THEMED RESTAURANTS INC v. ZAGAT SURVEY LLC LLC XX

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Supreme Court, New York County, New York.

THEMED RESTAURANTS, INC., doing business as Lucky Cheng's, Plaintiff, v. ZAGAT SURVEY, LLC, a Delaware Limited Liability Company, Zagat Survey, Inc., a Delaware Corporation, Zagat Enterprises, LLC, a Delaware Limited Liability Company, and Does I Through Does XX, Defendants.

Decided: August 19, 2004

Ravi Ivan Sharma, Esq., New York, counsel for plaintiff. Martin London, Esq., and Audra J. Soloway, Esq., of Paul, Weiss, Rifkind, Wharton & Garrison, LLP, New York, counsel for named defendants.

Disregarding the common wisdom that “all publicity is good publicity,” a restaurant owner sues over its review in a Zagat restaurant guide.   This dispute presents a nation-wide issue of first impression, for no court has been called upon to consider the standards applicable to a defamation claim raised against a review of a commercial establishment based upon combined extracts of quoted anonymous consumer comments, accompanied by ratings based upon scores given by those consumers.   Additionally, as to New York law, the motion highlights the need for clear guidance in relation to the level of pleading specificity required to plead malice in a defamation claim where free speech and First Amendment protections are applicable.

Background

Plaintiff a New York City restaurant owner sues the Zagat Survey, LLC (“Zagat” or “Zagat Survey”), for libel, trade libel and negligence.   Defendant moves to dismiss (CPLR 3211) and seeks an award of sanctions (CPLR 8303-a;  22 NYCRR § 130).   The restaurant at issue is named Lucky Cheng's, which is located at 24 First Avenue in Manhattan.   As described by its owner, Lucky Cheng's is a theme restaurant with a drag queen cabaret, where female impersonators are both waiters and performers and customer participation contributes to the entertainment.   The 2004 Zagat Survey for New York City Restaurants (“2004 NYC Restaurant Survey”) contains this text, quoted in its entirety as follows:

“God knows ‘you don't go for the food’ at this East Village Asian-Eclectic rather you go to ‘gawk’ at the ‘hilarious' ‘cross-dressing’ staff who ‘tell dirty jokes', perform ‘impromptu floor shows' and offer ‘lap dances for dessert’;  obviously, it ‘can be exhausting’, and ‘weary well-wishers suggest they ‘freshen up the menu and their makeup.’ ”  (Id., at 74).

On a scale from zero to 30, the food is rated as 9 and the decor and service is rated as 15.1  The complaint alleges that, following the issuance of the 2004 NYC Restaurant Survey in October of 2003, Lucky Cheng's suffered a 35% drop in business.

The Zagat approach to its reviews is explained by the acknowledgments page at the front of the 2004 NYC Restaurant Survey as follows:  “The reviews published in this guide are based on public opinion surveys, with numerical ratings reflecting the average scores given by all survey participants who voted on each establishment and text based on direct quotes from, or fair paraphrasings of, participants' comments.”   Consumers' numerical ratings of the elements of food, decor and service are made on a scale of zero to three and, to reach the published rating numbers, are averaged and multiplied by ten.

Zagat Survey, LLC, is reputed to be the world's leading provider of consumer survey-based dining, travel and leisure information.   The 2004 NYC Restaurant Survey at issue is one volume of a series of Zagat guides, now approximately 50 in number, which cover restaurants, hotels, and lifestyle subjects such as shopping and nightlife.   The first Zagat publication was a 1979 mimeographed compilation of comments on New York City restaurants produced by Tim and Nina Zagat, co-founders and co-chairs of Zagat Survey.

Application of Defamation Law to a Survey and Summary of Consumer Reviews

 Every defamation claim is governed by the basic standard that a libel or slander plaintiff must plead that the statement at issue is “both false and defamatory” (Brian v. Richardson, 87 N.Y.2d 46, 51, 637 N.Y.S.2d 347, 660 N.E.2d 1126 [1995] ).   Additionally, where, as here, plaintiff is a commercial enterprise open to the public and the comment is made by the press, plaintiff must plead constitutional malice, also termed actual malice, i.e., that the statement was made with knowledge of falsity or with such reckless disregard of truth that the publisher or author in fact “entertained serious doubts” as to the truth of a published statement (see St. Amant v. Thompson, 390 U.S. 727, 731, 88 S.Ct. 1323, 20 L.Ed.2d 262 [1968], Sweeney v. Prisoners' Legal Services of New York, Inc., 84 N.Y.2d 786, 622 N.Y.S.2d 896, 647 N.E.2d 101 [1995] ).2

 The defense claims that its work is exempt from a defamation claim because its words are an expression of opinion protected by the First Amendment.   Generally, for reasons stated in the leading decision in this area, Mr. Chow of New York v. Ste. Jour Azur S.A., 759 F.2d 219, 230 [2nd Cir.1985], a restaurant review, no matter how harsh, is not an appropriate basis for a libel action because it reflects an individual's subjective opinion about the quality of food, service and decor (see also Kuan Sing Enterprises, Inc. v. T.W. Wang, Inc., 86 A.D.2d 549, 446 N.Y.S.2d 76 [1st Dept.1982], affd. 58 N.Y.2d 708, 458 N.Y.S.2d 544, 444 N.E.2d 1008 [1982];  Twenty-Five East 40th St. Restaurant Corp. v. Forbes, Inc., 37 A.D.2d 546, 322 N.Y.S.2d 408 [1st Dept.1971], affd. 30 N.Y.2d 595, 331 N.Y.S.2d 29, 282 N.E.2d 118 [1972];  see Annotation, Liability for Defamation for Criticizing Restaurant's Food, 96 A.L.R.3d 609 [1980 and Supp.2001] ).3  Nonetheless, where a review contains false statements of objective fact, sometimes termed “historic fact,” regarding items such as the physical conditions of a restaurant or the ingredients of a dish, the false statement can be actionable (e.g., Mr. Chow of New York v. Ste. Jour Azur S.A., supra, 759 F.2d at 226, manner of serving Peking Duck;  Terillo v. New York Newsday, 137 Misc.2d 65, 519 N.Y.S.2d 914 [Civ.Ct. N.Y. Co.1987], review incorrectly listed ingredients).

 Here, present is a distinctive fact pattern in that the review at issue is not that of an individual diner, but rather is an edited summary of multiple anonymous consumer opinions.   The question of legal interest is whether the use of a survey and of anonymous consumer opinions alters the traditional legal analysis, as plaintiff suggests.   These factors, upon reflection and for the reasons stated below, can be accommodated within existing and accepted defamation principles.

 First, as to the use of collected data, surveys and polls are a traditional way to assess opinion and can be assailed only if known falsity was present or, to paraphrase St. Amant v. Thompson, supra, 390 U.S. at 732, 88 S.Ct. 1323, a reckless defendant had “obvious reasons to doubt the veracity of the informant[s] or the accuracy of [the] reports” (see, knowing inaccurate presentation of data, Goldwater v. Ginzburg, 414 F.2d 324, 334 [2d Cir.1969], cert. denied 396 U.S. 1049, 90 S.Ct. 701, 24 L.Ed.2d 695 [1970], reh. denied 397 U.S. 978, 90 S.Ct. 1085, 25 L.Ed.2d 274 [1970], poll of “professional opinions” entitled “What Psychiatrists Say About Goldwater,” published after a warning by the American Psychiatric Association that “professional opinions” required a “thorough clinical examination” was basis for successful libel suit by former presidential candidate Barry Goldwater).   Typically, the use of multiple sources for collected information serves as its own protection against defamation claims (see Farrakhan v. N.Y.P. Holdings, Inc., 238 A.D.2d 197, 656 N.Y.S.2d 726 [1st Dept.1997], quoting New York Times Co. v. Sullivan, 376 U.S. 254, 280, 84 S.Ct. 710, 11 L.Ed.2d 686 [1964], reporters' review of numerous sources “conclusively demonstrates that the article was not published ‘with knowledge that it was false or with reckless disregard of whether it was false or not’ ”).   Accordingly, that a survey is at issue does not require development of a new and different legal analysis.

 Second, as to quoted opinions, the use of quotations is an accepted approach to conveying the remarks of others (Orr v. Lynch, 60 A.D.2d 949, 950, 401 N.Y.S.2d 897 [3rd Dept.1978], affd. on memorandum below 45 N.Y.2d 903, 411 N.Y.S.2d 10, 383 N.E.2d 562 [1978], “The defendants herein were clearly serving their informational function in relaying [the quoted] opinions”;  Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 511, 111 S.Ct. 2419, 115 L.Ed.2d 447 [1991], “Quotations allow the reader to form his or her own conclusions and to assess the conclusions of the author, instead of relying entirely upon the author's characterization of her subject”).   A claim of actual alteration of the material quoted in a manner adverse to the plaintiff is actionable (Goldwater v. Ginzburg, supra, 414 F.2d at 334, author “added to the original letters phrases, sentences and paragraphs” negative material).   No support is found for plaintiff's suggestion that the use of anonymous quotations from consumer surveys alone renders the text susceptible to a special challenge.

 Third, as to the use of anonymous sources, the factor to be scrutinized is whether the author or publisher fully disclosed the basis upon which quoted comments are considered credible (Brian v. Richardson, supra, 87 N.Y.2d at 53-54, 637 N.Y.S.2d 347, 660 N.E.2d 1126, article referred to “identified and unidentified sources” and “there was no suggestion in the article that there were additional undisclosed facts on which its credibility assessment had been based”).   This factor traditionally may be embraced by consideration of whether a writing is facially exempt from treatment as protected opinion (Steinhilber v. Alphonse, 68 N.Y.2d 283, 289, 508 N.Y.S.2d 901, 501 N.E.2d 550 [1986], “A ‘pure opinion’ is a statement of opinion which is accompanied by a recitation of the facts upon which it is based” or “does not imply that it is based upon undisclosed facts”;  Flowers v. Carville, 310 F.3d 1118, 1129 [9th Cir.2002], “where a publication sets forth the facts underlying its statement ․ and those facts are true, the Constitution protects that opinion from liability for defamation”;  see also Milkovich v. Lorain Journal Co., 497 U.S. 1, 19, 110 S.Ct. 2695, 111 L.Ed.2d 1 [1990] ).   Here, the publisher disclaims reliance upon anything other than the submission of a broad range of opinions, and inserts alerting symbols to indicate (1) if consumer comments were mixed, rather than uniform, and (2) if a scant number of responses put the basis of the review below a “low response” threshold.   Given the disclosure of methodology and the lack of endorsement of the credibility of any particular consumer, the court rejects the contention that the use of anonymous quotations alone requires the imposition of heightened or novel scrutiny.

Based on the foregoing, the court is satisfied that the distinctive features here do not require departure from the legal standards normally governing defamation by a consumer-oriented review of a public enterprise or figure, and that analysis of the complaint's adequacy may proceed along traditional lines.

Truth, Falsity and Opinion

 The court turns to the issue of whether the text in the review of Lucky Cheng's printed in the 2004 NYC Restaurant Survey is protected opinion or whether it contains a potentially defamatory factual statement which is capable of being false and is claimed to be false. This inquiry is conducted by reviewing the material “from the perspective of an ‘ordinary reader’ of the statement” (Mr. Chow of New York v. Ste. Jour Azur S.A., supra, 759 F.2d at 224).4

 The critical objected-to statements in the five-line review appear to be:  (1) “God knows ‘you don't go for the food’ ” and (2) “weary well-wishers suggest they ‘freshen up the menu and their makeup.’ ”   These statements express a viewpoint and are subjective in nature.   The comment regarding the suggestion to “freshen up” as it relates to menu choices logically cannot be read to imply the food served is unwholesome or fails to meet health standards, and an average reader would not understand it as a negative assertion concerning sanitation and cleanliness at Lucky Cheng's.   The balance of the text is not challenged as inaccurate or false.

 As to the ratings, it strikes the court that numerical ratings facially are quintessential opinion, no different than rating a film zero to five out of five stars.   Although the complaint attempts to characterize the ratings as objectively “false” by asserting it portrays plaintiff's establishment as being “substandard and unworthy of patronage,” plaintiff's phrasing precisely illustrates why a restaurant review is classified as opinion the reviewer assesses subjective qualities, considers his or her own standards, and uses words or scores to describe the experience so that the reader can decide whether to visit the establishment.   No more is present here.   While this restaurant owner believes it has “hit the sweet spot” with its menu and food choices, the Zagat reviewers suggest the menu selection misses the mark a bit, notwithstanding that the establishment as a whole offers an entertaining and engaging evening.   This disagreement over taste and fashion is not the stuff of defamation.

The court concludes that the words and ratings at issue reflect the collected subjective judgments of individual consumers, which “a reasonable reader would conclude ․ is an opinion” of each consumer and worthy of constitutional protection, rather than a statement of fact (Millus v. Newsday, Inc., 89 N.Y.2d 840, 842, 652 N.Y.S.2d 726, 675 N.E.2d 461 [1996], cert. denied 520 U.S. 1144, 117 S.Ct. 1313, 137 L.Ed.2d 476 [1997] ).   Accordingly, as to truth or falsity, the complaint does not plead an actionable statement of fact and discovery is not warranted.

Constitutional Malice

 Defendant also urges that the complaint is deficient for failure to plead constitutional malice.   As noted above, because the restaurateur plaintiff is a commercial establishment open to the public the equivalent of a public figure it must plead constitutional or actual malice.   Plaintiff urges that it has satisfied this standard based upon the facts in its possession at the time it served its complaint and that discovery is needed to ascertain further facts bearing upon malice.

This issue is of particular interest because New York cases appear to give conflicting guidance on the degree of specificity required when pleading constitutional malice.   On one hand, some New York cases require pleading some level of factual detail in relation to constitutional malice (Jimenez v. United Federation of Teachers, 239 A.D.2d 265, 657 N.Y.S.2d 672 [1st Dept.1997], app. dismissed 90 N.Y.2d 890, 661 N.Y.S.2d 834, 684 N.E.2d 283 [1997], public figure plaintiff “was required but failed to allege facts sufficient to show actual malice with convincing clarity”;  Pontarelli v. Shapero, 231 A.D.2d 407, 411, 647 N.Y.S.2d 185 [1st Dept.1996], complaint sufficient which set forth “gravamen of plaintiff's action” by pleading specific facts and motive;  see also Red Cap Valet, Ltd. v. Hotel Nikko (USA), Inc., 273 A.D.2d 289, 709 N.Y.S.2d 578 [2d Dept.2000], “plaintiff failed to allege any facts from which malice could be inferred” and conclusory allegations were insufficient to overcome qualified privilege asserted;  see generally Fairman, The Myth of Notice Pleading, 45 Ariz. L.Rev. 987 [Winter 2003], examining the many types of actions, including libel actions, in which federal courts require heightened particularity in pleading).   On the other hand, seemingly reflecting the general theory of notice pleading and the New York rule that a pleading is to be construed liberally in favor of the plaintiff (CPLR 3211 and 3013), at least one New York case suggests specific detail as to constitutional malice may be advanced later in the proceeding (Alianza Dominicana, Inc. v. Luna, 229 A.D.2d 328, 329, 645 N.Y.S.2d 28 [1st Dept.1996], lv. app. dismd. 89 N.Y.2d 1029, 658 N.Y.S.2d 244, 680 N.E.2d 618 [1997], dismissal of libel claim for inadequate pleading of malice was “premature” and public figure plaintiff could clarify the issue “after discovery has been completed”).

A clear standard on the issue of specificity in relation to pleading constitutional malice in a case touching upon free speech rights is highly desirable.   Indeed, federal courts have held it imperative that there be a clear and sufficient pleading of intent in this class of cases (see Franchise Realty Interstate Corp. v. S.F. Local Joint Executive Bd. of Culinary Workers, 542 F.2d 1076, 1082-83 [9th Cir.1976], cert. denied 430 U.S. 940, 97 S.Ct. 1571, 51 L.Ed.2d 787 [1977], “where a plaintiff seeks damages ․ for conduct which is prima facie protected by the First Amendment, the danger that the mere pendency of the action will chill the exercise of First Amendment rights requires more specific allegations than would otherwise be required”).   This vigilance is no less important in New York, for the free speech guarantee of the New York State Constitution is even more stringent than that of the First Amendment (N.Y. Const., Art I, § 8., “ every citizen may freely speak, write and publish ․ sentiments on all subjects”;  O'Neill v. Oakgrove Construction, Inc., 71 N.Y.2d 521, 528-529, 528 N.Y.S.2d 1, 523 N.E.2d 277 [1988], “The expansive language of our State constitutional guarantee, its formulation and adoption prior to the Supreme Court's application of the First Amendment to the States, the recognition in very early New York history of a constitutionally guaranteed liberty of the press, and the consistent tradition in this State of providing the broadest possible protection to the sensitive role of gathering and disseminating news of public events, all call for particular vigilance by the courts of this State in safeguarding the free press against undue interference” [citations and internal quotation marks omitted] ).

 In the instant case, the court holds that specificity in the pleading of constitutional or actual malice is required.   The court finds here no portion of the pleading which either directly or by implication satisfactorily pleads defendant made a defamatory statement with knowledge of falsity of the statement or acted with such reckless disregard of truth that the publisher or author in fact “entertained serious doubts as to the truth of his publication” (St. Amant v. Thompson, supra, 390 U.S. at 731, 88 S.Ct. 1323).   Proper support for constitutional malice cannot be met by pleading that defendants had “an obligation to insure” the rating was factually true (Harte-Hanks Communications, Inc. v. Connaughton, 491 U.S. 657, 688, 109 S.Ct. 2678, 105 L.Ed.2d 562 [1989], “failure to investigate before publishing, even when a reasonably prudent person would have done so, is not sufficient to establish reckless disregard”).   As to the claim that the Zagat knew or should have known that its survey and assessment procedures could be improved or that the participating consumers might have been screened somewhat differently in an allegedly more thorough fashion (see Steven A. Shaw, The Zagat Effect, Commentary Magazine [Nov. 2000], containing the criticisms urged by plaintiff), such assertions raise only a challenge to the reasonableness of defendants' methodology, sounding in negligence and lacking the requisite claim of an actual or reckless eliciting or presentation of false information (Masson v. New Yorker Magazine, Inc., supra, 501 U.S. at 511, 111 S.Ct. 2419, “Mere negligence does not suffice”;  Time, Inc. v. Pape, 401 U.S. 279, 291, 91 S.Ct. 633, 28 L.Ed.2d 45 [1971], there is “ a constitutional zone of protection for errors of fact caused by negligence”).

Accordingly, the court finds that the pleading of constitutional or actual malice is insufficient and that a negligence claim cannot be utilized to avoid the constitutional requirement that plaintiff plead a higher level of fault.

Conclusion

Accordingly, the motion to dismiss is granted.

The request for sanctions is denied, given that the action is found to have posed novel issues and not to have been frivolous either as a matter of law or as found by the court in the exercise of its discretion (CPLR 8303-a and 22 NYCRR § 130;  Entertainment Partners Group, Inc. v. Davis, 155 Misc.2d 894, 897-901, 590 N.Y.S.2d 979 [Sup.Ct. N.Y. Co.1992, Lebedeff, J.], affd. 198 A.D.2d 63, 603 N.Y.S.2d 439 [1st Dept.1993] ).   Further, it has bearing upon the sanctions request that plaintiff did not oppose dismissal of the first, second, fifth, eighth, tenth, and eleventh causes of action, nor of an identified portion of the sixth cause of action.

This decision constitutes the order of the court.

FOOTNOTES

1.   The restaurant received a food rating of 12 or better in the past (“good” in the fair to good range).   Despite a management change and upgrading in April of 2002, its 2003 food rating was 8 and, in 2004, the food rating was 9 (both “fair” in the poor to fair range).   Plaintiff submits printed copies of web pages from other Internet sites with favorable consumer reviews of Lucky Cheng's written in 2002 and 2003, with some mentioning a new chef and “great” food.

2.   The court rejects the plaintiff's contention that it is not a public enterprise or public figure for the purposes present here.   The general rule is “because a restaurant is a place of public accommodation that seeks public patrons, it is a public figure for the limited purpose of a food review or reporting on its goods and services” (Pegasus v. Reno Newspapers, Inc., 118 Nev. 706, 721, 57 P.3d 82, 92 [Nev.2002], cert. denied 540 U.S. 817, 124 S.Ct. 82, 157 L.Ed.2d 34 [2003], adopting rule applied by other states;  Steak Bit of Westbury v. Newsday, Inc., 70 Misc.2d 437, 334 N.Y.S.2d 325 [Sup.Ct. Nassau Co.1972], New York application of public figure standard).   Generally, this rule is applied to many types of consumer reviews of commercial plaintiffs (Steaks Unlimited, Inc. v. Deaner, 623 F.2d 264, 280 [3d Cir.1980], “Application of the public figure rule to [commercial plaintiffs] ․ serves the values underlying the First Amendment by insulating consumer reporters and advocates from liability unless they have abused their positions by knowingly or recklessly publishing false information”), and a similar rule governs common law trade libel complaints (Global Merchants, Inc. v. Lombard & Co., 234 A.D.2d 98, 650 N.Y.S.2d 724 [1st Dept.1996] ).

3.   Because restaurant reviews fall into a sui generis category commonly recognized as protected opinion, there is no need to analyze a restaurant review's “broader context” in the field of publishing to determine whether a reader would believe the review as a whole to be fact or opinion (compare Brian v. Richardson, supra, 87 N.Y.2d at 53, 637 N.Y.S.2d 347, 660 N.E.2d 1126, newspaper Op Ed article, court to consider whether the “ ‘broader context’ in which [the alleged defamation was] published provided some signals to the reader that its contents were expressions of opinion”).

4.   It is not required that the statement under scrutiny be dead-on accurate (New York Times Co. v. Sullivan, supra, 376 U.S. at 271-272, 84 S.Ct. 710, “[E]rroneous statement is inevitable in free debate, and ․ must be protected if the freedoms of expression are to have the ‘breathing space’ that they ‘need ․ to survive’ ”).   Further, neither imprecise phrasing nor simple misinterpretation render a statement actionable (Bose Corporation v. Consumers Union of United States, Inc., 466 U.S. 485, 513, 104 S.Ct. 1949, 80 L.Ed.2d 502 [1984], rehearing den. 467 U.S. 1267, 104 S.Ct. 3561, 82 L.Ed.2d 863 [1984], “The choice of such language, though reflecting a misconception, does not place the speech beyond the outer limits of the First Amendment's broad protective umbrella.  [It should not be that an] individual using a malapropism might be liable, simply because an intelligent speaker would have to know that the term was inaccurate in context, even though he did not realize his folly at the time”;  see, as to misinterpretation, Suozzi v. Parente, 202 A.D.2d 94, 102, 616 N.Y.S.2d 355 [1st Dept.1994], lv. app. den. 85 N.Y.2d 923, 627 N.Y.S.2d 321, 650 N.E.2d 1323 [1995], “misinterpretation of a source or the resolution of an ambiguity adversely to the plaintiff” not actionable, and Freeman v. Johnston, 192 A.D.2d 250, 252, 601 N.Y.S.2d 606 [1st Dept.1993], affd. 84 N.Y.2d 52, 614 N.Y.S.2d 377, 637 N.E.2d 268 [1994], cert. denied 513 U.S. 1016, 115 S.Ct. 576, 130 L.Ed.2d 492 [1994], “possibly mistaken inference” relating to source's statement not actionable).

DIANE A. LEBEDEFF, J.

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