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Greschner v. Becker

United States District Court, D. Arizona

February 18, 2015

Steven Greschner, Plaintiff,
Andrew Becker, et al., Defendants.


G. MURRAY SNOW, District Judge.

Before the Court is Defendants' Motion to Dismiss Plaintiff's First Amended Complaint. (Doc. 6.) For the following reasons, the Court grants the Motion in part and denies it in part.


Plaintiff describes himself as a "software, networking, security, and technology sales professional and executive." (Doc 1, Ex. 1, at 4.) He is the chief executive of Hummingbird Defense Systems, Inc., a Phoenix-based national security and technology firm. On August 26, 2014, the Center for Investigative Reporting ("CIR") and ProPublica, two non-profit news organizations, published an article on a purported security breach at an Arizona-based counterterrorism center by a computer programmer, a Chinese national employed by Hummingbird who had been contracted by the Maricopa County Sheriff's Office to build a facial recognition system for the counterterrorism site. The programmer had been originally hired by a woman with whom Plaintiff was romantically involved, and whom federal authorities allegedly suspected of international espionage. The article detailed the programmer's flight to China in June 2007 with computer equipment possibly containing sensitive data he enjoyed access to by virtue of his employment-including the Arizona driver's license database, arrest files from county jails, and criminal history data-and an ensuing cover-up of the leak by local government and law-enforcement officials. The article further connected the incident to an ongoing immigration-fraud case involving Plaintiff's girlfriend. Plaintiff was interviewed by Defendants over the course of their investigation and publication of this article.

On September 8, 2014, Plaintiff filed a defamation suit in the Superior Court of Maricopa County. His First Amended Complaint ("FAC") was filed on October 17, and Defendants-the CIR, ProPublica, and various reporters and editors with those organizations-subsequently removed the case to federal court pursuant to 28 U.S.C. §§ 1441 and 1446.[1] (Doc. 1.) They now move to dismiss the FAC for failure to state a claim.


I. Legal Standard for Motion to Dismiss

To survive dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must contain more than "labels and conclusions" or a "formulaic recitation of the elements of a cause of action"; it must contain factual allegations sufficient to "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While "a complaint need not contain detailed factual allegations... it must plead enough facts to state a claim to relief that is plausible on its face.'" Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008) (quoting Twombly, 550 U.S. at 570). When analyzing a complaint for failure to state a claim under Rule 12(b)(6), "[a]ll allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996). However, legal conclusions couched as factual allegations are not given a presumption of truthfulness, and "conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss." Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

II. Application

To state a claim for defamation under Arizona law, a plaintiff must plead: (1) a false and defamatory statement of and concerning the plaintiff; (2) an unprivileged publication of that statement to a third party; and (3) fault amounting to at least negligence on the part of the publisher or "actual malice, " depending on the status of the plaintiff as a private or public figure and whether the statement at issue involves a matter of public concern. Boswell v. Phoenix Newspapers, Inc., 152 Ariz. 1, 3, 730 P.2d 178, 180 (Ct. App. 1985) (citing Restatement (Second) of Torts § 558); see also Citizen Publ'g Co. v. Miller, 210 Ariz. 513, 517, 115 P.3d 107, 111 (2005) (discussing heightened protection for speech that touches on public issues). Defendants challenge the sufficiency of Plaintiff's pleading as to the first element.

A. Defamatory Statement

To be defamatory, "a publication must be false and must bring the defamed person into disrepute, contempt, or ridicule, or must impeach plaintiff's honesty, integrity, virtue, or reputation." Godbehere v. Phoenix Newspapers, Inc., 162 Ariz. 335, 783 P.2d 781, 787 (1989). A publication that impeaches the integrity and reputation of a corporation may be actionable by an individual if a reader of the article would understand it as referring to the corporate entity as well as its executives. See Peagler v. Phoenix Newspapers, Inc., 114 Ariz. 309, 315, 560 P.2d 1216, 1222 (1977). In contrast, statements of opinion are protected under the First Amendment, and are generally not actionable. Obsidian Fin. Grp., LLC v. Cox, 740 F.3d 1284, 1293 (9th Cir. 2014) (quoting Partington v. Bugliosi, 56 F.3d 1147, 1153 (9th Cir. 1995)). In determining whether a statement is a factual assertion capable of defamatory meaning or mere opinion, consideration should be given to "(1) whether the general tenor of the entire work negates the impression that the defendant was asserting an objective fact, (2) whether the defendant used figurative or hyperbolic language that negates that impression, and (3) whether the statement in question is susceptible of being proved true or false." Id.

Plaintiff asserts the article contained a number of defamatory statements. Nevertheless, only a few of the statements identified in his amended pleading assail the reputation of either Plaintiff or his company.[2]

For example, in one instance the article refers to Plaintiff's technology company as "dubious." (Doc. 1, Ex. 1, at 26) This statement does not represent an assertion of verifiable fact. See Obsidian Fin. Grp., 740 F.3d at 1293. It cannot fairly be characterized as either true or false, since there is no objective benchmark with which to measure the veracity of the Defendants' description. As to the allegation that a contract with Hummingbird to install security equipment at a Nevada Airport "ended in litigation, " Plaintiff concedes that a lawsuit was initiated between his company and an electrician they had hired that arose from that project. (Doc. ...

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