reasonable inferences in favor of the party defending against the motion." Eastway Constr. Corp. v. New York, 762 F.2d 243, 249 (2d Cir.1985); see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1608-09, 26 L.Ed.2d 142 (1970); Hathaway v. Coughlin, 841 F.2d 48, 50 (2d Cir.1988); Knight v. United States Fire Ins. Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). But the Court is to inquire whether "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for the party," Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986), and to grant summary judgment where the nonmovant's evidence is merely colorable, conclusory, speculative or not significantly probative. Id. at 249-50, 106 S.Ct. at 2510-11; Knight v. United States Fire Ins. Co., 804 F.2d at 12, 15; Argus Inc. v. Eastman Kodak Co., 801 F.2d 38, 45 (2d Cir.1986), cert. denied, 479 U.S. 1088, 107 S.Ct. 1295, 94 L.Ed.2d 151 (1987). To determine whether the nonmoving party has met his or her burden, the court must focus on both the materiality and the genuineness of the factual issues raised by the nonmovant. As to materiality, "it is the substantive law's identification of which facts are critical and which facts are irrelevant that governs." Anderson v. Liberty Lobby, Inc., 477 U.S. at 248, 106 S.Ct. at 2510. A dispute over irrelevant or unnecessary facts will not preclude summary judgment, id., but the presence of unresolved factual issues that are material to the outcome of the litigation mandates a denial of the summary judgment motion, see, e.g., Knight v. United States Fire Ins. Co., 804 F.2d at 11-12. In sum, if the court determines that "the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (quoting First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968)).

II. Section 74 of the New York Civil Rights Law

Section 74 of the New York Civil Rights Law provides that "[a] civil action cannot be maintained against any person, firm or corporation, for the publication of a fair and true report of any judicial proceeding. ..." N.Y.Civ.Rights Law § 74. The public policy underlying this statutory privilege is the promotion of truth on the part of litigants who may state their positions without fear of being sued for libel, Williams v. Williams, 23 N.Y.2d 592, 599-600, 298 N.Y.S.2d 473, 480, 246 N.E.2d 333, 337-338 (1969), and the interest in having judicial proceedings public for the proper administration of justice, Stolow v. Hearst Corp., 201 Misc. 504, 507, 105 N.Y.S.2d 284 (Sup.Ct.N.Y. 1951). Significantly, the privilege is not intended to protect statements which, at some subsequent time, may become the topic of a lawsuit. Rather, the privilege applies only where (1) the allegedly defamatory statement is connected to a judicial proceeding; and (2) the statement fairly and accurately reports the judicial proceeding. Phillips v. Murchison, 252 F.Supp. 513, 516 (S.D.N.Y.1966), rev'd on other grounds, 383 F.2d 370 (2d Cir.1967), cert. denied, 390 U.S. 958, 88 S.Ct. 1050, 19 L.Ed.2d 1154 (1968).

A. Report on a Judicial Proceeding

Allegedly defamatory statements are protected by Section 74 only where the statements report on a judicial...