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Banco Nacional de Mexico, S.A. v. Menendez-Rodgriguez, et al.

Index No. (Sup. Ct. N.Y. Co., December 14, 2001)

Plaintiff bank brought defamation claims against defendant Mario Menendez-Rodriguez, a Mexican resident and journalist, defendant Narco News, a web site, and defendant Al Giordano, its publisher, arising, in part, out of statements defendants made concerning Roberto Hernandez-Ramirez, plaintiff's largest shareholder, general director and chairman of its board of directors, and the bank itself. In these statements, defendants accused Hernandez-Ramirez of being a "drug trafficker", and of having used gains from illegal endeavors to acquire the plaintiff bank. The Narco News also allegedly claimed that "bank officials have been arrested for drug-money laundering …". Defendants allegedly made the statements in question in a newspaper published in Mexico, Por Esto! with which defendant Menendez-Rodriguez is affiliated, in an interview given to The Village Voice, a New York publication, during a panel discussion at Columbia University in New York, and/or in articles published on the Narco News web site.

The court, on defendants' motions, dismissed the complaint. The claims advanced against defendant Menendez-Rodriguez were dismissed on the ground that the court lacked personal jurisdiction over him given the plaintiff's failure to allege facts sufficient to show that Menendez-Rodriguez, a non-resident, "transacted purposeful business activity bearing a substantial relationship to the subject matter of the lawsuit in [New York]." The defamation claims against the remaining defendants were dismissed as a result of plaintiff's failure to allege facts sufficient to state a claim against them. The court determined that these defendants were media defendants entitled to heightened protection under the First Amendment. Given that they were reporting on matters of public concern plaintiff, to state a claim against them, had to allege facts sufficient to show both that the statements they allegedly made were false, and that they were made with "actual malice," that is with knowledge that the statements were false or made with reckless disregard for the truth. The court held that plaintiff had not alleged facts sufficient to establish that the remaining defendants had acted with actual malice, given, inter alia, their reliance on articles appearing in Por Esto! for the statements they made, and accordingly dismissed the complaint against them.

Plaintiff Banco Nacional de Mexico S.A. (the "Bank") is a bank in Mexico authorized to do business in New York, where it maintains an office. Roberto Hernandez-Ramirez is plaintiff's largest shareholder, as well as its general director, and chairman of its board of directors. Mr. Hernandez-Ramirez was not a party to the action.

Defendant Mario Menendez-Rodriguez ("Menendez-Rodriguez") is a Mexican resident and journalist who is affiliated with the Mexican newspaper Por Esto!. Defendant Narco News is a non-subscription web site available to New York residents. Defendant Al Giordano ("Giordano") is its publisher. Defendants claim that the Narco News is a non-commercial passive web site whose purpose is to educate its readers about the drug trade. It does, apparently, invite and receive e-mail comments from its readers concerning the subject matter of the site.

In or about 1997, Por Esto! published articles which claimed that drugs were being transported to and from Punta Pajaros, a property allegedly owned by Hernandez-Ramirez. The newspaper also reported that "it received confirmation from the PGB (the Office of the Mexican General Attorney) that there was a drug seizure on Punta Pajaros in February of 1997 …". The paper also allegedly published a photo of "large packages of cocaine seized on Punta Pajaros …". Defendant Menendez-Rodriguez claimed his reporting was supported by an interview with a fisherman, after which he dispatched several reporters and photographers to conduct an investigation.

In the Spring of 2000, Menendez-Rodriguez gave an interview, reported in the Village Voice, in which he allegedly described Hernandez-Ramirez as a "narcotics trafficker." At or about the same time, defendants Menendez-Rodriguez and Giordano appeared at Columbia University Law School in New York. According to plaintiff, defendants there stated that "the one that is heading the traffic of drugs … we are talking about the national Bank of Mexico director Roberto Hernandez-Ramirez. … Well, we went there. We stayed 10 days … and we saw what was happening there. Freely, once, twice and three times a day you have these boats … that will leave the Colombian coast at the north part … Every boat it had - it takes about 1.2 tons of cocaine up to 1.6 tons of cocaine. All that cocaine … would arrive to the coast of Quintana Roo … It would leave the Colombian coast from the north and in 22 hours will be in Mexican territory. That cocaine was loaded in Roberto Hernandez-Ramirez' land, and taken by airplanes, by bigger boats, and by trucks up to the United States frontier. … We found the drug in Roberto Hernandez's land, and we published the photo of Roberto Hernandez property with drugs. …".

According to the court, "defendant Giordano is alleged to have made a series of spoken and written statements calling Mr. Hernandez-Ramirez a criminal, a drug trafficker and money launderer and portraying plaintiff as an institution that is involved in criminal activity. In addition, plaintiff alleged that Giordano published a series of articles in defendant Narco News that repeated and expanded upon his portrayal of plaintiff. Plaintiff states that Mr. Giordano's online magazine informed readers that Mr. Hernandez-Ramirez purchased the nation's banks with narco-money and that bank officials have been arrested for drug money laundering."

Various criminal actions were pursued against defendant Menendez-Rodriguez without success. These included a complaint filed against him for criminal defamation and libel, as well as a complaint charging him with violation of the Mexican Printing Law. These actions were dismissed in large part due to the fact that the complainant was an entity, not an individual, which lacked standing to bring its claims, and because "there was not enough evidence of the crime of libel against the corporate entity since there was no imputation of any type against the juridical identity of the Banamex-Accival."

The court determined that these Mexican judicial proceedings did not bar the present action, either on grounds of res judicata or collateral estoppel. The court further determined that it would apply the laws of New York, and not Mexico, to the dispute in question. The court reached this conclusion, in part, given "the First Amendment implications of this matter …". The court further noted the sharp distinction between the defamation law of Mexico, in which the truth of the statements at issue is not an absolute defense to such a claim, and the law of New York, where it is. The court also noted New York's interest in the matter, given that the alleged defamation occurred at public meetings in New York, and on a radio program and on a web site which may be accessed in New York.

Having made these determinations, the court turned to motions made by defendants to dismiss the complaint for want of personal jurisdiction.

The court granted the motion of defendant Menendez-Rodriguez, a Mexican resident, to dismiss the complaint for want of personal jurisdiction. The court noted that under New York law, the commission of the tort of defamation in New York does not, by itself, give rise to jurisdiction over the defendant. In this regard, the court noted that this tort was treated differently than others "in order to avoid unnecessary inhibitions on freedom of speech or freedom of the press." As such, given defendant's status as a non-resident, plaintiff, to establish the jurisdiction of the court over him, was obligated to show that the defendant "transacted purposeful business activity bearing a substantial relationship to the subject matter of the lawsuit in this State." On the facts before it, the court concluded that plaintiff had failed to meet this burden as to Mr. Menendez-Rodriguez. Mr. Menendez-Rodriguez's only contact with New York was his single trip to New York to participate in the panel discussion at Columbia University, for which he was not compensated. Other than that, he had not been in New York for 33 years. He was not affiliated with any New York newspaper, radio or television station, and had not worked as a journalist here. As such, held the court, plaintiff "has failed to show that Mr. Menendez-Rodriguez … is engaged in any business in New York …" and the court accordingly dismissed the complaint against him.

The court declined to dismiss the complaint against the remaining defendants, however, on grounds of personal jurisdiction, holding instead that plaintiff had alleged sufficient facts which, if proven, "would support a finding of jurisdiction against the remaining defendants." These allegations would, absent the ruling later rendered by the court, entitle plaintiff to conduct jurisdictional discovery. The court reached this determination despite defendants' claims that defendant Giordano had lived in Mexico since September 1998, from which location he established the Narco News web site by computer. The court noted plaintiff's allegations that Giordano had maintained a post office box with a New York address, had allegedly engaged a New York company to host and be technical consultant for his web site, and had allegedly procured funding for his web site, which was available to New York residents, from an organization located in New York city.

The court nonetheless dismissed the complaint against both Giordano and the Narco News as a result of plaintiff's failure to allege facts sufficient to state a claim against them. The court noted that "in New York, a corporation does not have a cause of action based on an allegedly defamatory statement made solely against an individual identified as a company owner or officer. However, plaintiff has stated sufficient facts to show that the alleged defamation was not limited to corporate officers, namely the statements that plaintiff bank was created with drug money and that officers of the corporation were involved in money laundering."

After analyzing the Narco News, the court held that defendants Giordano and the Narco News were media defendants entitled to heightened protection under the First Amendment. The court rested this conclusion on its finding that the Narco defendants' web site is similar to a regularly published news magazine or newspaper except for the fact that it is published online. The court also held that the nature of the comments in question were matters of public concern.

The court ruled that because the matters in question were of public concern, the plaintiff, to prevail on his defamation claim, must prove both that the statements in question were false and were made with actual malice - that is with knowledge that the statements in question were false, or made with reckless disregard for the truth. Said the court:

Plaintiff is still not entitled to enjoy the lower standard of proof accorded private complainants because even private individuals suing media defendants over statements involving matters of public concern must prove constitutional malice to recover presumed or punitive damages.

According to the court, "plaintiff may not rely on allegations of falsity alone to raise an inference of malice but must plead facts which, if proven true, would show that the Narco defendants intended to injure plaintiffs." The court held that plaintiff had not met this burden, as it had neither shown that defendants had any interest in the banking business, nor any interest in harming plaintiff's business.

Nor, held the court, did plaintiff allege facts sufficient to show that "the Narco defendants acted in a grossly irresponsible manner without due consideration for the standards of information gathering and dissemination ordinarily followed by responsible parties." The court held that defendants were entitled to rely on the articles published in Por Esto! for the information they published on the Narco News web site. Plaintiff had failed to allege that the Narco defendants used sources that they knew, or should have known, were unreliable, or that the Narco defendants were aware of other reliable sources to verify the information alleged in Por Esto!

The court accordingly dismissed the defamation claims asserted against Giordano and the Narco News for failure to state a claim.

Lastly, the court dismissed plaintiff's claim that Giordano and the Narco News tortuously interfered with plaintiff's future contractual relationships because "plaintiff has failed to allege any specific relationships with which the Narco defendants interfered."

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