BYD Company Ltd. v. VICE Media LLC

Background

BYD Company Ltd. brought a single defamation claim against VICE Media LLC. BYD alleged that a VICE article about BYD’s production of coronavirus masks falsely described BYD as having been “blacklisted” by President Trump and misrepresented an Australian Strategic Policy Institute report concerning companies associated with alleged forced Uyghur labor.

The article discussed a provision of the 2020 National Defense Authorization Act that prohibited federal funds from being used to purchase certain rail cars and buses from companies owned or subsidized by the Chinese government. BYD acknowledged that it was among the companies affected by the legislation but argued that the word “blacklisted” falsely suggested that Congress specifically targeted BYD. BYD also alleged that the Australian report did not say that BYD used forced Uyghur labor in its supply chain, and that VICE acted with knowledge of, or reckless disregard for, the alleged falsity. BYD further alleged that third parties had cited the article when delaying or ending potential business transactions with BYD.

Legal standard

The court applied New York law because the case was in federal court based on diversity jurisdiction and the parties relied on New York law. To state a defamation claim under New York law, a plaintiff generally must allege a defamatory written statement about the plaintiff, publication to a third party, fault, falsity, and either special damages or a statement actionable without proof of special damages.

Because BYD pursued its claim as a public-figure defamation claim, it also had to plausibly allege “actual malice.” Actual malice means that VICE knew a statement was false or recklessly disregarded whether it was false. The court explained that, at the motion-to-dismiss stage, it accepted well-pleaded factual allegations as true and drew reasonable inferences in BYD’s favor, but it did not have to accept unsupported legal conclusions.

Rulings

The court concluded that BYD was a limited-purpose public figure. BYD did not oppose VICE’s argument on that point and assumed that its public role in distributing needed supplies during the COVID-19 crisis made it at least a limited-purpose public figure.

The court held that the headline was not actionable. Under New York’s “fair index” rule, a headline is not defamatory if it fairly reflects the substantially accurate content of the article. The court found that the article explained the legislation, stated that BYD was prohibited from bidding on some federal contracts, and provided context about Congress’s action and President Trump’s role in signing the law. In that context, the court viewed “blacklisted” as rhetorical hyperbole rather than a literal claim that a blacklist existed.

The court also held that the headline and related article content were protected by New York Civil Rights Law § 74, which protects fair and true reports of legislative and other official proceedings. The court found that the article substantially and accurately described the relevant legislative process. BYD’s failure to respond to VICE’s § 74 argument supplied an additional reason for applying that protection.

The court then held that BYD failed to plausibly allege actual malice regarding the Australian report. BYD’s allegations that VICE knew the report did not support the article’s description were conclusory and did not identify specific VICE personnel who allegedly possessed that knowledge. The court also found that the article described BYD as one of the companies identified in the report, linked to the report, and included BYD’s prior denials of labor-abuse allegations. The court concluded that the similarities between the report and the article did not plausibly show that VICE knowingly fabricated the report’s contents.

The court likewise rejected BYD’s theory that VICE acted recklessly by relying on the Australian report or failing to investigate criticisms of the organization. The court stated that failure to investigate, without facts showing that VICE had subjective doubts about the source’s accuracy, would at most suggest negligence rather than actual malice. The court did not reach VICE’s separate argument that the neutral-reportage privilege protected the statements because it resolved the motion on the failure to plead actual malice.

Disposition

The court granted VICE’s motion to dismiss with prejudice. BYD had previously been given an opportunity to amend but declined to do so, and the court concluded that amendment would be futile. The court denied VICE’s request for oral argument, directed the Clerk to enter judgment and close the case, and stated that the order resolved Docket Nos. 17 and 27.