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Employees of targeted strip club cannot bring defamation lawsuit based on statements about their employer


     brigham dixson

By Brigham Dixson

         The New York Court of Appeals, the highest court in the State of New York, recently decided that the employees and suppliers of a strip club at the heart of a federal  investigation for human trafficking could not sue for defamation against a television station based on reports about their employer’s involvement. 

         On November 30, 2011, federal authorities raided the club in Manhattan.  It, along with other strip clubs, was involved in a trafficking ring involving members of the Bonnano and Gambino crime families who illegally brought Russian and Eastern European women into the United States, placed them into sham marriages to obtain citizenship, and forced them to dance in New York City strip clubs.  A New York City television station reported on the investigation, noting that “federal authorities say [the club] is run by the mafia” and that twenty-five men were arrested and described as ringleaders of the operation. 

  Scorn and ridicule

         Two independent entities that provided management and talent services to the club, and three individual employees of the club sued, arguing that the station’s reports that the club was “run by the mafia” subjected them to scorn and ridicule, and adversely affected their ability to earn income.   The station moved to dismiss these claims, arguing that the news reports were not “of and concerning” the independent entities or the individual employees.  The station’s motion was granted. Only the individual employees appealed to the New York Court of Appeals. 

         The “of and concerning” standard for defamation in New York requires that plaintiffs plead and prove that the allegedly defamatory statement referred to them and that a person hearing or reading the statement reasonably could have interpreted it as referring to the plaintiffs.   Here, the court of appeals’ majority could find no reasonable interpretation of the reports that would implicate the employees. 

        The appeals court relied on the facts that the reports did not mention any employees of the club, nor management and talent agencies involved in its operations.  Specifically, the individual employees were not mentioned by name and their pictures were not shown.  Also of particular importance, the court of appeals found that the allegedly defamatory reporting did not describe a particular, specifically-defined group of individuals who “run” the club, so as to invoke the small group libel doctrine, which applies when defamatory broadcasts are necessarily aimed at a specifically-identified group of limited size. 

  Not all on the court agreed

         One judge of the New York Court of Appeals dissented from the majority of the court, and was clearly more deferential to the possibility that patrons, business associates or others familiar with the employees could indeed reasonably believe that the reports implicated all employees.  Specifically, the dissent found that “the statement that [the club] was ‘run by the mafia’ could just as reasonably be interpreted as meaning that the individuals who ran the Club were associated with the mafia.” 

        Furthermore, the fact that the individual plaintiffs did not own the club was irrelevant to the effect of the statements on someone who heard or saw the reports who might also believe, even if mistakenly, that the individual employees were in control or running the club. 

        The dissent also pointed to an affidavit from one of the individual employees pointing out that the employees comprised a “small and exclusive group of individuals who ‘run’ and manage” the club, and were known throughout the city as such.  The same individual also stated in the affidavit that, after the news reports, numerous individuals inquired about her connection to the mafia and human trafficking.  

        Ultimately, the dissent believed that the small number of plaintiffs and their affiliation with the club  presented, at the pleading stage, a sufficient likelihood that anyone with knowledge or baseline familiarity with the plaintiffs or the club  could believe the reports were “of and concerning” those employees. Importantly, the dissenting judge did not discount the majority’s opinion as being unreasonable, but instead found her own conclusion equally reasonable.  

         This case, decided five to one in favor of the station, shows that New York employees continue to face a significant hurdle when seeking to bring a defamation action by imputing statements about their employer onto themselves.  So long as an employee is not mentioned by name or specifically mentioned in relation to some kind of alleged defamatory statement, New York courts will be reluctant to let them pursue a defamation claim.





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