April 25, 2001





Index No. 00603429





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 itself.

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

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

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

4 For the remainder of this memorandum it is assumed hypothetically that Narco News Bulletin is an entity with the capacity to be sued.

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 defamation actions.

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

5 J. Weinstein, H. Korn and A. Miller, New York Civil Practice, §302.15 at 3-142.26.

6 Ibid

7 Ibid

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.

8 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 below. 9

9 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, pars. 22-28).

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.

10 This argument has been rejected by every court that has considered it. See argument below.

11 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

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 (Sup. 1997).

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 York.

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

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 to evolve:

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). 14

14 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 site.

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 of information.

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.

15 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 website.

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

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, par. 2.

(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.

18 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 added).

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. [1])."

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, par. 21).

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.

19 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 extant here.

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

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." Id.

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

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. 22

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 rules. 23

22 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.

23 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. 1963).

24 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 case:

[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 added).

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

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 factors. However,

[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. at 311.

27 Defamation is a conduct-regulating (as opposed to loss allocating) law.

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. Id.

28 "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 jurisdictions.

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 borders.

29 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. 30

30 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 York.

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).

31 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 is greatest.

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 defendants.

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 the plaintiff.

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

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. 1995).

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, Torts §561.

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 CPLR 3211(a)(7).

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.

1. Introduction

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 requires dismissal.

(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 advantage claim.

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 relations.

33 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 conduct).

4. The plaintiff has failed to plead specific facts which support the interference with prospective economic relations claim.
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 statements:

(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

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

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).

36 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.

37 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.

(e) Summary.

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 3211(a)(7).

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 court

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." 38

38 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.

Respectfully submitted,

Narco News Bulletin
by Its Attorneys

Dated: April 25, 2001 ____________________________________
Thomas Lesser
Lesser, Newman, Souweine & Nasser
39 Main Street
Northampton, MA 01060
413 584-7331

Dated: April 25, 2001 _____________________________________
Leonard Weinglass
6 West 20th Street, Suite 10A
New York, NY 10011
212 807-8646

This memorandum and accompanying exhibits and affidavits are offered to the Court in support of:

Motion to Dismiss by The Narco News Bulletin

Motion to Dismiss by Al Giordano

And are filed together with:

Affidavit by Al Giordano

Affidavit by Al Giordano With Respect to Narco News Bulletin

Affidavit by Karen Thatcher concerning Banamex "Agency" in New York

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