Opinion ID: 6331470
Heading Depth: 2
Heading Rank: 2

Heading: California law applies to Nunes’s claims.

Text: It is undisputed that Virginia’s choice-of-law principles determine the substantive law governing Nunes’s defamation claim because this case was transferred from the Eastern District of Virginia. “Transfers under [28 U.S.C.] § 1404(a) by a court that has jurisdiction are adjudicated in the transferee state under the law of the transferor 10 state.” U.S. Bank Nat’l Ass’n v. Bank of Am. N.A., 916 F.3d 143, 154 (2d Cir. 2019) (emphasis omitted); see Van Dusen v. Barrack, 376 U.S. 612, 639 (1964); Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 494–97 (1941). Virginia applies the doctrine of lex loci delicti to determine which state’s substantive law applies in tort actions. See Dreher v. Budget Rent-A-Car Sys., Inc., 272 Va. 390, 395 (2006). Under this approach, “the law of the place of the wrong governs all matters related to the basis of the right of action.” Id. “The place of the wrong for purposes of the lex loci delicti rule . . . is defined as the place where the last event necessary to make an act liable for an alleged tort takes place.” Quillen v. Int’l Playtex, Inc., 789 F.2d 1041, 1044 (4th Cir. 1986) (internal quotation marks omitted); accord Restatement (First) of Conflict of Laws § 377 (1934) (articulating the traditional lex loci delicti approach). “Where harm is done to the reputation of a person, the place of wrong is where the defamatory statement is communicated.” 11 Id. § 377 note 5; see also id. illus. 7 (“A, broadcasting in state X, slanders B. B is well and favorably known in state Y and the broadcast is heard there by many people conversant with B’s good repute. The place of wrong is Y.”). In other words, “[i]n defamation actions, the place of the harm has traditionally been considered to be the place where the defamatory statement was published, i.e., seen or heard by nonparties.” Wells v. Liddy, 186 F.3d 505, 521–22 (4th Cir. 1999). As the district court noted, the Virginia Supreme Court has not expressly addressed how Virginia’s lex loci delicti rule applies to a defamation action involving content that, at the time of broadcasting, simultaneously reaches viewers in multiple states and causes reputational harm in several jurisdictions. See CNN, 520 F. Supp. 3d at 555. When the Virginia Supreme Court “has spoken neither directly nor indirectly on the particular issue,” a federal court sitting in diversity must “predict how that court would rule if presented with the issue.” St. Paul Fire & Marine Ins. Co. v. Am. Int’l Specialty Lines Ins. 12 Co., 365 F.3d 263, 272 (4th Cir. 2004) (internal quotation marks omitted). “In so predicting . . . we may consider the teachings of treatises, as well as the practices of other states.” Id. (internal quotation marks omitted); see also Fed. Deposit Ins. Corp. v Nat’l Union Fire Ins. Co. of Pittsburgh, 205 F.3d 66, 71 (2d Cir. 2000) (“Where there is no decision of a state’s highest court directly, this court may look to any sources on which the state’s highest court might rely in order to determine what that court may decide.”). Applying the principles set forth above, as well as those animating the Virginia Supreme Court’s adherence to lex loci delicti, we hold that the district court correctly determined that under the circumstances presented in this case, the Virginia Supreme Court would apply the substantive law of the state where the plaintiff incurred the greatest reputational injury, with a presumption that absent countervailing circumstances, a plaintiff suffers the most harm in his state of domicile. See CNN, 520 F. Supp. 3d at 557. 13 We reject Nunes’s contention that, in the context of simultaneous multi-state defamation cases, Virginia’s choice-of-law principles require application of “the law of the state where the publication first occurred,” understood by Nunes as the state from which the statement emanated. Appellant’s Br. at 29. Under Virginia law, a statement is not considered to be published until it is seen or heard by a third party. See Food Lion, Inc. v. Melton, 250 Va. 144, 150– 51 (1995) (holding that publication requires a third party to have heard the words spoken); Meadows v. Northrop Grumman Innovation Sys., Inc., 436 F. Supp. 3d 879, 886 (W.D. Va. 2020) (collecting cases for the proposition that, in the context of purportedly defamatory emails, the place of publication is where the email was “opened and read”); Katz v. Odin, Feldman & Pittleman, P.C., 332 F. Supp. 2d 909, 915 (E.D. Va. 2004) (“[P]ublication of a defamatory statement requires that it be communicated to a third party ‘so as to be heard and understood by such person.’” (quoting Thalhimer Bros. v. Shaw, 156 Va. 863, 871 14 (1931))). Further, under the Restatement (First) of Conflict of Laws, which sets forth the traditional lex loci delicti doctrine, the “place of the wrong” for purposes of a defamation claim is where the content was received and harm to the plaintiff’s reputation occurs. See Restatement (First) of Conflict of Laws § 377 note 5, illus. 7. Nunes’s proposed approach to apply “the law of the state where the defendant first publishes the defamatory statements,” Appellant’s Br. at 31, would focus on the place where the statements were made or where the article was prepared, which he claims was New York. This approach is in tension with the Restatement (First) of Conflict of Laws and precluded by Virginia’s lex loci delicti rule, which instead looks to “where the last event necessary to make an act liable for an alleged tort takes place.” Quillen, 789 F.2d at 1044 (internal quotation marks omitted). Here, that event was the receipt and viewing of the allegedly defamatory information by third parties, not CNN’s broadcast of that content or the preparation of the article 15 which, by themselves, are insufficient for the completion of the tort of defamation. A consideration of where (or even whether) a third party viewed the content is crucial in determining whether and where a “publication” has occurred, which is an element of the tort of defamation, and does not impermissibly focus on the “effects” of the completed tort. See Restatement (Second) of Torts §§ 558, 577; see also Food Lion, 250 Va. at 150–51. The state in which the message was viewed, in turn, is the place of “the last event necessary” to complete the tort for the purposes of lex loci delicti. See Restatement (First) of Conflict of Laws § 377 note 5, illus. 7. In any case, as a factual matter, we note that Nunes’s theory— that New York is the place where the allegedly defamatory statements were made—is unsupported by the allegations of the complaint, to which we are limited on a motion to dismiss. The complaint says nothing about where the content was uploaded or where the relevant server resided, much less that either event occurred in New York. To 16 the contrary, the complaint asserts that “CNN published the CNN Article . . . in Virginia and around the World” and that CNN is “a Delaware corporation, headquartered in Georgia.” Joint App’x at 18, 37. The only evidence in the record linking New York to the defamatory content is contained in the affidavits submitted by CNN in support of its motion to transfer. These affidavits assert that the allegedly defamatory article was prepared in New York, its writer lived in New York, and that CNN telecast its nightly show discussing the article from that state. Yet Nunes fails to explain why consideration of this material is appropriate on a motion to dismiss under Rule 12(b)(6). See Fed. R. Civ. P. 12(d) (requiring a court to treat “a motion under Rule 12(b)(6) . . . as one for summary judgment under Rule 56” if “matters outside the pleadings are presented to and not excluded by the court”); Lively v. WAFRA Inv. Advisory Grp., Inc., 6 F.4th 293, 305 (2d Cir. 2021) (noting the exceptions to this rule, which allow a court to “consider extrinsic material that the complaint 17 incorporates by reference, that is integral to the complaint, or of which courts can take judicial notice” (internal quotation marks omitted)). Further, a straightforward application of the lex loci delicti rule to a multistate defamation claim is impracticable and unworkable. A statement that is instantaneously transmitted across the country could be viewed or heard simultaneously in several states, implicating the law of all jurisdictions where third parties were exposed to the information. See Wells, 186 F.3d at 527 (noting that the “application of the traditional lex loci delicti rule becomes cumbersome, if not completely impractical,” when the allegations involve “widespread simultaneous publication of . . . allegedly defamatory statement[s] in many different jurisdictions”); Nunes v. WP Co., 21-cv-506, 2021 WL 3550896, at –7 (D.D.C. Aug. 11, 2021) (explaining that “internet publications that are instantaneously made available to third parties in multiple states (indeed, around the globe) evade easy categorization under the lex loci rule” and that “[a] 18 patchwork of state laws could apply . . . to a radio show simultaneously broadcast across and heard in several states”); James R. Pielemeier, Constitutional Limitations on Choice of Law: The Special Case of Multistate Defamation, 133 U. Pa. L. Rev. 381, 394 (1985) (“[A] literal interpretation of [the lex loci delicti] approach would require application of the law of each state of circulation. This would necessitate separate instructions to the jury on the law of each state and a separate award of damages for the injury suffered in each state.”). Such a framework is plainly incompatible with the principles of “uniformity, predictability, and ease of application” animating Virginia’s decision to adhere to lex loci delicti when making a choiceof-law determination. McMillan v. McMillan, 219 Va. 1127, 1131 (1979). We thus agree with the district court that the Virginia Supreme Court would—in the context of online defamatory content published simultaneously in multiple jurisdictions—follow the lead 19 of numerous other courts in lex loci delicti jurisdictions and apply the law of the state where a plaintiff incurs the greatest reputational injury, with a presumption that a plaintiff suffers the brunt of the injury in their home state. 3 Accord, e.g., Donald J. Trump for President, Inc. v. CNN Broad., Inc., 500 F. Supp. 3d 1349, 1353–54 (N.D. Ga. 2020); Swinney v. Frontier Airlines, Inc., 19-cv-808, 2020 WL 3868831, at  (M.D.N.C. July 9, 2020); Nobles v. Boyd, 14-cv-214, 2015 WL 2165962, at  (E.D.N.C. May 8, 2015); Ascend Health Corp. v. Wells, 12-cv-83, 3We note here that three district courts confronted with this issue have reached a similar conclusion. See WP Co., 21-cv-506, 2021 WL 3550896, at ; Gilmore v. Jones, 370 F. Supp. 3d 630, 664–66 (W.D. Va. 2019); Hatfill v. Foster, 415 F. Supp. 2d 353, 365 (S.D.N.Y. 2006). Nunes points to Depp v. Heard, which held that in the context of online defamation, “the place of the wrong . . . is the place where the act of publication . . . to the internet occurred,” which in that case was where the servers used to upload the article resided. 102 Va. Cir. 324, 2019 WL 8883669, at –6 (Va. Cir. Ct. July 25, 2019). We disagree with that court’s conclusion that, under the law of Virginia, “[t]he last event to make [the defendant] liable for the alleged defamatory statements . . . was uploading [them] to the internet.” Id. at . As we understand the case law of the Virginia Supreme Court, the act of uploading content to the internet is not enough to constitute the completed tort of defamation; instead, a third party must also receive and understand the content. In any event, as noted above, the complaint says nothing about where the content was uploaded or the relevant server resided. 20 2013 WL 1010589, at  (E.D.N.C. Mar. 14, 2013); Miller v. Lear Siegler, Inc., 525 F. Supp. 46, 56 (D. Kan. 1981). We also reject Nunes’s argument that applying the law of the state where the plaintiff suffers the greatest reputational harm is an adoption of the “most significant relationship” test rejected by the Virginia Supreme Court. 4 That choice-of-law doctrine considers various factors to determine the state with “the most significant relationship to the occurrence and the parties.” Restatement (Second) of Conflict of Laws § 150. Thus, courts applying that test account for considerations other than the place of injury. See, e.g., Kinsey v. N.Y. 4 Nunes finds support for his argument in a pair of decisions noting the similarity between the “most significant relationship” test and an approach that looks to where the plaintiff suffered the greatest harm and presumes that location to be the plaintiff’s domiciliary state. See Depp, 102 Va. Cir. 324, 2019 WL 8883669, at –5 (finding that a test “defin[ing] the place of the wrong as the state where the plaintiff is primarily injured . . . . tracks closely to the underlying rationale behind the significant relationship test” (internal quotation marks omitted)); Kylin Network (Beijing) Movie & Culture Media Co. v. Fidlow, 16-cv-999, 2017 WL 2385343, at  n.2 (E.D. Va. June 1, 2017) (without deciding the issue, “view[ing] [the plaintiff’s] argument” that his domicile is a relevant consideration under Virginia choice-of-law principles “with skepticism” because it is a factor under a provision of the Second Restatement that “Virginia has never adopted”). 21 Times Co., 991 F.3d 171, 176 (2d Cir. 2021) (considering under New York choice of law “all the factors that might impact on the interests of various states in the litigation” such as “where the plaintiff suffered the greatest injury; where the statements emanated and were broadcast; where the activities to which the allegedly defamatory statements refer took place; and the policy interests of the states whose law might apply” (internal quotation marks omitted)). Indeed, Nunes’s preferred approach tracks the Second Restatement by urging this Court to focus on acts preceding publication (such as facts about the article’s preparation, posting, and authorship), rather than looking simply to the last event necessary to complete the tort: publication. Cf. Restatement (Second) of Conflict of Laws § 150 cmt. e (instructing courts to look also to “the state or states where the defendant did his act or acts of communication, such as assembling, printing and distributing” the material). 22 The district court’s framework here, on the other hand, focuses on the place of injury specifically to identify the presumed locus of the final event needed to complete a multistate tort of defamation and permits consideration of countervailing factors only in rare circumstances. And while the “most significant relationship” test similarly employs a presumption that “the state of most significant relationship will usually be the state where the person was domiciled at the time,” Restatement (Second) of Conflict of Laws § 150(2), we do not believe that the Virginia Supreme Court would jettison its preference for consistency, predictability, and ease-of-application, along with its focus on the last event necessary to make an actor liable for a tort, merely to avoid any overlap with the Second Restatement. 5 5 Under our rules and those of the Supreme Court of Virginia, we may certify a question to that court “where a question of state law is ‘determinative’ of a claim before us and ‘it appears that there is no controlling precedent on point in the decisions of [the Supreme Court of Virginia] or the Court of Appeals of Virginia.’” Casey v. Merck & Co., 653 F.3d 95, 101 (2d Cir. 2011) (quoting Va. Sup. Ct. R. 5:40(a)) (citing 2d Cir. Local R. 27.2). “We do not certify every case that meets these criteria, but instead evaluate at least three factors in determining whether certification is appropriate: (1) the absence of authoritative state court decisions; 23
With the above framework in mind, we hold that the district court correctly determined that California law applies to Nunes’s claims because (1) the complaint alleges with substantial detail Nunes’s connection to California and the importance of his reputation among the constituents in his district, and (2) nothing alleged in the complaint suggests countervailing circumstances sufficient to overcome the presumption that his greatest reputational harm occurred in his home state. We therefore disagree with Nunes’s arguments to the contrary. Nunes argues that “[e]ven if the Court were to follow” the district court’s rationale, “the fact is that [his] injuries are concentrated (2) the importance of the issue to the state; and (3) the capacity of certification to resolve the litigation.” Id. (internal quotation marks omitted). Because we find sufficient authority with which to predict the Virginia Supreme Court’s disposition of this issue, and because we do not certify questions to a state’s highest court “routinely”—indeed, “[t]he procedure must not be a device for shifting the burdens of this Court to those whose burdens are at least as great,” DiBella v. Hopkins, 403 F.3d 102, 111 (2d Cir. 2005) (internal quotation marks omitted)—we decline to certify the issue here. 24 in Virginia or the District of Columbia where [he] works.” Appellant’s Br. at 32 n.5. We are unpersuaded by this argument, which is unsupported by the allegations in Nunes’s complaint. Nunes was domiciled in California and, as one of California’s representatives in Congress, was accountable to his constituents there. The complaint describes his extensive ties to that state, not Virginia or the District of Columbia. See Joint App’x at 16–17. To be sure, the complaint does allege that Nunes suffered some reputational harm outside of California, see, e.g., id. at 61 (alleging that CNN “intentionally and unlawfully imped[ed] . . . . [Nunes’s] duties as a United States Congressman, including the performance of his duties as Ranking Member of the House Intelligence Committee during the impeachment inquiry”); id. at 41 (alleging that CNN’s goal “was to inflict maximum damage to [his] reputation . . . and to cause him to be removed from the impeachment inquiry”). But these allegations are insufficient to overcome the presumption that Nunes suffered the 25 greatest harm in his home state of California among those constituents who were responsible for sending him to Washington, D.C., in the first place. See Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009) (requiring a plaintiff to offer more than “naked assertions devoid of further factual enhancement” (internal quotation marks omitted)). Nunes’s reliance on Nunes v. WP Co., 2021 WL 3550896, also does not alter this outcome. The court in WP found that Nunes suffered the greatest harm in the District of Columbia because the defendant there, the Washington Post, “reports on local D.C. news and is more directed toward D.C. audiences than media outlets such as CNN.” Id. at . Additionally, unlike the complaint here, the complaint in that case did not include factual allegations further supporting the presumption that Nunes suffered the greatest injury in California. Likewise, we reject Nunes’s assertion that the choiceof-law issue here cannot be decided “without evidence,” Appellant’s Br. at 33–34, because, first, Nunes does not describe what is not 26 currently known but that could be determined through discovery and, second, he makes no cogent argument as to why any discovery would be required to adequately allege a reputational tort on the basis of widely publicized news articles and broadcasts. In sum, the district court did not err in applying Virginia’s lex loci delicti rule by determining where the plaintiff suffered the greatest injury, which is presumptively the state of plaintiff’s domicile. The district court also correctly held that California law applied to Nunes’s defamation action under this framework. C. The California retraction statute is a substantive rule of decision under Virginia law. The district court determined that California’s retraction statute, California Civil Code § 48a, is a substantive law and thus applies under Virginia’s choice-of-law rules because “limits on recovery are substantive law.” CNN, 520 F. Supp. 3d at 560 (internal quotation marks omitted) (citing Price v. Stossel, 07-cv-11364, 2008 WL 2434137, at  n.12 (S.D.N.Y. June 4, 2008) (noting that “[a]t least one 27 court in this District [] has found the [California retraction] statute applicable in diversity actions . . . and another has implied that the statute is substantive . . . .”) (alterations in original)). On appeal, Nunes does not challenge the district court’s determination that he failed to request a correction, as required by section 48a, or its determination that he did not adequately plead special damages. Instead, he claims that the district court erred in applying that statute because it is procedural rather than substantive under Virginia law. We disagree. To determine whether a state statute is a substantive rule of decision that a district court is bound to apply in a diversity action, we must discern whether “state conflict-of-law principles” require application of that statute if the case “were brought in [the applicable] 28 state court.” Liberty Synergistics Inc. v. Microflo Ltd., 718 F.3d 138, 153 (2d Cir. 2013). 6 Under Virginia conflict-of-law principles, the lex loci delicti doctrine determines the choice of substantive law while procedural matters are governed by Virginia law. See Hooper v. Musolino, 234 Va. 558, 566 (1988). If a provision of a statute “goes to the very right of the action . . . it is a matter of substantive law.” Willard v. Aetna Cas. & Sur. Co., 213 Va. 481, 483 (1973). “[W]hile the right to recovery and the limits on recovery are substantive law, the distribution of the recovery is remedial law.” Walters v. Rockwell Int’l Corp., 559 F. Supp. 47, 49–50 (E.D. Va. 1983); accord Spring v. United States, 833 F. Supp. 575, 579 (E.D. Va. 1993) (finding that a statute involving “limits on recovery” is a substantive rule of decision); see also Baise v. Warren, 158 6 Typically, a federal court must also consider whether the rule of decision “is ‘substantive’ within the meaning of Erie,” which “is a question of federal law.” Liberty Synergistics Inc., 718 F.3d at 152. We do not reach this issue because Nunes argues only that Virginia law precludes the application of the California retraction statute. 29 Va. 505, 508 (1932) (noting that “the rights of the parties with respect to their causes of action are governed by the lex loci” while laws concerning “the admissibility of evidence and the enforcement of those rights are governed by the lex fori”). The California retraction statute provides that “[i]n any action for damages for the publication of a libel in a daily or weekly news publication, or of a slander by radio broadcast, plaintiff shall only recover special damages unless a correction is demanded and is not published or broadcast.” Cal. Civ. Code § 48a(a). Moreover, the statute requires that such a request “be served within 20 days after knowledge of the publication or broadcast of the statements claimed to be libelous.” Id. Under Virginia choice-of-law rules, we hold that this statute is substantive, not procedural. It substantially limits—and may even preclude—a defendant’s liability for defamation and therefore alters the “rights of the [plaintiff] with respect to the[] cause[] of action.” Baise, 158 Va. at 508; see Jones v. R.S. Jones & Assocs., 30 Inc., 246 Va. 3, 7 (1993) (finding a statute specifically limiting liability under a right of action to be substantive); Hoilett v. Goodyear Tire & Rubber Co., 81 Va. Cir. 176, 2010 WL 11020458, at  (Va. Cir. Ct. 2010) (holding that a Maryland statutory cap on non-economic damages for wrongful death suits is substantive as a matter of Virginia law). Thus, the district court correctly applied the California retraction statute to this dispute. As noted above, Nunes makes no claim that he complied with the procedures outlined in section 48a. Accordingly, the district court did not err in concluding that California Civil Code § 48a governs, that Nunes failed to comply with that statute because he did not make a timely demand for a correction from CNN, and that the complaint should therefore be dismissed with prejudice for failure to state a claim. Dismissal is required because, as the district court correctly found, the complaint does not allege special damages with the necessary specificity under Federal Rule of Civil Procedure 9(g), and instead merely alleges “special 31 damages” by including those words conclusorily in the general allegations of damages. 7 Lastly, because, under California law, conspiracy “[s]tanding alone . . . does no harm and engenders no tort liability,” Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 869 P.2d 454, 457 (Cal. 1994), the district court also correctly dismissed Nunes’s civil conspiracy claim with prejudice.