Opinion ID: 771328
Heading Depth: 3
Heading Rank: 1

Heading: Development of the Chapadeau Standard

Text: 33 In New York Times Co. v. Sullivan, 376 U.S. 254 (1964), the Supreme Court held that for a public official to succeed in a defamation suit, the First Amendment requires that he or she first establish with convincing clarity that the defendant published a defamatory falsehood with actual malice. Id. at 285-86. The Court later extended the same test to defamation suits brought by public figures. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 335-36 & n.7 (1974). As we noted above, the Supreme Court interpreted the term actual malice to require proof that the defendant published a statement with knowledge of its falsity or with [a] high degree of awareness of [the publication's] probable falsity, Garrison, 379 U.S. at 74, or while the defendant in fact entertained serious doubts as to the truth of [the] publication, St. Amant, 390 U.S. at 731. See also Gertz, 418 at 335 n.6 (1974) (requiring proof of subjective awareness of probable falsity) (citing St. Amant, 390 U.S. at 731). 34 In Gertz, decided some ten years after Sullivan, the Supreme Court turned to the question of what standard the First Amendment required private defamation plaintiffs to meet in defamation cases. The Court held, inter alia, that, so long as they do not impose liability without fault, the States may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual. 418 U.S. at 347. The vast majority of states subsequently decided that the appropriate standard of liability left for them to decide by Gertz is negligence. See Turf Lawnmower Repair, Inc. v. Bergen Record Corp., 139 N.J. 392, 404 n.1, 655 A.2d 417, 423 n.1 (1995) (collecting state authority). 35 The New York State Court of Appeals, however, chose a different path. It held in Chapadeau that where the content of the article is arguably within the sphere of legitimate public concern, which is reasonably related to matters warranting public exposition, the party defamed may recover if he or she can establish by a preponderance of the evidence, that the publisher acted in a grossly irresponsible manner without due consideration for the standards of information gathering and dissemination ordinarily followed by responsible parties. Chapadeau, 38 N.Y.2d at 199, 341 N.E.2d at 571, 379 N.Y.S.2d at 64. 7 36 Chapadeau itself was about the liability of a newspaper publisher for a statement contained in a published article, and the court's invocation of the terms publisher and standards of information gathering and dissemination suggest that the gross irresponsibility standard may apply only to cases against media defendants. Courts applying New York law have, however, uniformly applied Chapadeau to cases involving non-media defendants, at least where the communication at issue admits of measurement by the Chapadeau standard. See, e.g., McGill v. Parker, 179 A.D.2d 98, 108, 582 N.Y.S.2d 91, 97 (1st Dep't 1992) (noting that while a standard which requires a showing that the publisher of defamatory material 'acted in a grossly irresponsible manner...' is particularly suited to a media defendant, there is no reason... why the Constitution should be construed to provide greater protection to the media in defamation suits than to others exercising their freedom of speech) (citation omitted). Other cases to the same effect are collected in the margin. 8 The Chapadeau standard therefore applies to this suit by private plaintiff Konikoff against non-media defendant Prudential about the statements by Prudential concerning appraisals of property, a subject arguably within the sphere of legitimate public concern. 9 Chapadeau, 38 N.Y.2d at 199, 341 N.E.2d at 571, 379 N.Y.S.2d at 64.B. Application of the Chapadeau Standard 37 The situation presented by this appeal is hardly unique. It is not at all uncommon for a business entity to respond to charges of wrongdoing by preparing or commissioning from counsel or other experts a report on the allegations which is then disseminated to its shareholders, employees and the general public. 10 38 Prudential commissioned the Sonnenschein report to investigate the Jorgensen allegations. While there is some minor skirmishing between the parties about the extent of Prudential's involvement in the report's preparation, there is no evidence to suggest that in commissioning the report Prudential acted other than responsibly. It hired a well-respected law firm and a well-respected accounting firm to conduct parallel investigations. The magistrate judge found that Sonnenschein interviewed approximately 85 current and former Prudential employees and outside appraisers, including Ms. Konikoff, and reviewed 50,000 documents. Konikoff, 1999 WL 688460, at , 1999 U.S. Dist. LEXIS 13501, at . The Sonnenschein report contains the uncontradicted statement that Sonnenschein received complete and unfettered access to all Prudential records and personnel. Cf. Lewis v. Newsday, Inc., 246 A.D.2d 434, 436, 668 N.Y.S.2d 377, 379 (1st Dep't 1998) (holding that newspaper's publication of statements from sources who were mere conduits for unverified rumor raised a triable issue of fact as to whether newspaper was grossly irresponsible where it made no effort to substantiate statements and sources made no representation that they had done so). 39 There also is no indication that Prudential was grossly irresponsible in disseminating the statements. On the contrary, it was plainly reasonable for Prudential to publish the full text of the independent report it had commissioned and the transcript of the related question and answer session in response to demands by investors and governmental agencies that Prudential address the charges. The purpose of releasing these documents was to inform the public about the assessment by independent investigators of the allegations against the company. Prudential could hardly have edited the reports to omit information Prudential thought to be inaccurate while honoring its goal of publicly disclosing, in haec verba, what Sonnenschein thought to be the facts. Prudential's censorship of the report, even for the purpose of sparing the reputation of third parties, would have undermined its justifiable objective of baring all that the investigators had to report. 40 Courts addressing cases strikingly similar to the case at bar have held the defendants' publications to be protected by the Chapadeau principle. 41 In Post v. Regan, 677 F. Supp. 203 (S.D.N.Y.), aff'd mem., 854 F.2d 1315 (2d Cir. 1988), cert. denied, 488 U.S. 1043 (1989), the defendant insurance brokerage responded to reports of unauthorized transactions by the plaintiff's subordinate by conducting an investigation, using internal investigators and an external auditor. The investigation revealed extensive misconduct and significant concealed losses. The defendant announced the results of the investigation at a shareholders' meeting and stated that certain employees, including the plaintiff, had been terminated as a result of the investigation. Several major newspapers reported the results of the investigation and the defendants' statements. The district court for the Southern District of New York dismissed the plaintiff's defamation suit under Chapadeau, concluding that the firm's losses were a matter of public interest and that there was no evidence that the defendants conducted and reported the results of their investigation in a grossly irresponsible manner. Id. at 209. The court emphasized that the investigation was not done hastily and involved interviews of relevant parties and thorough reviews of the allegedly wrongful transactions. Id. We affirmed in an unpublished summary order. See 854 F.2d 1315 (2d Cir. 1988) (table). 42 In Mott v. Anheuser Busch, Inc., 910 F. Supp. 868 (N.D.N.Y. 1995), aff'd mem., 112 F.3d 504 (2d Cir. 1996), the defendant initiated an investigation into published allegations that its employees had defrauded a state environmental agency. The investigation confirmed that the plaintiff and others had indeed engaged in wrongdoing. The defendant released the results of the investigation in press releases and made several related statements to reporters. The district court granted summary judgment for the defendant under Chapadeau. Noting that the investigation was conducted with the help of respected outside legal counsel and involved extensive review of the pertinent documents, id. at 875-76, the court concluded that the investigation and subsequent reporting were carried out in a thorough and responsible manner, id. at 875. We again affirmed in an unpublished summary order. See 112 F.3d 504 (2d Cir. 1996) (table). 43 And in Luisi v. JWT Group, Inc., N.Y.L.J., Sept. 18, 1987, at 7, col.3, 14 Media L. Rep. (BNA) 1731 (N.Y. Sup. Ct. 1987), aff'd w/o opinion, 138 A.D.2d 987, 525 N.Y.S.2d 454 (1st Dep't), appeal denied, 72 N.Y.2d 803, 528 N.E.2d 520, 532 N.Y.S.2d 368 (1988), relied upon by the district courts in both Post, 677 F. Supp. at 208, 209, and Mott, 910 F. Supp. at 878, the defendant advertising agency retained an external accounting firm to help investigate allegedly improper accounting practices by the plaintiff, a former employee, and others. When the investigation was concluded, the defendant issued a press release stating that the plaintiff was responsible for improper activities that contributed to a $30 million loss in revenues. Luisi, 14 Media L. Rep. at 1733. Applying Chapadeau, the trial court granted summary judgment for the defendant on the ground that the statements were in the public interest and the plaintiff had failed to show that the defendant had acted with gross irresponsibility. Id. at 1733-34. The court noted that the statements were made solely in reliance on the outside investigators' report and that the report was prepared with due care and thoroughness. Id. at 1734. 44 We see no legally significant distinction between those cases and the case at bar. 45 The plaintiff also points us to statements by courts indicating that the Chapadeau test may be less onerous for a plaintiff to meet than the actual malice standard. As we have said, we doubt a triable issue of fact exists as to actual malice. 46 More important, we think that the actual malice and Chapadeau tests are different from one another rather than the first simply being a more onerous version of the second, from the plaintiff's perspective. Ordinarily a communication made with actual malice is also made in violation of the Chapadeau standard because ordinarily it is grossly irresponsible to make a defamatory statement knowing that it is false or while highly aware that it is probably false. But this is not necessarily the case. There are situations in which a statement may be published with awareness of its probable falsity under the Sullivan line of cases and yet neither in a grossly irresponsible manner nor without due consideration for the standards of information gathering and dissemination ordinarily followed by responsible parties under Chapadeau. If, for example, a television station were to rebroadcast a public official's news conference despite the broadcaster's knowledge that one of the speaker's statements, a defamatory one, was likely false, the rebroadcast would arguably have been made with subjective awareness of probable falsity of the defamatory remarks -- actual malice -- yet in accordance with standards of responsible journalism under Chapadeau. 47 We understand that an anomaly seems to emerge: A publication about a private figure might not be actionable under Chapadeau, while an identical publication about a public figure would be actionable under Gertz. This would be a rather startling result in view of the higher protection for statements about public figures that the Supreme Court thought it was establishing in Gertz. 11 48 The solution to this apparent dilemma must, of course, await its presentation to a court in justiciable form. We note, however, that the anomaly may be more apparent than real. If presented with a case that is similar to the case at bar but is brought by a public official or public figure rather than a private person like Konikoff, New York courts may conclude that the plaintiff must establish gross irresponsibility under Chapadeau in addition to actual malice under Sullivan in order to recover. The actual malice requirement promulgated by the Supreme Court for public-official and public-figure libel suits constitutes only the level of protection for defamation defendants required by the United States Constitution. It is a minimum standard. New York State is plainly free under its own law to superimpose the Chapadeau test on the actual malice standard in appropriate cases in order to increase the defendants' protection or to harmonize the protection available to defendants in public-plaintiff suits with that available to defendants in private-plaintiff suits. See Immuno AG. v. Moor-Jankowski, 77 N.Y.2d 235, 248-52, 567 N.E.2d 1270, 1277-80, 566 N.Y.S.2d 906, 913-16 (1991) (holding that the New York State Constitution independently provides protection for statements of opinion greater than those required by the First Amendment); O'Neill v. Oakgrove Constr., Inc., 71 N.Y.2d 521, 528-29 & n.3, 523 N.E.2d 277, 280 & n.3, 528 N.Y.S.2d 1, 4 & n.3 (1988) (holding that the New York State Constitution protects journalists' nonconfidential source material from disclosure even if the federal constitution does not, and remarking that [t]he protection afforded by the guarantees of free press and speech in the New York Constitution is often broader than the minimum required by the First Amendment.). 49 In any event, where, as here, a defendant publishes in its entirety a report prepared by an outside investigator examining allegations of the defendant's wrongdoing in order to inform government agencies and the public of the investigator's conclusions, the question is not whether the defendant knew or was aware of the probability that some statement in it was false, but whether the defendant acted responsibly in selecting and interacting with the investigator and disseminating the results as a whole. 12 The Supreme Court in Gertz explicitly left it to the States [to] define for themselves the appropriate standard of liability in private plaintiff cases. 418 U.S. at 347. The State of New York adopted as that standard gross irresponsib[ility]. Chapadeau, 38 N.Y.2d at 199, 341 N.E.2d at 571, 379 N.Y.S.2d at 64. As a matter of law, it was not grossly irresponsible of Prudential to publish the Statements. The district court was therefore correct in granting summary judgment to Prudential.