Opinion
No. 04 Civ. 667 (NRB).
September 24, 2004
MEMORANDUM and ORDER
Dr. Leo Kirch ("Kirch"), KirchGroup Litigation Pool GmbH ("KGL") and International Television Trading Corporation ("ITTC") (collectively, "plaintiffs") bring this action against Liberty Media Corporation ("Liberty"), John Malone ("Malone," Liberty's chairman), Deutsche Bank AG ("DB") and Dr. Rolf-Ernst Breuer ("Breuer," DB's CEO) (collectively, "defendants"). Plaintiffs assert several tort claims under New York law arising out of an alleged conspiracy among defendants to break up a group of companies known as the "KirchGroup" and capture those companies' shares of various German media markets. Defendants DB and Breuer have moved to dismiss plaintiffs' claims on the grounds that: (i) the forum non conveniens doctrine warrants dismissal; (ii) plaintiffs' claims are barred by res judicata principles; (iii) an applicable forum selection clause requires that the action be brought in Germany; and (iv) plaintiffs fail to state a claim upon which relief can be granted. Defendants Liberty and Malone have moved to dismiss on the grounds that: (i) plaintiff ITTC lacks standing and (ii) plaintiffs fail to state a claim upon which relief can be granted. Defendants Malone and Breuer have moved to dismiss on the additional ground that the Court lacks personal jurisdiction over them. For the reasons stated below, defendants' motions to dismiss for failure to state a claim are granted.
Because the Court finds that plaintiffs have failed to state a claim, it does not rule on defendants' additional grounds for dismissal.
BACKGROUND
I. Plaintiffs' AllegationsThe following facts are drawn from plaintiffs' First Amended Complaint and Jury Demand, dated January 14, 2004 (the "Complaint"), and are taken to be true for the purposes of these motions.
A. Plaintiffs
Plaintiff Kirch is the founder of the KirchGroup, one of Europe's leading media conglomerates. Compl. ¶ 4. Kirch is the sole limited partner of TaurusHolding GmbH Co. KG ("Taurus"), a German company that operated during the relevant times as the central management and holding company of the KirchGroup. Id. The KirchGroup consists of Taurus and various subsidiary media companies, including KirchMedia GmbH Co. KGaA ("KirchMedia"), Taurus TV GmbH ("Taurus TV"), KirchPayTV GmbH Co. KGaA ("KirchPayTV") and KirchBeteiligungs GmbH Co. KG ("KirchBeteiligungs"). In Spring 2002, the KirchGroup went into bankruptcy. Id. ¶ 76. KGL is a German company that brings this action as assignee of the claims of KirchMedia, KirchPayTV, Taurus TV and KirchBeteiligungs. Id. ¶ 5.
Plaintiff ITTC is a New York corporation that has its principal place of business in Massachusetts. Compl. ¶ 6. During all times relevant to the Complaint, ITTC acted as the KirchGroup's exclusive agent for the acquisition of film and television properties in the United States. Id. ITTC was known throughout the industry as the KirchGroup's "face" in North America. Id.
B. Kirch's Plan to Take the KirchGroup Public
Kirch founded the KirchGroup in the 1950s and transformed it over the years into one of the largest media conglomerates in the world. Compl. ¶ 11. The KirchGroup acquired a portfolio of media assets that enabled it to dominate numerous sectors in the German markets. Id. ¶ 12. By 2001, the KirchGroup controlled the largest library of feature films and television programs in the world outside of the United States, giving the KirchGroup effective control over the vast majority of Germany's free and pay television content. Id.
In the mid-1990s, Kirch formulated a strategic plan to talk the KirchGroup into a unified, publicly traded company. Compl. ¶ 13. The plan consisted in three consecutive steps: Project Traviata, Project Concordia and Project Galaxy.
It appears from the Complaint that Project Traviata was completed by 2000. Compl. ¶ 18. Project Concordia and Project Galaxy do not appear to have been completed before the KirchGroup declared bankruptcy.
Project Traviata restructured the KirchGroup to make Taurus the central management and holding company of three principal subsidiaries — KirchMedia, KirchPayTV and KirchBeteiligungs.Id. ¶
14. Certain "mezzanine" investors were brought in to provide strategic and financial support, id. ¶ 15, and two of the KirchGroup's television networks — SAT.1 and ProSieben — merged to create ProSiebenSat.1 Media AG ("ProSiebenSat.1"),id. ¶ 18. To facilitate that merger, Kirch granted Axel Springer Verlag AG ("ASV"), which owned a minority interest in SAT.1, an option to require KirchMedia to purchase ASV's shares in ProSiebenSat.1 for a predetermined price (the "Put Option").Id. The Put Option was given to ASV in exchange for ASV's consent to the SAT.1-ProSieben merger. Id. By its terms, the Put Option would expire if unexercised by January 31, 2002.
Mezzanine financing sits, as a matter of risk, between equity and debt. Mezzanine investors bargain for rights to receive minimum returns on their investments upon the occurrence of certain events such as sales or initial public offerings. Compl. ¶ 15. A typical mezzanine financing arrangement allows the investor to exercise a put option on his investment when the relevant event occurs. Id.
A forty-percent stake in ASV was owned by PrintBeteiligungs GmbH ("Print"), a wholly-owned subsidiary of KirchBeteiligungs. Compl. ¶ 14. The size of Print's stake in ASV was second only to that of Friede Springer, the widow of the late founder of ASV, Axel Springer Verlag AG. Id. ¶ 51.
The second step in Kirch's plan, Project Concordia, would merge. ProSiebenSat.1 into KirchMedia (the "ProSiebenSat.1-KirchMedia merger") to create one publicly traded company. Compl. ¶ 19. The KirchGroup retained several investments banks — including JP. Morgan, Lehman Brothers and Credit Suisse First Boston — to assist with the merger. Id. In September 2001, Kirch and ASV reached an "agreement in principal" that ASV would consent to the merger. Id. ¶ 20. Five months of "complex negotiations" between ASV and the KirchGroup followed. Id.
Kirch's third step, Project Galaxy, would consolidate all of the separate entities within the KirchGroup into one publicly traded company that would continue to run after Kirch retired. Compl. ¶¶ 21-22. The KirchGroup would seek several billion dollars of new financing from large equity investors, consolidate the various separate entities within the KirchGroup, buy out the mezzanine investors (including ASV) and conduct an initial public offering in 2004 or 2005. Id. ¶ 23. The KirchGroup retained JP Morgan to assist with the plan. Id.
C. Defendants' Alleged Plan to Cause a Breakup of the KirchGroup
Defendant Liberty is a Delaware holding company with an extensive portfolio of investments and subsidiaries operating in the media, communications and entertainment industries. Compl. ¶ 7. In Spring 2001, Liberty decided to enter the German cable television market by making a bid to acquire Deutsche Telekom's ("DT") cable system. Id. ¶ 25. On September 4, 2001, Liberty and DT announced that, subject to the approval of German antitrust authorities, Liberty would purchase six regional cable systems from DT (the "Liberty-DT transaction").Id. ¶ 26. According to the Complaint, however, KirchGroup's ownership of a significant number of bandwidth leases and a majority of the most competitive German television content made Liberty and Malone perceive the KirchGroup as an obstacle to Liberty's hoped-for dominance in the German cable market. Id. ¶ 27. Plaintiffs allege that Liberty and Malone therefore determined that the KirchGroup should be broken up. Id. ¶ 28.
Liberty's principal assets include interests in Starz Encore Group LLC, On Command Corp., Discovery Communications, Inc., Ascent Media Group, Inc., UnitedGlobalCom, Inc., Jupiter Telecommunication Co., Ltd., Court Television Network, Game Show Network, InterActiveCorp., Time Warner Inc., QVC, Inc. and Sprint PCS Group. Compl. ¶ 7.
DT is a large German telecommunications conglomerate, forty percent of which is owned by the German government. Compl. ¶ 25. DT is not affiliated with DB. Id.
Defendant DB is Germany's largest banking institution. Compl. ¶ 9. The Complaint alleges that DB and Breuer, like Liberty and Malone, were interested in causing the KirchGroup to break up. Compl. ¶ 29. In a series of meetings and telephone conversations in New York, Malone and DB allegedly struck a deal. DB allegedly agreed to assist in breaking up the KirchGroup by "employ[ing its] considerable political contacts and financial expertise to exert influence over the KirchGroup's other lenders to pressure Dr. Kirch into surrendering control of his businesses." Compl. ¶ 37. Liberty allegedly agreed both to "facilitate" having DB hired to "preside over" the breakup and to roll DB's cable holdings into Liberty's new German cable company (presumably the result of the Liberty-DT transaction, although this is not entirely clear from the Complaint), with DB receiving a twelve-percent ownership interest in that company. Id.
Plaintiffs contend that DB's and Breuer's interest in a KirchGroup breakup was a result of at least three factors. First, DB allegedly saw an opportunity to earn large investment banking fees if it was hired to assist with a breakup. Compl. ¶ 29. Second, a breakup could enable DB to gain control of one of the KirchGroup's prized assets — Formula One auto racing — and sell it either to various European auto manufacturers (in which DB owned significant equity) or to some other entity that DB could control. Id. ¶¶ 29, 32-35. Third, a breakup of the KirchGroup would remove a major competitor from the German cable television market, which would increase the profits of TeleColumbus GmbH ("TeleColumbus"), a large cable operator owned by DB Investor, DB's wholly-owned subsidiary.Id. ¶ 36.
D. The Implementation of Defendants' Plan
Defendants allegedly became aware in late 2001 that the KirchGroup was in a precarious financial position. The KirchGroup was highly leveraged. Compl. ¶ 48. ASV was threatening to exercise the Put Option, which was due to expire on January 31, 2002 and, if exercised, would require the KirchGroup to come up with 767 million Euros to satisfy it. Id. ¶¶ 50, 62. The KirchGroup and ITTC were involved in complex negotiations with major United States studios to restructure the terms of their long-term pay television output deals. Id. ¶ 53. The KirchGroup was also in final negotiations with its four major lenders — DZ Bank, Bayerische Landesbank, Hypo Vereinsbank and Commerzbank (collectively, the "Pool Banks") — to extend the repayment deadlines on the KirchGroup's outstanding loans with those entities until June 2003. The deadlines at that time were in late 2001 and early 2002. Id. ¶ 52. By January 17, 2002, the Pool Banks had informally agreed to the extensions. Id. ¶ 54.
Over the course of 2001, DB personnel had met with Kirch and other KirchGroup employees to discuss the possibility of the KirchGroup retaining DB as the KirchGroup's lead financial advisor, including to assist with Project Galaxy. Compl. ¶¶ 41-42, 45. During those meetings, KirchGroup personnel shared with DB "proprietary, highly valuable and strictly confidential business information," Id. ¶ 42, including Project Galaxy discussing materials, id. ¶ 45. It is alleged that DB sought these materials "only for the purpose of facilitating its conspiracy with Malone and Liberty." Id. ¶ 42.
According to the Complaint, in mid-January 2002, Malone and DB "convinced [Rupert] Murdoch [the chairman and CEO of News Corporation] that the KirchGroup was vulnerable and that, if they cooperated, Liberty and News Corp. could acquire control of Dr. Kirch's companies." Compl. ¶ 55. Murdoch then "encouraged ASV to turn the screws on Dr. Kirch," and DB allegedly "promised Friede Springer [the largest shareholder in ASV] that if ASV went along with the breakup plan, [DB] would convey enough of the KirchGroup's shares in ASV to Mrs. Springer so as to give her undisputed control of ASV." Id. ¶ 56.
As noted above, Kirch's Print owned a forty-percent stake in ASV. See note 4, supra. Plaintiffs allege that, by virtue of this ownership interest, "Kirch was able to exercise a considerable amount of influence over ASV's business, which generated a fair amount of tension with Friede Springer." Compl. ¶ 51.
On January 23, 2002, ASV terminated its months-long negotiations with the KirchGroup regarding the ProSiebenSat. 1-KirchMedia merger. Compl. ¶ 58. ASV informed the KirchGroup that ASV intended to exercise the Put Option by the end of January 2002. Id. On January 30, 2002, the day before the Put Option was set to expire, ASV exercised the option. Id. ¶ 62.
At the time the Put Option was exercised, its exercise price "greatly exceeded" the market price of ProSiebenSat. 1's stock. Compl. ¶ 50. The Complaint alleges that ASV hoped Kirch would be forced to sell Print's shares in ASV to come up with the cash needed to satisfy the exercised Put Option, which "would remove Dr. Kirch from his position of influence over ASV." Id. ¶ 51.
Four days later, on February 3, 2002, while in New York City attending the 2002 World Economic Forum, Breuer was interviewed by journalist Michael Storfner, who worked for Bloomberg and several other news agencies. Id. ¶ 63. The interview (the "Breuer interview") included the following exchange:
Q. Let's talk about another big topic right now in Germany: the KirchGroup and the problems concerning its indebtedness. According to an article in the Financial Times, you talked to the German chancellor about Kirch. Did you?
A. I cannot comment on this. It is up to the chancellor to say whether he talked to me or not.
Q. Let's ask this in a different way. Kirch has many, many debts, very large debts. What is Deutsche Bank's exposure?
A. I'd say [we are] relatively comfortable. First, and that is known and I am not indiscreet by telling you, our credit is not one of the largest ones but it is relatively in the middle amount-wise, and second, the credit is fully secured by a pledge of Kirch's shares in [Axel] Springer Verlag [AG]. Hence, we are practically safe, and we feel secured. It is never nice when a debtor runs into difficulties, and I hope this is not the case. But if this turned out to be, we should not be worried.
Q. It is more a question of whether someone will help him carry on.
A. I believe this is relatively questionable. All that you can hear and read about this is that the financial sector is not willing to provide further debt or equity under current conditions. Hence, only third parties could be interested in a — as you phrased it — support action.
Q. Thank you very much, Rolf Breuer.
Id. ¶ 63 (alterations in original). The interview, which was conducted in German, was broadcast on German television on February 4, 2002, but not in the United States. Id. ¶¶ 63-64. Subsequently, the interview was translated into English and distributed in print via Bloomberg's online service. Id.
Breuer's statements — which, the Complaint alleges, were "blatantly false" — "set off a firestorm of controversy." Compl. ¶ 67. Because of a "sea change in the financial community's attitudes toward the KirchGroup," both JP Morgan and DT "walked away" from Project Galaxy. Id. ¶ 70. Negotiations with the majority of the United States studios who had been talking with the KirchGroup and ITTC collapsed. Id. ¶ 71. Two of the Pool Banks refused to extend the repayment deadlines on the KirchGroup's loans without receiving favorable opinions from independent experts as to the KirchGroup's viability. Id. ¶¶ 69, 74. One of the Pool Banks "cancelled" its loan to the KirchGroup. Id. ¶ 74.
On April 8, 2002, KirchMedia filed for bankruptcy protection. Compl. ¶ 76. The other KirchGroup entities eventually followed suit. Id. ITTC "lost virtually its entire business," id., and, on August 1, 2002, was forced to close its Manhattan office,id. ¶ 6.
II. Kirch's German Lawsuit
In May 2002, Kirch filed an action in Germany against DB and Breuer. Kirch contended that he personally held an assignment of claims from several KirchGroup companies. He asserted, among other things, that the Breuer interview's predictions about whether the KirchGroup would receive financing, as well as its description of DB's debt exposure with the KirchGroup, contained KirchGroup-related "facts and evaluations" and thus breached a duty of confidentiality arising from a preexisting contract between DB and Print. The German courts found that the Breuer interview did constitute a breach of confidentiality on DB's part but not on Breuer's part. The case is currently on appeal by both parties.
In their motion papers, the parties dispute the scope of the German action, as well as the nature of the judgments delivered by the German courts in that action. The description of the German proceedings here is therefore brief and limited to those aspects on which the parties appear to agree.
The contract between DB and Print states, among other things, that "[t]he Bank [DB] has the duty to maintain secrecy about any customer-related facts and evaluations of which it may have knowledge (banking secrecy). The Bank may disclose information concerning the customer only if it legally required to do so or if the customer has consented thereto or if the Bank is authorized to disclose banking affairs." Krekeler Decl., Ex. D (translation of German decision) at 5.
III. Plaintiffs' Claims
Plaintiffs contend that the conduct described above constitutes: (i) slander; (ii) libel; (iii) tortious interference with contract; and (iv) tortious interference with prospective economic advantage. Defendants move to dismiss plaintiffs' claims on the ground, among others, that plaintiffs have failed to state a claim upon which relief can be granted.
Plaintiff ITTC asserts claims only for slander, libel and tortious interference with prospective economic advantage, not tortious interference with contract.
DISCUSSION
I. Standard for Motion to DismissIn considering a motion to dismiss, the Court must accept as true all material factual allegations in the complaint. Levy ex rel. Immunogen Inc. v. Southbrook Int'l Invs., Ltd., 263 F.3d 10, 14 (2d Cir. 2001). A motion to dismiss may be granted only where "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Still v. DeBuono, 101 F.3d 888, 891 (2d Cir. 1996) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
II. Slander and Libel
Plaintiffs contend that the Breuer interview and its subsequent publication constituted slander and libel because Breuer's statements were defamatory. Defendants argue that Breuer's statements were not defamatory and that plaintiffs' slander and libel claims must therefore be dismissed.
The existence of a defamatory statement of fact is an essential element of both slander and libel under New York law. See, e.g., Celle v. Filipino Reporter Enters. Inc., 209 F.3d 163, 176 (2d Cir. 2000) (libel); Weldy v. Piedmont Airlines, Inc., 985 F.2d 57, 61 (2d Cir. 1993) (slander). To survive a motion to dismiss, the statements described in the Complaint must be "reasonably susceptible of a defamatory meaning." Flamm v. American Ass'n of Univ. Women, 28 F. Supp. 2d 185, 187 (S.D.N.Y. 1998), vacated on other grounds, 201 F.3d 144 (2d Cir. 2000). The Court finds that, for at least two reasons, Breuer's statements do not satisfy this requirement. First, it is plain from the Complaint that the allegedly defamatory aspects of the Breuer interview constituted opinion, which is not actionable under New York defamation law. Second, even if Breuer's statements were factual (not opinion), the Complaint does not adequately plead that the statements were false.
Because most of the material facts in the Complaint relate to Germany, there is obviously an issue whether — and, if so, to what extent — New York law applies to this case. Because the parties have assumed in their papers that New York law governs defendants' motion to dismiss for failure to state a claims however, the Court assumes (without adoption) the same for purposes of the present motion.
Even if the Complaint did state a claim for defamation under New York law, ITTC would nevertheless have to be dismissed as a plaintiff because Breuer's allegedly defamatory statements were not "of and concerning" ITTC. See, e.g., Cerasani v. Sony Corp., 991 F. Supp. 343, 355 (S.D.N.Y. 1998) ("Hornbook libel law requires that an allegedly defamatory statement must be `of and concerning' a particular individual." (internal citations omitted)); Lauren Feche v. Viacom Int'l, Inc., 233 A.D.2d 125, 649 N.Y.S.2d 782 (1st Dep't 1996) (statement that is not "of and concerning" plaintiff is not actionable). The test for whether a statement is "of and concerning" an individual is whether "[a]n average viewer would . . ., taking into account the context in which the remark was uttered, perceive that [the speaker] was making a factual statement about [the individual]." Lauren Feche, 233 A.D.2d at 125, 649 N.Y.S.2d at 782. Under any reasonable interpretation of Breuer's statements, they cannot be read as making assertions about ITTC. ITTC claims that its "decades-long, symbiotic relationship" with the KirchGroup made ITTC a "fully integrated part" or "alterego" of the KirchGroup. ITTC Opp'n at 10-11. ITTC Opp'n at 10-11. ITTC also argues that it "was effectively part of the KirchGroup and, therefore, directly affected by Breuer's injurious words." Id. at 12. ITTC is not mentioned once during the entirety of the Breuer interview however. Moreover, notwithstanding ITTC's assertions about the close working relationship with the KirchGroup, the complaint alleges only that ITTC was known as the KirchGroup's "exclusive agent." In North America, not that the public perceived ITTC to share in the KirchGroup's debts, the only subject of the interview.
A. Breuer's Statements Were Protected Opinion
New York law absolutely protects statements of "pure opinion," such that they can never be defamatory. See, e.g., Celle, 209 F.3d at 178; see also Steinhilber v. Alphonse, 68 N.Y.2d 283, 289, 508 N.Y.S.2d 901, 903 (1986). The Court of Appeals of New York, adopting the test set forth in Ollman v. Evans, 750 F.2d 970 (D.C. Cir. 1984), has advised that, in deciding whether a statement is fact or opinion, a court should consider four factors:
(1) an assessment of whether the specific language in issue has a precise meaning which is readily understood or whether it is indefinite and ambiguous; (2) a determination of whether the statement is capable of being objectively characterized as true or false; (3) an examination of the full context of the communication in which the statement appears; and (4) a consideration of the broader social context or setting surrounding the communication including the existence of any applicable customs or conventions which might "signal to readers or listeners that what is being read or heard is likely to be opinion, not fact. . . ."Steinhilber, 68 N.Y.2d at 292, 508 N.Y.S.2d at 905 (quotingOllman, 750 F.2d at 983).
In light of the factors set forth in Steinhilber, an examination of the full context of the Breuer interview shows that Breuer's statements did contain opinion. On its face, the interview contained numerous indicators — e.g., "I believe . . .," "Hence, . . .," "I'd say . . .," "I hope . . ." — suggesting that Breuer meant to "signal to readers that what [wa]s being read or heard [wa]s likely to be opinion, not fact,"Steinhilber, 68 N.Y.2d at 292, 508 N.Y.S.2d at 905 (quotingOllman, 750 F.2d at 983). Moreover, Breuer's statements that, among other things, DB was "relatively comfortable" with its position and that he believed it was "relatively questionable" whether "someone w[ould] help [Kirch] carry on," Compl. ¶ 63, do not have a "precise meaning" but are "indefinite and ambiguous" because they are not "capable of being objectively characterized as true or false," Steinhilber, 68 N.Y.2d at 292, 508 N.Y.S.2d at 905.
A statement of opinion may nevertheless be actionable as "mixed opinion" (as opposed to nonactionable "pure opinion") if the statement "implies that it is based upon facts which justify the opinion but are unknown to those reading or hearing it." Id. at 289. In determining whether a statement is "pure opinion" or "mixed opinion," the "essential task" is for the Court to decide "whether the words complained of, considered in the context of the entire communication and of the circumstances in which they were . . . written, may be reasonably understood as implying the assertion of undisclosed facts justifying the opinion." Id. at 290. If an ordinary listener would not reasonably understand the statement as implying undisclosed facts, then the statement is protected "pure opinion." Id.
Under New York law, whether the challenged statements are fact or opinion is a question of law to be decided by the Court.Id. (citing Rinaldi v. Holt, Rinehart Winston, 42 N.Y.2d 369, 397 N.Y.S.2d 943 (1977)). Moreover, it is plaintiffs' burden to establish that the statements are not protected opinion.Celle, 209, F.3d at 179.
Steinhilber instructs that, although "mixed opinion" is actionable, "[t]he actionable element of a `mixed opinion' is not the false opinion itself — it is the implication that the speaker made certain facts" that are undisclosed. Steinhilber, 68 N.Y.2d 283, 508 N.Y.S.2d at 904.
Notwithstanding plaintiffs' assertion that Breuer "had access to inside information about the KirchGroup," Compl. ¶ 67, even a cursory review of the Breuer interview reveals that no reasonable listener could interpret Breuer's statements as implying the existence of undisclosed facts supporting the statements. To the contrary, Breuer explicitly stated that he was basing his opinions on "[a]ll that you can hear or read about [the KirchGroup's viability]. . . .," i.e., publicly available information. This is especially true because the interviewer's questions themselves revealed that a "big topic . . . in Germany[was] the KirchGroup and the problems concerning its indebtedness," that it was known publicly that "Kirch has many, many debts, very large debts" and that public attention was focused on whether non-debt-holders would come to Kirch's aid.Id. ¶ 63. Even if there were some undisclosed facts upon which Breuer had based his conclusions, no ordinary listener could reasonably have understood that. Under the applicable standard, therefore, Breuer's statements constituted "pure opinion" and are not actionable. See Steinhilber, 68 N.Y.2d at 290, 508 N.Y.S.2d at 904. Plaintiffs' slander and libel claims must be dismissed.
B. The Complaint Does Not Sufficiently Allege Falsity
Even if the Breuer interview did contain actionable elements of fact, the Complaint fails adequately to plead the requisite falsity. The only factual allegation that plaintiffs offer in support of their contention that the interview was false is that, at the time of the interview, "all of the Pool Banks had agreed to extend the repayment deadlines on their loans to the KirchGroup until at least June 30, 2002." Compl. ¶¶ 54, 69. However, that is not inconsistent with the interview as it is reproduced in the Complaint. First, there is no allegation that the Pool Banks were willing to provide "further debt or equity," only that they were willing to extend repayment on the KirchGroup's existing loans. Second, as noted above, Breuer's statements purported to describe the public's view (not inside information) of the KirchGroup's financial condition. Because the interviewer's questions reveal that it was widely believed that the KirchGroup was in serious financial trouble, Breuer's statements about what one "could hear or read" appear to be consistent with reality, and plaintiffs offer no other basis for their contention that Breuer's statements were false.
To be defamatory, a statement of fact must be false.See, e.g., Dillon v. City of New York, 261 A.D.2d 34, 38, 704 N.Y.S.2d 1, 5 (1st Dep't 1999). Moreover, where the statement at issue involves a matter of public concern, the plaintiff has the burden of proving falsity. See, e.g., Flamm, 201 F.3d at 149. It is plain from the Complaint and the reporter's questions that Breuer's statements "comment on `persons who present themselves or their services or goods to the public,'" and therefore involved matters of public concern. Id. at 150.
In fact, given the speed with which the Pool Banks allegedly changed their position after the Breuer interview was broadcast, the implication from the Complaint is that the Pool Banks would not have been willing to provide further debt or equity under current conditions.
As noted above, the journalist peppered his interview with statements that: (i) the KirchGroup's "problems concerning its indebtedness" was a "big topic . . . in Germany;" (ii) "Kirch ha[d] many, many debts, very large debts;" and (iii) there was "a question of whether someone w[ould] help [Kirch] carry on." Compl. ¶ 63.
Plaintiffs do allege in the Complaint that Breuer's statements were "blatantly false." Compl. ¶ 69. However, that conclusory assertion alone is insufficient to overcome a motion to dismiss under Rule 12(b)(6). See, e.g., DeJesus v. Sears, Roebuck Co., Inc., 87 F.3d 65, 70 (2d Cir. 1996). To survive a motion to dismiss, the Complaint must put forth "specific facts or circumstances supporting th[eir] assertion." Id.
Because the Complaint does not sufficiently allege falsity, it fails to state a claim for defamation under New York law. Plaintiffs' slander and libel claims must therefore be dismissed.
Defendants argue that, even if it were not apparent from the Complaint that plaintiffs did not satisfy the falsity element, plaintiffs are collaterally estopped by the prior German proceedings (which decided the issue) from arguing that Breuer's statements were false. Plaintiffs counter that the German courts found only that Breuer's statements were not "grossly exaggerated," not that they were true. Because the Court finds that the Complaint does not sufficiently allege falsity, we do not rule on the merits of defendants' collateral estoppel argument. The Court notes, however, that even a finding that Breuer's statements were not "grossly exaggerated" would, under New York's public figure doctrine, weigh strongly in defendants' favor. See, e.g., Chapadeau v. Utica Observer-Dispatch, 38 N.Y.2d 196, 199, 379 N.Y.S.2d 61, 64 (1975) (where content of allegedly defamatory statement is "arguably within the sphere of legitimate public concern," plaintiff "must establish . . . that the publisher acted in a grossly irresponsible manner without due consideration for other standards of information gathering and dissemination orders that are followed by responsible parties").
III. Tortious Interference
The Complaint asserts that defendants' conduct constitutes tortious interference with contract and tortious interference with prospective economic advantage. Defendants move to dismiss the claim for tortious interference with contract on the ground that plaintiffs do not allege that any contract was interfered with. Defendants also move to dismiss the claim for tortious interference with prospective economic advantage, on the ground that the Complaint does not sufficiently allege either that defendants acted solely with malice or that defendants' conduct constituted "wrongful means," Scutti Enters., LLC v. Park Place Entertainment Corp., 332 F.3d 211, 215-16 (2d Cir. 2003). Again, we conclude that defendants' arguments are meritorious.
A. Tortious Interference With Contract
The elements of a claim for tortious interference with contract under New York law are "the existence of a valid contract between the plaintiff and a third party, defendant's knowledge of that contract, defendant's intentional procurement of the third party's breach of the contract without justification, actual breach of the contract, and damages resulting therefrom." Lama Holding Co. v. Smith Barney, 88 N.Y.2d 413, 424, 646 N.Y.S.2d 76, 82 (1996). Plaintiffs do not allege that any breach of contract occurred here. Instead, they argue that tortious interference with contract requires only that a plaintiff be deprived of the "fruits of an enforceable contract . . . whether or not that loss takes the form of a formal breach of contract". Kirch/KGL Opp'n to DB Mot. to Dismiss at 36. Plaintiffs are mistaken.
Plaintiffs allege the KirchGroup "retained JP Morgan for the purpose of making Project Galaxy a reality," Compl. ¶ 22, and that the KirchGroup "had entered into contracts" with JP Morgan,id. ¶ 3, "concerning the design and implementation of Project Galaxy," id. ¶ 81. However, although plaintiffs allege that JP Morgan "abandoned" Project Galaxy, id. ¶ 3, and "walked away" from it, id. ¶ 70, they do not allege that any contract was breached.
The Court of Appeals of New York has decided unequivocally that a claim for tortious interference with contract requires actual breach. NBT Bancorp Inc. v. Fleet/Norstar Financial Group, Inc., 87 N.Y.2d 614, 641 N.Y.S.2d 581 (1996). In NBT Bancorp, the plaintiff entered into a formal merger agreement with a third-party target company contingent on the approval of the target's shareholders and Comptroller of Currency. The defendant, who had submitted a previous, unsuccessful bid to acquire the target, took various actions aimed at frustrating the proposed merger before it gained the requisite approval. The plaintiff argued to the Court of Appeals that "a defendant's deliberate interference with plaintiff's contractual rights that causes damage should be punishable as tortious interference whether or not the contract was actually breached." Id. at 620. The New York Court of Appeals rejected that argument, holding that the requirement of a breach was essential to the claim because it "promotes the integrity of the marketplace; it signifies the substantiality of the interest protected, and it conforms with th[e] tort's function as a back-up remedy for breaches of contract." Id. at 623-24.
Included in the defendant's alleged conduct was "dumping" a significant number of the plaintiff's shares on the market at a reduced price, counseling dissenting target shareholders on how to oppose the merger and writing letters to the target's board.
Plaintiffs' argument here is no different from that rejected by the Court of Appeals in NBT Bancorp. Therefore, plaintiffs' claim for tortious interference with contract must be dismissed.
B. Tortious Interference With Prospective Economic Advantage
To state a claim for tortious interference with prospective economic advantage, plaintiffs must prove that: (i) they had a business relationship with a third party; (ii) defendants knew of that relationship and intentionally interfered with it; (iii) defendants either acted "solely out of malice" or used "wrongful means;" and (iv) defendants' interference caused injury to the relationship with the third-party. See, e.g., Carvel Corp. v. Noonan, 350 F.3d 6, 17 (2d Cir. 2003); Guard-Life Corp. v. S. Parker Hardware Manuf. Corp., 50 N.Y.2d 183, 190-91, 428 N.Y.S.2d 628, 632-33 (1980). At issue on this motion is whether plaintiffs have sufficiently pleaded the third element listed above. Plaintiffs contend that the Complaint alleges that both the Breuer interview and the indirect encouragement of ASV to exercise the Put Option were undertaken either "solely out of malice," Carvel Corp., 350 F.3d at 17, or through "wrongful means," Guard-Life, 50 N.Y.2d at 190-91, 428 N.Y.S.2d at 632-33, and therefore satisfy the third element. We disagree.
The Second Circuit has noted that it is not entirely clear under New York law whether (i) the "wrongful means" standard applies to both non-competitor defendants and competitor defendants, or (ii) the "wrongful means" standard applies to competitors, while a less stringent "improper" standard applies to non-competitors. See Carvel Corp., 350 F.3d at 17-20. For two reasons, the Court assumes for the purposes of this motion that the "wrongful means" standard applies in this case. First, the parties' motion papers all assume that the "wrongful means" standard applies. Second, the Complaint, taken as true, provides ample evidence that defendants were or sought to be the KirchGroup's competitors in the German cable market. See, e.g., Compl. ¶¶ 25 (alleging that Liberty and Malone "decided to launch an extensive foray into the German cable television market"), 36 (alleging that DB sought to "further [its] own substantial cable television interests" in the German market).
Even if the Complaint did state a claim for tortious interference with prospective economic advantage, it would nevertheless be necessary to dismiss ITTC as a plaintiff. ITTC does not have standing to sue because it does not allege cognizable harm under New York tortious interference law. ITTC's damages theory is that, when it lost the ability to generate negotiating fees from the KirchGroup as a result of the KirchGroup's insolvency, it "lost virtually its entire business." Compl. ¶ 76. Under New York law, however, any such loss is too attenuated to be cognizable under a tortious interference theory.See, e.g., I.R.V. Merchandising Corp. v. Jay Ward Prods, Inc., 856 F. Supp. 168, 175-76 (S.D.N.Y. 1994) ("As a matter of law, the relationship between [licensor's agent] and prospective licensees cannot be construed as the sort of contractual business relationship protected by the tort of interference with prospective economic advantage."); Int'l Minerals and Resources, Inc. v. Pappas, 761 F. Supp. 1068, 1074 (S.D.N.Y. 1991) (broker who lost commissions as a result of tortious interference with principal's business relationships cannot assert independent claim for tortious interference). The case principally relied upon by ITTC, TVT Records v. Island Def Jam Music Group, 279 F. Supp. 2d 366 (S.D.N.Y. 2003), is not to the contrary. In TVT Records, TVT Music, Inc. ("TVT Music") was permitted to assert a claim for tortious interference arising from interference with its parent company's contracts. See id. at 383-84. However, TVT Music was both wholly owned by its parent company and an intended third-party beneficiary of the contracts at issue. See id. Here, by contrast, it is not alleged either that ITTC was owned by any KirchGroup entity or that ITTC was an intended third-party beneficiary of any contract or prospective contract. As the cases cited above explain, any loss of incidental benefit to ITTC arising from ITTC's principal-broker relationship with the KirchGroup is not sufficient under New York law.
1. Malice
The Complaint does not suggest anywhere that defendants acted "solely out of malice," Guard-Life, 50 N.Y.2d at 190-91, 428 N.Y.S.2d at 632-33. To the contrary, the Complaint alleges that both DB and Breuer acted in the hope of enhancing TeleColumbus's profitability and earning large investment banking profits in the event of a KirchGroup breakup. See, e.g., Compl. ¶¶ 36 (alleging that DB sought to "eliminate Kirch's dominant position over cable television and thereby enhance the profitability of TeleColumbus"), 37 (alleging that DB "would be poised to earn at least one billion dollars from its investment banking activities, from its acquisition and resale of KirchGroup assets for its own account and from its substantial ongoing equity interest in Germany's dominant television system"). The Complaint also alleges that Liberty and Malone acted to further their interests in the German cable market. See, e.g., id. ¶¶ 26 ("Germany's cable television market was widely believed at the time to have more growth potential than any other cable market in the world, which led Liberty to see German cable television as a tremendous business opportunity."), 46 ("Malone believed he could not make money in that [German cable television] market without owning both the programming content and the `last mile of cable' for the vast majority of cable subscribers."), 55 (alleging that Liberty sought to acquire the KirchGroup's "prized media assets.")
TeleColumbus is a German cable operator indirectly owned by DB. See note 7, supra.
2. "Wrongful Means"
Neither the Breuer interview nor the ultimate exercise by another of the Put Option constituted "wrongful means," which, as the Court of Appeals of New York has explained, include "physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure; they do not, however, include persuasion alone although it is knowingly directed at interference with the [prospective] contract." NBT Bancorp, 87 N.Y.2d at 624, 641 N.Y.S.2d at 586 (quotingGuard-Life, 50 N.Y.2d at 191, 428 N.Y.S.2d at 632).
i. The Breuer Interview Did Not Constitute "Wrongful Means"
Plaintiffs argue that the Breuer interview was a "false `going concern' opinion," which constituted "fraud or misrepresentation" and therefore "wrongful means" under Guard-Life. Kirch/KGL Opp'n to DB Mot. to Dismiss at 37. Plaintiffs also argue that the Breuer interview constituted "economic pressure" — and therefore "wrongful means" — because the interview "had the effect of depriving the KirchGroup of all sources of short term liquidity and destroying Project Galaxy." Id. Plaintiffs are mistaken.
As explained above, there is no basis in the Complaint from which to conclude that the Breuer interview contained false statements. It follows that there is no basis to conclude that the interview contained a "fraud or misrepresentation." See, e.g., Pits, Ltd. v. American Express Bank Int'l, 911 F. Supp. 710, 719 (S.D.N.Y. 1996) (falsity is essential element of fraud under New York law).
There is likewise no basis in the Complaint to conclude that the Breuer interview constituted "economic pressure" within the meaning of Guard-Life. First, the only "economic pressure" alleged in the Complaint is that suffered by the KirchGroup. That allegation is insufficient because economic pressure, in order to constitute "wrongful means," must be directed at third-party prospective business relations for the purpose of convincing the third parties not to enter into business relationships with plaintiffs. See, e.g., Scutti Enters., 322 F.3d at 216;Creative Transaction Corp. v. Monroe Allen Publishers, Inc., No. 01 Civ. 4383, 2004 WL 60291, *4 (S.D.N.Y. Jan. 12, 2004);Oxyn Telecomms., Inc. v. Onse Telecom, No. 01 Civ. 1012, 2003 WL 22271224, *5-*6 (S.D.N.Y. Sept. 30, 2003). Second, even if economic pressure suffered by the KirchGroup were cognizable under New York law, to the extent that Breuer's statements caused such pressure, they did so merely as a result of their persuasive effect on third parties who, in the end, independently decided not to enter into various subsequent agreements with the KirchGroup. Under NBT Bancorp, such persuasion alone cannot give rise to liability. NBT Bancorp, 87 N.Y.2d at 624, 641 N.Y.S.2d at 586 ("persuasion alone" not sufficient).
ii. The Exercise of the Put Option by ASV Did Not Constitute "Wrongful Means"
The Complaint alleges that "Malone and Deutsche convinced [Rupert] Murdoch that the KirchGroup was vulnerable and that, if they cooperated, Liberty and News Corp. could acquire control of Dr. Kirch's companies." Compl. ¶ 55. Murdoch, in turn, "encouraged ASV to turn the screws on Dr. Kirch" by exercising the Put Option. Id. ¶ 56. It is alleged that DB then "promised Friede Springer that if ASV went along with the breakup plan, [DB] would convey enough of the KirchGroup's shares in ASV to Mrs. Springer so as to give her undisputed control of ASV." Id. Plaintiffs argue that defendants' conduct constituted unlawful "economic pressure" because ASV's exercise of the Put Option created a "liquidity crisis" for the KirchGroup. Kirch/KGL Opp'n to Liberty Mot. to Dismiss at 19. Plaintiffs' argument fails for two reasons.
First, as with the Breuer interview, the only "economic pressure" alleged is that allegedly suffered by the KirchGroup as a result of ASV's exercise of the Put Option. As explained above, that allegation is not sufficient to state a claim. See Section III.B.2.i, supra.
No economic pressure is alleged to have been applied to ASV.
Citing Scutti Enters., 322 F.3d at 216-17, plaintiffs argue that the question whether defendants' conduct amounted to "economic pressure" sufficient to constitute "wrongful means" under Guard-Life is a question of fact that may not be resolved on a motion to dismiss. Kirch/KGL Opp'n to Liberty Mot. to Dismiss at 21-23. Plaintiffs miscite Scutti Enters. In Scutti Enters., the plaintiff alleged that the defendant had offered the plaintiff's third-party business partner substantial financing for capital improvements in exchange for the third party's agreement not to honor an ancillary agreement with the plaintiff. 322 F.3d at 214. The Second Circuit held that it was "not beyond doubt that [the plaintiff] could demonstrate that [the defendant's] loan offer . . . was economic pressure" on the third party. Id. at 217. Here, by contrast, plaintiffs do not allege that defendants exerted any economic pressure on ASV to induce ASV to exercise the Put Option. To the contrary, it is plain from the Complaint that ASV had sufficient motivations of its own to exercise the Put Option on the day before it expired. The exercise price of the Put Option "greatly exceeded" the market price of ProSiebenSat.1's stock at that time. Compl. ¶ 50. Additionally, ASV hoped that Kirch would have to give up his shares in ASV to satisfy the exercised Put Option, leaving Friede Springer as the sole dominant ASV shareholder. Id. ¶ 51.
Second, even if economic pressure on the KirchGroup were relevant, there is no allegation that defendants applied that pressure. To the extent defendants are implicated at all in orchestrating ASV's exercise of the Put Option, it is solely through their efforts indirectly to suggest to ASV that it should exercise the option. See, e.g., Compl. ¶¶ 55, 56. Again, however, persuasion alone is not sufficient under New York law.See Section III.B.2.i, supra. Plaintiffs' claims for tortious interference with prospective economic advantage must therefore be dismissed.
The New York cases that plaintiffs cite are not contrary to our holding. In KLS Recreation, Inc. v. Boca Raton Hotel and Club Ltd. P'ship., the defendant counterclaimed that the plaintiff's pre-filing facsimile transmission of a complaint to the defendant's prospective financier "was born of a vindictive desire to prevent [the defendant] from obtaining financing from any other source once it spurred [the plaintiff's] offer," and not of a legitimate business interest. 168 Misc.2d 18, 24, 637 N.Y.S.2d 261, 265 (Sup.Ct. 1995). Likewise, in Butler v. Deleware Otsego Corp., the court held that the plaintiff adequately alleged that, in disseminationg "derogatory and defamatory material about [the plaintiff] to the New York Times, as well as several of [the plaintiffs] friends, acquaintances and business associates," 218 A.D.2d 357, 358-81, 638 N.Y.S.2d 805, 805-08 (3d Dep't 1996). As explained supra, the complaint provides more than sufficient ground on which to reject the motion that defendants acted solely out of a vindictive desire to harm plaintiffs.
IV. Conspiracy
Plaintiffs conspiracy claim must also be dismissed. Under New York Law, conspiracy to commit a tort is not, itself, actionable; "[a]llegations of conspiracy are permitted only to connect the actions of seperate defendants with an otherwise actionable tort. . . ." Alexander Alexander of New York, Inc. v. Fritzen, 68 N.Y.2d 968, 969, 510 N.Y.S.2d 546, 547 (1986) (internal citations omitted); see also Missigman v. USI Northeast, Inc., 131 F. Supp.2d 495, 510 (S.D.N.Y. 2001) ("Under New York Law, a claim for civil conspriacy is available only if there is evidence of an underlying actionable tort."); MBF Clearing Corp. v. Shine, 212 A.D.2d 478, 479, 623 N.Y.S.2d 204, 205 (1st Dept. 1995) (holding that "`mere conspiracy to commit a fraud is never of itself a cause of action'" (quoting Brackett v. Griswold, 112 N.Y. 454, 467 (1889)). Because plaintiffs have failed to state a claim for any "otherwise actionable tort," the conspiracy claim cannot survive.
The Court notes without deciding the issue that, even if the Complaint did state a claim upon which relief could be granted, this action would likely be dismissed on forum non conveniens grounds. As explained in footnotes 15 and 26,supra, ITTC must be dismissed for lack of standing. With ITTC properly removed, this case, the majority of whose events, people and documents exist in or concern Germany, probably lacks the requisite connection to the United States to be maintained here.See, e.g., Base Metal Trading SA v. Russian Aluminum, 253 F. Supp. 2d 681 (S.D.N.Y. 2003).
CONCLUSION
For the foregoing reasons, defendants' motion to dismiss is granted. The Clerk of the Court is respectfully requested to close this case on the Court's docket.
IT IS SO ORDERED.