Olivet University v. Newsweek Digital LLC

Background

Olivet University brought one claim for defamation per se under New York law against Newsweek-related entities and journalist Naveed Jamali. The claim concerned statements in two Newsweek articles saying that Olivet had pleaded guilty to money laundering.

Olivet’s criminal case involved charges arising from an alleged fraudulent financing scheme. In 2020, Olivet pleaded guilty to falsifying business records in the first degree, a felony, and conspiracy in the fifth degree, a misdemeanor. The conspiracy count accused Olivet and others of agreeing to engage in conduct constituting second-degree money laundering. After Olivet complied with its plea agreement, the felony charge was reduced to a misdemeanor, and the other charges were dismissed except for the conspiracy charge.

The 2022 and 2023 articles discussed investigations and scrutiny involving Olivet. Each article also stated that Olivet had previously pleaded guilty to money laundering. Olivet alleged that this was false because it had pleaded guilty to falsifying business records and conspiracy, not to money laundering itself. It claimed reputational, financial, and professional harm.

Legal standard

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which asks whether the complaint states a legally sufficient claim. For a New York defamation claim, a plaintiff must plausibly allege that the challenged statement was false, defamatory, about the plaintiff, published to a third party, made with the required level of fault, and either defamatory on its face or associated with specific harm.

A plaintiff must plausibly allege that the statement was substantially false. A statement is substantially true when its overall meaning, or its effect on an ordinary reader, would not differ from the effect of the actual facts. The court could consider the criminal-case documents and the articles because they were public documents or attached to, and integral to, the complaint.

Court’s analysis

The court held that Olivet could not plausibly allege substantial falsity. The articles technically misstated that Olivet pleaded guilty to money laundering rather than conspiracy to commit money laundering. But the court found that this was a technical distinction that would not produce a materially different impression in the mind of an ordinary reader. Both descriptions conveyed that Olivet had pleaded guilty to a serious crime closely related to money laundering.

The court also considered the full context of the articles. They discussed separate investigations into possible money laundering and other alleged misconduct involving Olivet. In that context, the court concluded that the articles’ overall message was that Olivet had previously pleaded guilty to a crime involving money laundering, which the court found substantially true.

The court further relied on Olivet’s admissions during its plea allocution. Olivet admitted that William Anderson, a high managerial agent of Olivet, committed money laundering while acting within the scope of his employment and on Olivet’s behalf. The court concluded that these admissions established factual predicates for corporate criminal responsibility under New York law and provided an additional reason why the challenged statement was not substantially false.

Because the court found the statement substantially true, it did not reach the defendants’ arguments concerning the fair-report privilege or whether the statement caused additional harm. The court also rejected Olivet’s argument that substantial truth could not be considered on a motion to dismiss, explaining that falsity is an element Olivet had to plausibly allege.

Disposition

Judge Buchwald granted the defendants’ motion to dismiss and dismissed the amended complaint with prejudice. The Clerk of Court was directed to terminate the pending motions and close the case. Olivet’s later request for a scheduling or discovery conference was denied as moot.