Libre by Nexus v. Buzzfeed, Inc.

Citation: 311 F. Supp. 3d 149Docket: Case No. 17–cv–01460 (APM)

Court: Court of Appeals for the D.C. Circuit; May 16, 2018; Federal Appellate Court

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A defamation lawsuit has been filed by Plaintiff Libre by Nexus against BuzzFeed, Inc., its editor Ben Smith, and others following the publication of a BuzzFeed article discussing the company and a purported federal investigation into its practices. The article, titled "Immigrants Desperate To Get Out Of U.S. Detention Can Get Trapped By Debt," features an immigrant detainee who appreciates the company's help but highlights the financial strain of a $420 monthly fee for GPS monitoring. It also includes criticisms from immigrant advocates who argue that the financial burdens placed on detainees can exceed the immigration bond amounts due to extended court processes. The article details Libre by Nexus's business model, which involves initial fees and ongoing payments, illustrating that some detainees end up paying significantly more than their bonds. However, the article also presents the company's perspective, featuring comments from its President, Michael Donovan, who defends the business practices by emphasizing the limited options available to detainees and noting a high court appearance rate among customers. The court partially grants and partially denies the defendants' motion to dismiss the complaint, while denying the special motion under the D.C. Anti-SLAPP Act.

Federal and state officials have investigated Plaintiff's business practices, including a 2015 request from U.S. Representative Norma Torres to ICE regarding potential exploitation of clients. Notably, Plaintiff was previously investigated in 2013 by the Virginia commonwealth attorney, Fairfax City Police, and ICE's HSI unit for allegedly targeting undocumented immigrants and fraudulently charging for services; however, these investigations concluded due to insufficient evidence. Additionally, Donovan, associated with Plaintiff, has a prior conviction for passing bad checks at age 19, which led him to engage in prison diversion programs. Since its establishment in 2014, Plaintiff has emerged as an industry leader, donating a significant portion of its profits to a charitable arm providing pro bono legal services in immigration court, though critics argue this may create conflicts of interest. Donovan denies these claims. A detainee’s quote expressing gratitude for Plaintiff’s services is included. 

In a procedural context, Plaintiff initiated a defamation lawsuit against Defendants on July 22, 2017, later amending the complaint. Plaintiff claims the Article contains false and defamatory statements, specifically regarding an investigation by ICE for alleged fraud. Plaintiff asserts that the investigation was closed due to lack of evidence and contends that Defendants were aware of a November 15, 2015 letter from ICE to Torres, which purportedly clarified that Plaintiff was not under investigation and endorsed its business model.

Plaintiff cites a quote from the November 2015 Letter, asserting that ICE lacks legal authority to investigate bail bond companies regarding private party conduct. However, the November 2015 Letter was not attached to the pleading. On October 13, 2017, Defendants filed a motion to dismiss Plaintiff's Amended Complaint with prejudice under Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing that Plaintiff fails to present sufficient facts to support claims of defamation, including that the statement was false or published with actual malice. Defendants also invoke the 'fair report privilege' due to the Article's accurate description of a governmental record. Alongside this, Defendants submitted a 'Special Motion to Dismiss' under the D.C. Anti-SLAPP Act, claiming that the Article pertains to public interest advocacy and that Plaintiff cannot show a likelihood of success on the defamation claim. Defendants seek dismissal with prejudice and request reasonable attorneys' fees and costs. The legal standard for a Rule 12(b)(6) motion requires that a complaint contain enough factual matter to state a claim that is plausible on its face, with the court accepting the plaintiff's allegations as true while disregarding legal conclusions presented as facts.

To evaluate whether a complaint fails to state a claim under Rule 12(b)(6), a court may only consider the facts in the complaint, documents attached or incorporated therein, and matters subject to judicial notice. A district court can review documents attached to a motion to dismiss if their authenticity is undisputed, they are referenced in the complaint, and they are integral to the plaintiff's claims. In this case, the Article is integral to the Plaintiff's defamation claim, as referenced throughout the Amended Complaint, despite not being attached as an exhibit by the Plaintiff. The Defendants included the Article in their motion, and the Plaintiff did not challenge its authenticity, allowing the court to consider it without converting the motion to one for summary judgment.

However, the court clarifies that the Amended Complaint does not incorporate the Article in its entirety; referencing the Article does not imply that the Plaintiff adopts its contents as true, which would undermine their defamation claim. To establish a defamation claim under District of Columbia law, a plaintiff must demonstrate that the defendant made a false and defamatory statement, published it without privilege to a third party, acted with at least negligence, and that the statement either caused special harm or is actionable per se. The Defendants argue that the Plaintiff has not alleged sufficient facts for a plausible defamation claim, and the court agrees, concluding that the Amended Complaint does not contain enough factual allegations to infer that the statement in the Article is false. Therefore, the court determines that the Plaintiff fails to state a claim for defamation under District of Columbia law.

A plaintiff in a defamation case is not subject to a heightened pleading standard but must clearly allege the content of any defamatory statements. Courts have consistently ruled that failing to identify specific statements renders a defamation claim inadequate. Falsity and defamatory meaning are separate elements of defamation that must be assessed individually. When evaluating a motion to dismiss, a court must ascertain both the capability of a statement to hold defamatory meaning and its plausibility of being false. While the capacity for defamatory meaning is a legal question, falsity can also sometimes be determined as a matter of law. The D.C. Circuit's decision in Trudeau illustrates that the threshold inquiry for falsity is whether a reasonable person could perceive a statement as false. The court must thus assess whether the plaintiff has presented sufficient facts to plausibly support the claim of falsity regarding the allegedly defamatory statement.

Plaintiff alleges defamation based on a single false statement in an article claiming that Plaintiff was investigated by ICE in 2013 for targeting undocumented immigrants and fraudulently charging fees for services. The Plaintiff argues that the defendants were aware of the statement's falsity, citing a November 2015 letter from ICE to U.S. Representative Torres, which stated that ICE lacked the legal authority to investigate bail bond companies regarding inappropriate conduct between private parties. Plaintiff contends that this letter demonstrates they were not under investigation in 2013, as claimed by BuzzFeed. The court compares Plaintiff's complaint to a previous case, noting that Plaintiff clearly identifies the false statement and its reasoning for this assertion.

However, the court finds no material inconsistency between the article's claim and the November 2015 letter, as the letter only addresses ICE's authority concerning private conduct and does not contradict the article's implication that ICE could investigate actions involving detained immigrants. Additionally, the article includes hyperlinks to documents purportedly demonstrating that Plaintiff's business practices were under investigation by various authorities, including ICE. Plaintiff disputes the authenticity of one linked document that supposedly shows an investigation was closed due to lack of evidence, leading the court to disregard that record in its evaluation of the case. Overall, the court concludes that Plaintiff's theory of defamation lacks sufficient factual support.

A court may incorporate a document into a complaint by reference if its authenticity is undisputed. In this case, the Plaintiff does not contest the authenticity of two hyperlinked records from investigations by the Commonwealth Attorney for Virginia and the Fairfax City Police Department, both linked within the same sentence as the contested statement regarding an ICE investigation. These records, dated from 2013, show redactions consistent with Freedom of Information Act (FOIA) exemptions. Although the court does not need to definitively establish the origins of these records at this stage, their existence undermines the Plaintiff's claim that ICE conducted no investigation into the Plaintiff's business practices in 2013.

Additionally, the Plaintiff did not attach a critical November 2015 Letter to the Amended Complaint, which weakens the factual basis for the defamation claim. The Article quotes an October 16, 2015 letter from U.S. Representative Torres to ICE, inquiring about the agency's awareness of potential exploitation by the Plaintiff. The court is uncertain if the November 2015 Letter is a response to Representative Torres's letter, but it could provide significant context regarding ICE’s investigation.

The court concludes that the Amended Complaint does not sufficiently state a claim under Rule 12(b)(6). However, rather than dismiss the complaint with prejudice, which is uncommon in federal practice, the court will permit the Plaintiff to re-plead, reflecting the principle that dismissal with prejudice should be an exception rather than a rule. The court also denies the Defendants' special motion to dismiss under the D.C. Anti-SLAPP Act.

The D.C. Anti-SLAPP Act mandates the dismissal of defamation lawsuits targeting public advocacy unless the plaintiff can show a likely success on the merits. A key issue in this case is whether a federal court with diversity jurisdiction can apply the D.C. Anti-SLAPP Act's special motion to dismiss. The D.C. Circuit previously ruled that it cannot, as established in Abbas v. Foreign Policy Group, but the defendants argue that a subsequent D.C. Court of Appeals decision, Competitive Enterprise Institute v. Mann, has altered this interpretation. The D.C. Circuit's ruling has not been directly addressed regarding whether district courts must follow its interpretation or a conflicting one from the D.C. Court of Appeals. However, several district courts have indicated that they should defer to a clear interpretation from the D.C. Court of Appeals. 

The court believes that Mann does not render Abbas inaccurate. Abbas determined that federal courts must apply the Federal Rules of Civil Procedure instead of the D.C. Anti-SLAPP Act because the Act establishes a specific dismissal standard that differs from the federal rules, which allow a plaintiff to proceed to trial if they meet the standard for a motion to dismiss or for summary judgment. The D.C. Anti-SLAPP Act imposes an additional hurdle, thus conflicting with the Federal Rules.

The court concluded that, unlike the D.C. Anti-SLAPP Act, the Federal Rules do not require a plaintiff to demonstrate a likelihood of success on the merits to prevent pre-trial dismissal. The D.C. Anti-SLAPP Act mandates that a plaintiff must provide evidence supporting their claim after a defendant makes a prima facie showing that the claim arises from an act in furtherance of public interest advocacy. The term "demonstrate" indicates that mere allegations are insufficient; actual evidence must be produced or proffered. The court defined "likely to succeed" as the ability of a properly instructed jury to reasonably find support for the claim based on the presented evidence. Dismissal should only occur if the plaintiff cannot prevail as a matter of law, allowing for evidence weighing and permissible jury inferences.

Despite Mann's clarification of the D.C. Anti-SLAPP Act, it does not require the court to diverge from the D.C. Circuit's interpretation in Abbas. The two standards for motions to dismiss are fundamentally different: under the Anti-SLAPP Act, a plaintiff must present evidence to survive dismissal, while under Rule 12(b)(6), a plaintiff only needs to plead plausible facts. Mann acknowledged this distinction and emphasized that without requiring more than mere allegations, the special motion to dismiss would be unnecessary. Additionally, the burden of proof differs; the Anti-SLAPP Act shifts the burden to the plaintiff to present evidence, while Rule 12(b)(6) places the burden on the defendant to justify dismissal. This shift in burden under the Anti-SLAPP Act significantly favors defendants, altering the typical dismissal procedure established by Rule 12.

The court adheres to the precedent established in Abbas, determining that the D.C. Circuit's decision is binding and must be followed. In Deripaska v. Associated Press, Judge Huvelle concluded that Mann did not definitively resolve the current issue, leading to the dismissal of the defendant's special motion to dismiss. This court finds Deripaska's reasoning persuasive and declines to take a different approach, affirming the necessity to follow the D.C. Circuit's guidance. Consequently, the court partially grants and partially denies the Defendants' Motion to Dismiss, while also denying their Special Motion to Dismiss. The court will dismiss the Plaintiff's Amended Complaint without prejudice, allowing the Plaintiff 21 days to file an amended complaint regarding the defamation claim. Both parties agree that D.C. law applies, which the court will utilize. The D.C. Circuit has indicated that, when reviewing a complaint's dismissal, courts must assume the allegations of falsity and requisite state of mind, yet this does not alter the application of the Twombly and Iqbal pleading standards. The court acknowledges that despite a broad statement in Farah, District courts still dismiss defamation claims lacking plausible allegations. The Plaintiff does not contest the requirement to plausibly allege the falsity of the statements in question.

The Circuit affirmed the district court's ruling that two defamatory statements were not legally actionable because no reasonable juror could determine them to be false, referencing the precedent set in Trudeau and applying the less stringent Conley standard due to the pre-Twombly context. The Article cites HSI investigation records obtained by BuzzFeed News under the Freedom of Information Act to support claims that Donovan has a criminal history. In response, Donovan contended that these HSI documents misrepresented his record but did not directly challenge this aspect in his complaint. The court noted that the absence of a full statement from Donovan, if not addressed in his complaint, could further undermine the credibility of his allegations regarding the falsity of the statements.