Reliance Insurance Co. v. Barron's

442 F. Supp. 1341, 1977 U.S. Dist. LEXIS 18153
CourtDistrict Court, S.D. New York
DecidedNovember 18, 1977
Docket76 Civ. 4094
StatusPublished
Cited by77 cases

This text of 442 F. Supp. 1341 (Reliance Insurance Co. v. Barron's) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reliance Insurance Co. v. Barron's, 442 F. Supp. 1341, 1977 U.S. Dist. LEXIS 18153 (S.D.N.Y. 1977).

Opinion

MEMORANDUM AND ORDER

BRIEANT, District Judge.

After exhaustive pre-trial discovery, upon a mound of papers submitted by both sides exceeding in volume those usually resulting from a plenary trial, defendants have now moved for summary judgment pursuant to Rule 56, F.R.Civ.P. If it appears clear that an essential element of plaintiff’s claim cannot be proved at trial, for want of evidence, it is appropriate to grant the motion. Summary judgment is a remedy which must be applied when the *1344 Court is convinced as a matter of law that the suit can have only one possible outcome. See Epoch Producing Corporation v. Killiam Shows, Inc., 522 F.2d 737, 742-43 (2d Cir. 1975); Applegate v. Top Associates, Inc., 425 F.2d 92, 96 (2d Cir. 1970). Indeed, as the recent cases of Hotchner v. CastilloPuche, 551 F.2d 910 (2d Cir. 1977), Edwards v. National Audubon Society, Inc., 556 F.2d 113 (2d Cir. 1977) and Meeropol v. Nizer, 560 F.2d 1061 (2d Cir. 1977) all demonstrate, the level of clear and convincing proof required now in this Circuit to show “actual malice” in a defamation case is almost insuperable. It is abundantly clear that this plaintiff cannot surmount the barrier.

Plaintiff, Reliance Insurance Company, filed its complaint on September 14, 1976, requesting compensatory damages of $7,500,000.00, general damages of $10,000,-000.00, special damages of $10,000,000.00 and punitive damages- of $10,000,000.00, arising out of an article written by the defendant Dr. Abraham J. Briloff and subsequently published by the defendant Barron’s in its July 19, 1976 issue entitled “Whose ‘Deep Pocket’? At Reliance Group, the Slogan is ‘Dig We Must’.”

Reliance charges, in its complaint, that Briloff and Barron’s violated § 10(b) of the Securities Exchange Act of 1934, as well as Rule 10b-5 promulgated thereunder, and the laws’of the State 6f New York relating to libel and defamation, negligence and intentional tort.

Facts

Plaintiff Reliance Insurance Company (hereinafter sometimes “Insurance”) is engaged in the property and casualty insurance and life insurance businesses. Of the common stock of Insurance, 96.9% is owned by Reliance Financial Services Corporation (“Financial”), the common stock of which in turn is wholly owned by Reliance Group, Incorporated (“Group”) Reliance Group was formerly known as Leasco Data Processing Equipment Corporation. Group acquired control of Insurance in 1968.

On June 11, 1976 Insurance filed an S-l registration statement pursuant to the Securities Act of 1933 and circulated a preliminary prospectus to the investment community with the intention of offering at public sale, two million shares of its Series A Cumulative Preferred Stock. This sale was scheduled for July 20, 1976.

The corporate defendant (hereinafter “Barron’s”) is the proprietor of a well known financial magazine published weekly in New York City. Because of the continuing interest in Group on the part of the financial community, editors of Barron’s requested and received a copy of this preliminary prospectus sometime between June 11 and June 18, 1976. After studying the prospectus, the editors determined that several interesting financial questions were raised which might warrant treatment in an article in Barron’s. The editors therefore asked defendant Dr. Abraham J. Briloff to review the prospectus with a view toward possibly writing an article. Dr. Briloff was sent a copy of the prospectus, as well as Group’s 1975 Annual Report and Form 10-K and Financial’s Form 10-K. Dr. Briloff holds the Emanuel Saxe Chair of Distinguished Professor of Accountancy at Baruch College of the City University of New York. In addition to teaching and lecturing in the field of accounting, Briloff has also published widely on this subject, writing articles on financial and accounting matters directed to nontechnical readers, including members of the investing public. He may be regarded, for our purposes, as a journalist or reporter, and is the Cassandra of the Accóuntants.

Three weeks later, sometime around July 4,1976, Dr. Briloff delivered a first draft of an article to Barron’s. According to Dr. Briloff’s deposition testimony, he based his article oh a review of the preliminary prospectus and other public documents, and research conducted at the Securities and Exchange Commission in New York, American Stock Exchange and New York Stock Exchange. Once received, the article was reviewed and edited at Barron’s by Mr. *1345 Steven S. Anreder, one of three News Editors employed by Barron’s. Finally, the article was reviewed by Mr. Alan Abelson, Managing Editor of Barron’s and Mr. Robert M. Bleiberg, Editor [in Chief] of the publication since 1955.

The Briloff article was published under the author’s by-line, in the July 19, 1976 issue of Barron’s of which there were more than 225,000 copies, reaching a wide readership in the financial community.

In the article, Dr. Briloff analyzed the proposed public offering of Insurance, and the accounting of Group. He concluded that the purpose of the- public offering was to serve the interests and needs of Group rather than Insurance. The article charged that the proceeds of the sale were to flow upstream to Group, the .parent, to the detriment of Insurance and its policyholders and minority shareholders. The article also implied, inter alia, that Group was employing certain “creative accounting” concepts, and engaging in improprieties, bad business judgment and breach of fiduciary duties, all of which led to its decision to market the proposed Series A issue.

The article consisted of 38 paragraphs covering approximately four pages of the July 19th issue. A full copy is attached hereto as Appendix A.

The Court regards the subject article as clearly defamatory of plaintiff, and probably also of Reliance Group. It also criticizes practices of Touche Ross & Co., the prestigious accounting firm serving the Reliance companies. For the most part, the article is opinion only. That Dr. Briloff sincerely holds the opinions expressed, and reached the conclusions uttered, after a professional consideration of public documents cannot be disputed. This is not the first time Briloff had publicly criticized the financial and accounting practices of the Reliance Group, and its corporate predecessor, Leasco. His criticisms appear to have brought about substantial revisions in the wording of the final prospectus. That a reasonably prudent investor could purchase the issue, first -reading the offending article,, and believing ' it, defies ¿imagination.

Strong public policies exist in favor of the right to publish such '.critiques as those, contained in Dr. Briloff’s article. Our federal securities laws are based on the theory that full disclosure will protect; the integrity of themarket; place.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

ShotSpotter Inc. v. VICE Media, LLC
Superior Court of Delaware, 2022
Talley v. Time, Inc.
923 F.3d 878 (Tenth Circuit, 2019)
Fairfax Financial Holdings Limited v. S.A.C.
160 A.3d 44 (New Jersey Superior Court App Division, 2017)
Biro v. Condé Nast
963 F. Supp. 2d 255 (S.D. New York, 2013)
Hemispherx Biopharma Inc. v. Asensio
55 Pa. D. & C.4th 502 (Philadelphia County Court of Common Pleas, 2001)
Agora, Inc. v. Axxess, Inc.
90 F. Supp. 2d 697 (D. Maryland, 2000)
Computer Aid, Inc. v. Hewlett-Packard Co.
56 F. Supp. 2d 526 (E.D. Pennsylvania, 1999)
Lopez v. Univision Communications Inc.
45 F. Supp. 2d 348 (S.D. New York, 1999)
Stolz v. KSFM 102 FM
30 Cal. App. 4th 195 (California Court of Appeal, 1994)
NBC Subsidiary (KCNC-TV), Inc. v. Living Will Center
879 P.2d 6 (Supreme Court of Colorado, 1994)
National Life Insurance v. Phillips Publishing, Inc.
793 F. Supp. 627 (D. Maryland, 1992)
Silvester v. American Broadcasting Companies, Inc.
839 F.2d 1491 (Eleventh Circuit, 1988)
Blue Ridge Bank v. Veribanc, Inc.
675 F. Supp. 1007 (W.D. Virginia, 1987)
Dairy Stores, Inc. v. Sentinel Publishing Co.
516 A.2d 220 (Supreme Court of New Jersey, 1986)
Sepmeier v. Tallahassee Democrat, Inc.
19 Fla. Supp. 2d 1 (Florida Circuit Courts, 1986)

Cite This Page — Counsel Stack

Bluebook (online)
442 F. Supp. 1341, 1977 U.S. Dist. LEXIS 18153, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reliance-insurance-co-v-barrons-nysd-1977.