April 25, 2001
IN THE SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
BANCO NACIONAL de MÉXICO, S.A.
Index No. 00603429
MARIO RENATO MENÉNDEZ RODRIGUEZ,
AL GIORDANO, and
THE NARCO NEWS BULLETIN,
DEFENDANT NARCO NEWS BULLETIN'S MEMORANDUM
IN SUPPORT OF ITS MOTION TO DISMISS THE COMPLAINT
The complaint brought by Banco Nacional de México,
S.A. ("Banamex") must be dismissed as to The Narco
News Bulletin ("Narco News Bulletin"). The Narco News
Bulletin is not a legal entity capable of being sued. It is simply
a name that was given to identify a particular Internet website,
www.narconews.com. A person, or other legal entity responsible
for the actions which occur under the umbrella of a particular
name can be sued, but not, as pleaded by the plaintiff, the name
The fact that the complaint against Narco News Bulletin must
be dismissed should not be allowed to cloud the larger threat
to Internet news reporting raised by this case. A Mexican bank
(Banamex) is suing a website which emanates from Mexico (Narco
News Bulletin) over articles concerning events which occurred
in Mexico. If Narco News Bulletin were required to defend itself
in New York under these circumstances, the concept of personal
jurisdiction (as well as choice of law rules and forum non conveniens)
will have been stretched well beyond its natural and previously
recognized boundaries. Such a ruling would leave every Internet
website potentially subject to suit in any of the 50 states or
in any foreign country. The Internet, as a forum for robust debate
and exchange of information, would be unalterably changed.
The facts supporting this memorandum are set forth in the
affidavit of Al Giordano with regard to Narco News Bulletin submitted
in support of this motion, the affidavit of Al Giordano submitted
in support of his motion to dismiss, the affidavit of Karen Thatcher
and the affidavits submitted by Mario Menendez in support of
his motion to dismiss. Those affidavits are incorporated herein.
The specific facts relevant to the legal issues are discussed
in the context of the argument below.
A. Narco News Bulletin is simply a name
given to an Internet website. It is not a legal entity capable
of being sued.
Banamex has named Narco News Bulletin as a defendant in Count
I of its complaint, alleging libel, and Count III of its complaint,
alleging interference with prospective economic advantage. However,
Narco News Bulletin is not a legal entity capable of being sued.
It is only a name--the name that the defendant Al Giordano gave
to a web site, www.narconews.com--that he established on April
7, 2000 (see affidavit of Al Giordano,
pars. 1-5). 1
New York statutes allow service to be made on (a) an individual,
CPLR §308; (b) an infant, CPLR §309; (c) a corporation
or governmental subdivision, CPLR §311; (d) a limited liability
company, CPLR § 311-a; (e) a court, board or commission,
CPLR §312; (f) a partnership, CPLR §310; (g) a limited
partnership, CPLR §310-a; (h) the state, CPLR §307
and (i) an unincorporated association, CPLR §1025. (The
complaint properly does not allege that Narco News Bulletin is
any one of those entities.) However, nowhere in the statutes
is there a provision for suing a name.
Narco News Bulletin, as the name of a website, is no different
than the name of a television show, such as "Frontline,"
the name of a magazine, such as Nation, or the
brand name of a product, such as Ford. None of these "names"
(or any other name) can be sued. Only the legal entities responsible
for the named television show or magazine or product, e.g., the
Public Broadcasting System, The Nation Company, L.P. and the
Ford Motor Company, can be sued. 2
Banamex's confusion as to the nature of Narco News Bulletin is
obvious from its complaint, which alleges that: (a) "Mr.
Giordano was an agent of the Narco News Bulletin" (complaint
at par. 4) and (b) "through its agent Giordano, the Narco
News Bulletin is vicariously liable for all false and defamatory
statements made by Giordano in the Narco News Bulletin and is
directly liable for the false and defamatory statements it publishes"
(complaint at par. 6). Only legal entities can have agents. A
person cannot be the agent of a name, which has no legal identity.
The New York statutes governing civil procedure do not specifically
address the issue of how a defense based on the lack of the capacity
of a defendant, such as Narco News Bulletin, to be sued is to
be raised. However, CPLR §3211(a)(3) does state that the
capacity of a plaintiff to sue can be raised in a motion to dismiss.
Therefore, Narco News Bulletin has assumed that a defense based
on its lack of capacity to be sued can likewise be properly raised
in a motion to dismiss.
This is consistent with the Federal Rules of Civil Procedure.
The capacity of a party to sue or be sued is discussed in Rule
9(a), which states that "the party desiring to raise the
issue shall do so by specific negative averment, which shall
include such supporting particulars that are within the pleader's
knowledge." Although the method by which to raise a Rule
9(a) defense is not specifically set forth in the Rules, the
proper method is by a motion to dismiss for failure to state
a claim. Wright and Miller, Federal Practice and Procedure, §1294.
Therefore, Counts I and III must be dismissed as to Narco
News Bulletin. 4
For the remainder of this memorandum it is assumed hypothetically
that Narco News Bulletin is an entity with the capacity to be
B. Even if Narco News Bulletin were a
legal entity capable of being sued, New York does not have personal
jurisdiction over an Internet website which emanates from Mexico
and is accessible to computer users in New York. A finding of
personal jurisdiction in New York would mean worldwide jurisdiction
over every Internet website--all websites would be amenable to
lawsuit in any of the 50 states or in foreign countries.
1. New York's long-arm statute limits
The complaint in this case alleges slander and libel. The
New York long-arm statute regulating personal jurisdiction over
out-of-state defendants significantly limits personal jurisdiction
in such defamation actions. CPLR §302(a) provides:
As to a cause of action arising from any of the acts enumerated
in this section, a court may exercise personal jurisdiction over
any non-domiciliary, or his executor or administrator, who in
person or through an agent:
1. transacts any business within the state or contracts
anywhere to supply goods or services in the state; or
2. commits a tortious act within the state, except
as to a cause of action for defamation of character arising from
the act; or
3. commits a tortious act without the state causing
injury to person or property within the state, except as to a
cause of action for defamation of character arising from the
act . . . (emphasis added).
The legislative exclusion of defamation from the provisions
of §302(a)(2) and §302(a)(3) was an intentional policy
decision: the legislature "did not wish New York to force
newspapers published in other states to defend themselves in
states where they had no substantial interests." 5 The statute was intended "to avoid unnecessary
inhibitions on freedom of speech or the press." 6 These two freedoms were deemed "entitled
to special protections lest procedural burdens shackle them." 7
J. Weinstein, H. Korn and A. Miller, New York Civil Practice,
§302.15 at 3-142.26.
The limiting language in §302(a)(2) and §302(a)(3)
means that in New York, personal jurisdiction in a defamation
cause of action cannot be based on the defamatory act itself,
even if that defamatory act caused injury within New York. Rather,
personal jurisdiction for acts of defamation can only be established
by proof under CPLR §302(a)(1) that a defendant has "transact[ed]
any business within the state or contract[ed] anywhere to supply
goods or services in the state." 8
In this case, Narco News Bulletin has done neither, and therefore
personal jurisdiction does not lie against it in New York.
The limited scope of the New York long-arm statute stands in
contrast to most other jurisdictions, where long-arm statutes
establish personal jurisdiction over a defendant if the defendant
has either: (a) committed the defamatory act in that jurisdiction
or (b) committed the defamatory act outside the jurisdiction,
but caused injury within the jurisdiction.
2. Banamex has failed to show that CPLR
§302(a)(1) confers jurisdiction over Narco News Bulletin.
New York law holds that the plaintiff has the burden of setting
forth the statutory basis upon which it is asserting jurisdiction
in its complaint. See Sipa Press, Inc. v. Star-Telegram
Operating, Ltd., 181 Misc. 2d 550, 583, 694 N.Y.S. 2d
850 (Sup. Ct. N.Y. Co. 1999). In this case, Banamex has failed
to set forth any jurisdictional basis for a claim against Narco
News Bulletin--perhaps because it recognizes the impossibility
of that task.
Despite Banamex's failure to allege any jurisdictional basis
for its action, Narco News Bulletin has chosen to address the
issue of personal jurisdiction over Narco News Bulletin directly
Banamex is obligated to plead facts that establish the basis
for the exercise of personal jurisdiction over Narco News Bulletin.
Roldan v. Dexter Folder Co., 178 A.D.2d 589, 577
N.Y.S.2d 483 (2d Dept. 1991).
3. New York has no personal jurisdiction
over a website emanating from a foreign country simply because
the website is always available for viewing in New York.
Narco News Bulletin is the name of a non-commercial, non-interactive
website, what is known as a passive informational website. It
offers nothing for sale. It directs persons who log on to no
commercial enterprise. It offers no interaction such as a "chat
room" in which people can "talk" to each other
(see affidavit of Al Giordano,
Narco News Bulletin assumes that Banamex nonetheless will
argue that the website itself is subject to personal jurisdiction
in New York because it is available 24 hours per day, seven days
per week, to any New York citizen who chooses to "log"
onto it. 10 In order to
prevail on this theory, Banamex will have to convince this court
that it has personal jurisdiction over a passive, informational
website which: (a) emanated from Mexico, (b) was produced in
Mexico 11 , (c) had no
offices, agents, employees or subscribers in New York, (d) raised
no funds in New York, (e) made available the allegedly defamatory
articles about activities which a Mexican bank conducted in Mexico,
and (f) uses a server in Maryland.
This argument has been rejected by every court that has considered
it. See argument below.
The person responsible for the website, Al Giordano, was not
in New York between April 7, 2000, the date on which he established
the website, and August 9, 2000, the date on which this lawsuit
was filed (see affidavit of Al Giordano regarding Narco News
Bulletin, par. 7).
Such a ruling would be unprecedented and its implications
truly staggering. It would mean that New York would have personal
jurisdiction in a defamation action over any website anywhere
in the world. This is not what the legislature intended when
it limited defamation jurisdiction under §302(a), nor is
it in accordance with the case law in the Internet area. 12
"'The Internet is not a physical or tangible entity, but
rather a giant network which interconnects innumerable smaller
groups of linked computer networks. It is thus a network of networks'
(American Civil Liberties Union v. Reno, 929 F.Supp.
824, 830 [E.D. Pa. 1996] probable juris. noted ___ U.S. ___,
117 S.Ct. 554, 136 L.Ed.2d 436). As of 1996, it was estimated
that more than 9.4 million computers were so linked, with 40
million people accessing the system, and it was anticipated that
there would be 200 million Internet users by 1999 (id. at 831).
Internet 'communications can occur almost instantaneously, and
can be directed either to specific individuals, to a broader
group of people interested in a particular subject, or to the
world as a whole' (id.). 'Individuals can also access the Internet
through commercial and non-commercial Internet service providers
that typically offer modem telephone access to a computer or
computer network linked to the Internet' (id. at 833)."
People by Vacco v. Lipsitz, 663 N.Y.S.2d 468, 472-73
In examining the issue of Internet jurisdiction in People
by Vacco v. Lipsitz, supra, the court phrased the first
jurisdictional question in such cases as follows: "whether
the litigation target has established a physical presence or
a sufficiently close equivalent in the jurisdiction." The
court then went on to clearly state that the existence of a non-commercial,
passive website in a foreign jurisdiction does not create jurisdiction
in New York:
As recognized by Magistrate Peck in Hearst Corp. v.
Goldberger, n.o.r., 1997 WL 97097, *1 (S.D.N.Y. 1997), "a
finding of personal jurisdiction in New York based on an Internet
web site would mean that there would be nationwide (indeed worldwide)
personal jurisdiction over anyone and everyone who establishes
an Internet web site. Such nationwide jurisdiction is not consistent
with traditional personal jurisdiction case law nor acceptable
to the Court as a matter of policy" (see also, in accord,
Bensusan Restaurant Corp. v. King, 937 F.Supp. 295 [S.D.N.Y.
1996, Stein, J.]).
Id. at 473.
Hearst and Bensusan both stand
for the proposition that publication of an informational, non-commercial
website outside New York does not confer personal jurisdiction
in New York over the publisher of the website. Jurisdiction was
not appropriate in Bensusan because the defendant, B.B. King:
has done nothing to purposefully avail himself of the
benefits of New York. King, like numerous others, simply created
a Web site and permitted anyone who could find it access to it.
Creating a site, like placing a product into the stream of commerce,
may be felt nationwide or even worldwide--but, without more,
it is not an act purposefully directed towards the forum state.
There are no allegations that King actively sought to encourage
New Yorkers to access his site, or that he conducted any business--let
alone a continuous and systematic part of its business--in New
Bensusan, supra, 937 F.Supp. at 301. "[T]he
mere creation of a web site, without more, does not constitute
sufficient contacts to provide this Court with personal jurisdiction."
Hearst, supra, at 51. 13
See also McDonough v. Fallon McElligott, Inc.,
1996 U.S. Dist. LEXIS 15139, No. 95-4037, slip op. (S.D. Cal.
Aug. 6, 1996). "Because the Web enables easy world-wide
access, allowing computer interaction via the web to supply sufficient
contacts to establish jurisdiction would eviscerate the personal
jurisdiction requirement as it currently exists; the Court is
not willing to take this step."
The issue of Internet personal jurisdiction was analyzed
recently in Citigroup, Inc. v. City Holding Co.,
97 F.Supp.2d 549 (S.D.N.Y. 2000). There, the court began by noting
that in situations where the defendant's activity occurred mainly
or entirely over the Internet, it "raises the question of
. . . where such transactions should be viewed as having occurred"
(emphasis added). The court then suggested that the "virtual"
nature of the Internet requires standards of personal jurisdiction
It has long been observed that technological advances
affecting the nature of commerce require the doctrine of personal
jurisdiction to adapt and evolve along with those advances. See
Hanson v. Denckla, 357 U.S. 235, 250-52, 78 S.Ct. 1228,
2 L.Ed.2d 1283 (1958) ("As technological progress has increased
the flow of commerce between the States, the need for jurisdiction
has undergone a similar increase.") With the advent of the
Internet, the courts have been confronted with a new set of challenges
in this regard.
The court went on to note that cases on Internet personal
jurisdiction span the spectrum:
At one end are cases where the defendant makes information
available on what is essentially a "passive" web site.
This use of the internet has been analogized to an advertisement
in a nationally-available magazine or newspaper, and does not
without more justify the exercise of jurisdiction over the defendant
(citations omitted) (emphasis added).
The analysis in Citigroup is in accord with Zippo
Mfg. Co. v. Zippo Dot Comm. Inc., 952 F.Supp. 1119, 1124
(W.D. Pa. 1997), where the court similarly stated that: "At
the opposite end [of the spectrum] are situations where a defendant
has simply posted information on an Internet Web site which is
accessible to users in foreign jurisdictions. A passive Web site
that does little more than make information available to those
who are interested in it is not grounds for the exercise [of]
personal jurisdiction. The middle ground is occupied by interactive
Web sites where [**33] a user can exchange information with the
host computer. In these cases, the exercise of jurisdiction is
determined by examining the level of interactivity and commercial
nature of the exchange of information that occurs on the Web
Narco News Bulletin is just such a passive website. It made
information available to those who logged onto it.
In Citigroup, the court also notes that:
At the other end of the spectrum from the purely informational
websites are cases in which the defendant clearly does business
over the internet, such as where it knowingly and repeatedly
transmits computer files to customers in other states. See CompuServe,
Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996). Finally,
occupying the middle ground are cases in which the defendant
maintains an interactive web site which permits the exchange
of information between users in another state and the defendant,
which depending on the level and nature of the exchange may be
a basis for jurisdiction. See American Homecare Fed. Inc.
v. Paragon Scientific Corp., 27 F.Supp.2d 109, 113 (D.Conn.
1998); Zippo, 952 F.Supp. at 1124.
Narco News Bulletin does not fit into either the commercial
or the interactive categories. It did no business over the Internet
and it was not an interactive website on which there were exchanges
In contrast, in one of the few reported Internet defamation
cases, Blumenthal v. Drudge, 992 F.Supp. 44 (D.C.
1998), the United States District Court found jurisdiction in
the District of Columbia over an out of state defendant (but,
again, not the website name itself):
Because the Court finds that defendant Drudge has an interactive
website that is accessible to and used by District of Columbia
residents and, in addition, that he has sufficient non-Internet
related contacts 15 in the District of Columbia . . .
[that t]he exercise of personal jurisdiction over defendant Drudge
by this court is warranted.
Id. at 56 (emphasis added).
Neither of those two factors are present here.
These non-Internet related contacts included the facts that:
(a) the subject matter of the defendant's website in Drudge was
directed at Washington, D.C., (b) the defendant had received
contributions from District of Columbia residents, (c) the defendant
had been publicly interviewed in the District of Columbia to
promote his website, and (d) the defendant regularly contacted
District of Columbia residents to collect information for the
None of these contacts apply to Narco
News Bulletin. It is not directed at New York residents, no one
has ever appeared in New York to promote it (or for any other
purpose on its behalf) and it has not solicited or received contributions
from New York residents. See affidavit of Al Giordano regarding
Narco News Bulletin.
4. New York non-Internet defamation law
supports a finding of lack of jurisdiction.
(a) Defamatory acts decisions.
New York non-Internet defamation law is consistent with the
Internet jurisdictional cases. Defamatory acts in another jurisdiction
are not actionable in New York unless there are significant acts
of the defendant, specifically related to the defamation, which
take place in New York. For example, in Streslin v. Barrett,
36 A.D.2d 923, 320 N.Y.S. 2d 885 (1st Dept. 1971), the court
reversed a lower court decision denying a defendant's motion
to dismiss. The appellate court found that the distribution in
New York of a videotape of the defendant, which was recorded
in California for distribution to television studios throughout
the country, did not confer jurisdiction over the defendant in
New York. Under those circumstances, the defendant had not transacted
business in New York. 16
Streslin stands in contrast to New York cases which Citigroup
and Zippo would have described as being "at
the other end of the spectrum," where the defendant engaged
in acts in New York directly related to the defamation in question.
For example, in Montgomery v. Minarcin, 263 A.D.2d
665, 693 N.Y.S.2d 293 (3d Dept. 1999), the defamatory statements
were not only broadcast in New York, but: (a) the defendant was
employed by a local television station, and (b) the defamatory
statements were researched, written, produced and reported by
the defendant while he was in New York. Similarly, in Legros
v. Irving, 38 A.D.2d 53, 327 N.Y.S.2d 371 (1st Dept.
1971), the allegedly defamatory book was researched in New York,
the negotiations concerning the book contract took place in New
York, the book contract was executed in New York and all the
work surrounding the publication of the book occurred in New
York. See also Totero v. World Telegram Corp.,
41 Misc. 2d 594, 595-96, 245 N.Y.S.2d 870 (Sup. Ct. N.Y. Co.
1963) (where the defendant, a Spanish writer, had a contract
with a New York company to syndicate the newspaper column in
which the defamation occurred for distribution. He was found
to be subject to jurisdiction in New York.
Similarly, in Yanni v. Variety, Inc., 369 N.Y.S.
2d 448 (App. 1975), no jurisdiction was found over a California
resident who placed an allegedly defamatory advertisement in
a California newspaper with minimal distribution in New York.
The court found that the defendant had not transacted business
in New York where he "exercised no control over the distribution
in New York." Id. at 448.
(b) Non-domiciliary contract cases.
The New York state analysis with regard to personal jurisdiction
over non-domiciliaries in the area of contract law is also instructive.
The leading New York case interpreting CPLR §302(a)(1) in
this area is Longines-Wittenauer Watch Co. v. Barnes &
Reinecke, Inc., 15 N.Y.2d 443, 209 N.E.3d 68, 261 N.Y.S.2d
8, cert. denied, 382 U.S. 905, 86 S.Ct. 241, 15 L.Ed.2d
158 (1965). The test developed in Longines requires
a court to look at the aggregation of the defendant's activities,
coupled with the selective weighing of the various actions. See
J. Weinstein, H. Korn and A. Miller, New York Civil Practice
par. 302.07, at 3-113 (1986). The "primary factors to consider
include the physical presence of the defendant in New York, the
risk of loss as it affects the New York transaction, and the
extent to which the contract is performed in New York."
Rolls-Royce Motors, Inc. v. Charles Schmitt & Co.,
657 F.Supp. 1040 (S.D.N.Y. 1987).
In this case, all three factors militate against personal
jurisdiction in New York. First, the defendant Narco News Bulletin
emanates from Mexico. No one has been present in New York on
its behalf. Second, the risk of loss to Banamex in New York from
the allegedly defamatory material posted on the Narco News Bulletin
is minimal (Banamex does not even have a branch office in New
York; it only has what it calls an office "agency"
which cannot open accounts in the United States). 17 Third, the allegedly defamatory material
is not primarily available in New York, but rather is equally
available in all 50 states and any country in the world.
17 See affidavit of Karen Thatcher,
(c) Shipment of goods cases.
The New York analysis of jurisdiction based upon the shipment
of goods into New York is equally helpful to Narco News Bulletin.
18 Jurisdiction under
CPLR §302(a)(1) can be established only if, in addition
to the shipment of goods into New York, there is a showing that
there have been sufficient "'purposeful activities'"
that would justify bringing the non-domiciliary before the New
York courts [citations omitted]." McGowan v. Smith,
52 N.Y.2d 268, 419 N.E.2d 321, 437 N.Y.S.2d 643, 644 Ct. App.
(1981). Here, there are no such activities.
It is well established, however, that the long-arm authority
conferred by this subdivision does not extend to non-domiciliaries
who merely ship goods into the State without ever crossing its
borders (Kramer v. Vogl, 17 N.Y.2d 27, 267 N.Y.S.2d
900, 215 N.E.2d 159 (1966); see McLaughlin, Practice Commentaries,
McKinney's Cons. Laws of N.Y., Book 7B, C302:13,
p. 80)." McGowan v. Smith, 52 N.Y.2d 268,
419 N.E.2d 321, 437 N.Y.S.2d 643, 644 Ct. App. (1981) (emphasis
5. Narco News Bulletin did not have any
non-Internet business in New York, related to the alleged defamation,
which would confer jurisdiction over it.
Narco News Bulletin assumes that Banamex will also claim
that Al Giordano engaged in non-Internet business in New York
on its behalf. For example, Banamex may suggest that the fact
that Mr. Giordano was in New York the month before he established
Narco News Bulletin qualifies as one such activity. But the law
is clear that this fact does not confer jurisdiction. Mr. Giordano
never mentioned Narco News Bulletin during his March 2000 trip.
Indeed, at that time, it did not exist either as a website or
even as a name (see affidavit of Al Giordano, par. 5). Therefore,
that trip had no relationship to the website, let alone to the
publication of the allegedly defamatory material.
While these visits certainly may be characterized as "purposeful,"
they cannot form the predicate for the exercise of in personam
jurisdiction under CPLR 302 (subd. [a], par. 1) for the simple
reason that they have not been shown to bear a substantial relationship
to the transaction out of which the instant cause of action arose.
Absent such a showing, the occurrence of these visits serves
merely to establish [the defendant's] transitory physical presence
within the State. And, as we noted in Presidential Realty
Corp. v. Michael Sq. West, 44 N.Y.2d 672, 673, 376 N.E.3d
198, 405 N.Y.S.2d 37, "physical presence alone cannot talismanically
transform any and all business dealings into business transactions
under CPLR 302 (subd. [a], par. )."
McGowan, supra, 437 N.Y.S.2d at 645.
Banamex may also suggest that Al Giordano's use of a post
office box address in New York for Narco News Bulletin on the
website registration is an act which, taken in combination with
other acts in New York, would be sufficient to confer jurisdiction
in New York over Narco News Bulletin. But, again, this argument
would fail because there is no relationship between the allegedly
defamatory articles posted on the Narco News Bulletin and the
post office box. As the affidavit of Al Giordano states, the
key to the post office box was lost in March 2000, before Narco
News Bulletin was even established, and the box remained unopened
thereafter (affidavit of Al Giordano,
Finally, Banamex may claim that the fact that Voxel Dot Com
Inc. (which is located in New York) is the technical consultant
for Narco News Bulletin constitutes the type of purposeful act
of the defendant in New York, which, taken in combination with
other purposeful acts, should confer jurisdiction. However, this
relationship between the website and Voxel Dot Com does not confer
jurisdiction over Narco News Bulletin. First, Voxel Dot Com was
in no way involved in the production of the allegedly defamatory
articles. Second, Narco News Bulletin's Internet server was located
in Maryland. Accordingly, Voxel Dot Com's relationship to Narco
News Bulletin, looked at in the light most favorable to Banamex,
is similar to a situation in which a New York company is performing
maintenance work on a printing press located in Maryland, which
has been used to print an allegedly defamatory book written and
typeset in Mexico. 19
That set of facts would hardly confer jurisdiction in New York
over the Mexican writer.
This is the analogy most favorable to Banamex. Arguably, a more
apt analogy (although any analogy is difficult when the world
being described is "virtual") is that the server in
Maryland used by www.narconews is like an art gallery to which
the website in Mexico sends art. Voxel Dot Com, in turn, helps
maintain the art gallery.
C. Exercising jurisdiction over a Mexican
website in New York on behalf of a Mexican plaintiff, when all
the witnesses and evidence are located in Mexico, would violate
our "traditional notions of fair play and substantial justice."
Even if this court should conclude that CPLR §302(a)(1)
would allow personal jurisdiction against Narco News Bulletin
in New York, this court still must decide whether the exercise
of such personal jurisdiction against a website emanating from
Mexico would comport with the requisites of due process. International
Shoe v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154,
158, 90 L.Ed. 95 (1945). Under International Shoe, a three-pronged
test is used to determine the parameters of due process.
First, Banamex must show that its defamation claim arose
out of Narco News Bulletin's contacts in New York. Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414,
104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984).
Second, Banamex must show that Narco News Bulletin "purposefully
availed" itself of the privilege of doing business in New
York. International Shoe v. Washington, supra.
Third, in addition to satisfying these requirements, Banamex
must prove that jurisdiction "comports with 'traditional
notions of fair play and substantial justice'"--that is,
it was reasonable, under all the circumstances, for Narco News
Bulletin to foresee itself being "haled into court"
in New York. See World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980);
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475,
105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985). International
Shoe, 326 U.S. at 316, 66 S.Ct. at 158.
The test for this final prong, whether jurisdiction "comports
with fair play," is a five-fold test. Consideration is given
to: "(1) the burden that the exercise of jurisdiction will
impose on the defendant; (2) the interests of the forum state
in adjudicating the case; (3) the plaintiff's interest in obtaining
convenient and effective relief; (4) the interstate judicial
system's interest in obtaining the most efficient resolution
of the controversy; and (5) the shared interest of the states
in furthering substantive social policies." Metropolitan
Life Insurance Company v. Robertson-Cero Corp., 84 F.3d
560, 568 (2d Cir. 1996) (citing Asahi Metal Indus. Co.
v. Superior Court, 480 U.S. 102, 113-14, 107 S.Ct. 1026,
1032-33, 94 L.Ed.2d 92 (1987), and Burger King,
471 U.S. at 475, 105 S.Ct. at 2184).
Two United States Supreme Court cases have specifically examined
jurisdiction in defamation cases under International Shoe.
We now turn to those cases and then analyze the three-pronged
due process test of International Shoe in light of the facts
1. Keeton v. Hustler and Calder v. Jones.
The United States Supreme Court has specifically considered
when states may constitutionally exercise jurisdiction over non-residents
in defamation actions in Keeton v. Hustler, 465
U.S. 770, 104 S.Ct. 1473, 79 L.Ed.29 790 (1984) and Calder
v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804
(1984). In Keeton, the court found that the sale
of 10,000 to 15,000 copies of Hustler magazine
on a monthly basis in New Hampshire was "sufficient to support
an assertion of jurisdiction in a libel action based on the contents
of the magazine." 465 U.S. at 773-74, 104 S.Ct. at 1478.
The finding was not surprising. The defendant had purposefully
chosen to sell over 100,000 copies of its magazine each year
in the jurisdiction in which it was sued. It could have chosen
not to do so. Given its willingness to make money in New Hampshire,
a finding of personal jurisdiction there was fair. 20
Here, Narco News Bulletin has never profited from persons who
have "logged" onto the website in New York. Also, it
is not technologically possible for Narco News Bulletin to prevent
people in New York from visiting its website. Once information
is made available on Narco News Bulletin, anyone in the world
can view it.
In Calder, the court held that:
the due process clause did not prevent California from
exercising personal jurisdiction over the writer and editor of
an article that allegedly defamed a California resident. The
Court emphasized that the story appeared in a weekly newspaper
with a California circulation of 600,000 copies, was drawn from
California sources, and concerned the California activities of
a California resident whose career was "centered in"
that state. Calder, 465 U.S. at 788-89, 104 S.Ct. at 1486.
On these facts, the court found that California was the "focal
point both of the story and of the harm suffered," that
defendants knew that the "brunt" of plaintiff's injury
would be felt here, and that the defendants' "actions were
expressly aimed at California." Id. at 789-90, 104
S.Ct. at 1486-87. For these reasons, the Court ruled that although
defendants were Florida residents and had not acted in California,
they had directed their activities at that state and could therefore
have reasonably anticipated "being haled into court there."
Chaiken v. VV Pub. Corp., 119 F.3d
1018, 1029 (2nd Cir. 1997).
The facts in Calder are, again, far different from the facts
here. The Narco News Bulletin articles concerned Mexico. None
of the articles had to do with New York. Narco News Bulletin,
emanating from Mexico, could not have reasonably anticipated
"being haled into court" in New York.
2. The lack of a nexus between any contacts in New York
and the lawsuit.
Due process "prevents the exercise of jurisdiction over
a nonresident unless its contacts with the forum are continuous
and systematic or the suit arises out of or is related to those
contacts." Helicopteros Nacionales de Colombia v.
Hall, 466 U.S. 408, 415-16 & nn. 9-10, 104 S.Ct.
1868, 1872-73 & nn. 9-10, 80 L.Ed.2d 404 (1984).
Here, the availability of the website emanating from Mexico
to New York residents does not qualify as a "continuous
and systematic" presence in New York. Nor does Banamex's
claim of defamation arise out of any "contacts" the
website had in New York.
3. The lack of acts by Narco News Bulletin establishing
that it purposefully availed itself of the privilege of conducting
business in New York.
The posting by Narco News Bulletin of the articles in question
on its website emanating from Mexico is not an act by which it
has purposely availed itself of doing business in New York. Due
process is designed to give:
a degree of predictability to the legal system that allows
potential defendants to structure their primary conduct with
some minimum assurance as to where that conduct will and will
not render them liable to suit. World-Wide, supra, 444
U.S. at 297, 100 S.Ct. at 567.
Since the defendant could not publish a page on its website
in such a way as to make it inaccessible to residents of New
York, Narco News Bulletin should not now be subject to jurisdiction
in New York simply because its website could be viewed there.
4. To allow Banamex to pursue damages against Narco News
Bulletin in New York would "offend traditional notions of
fair play and substantial justice."
The third prong of a due process analysis is whether the
exercise of personal jurisdiction is sufficiently foreseeable
as to not offend "our traditional conception of fair play
and substantial justice." International Shoe, supra,
326 U.S. at 320, 66 S.Ct. at 160.
[T]he foreseeability that is critical to the due process
analysis is . . . that the defendant's conduct and connection
with the forum State are such that he should reasonably expect
to be haled into court there. World-Wide Volkswagen Corp.
v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d
490 (1980). This protects defendants from being forced to answer
for their actions in a foreign jurisdiction based on "random,
fortuitous or attenuated" contacts. Keeton v. Hustler
Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct. 1473, 1478,
79 L.Ed.2d 790 (1984) (emphasis added).
It also protects defendants against unfairly inconvenient
litigation. World-Wide Volkswagen Corp. v. Woodson, supra,
444 U.S. at 292, 100 S.Ct. at 564-65.
In answering the question of what is "reasonable,"
a five-factor "fairness" test has been set forth in
Asoki and Burger. Each of the factors
in that test militate against exercising jurisdiction over Narco
News Bulletin in New York.
First, a heavy burden will be imposed on the defendant if
jurisdiction is exercised in New York. The defendant is a noncommercial
website located in a foreign country--Mexico. To defend itself
in New York will be financially onerous.
Second, New York has no significant interest in adjudicating
the case. The plaintiff's place of business is in Mexico. The
articles posted on the website concern events that occurred in
Mexico, not New York. Mexico, not New York, is the place with
the most significant interest. 21
Banamex has no branch in New York. Its only contact with New
York is through an "agency."
Third, Banamex cannot legitimately claim that allowing this
lawsuit to proceed will advance its interest in obtaining "convenient
and effective relief." The witnesses in this case are located
in Mexico. The evidence is located in Mexico. Relief in New York
is hardly convenient.
Furthermore, there is a serious question as to whether witnesses
from Mexico are subject to subpoena in New York. Therefore, relief
most probably will also not be "effective" in New York.
Indeed, a fair resolution of the dispute may be impossible here.
Fourth, the "most efficient resolution" of the
controversy will occur in Mexico, not New York, given the location
of the parties, witnesses and evidence.
Fifth, substantive social policies militate against a lawsuit
in New York. Banamex has already pursued defamation actions in
Mexico against the defendant Mario Menendez, based on statements
in his newspaper with the same content as the articles made available
at www.narconews.com. Those cases were dismissed in Mexico based
on a finding that although Roberto Hernandez may or may not have
been libelled, Banamex itself had definitely not been libelled.
Now, Banamex is in New York, seeking a "friendlier"
jurisdiction in which to assert its damages. As a matter of social
policy, such forum-shopping should be discouraged.
D. The substantive law of Mexico applies
to the issues in this case of alleged multistate defamation under
New York's conflict-of-laws rules because Mexico has the most
significant relationship to the alleged torts and the parties.
Even if this court decides to exercise personal jurisdiction
over the defendant Narco News, the substantive law of Mexico
applies to the defamation claims under New York's choice-of-law
The analysis in this section of the memorandum is restricted
to the postings at the www.narconews.com website. Each discrete
claim of defamation is subject to a separate conflict of law
analysis, see Wells v. Liddy, 186 F.3d 505, 522-31
(1999), and the result argued here may or may not apply to the
other claims in Banamex's complaint, e.g the statements made
by Mr. Menendez and Mr. Giordano on the radio broadcast in New
York and at Columbia University Law School.
Under Mexican law, the parties appear in agreement that these
claims must be dismissed because the necessary predicate of a
finding of criminal defamation is lacking. See memoranda of Banamex
and Mario Menendez.
1. Under New York's choice-of-law rules, the local law
of the state with the most significant relationship to the occurrence
and the parties applies to the substantive issues to be decided.
Following the majority of jurisdictions, "New York's
choice of law rules require the court to apply the substantive
tort law of the state 24
'with the most significant interest in the litigation.'"
La Luna Enterprises, Inc. v. CBS Corp., 74 F.Supp.
2d 384, 388 (S.D.N.Y. 1999) quoting Lee v. Bankers Trust
Co., 166 F.3d 540, 545 (2d Cir. 1999); Dorsey v.
Yantambwe, 715 N.Y.S.2d 566, 569 (4th Dept. 2000); Padula
v. Lilarn Properties Corp., 84 N.Y.2d 519, 620 N.Y.S.2d
310, 311 (Ct.App. 1994); Nader v. General Motors Corporation,
25 N.Y.2d 560, 307 N.Y.S.2d 647, 651 (Ct.App. 1970); Babcock
v. Jackson, 12 N.Y.2d 482, 240 N.Y.S.2d 743 (Ct.App.
The choice-of-law principles recited in New York cases and in
the Restatement (Second) of Conflicts of Laws are applicable
when one of the states is a foreign nation. See Restatement
(Second) of Conflicts of Laws §§ 3 and 10;
Hill v. Citicorp., 215 A.D.2d 117, 626 N.Y.S.2d 103 (1st Dept.
1995); Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d
743 (Ct.App. 1963).
New York's "most significant relationship" rule
applies to cases where, as here, the allegation is one of multistate
defamation. The Restatement (Second) of Conflicts of Laws §150(1)
("Restatement") choice-of-law rule for multistate defamation
cases explicitly provides that:
The rights and liabilities that arise from defamatory
matter in any one edition of a book or newspaper, or any one
broadcast over radio or television, exhibition of a motion picture,
or similar aggregate communications 25 are determined by the local law of the
state which, with respect to the particular issue, has the
most significant relationship to the occurrence and the parties.
. . .
Restatement §150(1) (emphasis
added). See Babcock, supra 240 N.Y.S.2d
at 749-50 where the Court of Appeals employed the "most
significant relationship" test in connection with a personal
injury case with multistate contacts. See also La Luna
Enterprises, Inc., supra 74 F.Supp.2d at 388; Reeves
v. American Broadcasting Companies, Inc., 719 F.2d 602,
605 (2d Cir. 1983) and Bryks v. Canadian Broadcasting Corp.,
928 F.Supp. 381, 383 (S.D.N.Y. 1996).
25 The phrase "aggregate communication"
is used in the Restatement to mean a communication with extensive
circulation. Arochem International, Inc. v. Buirkle,
767 F.Supp. 1243, 1246 (S.D.N.Y. 1991).
Here, the state with the most significant relationship to
the questioned statements and the parties plainly is Mexico.
Banamex's principal place of business is Mexico. Its reputation
is most subject to damages there, particularly with regard to
alleged activities that occurred there.
The Restatement recognizes that in a multistate defamation
[w]hen a corporation, or other legal person, claims that
it has been defamed by an aggregate communication, the state
of most significant relationship will usually be the state where
the corporation, or other legal person, had its principal
place of business at the time, if the matter complained of
was published in that state.
Restatement at §150(3) (emphasis
The rule in §150(3) makes sense. In general, the state
where a corporation has its principal place of business will
be the place where the business's reputation will most negatively
be affected by a defamatory statement. The jurisdiction where
the principal place of business is located "is the place
where any injury is most likely to be felt, and accordingly the
jurisdiction that will have the greatest interest in having its
laws control the consequences of that injury." Bryks,
supra, 928 F.Supp at 383. 26
An alternative nine factor test was set forth in Palmisano v.
News Syndicate Co., 130 F.Supp. 17, 19 & n.2 (S.D.N.Y. 1955),
a case involving multistate elements. The factors were: "(1)
the state of the plaintiff's domicile; (2) the state of plaintiff's
principal activity to which the alleged defamation relates; (3)
the state where the plaintiff in fact suffered greatest harm;
(4) the state of the publisher's domicile or incorporation; (5)
the state where the defendant's main publishing office is located;
(6) the state of principal circulation: (7) the place of emanation;
(8) the state where the libel was first seen; and (9) the law
of the forum."
A review of these factors also points
to Mexico as the state with the most significant relationship.
Factors (1), (2), (3), (4), (5) and (7) point unequivocally to
Mexico. Because there is no state of principal circulation, factor
(6) is unhelpful. Because the dissemination was over the Web,
it is not possible to state where the libel was first seen (factor
(8)). Only factor (9), the law of the forum, points to New York.
2. Analyzing all the factors that might be considered
in a conflict of laws ruling, it is clear that Mexico has the
most significant relationship to the action, not New York.
The Restatement views the principal place of business test
as a presumption, not as a rigid rule. Restatement §150(3)
comment f. If another state is identified that may have a more
significant relationship, then the court is to consider additional
[a]lthough the preference for the plaintiff's [principal
place of business] is not conclusive, the significant contacts
[in a defamation case] are, almost exclusively, the parties'
[principal places of business] and the locus of the tort.
La Luna Enterprises, Inc., 74 F.Supp.2d at
389 (emphasis added) quoting Lee,
supra, 166 F.3d at 545 (which, in turn, quotes Schultz
v. Boy Scouts of America, Inc., 65 N.Y.2d 198, 491 N.Y.S.2d
90, 95 (Ct.App. 1985).
In Padula, supra, 620 N.Y.S.2d at 311, the
court looked to the locus of the tort ("lex loci delicti")
in order to establish which jurisdiction had the most significant
interest. "If conflicting conduct-regulating laws 27 are
at issue, the law of the jurisdiction where the tort occurred
will generally apply because that jurisdiction has the greatest
interest in regulating behavior within its borders." Id.
Defamation is a conduct-regulating (as opposed to loss allocating)
However, applying a lex loci test to establish which
state has the most significant relationship to the tort is not
always easy. The lex locus of a defamatory statement is
not necessarily the place of the wrong. It may be (a) where the
statement was heard or seen, but it also can be (b) the place
of injury. Arochem, supra, 767 F.Supp. at 1247.
Although the two are often the same 28
, the primary injury from a defamatory statement can occur
in a state different from the state where the statement was seen.
"In this case [personal injury], as in nearly all such cases,
the conduct causing the injury and the injury itself occurred
in the same jurisdiction. The phrase 'place of the tort,' as
distinguished from 'place of wrong' and 'place of injury,' is
used herein to designate the place where both the wrong and the
injury took place." Babcock, supra, 240 N.Y.S.2d
at 746 n.2.
Furthermore, determining the lex locus of a defamatory statement
is particularly difficult in an Internet case, such as this,
where the "offending" material is simultaneously available
for viewing in 50 states and innumerable foreign countries.
The place of wrong/place of injury dichotomy explains why,
in multistate defamation cases involving the World Wide Web as
the means of publication, the application of the locus of the
tort test "becomes cumbersome, if not completely impractical."
Wells v. Liddy, 186 F.3d 505, 527 (4th Cir. 1999).
In Wells, as here, the publication of the questioned statement
on the Web was simultaneously made in multiple state jurisdictions.
Not only was the statement seen in multiple jurisdictions, the
plaintiff, if injured at all, was arguably injured in multiple
Applying the above rules to the facts of this case, it is
clear that Mexico has the most significant relationship to both
the posting of the articles on the Internet website, as well
as the parties.
First, it is undisputed that Banamex's principal place of
business is in Mexico. Second, it is apparent from the face of
Banamex's complaint that the most serious injury to Banamex's
reputation from the Narco News Bulletin articles would have occurred
in Mexico. In its complaint, Banamex alleges that "[i]ts
efforts have been successful in making it one of the most respected
banking institutions in Mexico, with one of the largest
customer bases." Complaint at par. 8 (emphasis
added). 29 Third,
Mexico has a strong interest in protecting its resident businesses
and in controlling the behavior that emanates from within its
Therefore, by Banamex's own admissions, the primary place of
injury is Mexico.
In sharp contrast to the Mexican interests, New York's sole
connection to the case (other than being the forum selected by
the plaintiff) is that it was a location where the website was
accessed--making New York no different than literally hundreds
of jurisdictions which shared the same connection with the lawsuit.
Accordingly, Mexico has the greatest interest in regulating
the conduct in issue here and its substantive law should apply.
Banamex admits in its brief that under Mexican law, its right
to proceed with a civil defamation case is predicated on a court
finding of criminal liability. Since no criminal proceeding has
been brought in Mexico against Narco News Bulletin, the civil
suit here has no basis for going forward at this time. Hill
v. Citicorp, 215 A.D.2d 117, 626 N.Y.S.2d 102, 103 (1st
Dept. 1995). Plaintiff's concession that its cause of action
was not viable in the state whose law was chosen by the court
to apply (England) required a dismissal of the action in New
E. The complaint should be dismissed here
in New York on forum non conveniens grounds because all of the
parties reside in Mexico, all of the documents and the vast majority
of the witnesses are located in Mexico, the alleged defamatory
statements emanated from Mexico concerning activity that occurred
in Mexico and litigation regarding the same activity has already
been commenced in Mexico. In addition, the undue burden that
will be visited upon both the defendant Narco News and the court
by litigating this case in New York is not justified by the tenuous
nexus between the claim asserted and the forum.
In New York, the following factors are weighed by the court
to determine whether to dismiss a case on the ground of forum
non conveniens: (1) whether all parties are non-residents, (3)
whether the transaction out of which the cause of action arose
primarily occurred in a foreign jurisdiction, (3) the potential
hardship to the defendant, and (4) whether there is an alternate
forum for suit. Islamic Republic of Iran v. Pahlavi,
62 N.Y.2d 474, 478-80, 467 N.E.2d 245, 478 N.Y.S.2d 597 (1984).
Other relevant factors to consider include: the relative
ease of access to sources of proof; the availability of compulsory
process for witnesses; the cost of obtaining the attendance of
witnesses; all other practical problems that make trial of a
case easy, expeditious and inexpensive; the public interest factors
such as choice of law considerations, as well as the relationship
to the community in which the case will be tried and the occurrences
that gave rise to the litigation; and the plaintiff's choice
of forum. 31 Gulf
Oil Corp. v. Gilbert, 330 U.S. 501 (1947).
The plaintiff's choice of forum is given less deference when
the plaintiff, as here, is a foreign national. Denmark
v. Tzimas, 871 F.Supp. 261 (E.D.La. 1994), aff'd mem.,
60 F.3d 582 (5th Cir. 1996).
The rule of forum non conveniens is ultimately grounded on
principles of justice, fairness and convenience--accordingly,
no one of the above specific factors is controlling. Id.
at 479; CPLR §327 ("When the court finds that in the
interest of substantial justice the action should be heard in
another forum, the court . . . may . . . dismiss the action .
. . ."). See Silver v. Great American Insurance Co.,
29 N.Y.2d 356, 278 N.E.2d 619, 328 N.Y.S 2d 398 (1971).
Application of the above factors to this case strongly weighs
in favor of dismissal. Most importantly: (a) all of the parties
are residents of Mexico, (b) the statements attributed to Narco
News Bulletin emanated from Mexico and were seen in Mexico, and
(c) the alleged injury to the plaintiff occurred in Mexico where
it does business and the potential for harm to its reputation
Furthermore, the cause of action is centered in Mexico, almost
all of the witnesses and all of the documentary evidence are
located in Mexico. Maintaining this action in this forum will
require the wholesale transplantation of every aspect of this
litigation from Mexico to New York. Not only will such a transplantation
be inconvenient in the extreme, it will also be very costly.
In addition, given the potential problem with obtaining compulsory
process in Mexico, effective relief in New York may be impossible.
The plaintiff may argue that an alternative forum in which
it may bring suit does not exist because a similar action it
brought in Mexico has been dismissed. This argument misconstrues
the alternative forum factor by assuming that the forum must
be available at this moment in time. That is not the import of
the rule. The test is simply that another forum actually exists.
Here, the other forum, Mexico, not only actually exists, it in
fact was used by Banamex. Whether the plaintiff was (or will
be) successful in the alternative forum is not part of the equation.
In any event, this single factor, to the extent that it supports
keeping the action in the forum, does not outweigh the combined
effect of the other factors discussed above. See Weinstein,
Korn & Miller at 3-552 (the availability of an alternative
forum "is not an absolute prerequisite for applying the
doctrine [of forum non conveniens].").
This case is very similar to Millicom International
Cellular S.A. v. Simon, 247 A.D.2d 223, 668 N.Y.S.2d
591 (1st Dept. 1998). There, the plaintiff claimed that the defendant
had engaged in a "smear campaign" against it. As part
of that campaign, a report about the plaintiff was disseminated
in New York. However,
without more, [there] is not a sufficient nexus to defeat
this motion [to dismiss for forum non conveniens] where none
of the parties are residents of New York, the crucial events
underlying the action occurred in the Philippines, more than
64 witnesses to this dispute are located in the Philippines,
there are presently 28 actions pending in the Philippines arising
out of the same alleged "smear campaign" and the Philippines
is a viable and far more convenient forum. Clearly, the undue
burden that would be placed upon the New York courts if jurisdiction
were to be retained would be entirely unjustified given the extremely
tenuous nexus between the claim asserted and this forum, notwithstanding
the allegation that such nexus was deliberately created by the
For the same reasons, Banamex's lawsuit against Narco News
should be dismissed.
F. Banamex has no right to sue because
even if the statements in question were defamatory, they were
directed toward an officer of the bank, not the bank itself.
Banamex alleges in its complaint that Narco News has "impugned
Banamex and the management of its business through knowing false
statements of fact." Complaint, par. 1. Yet, a survey of
the factual allegations in the body of the complaint reveals
that virtually all of the questioned statements are directed
at Roberto Hernandez Ramirez, Banamex's General Director and
Chairman of its Board of Directors.
1. To be defamatory, a statement must be of and concerning
It is well established under New York law that a statement
is not defamatory unless it is "of and concerning"
the plaintiff. This means that the statement must "designate
the plaintiff in such a way as to let those who knew [the plaintiff]
understand that he was the person meant." (It is for the
court to determine in the first instance, as a matter of law,
whether a publication is "of and concerning" the plaintiff.)
Dalbec v. Gentleman's Companion Magazine, 828 F.2d
921, 925 (2d Cir. 1987); Fulani v. New York Times Co.,
260 A.D.2d 215, 686 N.Y.S.2d 703 (1st Dept. 1999). 32
Carlucci v. Poughkeepsie Newspapers, 57 N.Y.2d
883, 442 N.E.2d 442, 456 N.Y.S.2d 44 (1982); James v. Gannett
Co., Inc., 40 N.Y.2d 415, 353 N.E.2d 834, 386 N.Y.S.2d
871 (1976); Springer v. Viking Press, 90 A.D.2d
315, 457 N.Y.S.2d 246 (1st Dept. 1982); Alfajr Printing
and Publishing Co. v. Zuckerman, 230 A.D.2d 879, 646
N.Y.S.2d 858, 860 (2d Dept. 1996); Anyanwu v. Columbia
Broadcasting Systems, Inc., 887 F.Supp. 690, 692 (S.D.N.Y.
The law is equally settled in New York that statements about
a corporation's officers or directors generally do not give rise
to a claim for defamation by the corporation. Cal-Therm
Industries, Inc. v. Dun & Bradstreet, Inc., 75 F.Supp.
541 (S.D.N.Y. 1948) (holding that corporation cannot maintain
an action for defamation based on statements concerning its officers
or members); Hapgoods v. Crawford, 125 A.D.2d 856,
110 N.Y.S.122 (1st Dept. 1908) (words uttered about employees,
stating that they were robbers and thieves who extort money,
found not to be defamatory against corporation); Warner
Instrument Co. v. Ingersoll, 157 F. 311 (C.C.D.N.Y. 1907)
("To merely attack or challenge the rectitude of the officers
or members of a corporation, and to hold them or either of them
up to scorn, hatred, contempt, or obloquy for acts done in their
official capacity, or which would render them liable to criminal
prosecution, does not give the corporation a right of action
for libel."); The Adirondack Record, Inc. v. Lawrence,
202 A.D. 251 (3d Dept. 1922) ("A corporation cannot maintain
an action for slander or libel upon words spoken or published
solely of and concerning its officers or members.").
The long-settled practice in New York is in accordance with
the general rule: "a corporation is not defamed by communications
defamatory of its officers, agents or stockholders unless they
also reflect discredit upon the method by which the corporation
conducts its business." Restatement of the Law, Second,
Here, even assuming, for point of argument, that Banamex's
claim is accurate that Narco News reported that Roberto Hernandez
is a drug trafficker and that evidence exists of cocaine trafficking
at his vacation property in Mexico, Narco News has never made
an allegation that a connection exists between these reports
and the methods by which Banamex conducts its business. Accordingly,
because the statements made by Narco News are not of and concerning
Banamex, the defamation counts must be dismissed pursuant to
G. Banamex fails to set forth in its complaint
the factual predicates necessary for a claim of intentional interference
with prospective advantageous economic relations to survive a
motion to dismiss.
Using the factual allegations that it relies upon for its
defamation claims (Counts I and III), Banamex also asserts in
Count III that Narco News Bulletin interfered with Banamex's
prospective economic advantage. The claim, which has no basis
in fact, must be dismissed for two reasons, each of which independently
(1) Count III is pleaded in conclusory terms. It lacks the
specificity required in a claim of this nature.
(2) Count III is duplicative, seeking the same reputational
damages as the defamation claim.
2. The elements of an interference with prospective economic
In order to sustain a claim for interference with prospective
economic advantage, a plaintiff must prove four elements:
(1) Business relations with a third party.
(2) That a defendant interfered with those business relations.
(3) That the defendant: (a) acted with the sole purpose of
harming the plaintiff or (b) used unlawful means to interfere
with those relations.
(4) Injury to the specified business relations.
Burba v. Rochester Gas & Electric Corp.,
139 A.D.2d 939, 528 N.Y.S.2d 241 (4th Dept. 1988); Nadel
v. Play-by-Play Toys & Novelties, Inc., 208 F.3d
368, 382 (2d Cir. 2000).
3. An interference with prospective economic advantage
claim must be pled with specificity.
New York case law expressly requires that a complaint for
the tort of interference with prospective economic advantage
set forth in specific detail the factual predicates for each
of the four elements. It is not enough to plead such a claim
in vague or conclusory terms. The complaint will fail at the
pleading stage unless it:
(1) Identifies the specific third parties with whom the plaintiff
has business relations.
(2) Specifies the nature of the defendant's interference
with those relations.
(3) Sets forth specific facts in the claim to substantiate
that the defendant either: (a) acted with the sole 33 purpose of harming the plaintiff, or (b)
used unlawful means to interfere with the plaintiff's business
PPX Enterprises v. Audio Fidelity Enterprises,
818 F.2d 266, 269 (2d Cir. 1987) ("If a defendant's interference
is intended, at least in part, to advance its own competing interests,
the claim will fail unless the means employed include criminal
or fraudulent conduct").
(4) States with particularity how the plaintiff was injured.
Schuckman Realty, Inc. v. Marine Midland Bank, N.A.,
244 A.D.2d 400, 664 N.Y.S.2d 73 (2d Dept. 1997) (dismissing complaint
because allegations in support of claim for tortious interference
were "devoid of factual basis and vague and conclusory");
Chemical Bank v. Etinger, 196 A.D.2d 711, 602 N.Y.S.2d
332 (1st Dept. 1993) ("conclusory allegations of conspiracy
and improper interference were insufficient to meet requirements
for establishing liability"); Riddell Sports, Inc.
v. Brooks, 872 F.Supp. 73, 78-79 (S.D.N.Y. 1995) (allegations
too vague to support essential finding that the plaintiff would
have consummated contractual relationships if not for the defendant's
4. The plaintiff has failed to plead specific facts which
support the interference with prospective economic relations
Here, Banamex has completely failed to comply with the specificity
requirement of each of the four elements. The four failures are
addressed seriatim below.
(a) Banamex has failed to specify any third parties with
whom its economic relations were injured.
First, Banamex has failed to identify any specific third
party located in New York (or anywhere) with whom it has and/or
prospectively had economic relations that were adversely affected
by the allegedly defamatory articles at www.narconews.com. The
best that Banamex has done in this regard is the following conclusory
(1) "Banamex has lost existing and prospective customers
and customer goodwill," complaint at par. 15.
(2) "Defendants . . . have intentionally deterred present
and potential customers and business partners from conducting
business with Banamex," complaint at par. 59. 34
It would be surprising if Banamex could point to any such lost
customers in New York due to the Narco News Bulletin articles.
First, Banamex does not have a branch in New York at which an
account, either personal or business, can be opened. It only
has an "agency" that services accounts opened in Mexico
or other jurisdictions. Affidavit
of Karen Thatcher, par. 2. Second,
the Narco News Bulletin articles did not state any new facts.
the same facts had been set forth in Mexico by Mario Menendez
in his newspaper Por Esto and in the United States in an article
in the Village Voice and an article in the Boston
Phoenix (as well as allegedly by Mr. Menendez and Mr.
Giordano in New York in person in March 2000).
These allegations are patently insufficient to survive a
motion to dismiss. Business Networks of New York v. Complete
Network Solutions, Inc., 265 A.D.2d 194, 696 N.Y.S.2d
433 (1st Dept. 1999) (cause of action for tortious interference
with prospective business relations dismissed for failure to
allege any specific prospective business relations with which
the defendant interfered); M.J.&.K Co., Inc. v. Matthew
Bender and Company, 220 A.D.2d 388, 631 N.Y.S.2d 938
(2d Dept. 1995) (plaintiffs' mere contention that third parties
canceled contracts with them was insufficient because it offered
no specific factual basis to support the allegation). Contrast
Purgess v. Sharrock, 33 F.3d 134, 141 (2d Cir.
1994) (the plaintiff survived a motion to dismiss its interference
count under the specificity standard because she alleged specific
relationships that were affected by the defendant's behavior
and how they were affected, e.g., a specific job opportunity
that was foreclosed by the defendant's actions. 35
To the extent that Banamex's complaint can be read to allege
interference with actual, as opposed to prospective, economic
advantage, the claim also fails. For a complaint to state a claim
of interference with actual economic relations, the complaint
"must specify some particular, existing business relationship
through which plaintiff would have done business but for the
allegedly tortious behavior." Kramer v. Pollock-Krasner
Foundation, 890 F.Supp. 250, 258 (S.D.N.Y. 1995) quoting
PPX Enterprises, Inc. v. Audiofidelity Enterprises, Inc.,
818 F.2d 266, 269 (2d Cir. 1987).
(b) Banamex has failed to specify the nature of the Narco
News Bulletin's interference with its business relationships.
Second, the complaint fails to specify how the website articles
interferred with particular economic relations.
(c) Banamex has failed to specify any particular facts with
regard to the defendants' "scheme to extort."
The specificity requirement applies with particular force
to the third element of an interference with economic relations
cause of action where, as here, Banamex has charged the defendants
with a crime--extortion--and has alleged that Narco News acted
illegally--"as part of a scheme to extort [money] from Banamex."
Basic fairness to a defendant 36
demands that specific facts to substantiate such a claim be made
in the body of the complaint 37.
Merely conclusory allegations require dismissal. Pontos
Renovations v. Kitano Arms Corp., 226 A.D.2d 191, 640
N.Y.S.2d 525 (1st Dept. 1996); Porr v. NYNEX, 170 Misc.2d 203,
650 N.Y.S.2d 509 (Sup. 1996); Couri v. Westchester Country
Club, Inc., 186 A.D.2d 712, 589 N.Y.S.2d 491 (2d Dept.
1992); Greschler v. Greschler, 71 A.D.2d 322, 422
N.Y.S.2d 718 (1980).
The particularity requirement is intended to discourage unsupported
claims of serious wrongdoing. Such claims, which are immune from
suit, should be made only in circumstances when facts are already
known meriting the claim. Otherwise, reputations will be harmed
by meritless, conclusory allegations in a complaint, tailored
to withstand a motion to dismiss.
Even in a fraud claim, any allegation of wrongdoing must be set
forth in detail. CPLR §3016(b) provides in pertinent part:
Fraud or mistake. Where a cause of
action or defense is based upon misrepresentation, fraud, mistake,
wilful default, breach of trust or undue influence, the circumstances
constituting the wrong shall be stated in detail.
(d) Banamex has failed to specify its injury.
Along with its other failures, Banamex has also failed to
describe any specific injury to its business relations. Once
again, Banamex only offered generalities, such as:
(1) "Defendants' wrongful conduct caused Banamex actual
damage," complaint at par. 15.
(2) "Banamex has suffered and will continue to suffer
damages to its reputation, customer goodwill, and relationships
with its existing and prospective customers, business partners,
and others," complaint at par. 60.
Because Banamex has failed to plead all four elements of
its claim of interference with prospective economic relations
with the requisite specificity, the claim must be dismissed as
a matter of law for failure to state a claim, pursuant to CPLR
3. Plaintiff may not recast its defamation claim as a
separate tort of interference with economic relations claim.
Using the identical facts that it has alleged prove defamation,
Banamex claims the right to reclothe those facts as a separate
tort. This attempt is improper and should be rejected by the
In Anyanwu v. Columbia Broadcasting Systems, Inc.,
887 F.Supp. 690, 693 (S.D.N.Y. 1995), the court declared that
"[w]hen additional tort claims are aimed at controlling
the same speech that is the basis of a libel claim, courts should
not entertain the additional claim under less stringent standards."
In Butler v. Delaware Otsego Corp., 302 A.D.2d
783, 610 N.Y.S.2d 664, 666 (3d Dept. 1994), the plaintiff alleged
negligence, as well as defamation, in its complaint. The court
dismissed the negligence claim on the ground that it was "inseparable
from the tort of defamation and, as such, plaintiff is relegated
to any remedy that would have been available on that basis."
Similarly, in dismissing an interference with economic advantage
claim, a panel of the Seventh Circuit said:
If one person persuades another to break a contract with
a third he commits the tort of wrongful interference with business
relations. . . . Any libel of a corporation can be made to resemble
in a general way this archetypal, wrongful-interference case,
for the libel will probably cause some of the corporation's customers
to cease doing business with it. . . . But this approach would
make every case of defamation of a corporation actionable
as wrongful interference, thereby enabling the plaintiff
to avoid the specific limitations with which the law of defamation--presumably
to some purpose--is hedged about. We doubt that the Illinois
courts would allow this end run around their rules on defamation
. . . .
Brown & Williamson Tobacco Corp. v.
Jacobson, 713 F.2d 262, 273-74 (7th Cir. 1983) (emphasis added).
The test for determining whether a claim sounds in defamation,
as opposed to interference, is whether the plaintiff is seeking
reputational or pecuniary damages. Pecuniary damages are specific
to interference claims. Riddell Sports, Inc. v. Brooks, 872 F.Supp.
73, 76 (S.D.N.Y. 1995). Here, Banamex's claimed losses can only
fairly be characterized as reputational injury. Accordingly,
at its heart, this case is one of defamation. The plaintiff's
attempt to plead it otherwise should be rejected.
For the above reasons, the defendant Narco News Bulletin
respectfully requests this court to dismiss the complaint as
to Narco News in its entirety.
Narco News Bulletin
by Its Attorneys
Dated: April 25, 2001 ____________________________________
Lesser, Newman, Souweine & Nasser
39 Main Street
Northampton, MA 01060
Dated: April 25, 2001 _____________________________________
6 West 20th Street, Suite 10A
New York, NY 10011
This memorandum and accompanying
exhibits and affidavits are offered to the Court in support of:
Motion to Dismiss by The Narco News Bulletin
And are filed together
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